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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-K/A







Amendment No. 2






|    |                                                                    
|--- | -------------------------------------------------------------------
|[X] | Annual report pursuant to Section 13 or 15(d) of the
    Securities

Exchange Act of 1934


For the fiscal year ended March 31,
2003



|     |                                                                        
|---- | -----------------------------------------------------------------------
|[  ] | Transition report pursuant to Section 13 or 15(d) of the
    Securities

Exchange Act of 1934


Commission file number 0-22520

TERREMARK WORLDWIDE, INC.

(Exact Name of Registrant as Specified in Its
Charter)


|                                                                               |  |                                                   
|------------------------------------------------------------------------------ |  | --------------------------------------------------
|Delaware(State or Other Jurisdiction of
    Incorporation
    or Organization) |  | 52-1981922(I.R.S. Employer
    Identification No.)

2601 S. Bayshore Drive, Miami, Florida
33133

(Address of Principal Executive Offices,
Including Zip Code)


Registrants telephone number, including
area code: (305) 856-3200

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

|                                             |  |                                       
|-------------------------------------------- |  | --------------------------------------
|Common Stock, par value $0.001 per
    share |  | American Stock Exchange               
|(Title of Class)                             |  | (Name of Exchange on Which Registered)

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

NONE



---

Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days. Yes [X] No [  ]

Indicate by check mark if disclosure of
delinquent filers pursuant 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
an accelerated filer (as defined in Exchange Act
Rule 12b-2). Yes [  ] No [X]

The aggregate market value of the
registrants common stock held by non-affiliates of the
registrant on September 30, 2002, was approximately
$42,505,087, based on the closing market price of the
registrants common stock ($0.34) as reported by the
American Stock Exchange on such date.

The number of shares outstanding of the
registrants Common Stock, par value $0.001 per share, as
of June 25, 2003 was 306,452,865.



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TABLE OF CONTENTS




|                                             |          |  |                                                                                           |          |  |    | 
|-------------------------------------------- | -------- |  | ----------------------------------------------------------------------------------------- | -------- |  | -- | 
|                                             |          |  |                                                                                           | Page No.
|                                             |          |  |                                                                                           |         
|PART I                                       |          |  | 2                                                                                         |         
|                                             | ITEM  1. |  | BUSINESS                                                                                  |          |  | 2  | 
|                                             | ITEM  2. |  | PROPERTIES                                                                                |          |  | 9  | 
|                                             | ITEM  3. |  | LEGAL PROCEEDINGS                                                                         |          |  | 10 | 
|                                             | ITEM  4. |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS                                   |          |  | 10 | 
|PART II                                      |          |  | 10                                                                                        |         
|                                             | ITEM  5. |  | MARKET FOR REGISTRANTS COMMON EQUITY AND
    RELATED STOCKHOLDER MATTERS                 |          |  | 10 | 
|                                             | ITEM  7. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS |          |  | 12 | 
|PART IV                                      |          |  | 32                                                                                        |         
|SIGNATURES                                   |          |  | 35                                                                                        |         
|CERTIFICATION OF CEO PURSUANT RULE 13A-14(A)
|CERTIFICATION OF CFO PURSUANT RULE 13A-14(A)






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PART I




ITEM 1. BUSINESS.

Overview




We operate facilities at strategic locations in
Florida, California and Sao Paulo from which we assist users of
the Internet and large communications networks in communicating
with other users and networks. Our primary facility is the NAP
of the Americas, where we provide exchange point, colocation and
managed services to carriers, Internet service providers,
network service providers, government entities, multi-national
enterprises and other end users.




Network access points are locations where two or
more networks meet to interconnect and exchange Internet and
data traffic (traffic of data, voice, images, video and all
forms of digital telecommunications), much like air carriers
meet at airports to exchange passengers and cargo. Instead of
airlines and transportation companies, however, participation in
NAPs comes from telecommunications carriers, Internet service
providers and large telecommunications and Internet users in
general. Tier-1 NAPs are large centers that access and
distribute Internet traffic and, following the airport analogy,
operate much like large, international airport passenger and
cargo transportation terminals or hubs.

Initially, four NAPs  in New York,
Washington, D.C., Chicago, and San Francisco  were
created and supported by the National Science Foundation as part
of the transition from the United States government-financed
Internet to a commercially operated Internet. Since that time,
privately owned NAPs have been developed, including the NAP of
the Americas. We refer to our facilities as TerreNAP Centers.

Our TerreNAP Centers are carrier-neutral. We
enable our customers to freely choose from among the many
carriers available at TerreNAP Centers the carriers with which
they wish to do business. We believe the carrier neutrality
provides us with a competitive advantage when compared to
carrier-operated network access points where customers are
limited to conducting business with one carrier.

The NAP of the Americas generates revenue by
providing our customers with:



| |   |                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the site and platform they need to exchange
    Internet and data traffic;                                                                                                                
|
| |  | a menu of related professional and managed
    services; and                                                                                                                              
|
| |  | space to house their equipment and their network
    facilities in order to be close to the Internet and data traffic
    exchange connections that take place at the NAP of the Americas.

Currently, our customers include
telecommunications carriers such as AT&T, MCI, Qwest and
Sprint, enterprises such as Bacardi USA, Intrado and Crescent
Heights, and government agencies including the Diplomatic
Telecommunications Services Programming Office (DTSPO), a
division of the United States Department of State, and the City
of Coral Gables.

On April 28, 2000, Terremark Holdings, Inc.
completed a reverse merger with AmTec, Inc., a public company.
Contemporaneous with the reverse merger, we changed our
corporate name to Terremark Worldwide, Inc. and adopted
TWW as our trading symbol on the American Stock
Exchange. Historical information of the surviving company is
that of Terremark Holdings, Inc.

Terremark was formed in 1982 and, along with its
subsidiaries, was engaged in the development, sale, leasing,
management and financing of various real estate projects.
Terremark provided these services to private and institutional
investors, as well as for its own account. The real estate
projects with which Terremark was involved included retail,
high-rise office buildings, mixed-use projects, condominiums,
hotels and governmental assisted housing. Terremark was also
involved in a number of ancillary businesses that complemented
its core development operations. Specifically, Terremark engaged
in brokering financial services, property management,
construction management, condominium hotel management,
residential sales and commercial leasing and brokerage, and
advisory services.

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After the April 28, 2000 merger, and as a
result of changes in our business conditions, including market
changes in the telecommunications industry and the lack of debt
and equity financing vehicles to fund other business expansion,
we began to redefine and focus our strategy, and began
implementing a plan to exit all lines of business and real
estate activities not directly related to the TerreNAP Center
strategy. Lines of business discontinued included IP fax
services, unified messaging services, and telephony. Non-core
real estate activities exited included real estate development,
property management, financing and the ancillary businesses that
complemented the real estate development operations. Our real
estate activities currently include technology construction work
and management of the property where the NAP of the Americas is
located. As of March 31, 2002, we had completed the exit of
lines of business and real estate activities not related to our
TerreNAP Center strategy.

Our principal executive office is located at
2601 S. Bayshore Drive, Miami, Florida 33133. Our
telephone number is (305) 856-3200.

Industry

The Internet is a collection of many independent
networks interconnected with each other to form a network of
networks. Users on different networks are able to communicate
with each other through interconnection between these networks.
To accommodate the fast growth of traffic over the Internet, an
organized approach for network interconnection was needed. The
exchange of traffic between these networks became known as
peering. The points and places where these networks exchange
traffic, or peer, with each other are known as network access
points, or NAPs.

Since the beginning of the Internet, major
traffic aggregation and exchange points have developed around
the world. The first four Tier-1 NAPs were built in the United
States in the early 1990s to serve the northern part of
the country, from East Coast to West Coast, and are located in
New York, Washington, Chicago and San Francisco. These NAPs were
built with sponsorship from the National Science Foundation in
order to promote Internet development and used the existing
infrastructures of telecommunication companies, to which
ownership of the NAPs was eventually transferred. These four
Tier-1 NAPs offer only connectivity services.

We own and operate the only carrier-neutral
Tier-1 NAP, which is known as the NAP of the Americas, located
at 50 NE 9th Street, Miami, Florida 33132,
approximately five miles from our corporate headquarters. The
NAP of the Americas enables customers to locate equipment next
to each other, and provides customers with other managed
services. Using the airport analogy again, customers at the NAP
of the Americas exchange and redirect Internet and data traffic
to multiple destinations, and purchase various managed services,
similar to what happens in air terminals with the provision of
fuel, maintenance, spare parts and food. The exchange of
Internet traffic without payment is known as
peering. When a fee is paid, it is referred to as
transit.

During the past few years, the telecommunications
and Internet industry has come under economic and commercial
pressure to restructure and reduce costs. While this uncertain
environment has presented us with some challenges that are more
fully discussed below, there have been some positive effects for
us resulting from the current industry situation. For example,
as many telecom and Internet companies have been forced to
reduce their overhead, the market of talented employees
available to us has increased. As a result, we have been able to
build a robust operations and engineering team, thereby reducing
our reliance on third party vendors and consultants.

Another positive side effect of the industry
downturn is that many telecommunications carriers have
discontinued plans to build their own data centers to provide
high quality colocation space for their customers. This
retrenchment, however, did not reduce the telecommunications
carriers need to present their customers with competitive
offerings that include highly conditioned, carrier-grade
colocation facilities. We built the NAP of the Americas
specifically to address the needs of these telecommunications
and enterprise customers and to provide them with an alternative
to making these expenditures. Consequently, we believe that the
NAP of the Americas has become an attractive solution for these
telecommunications carriers because it provides a
carrier-neutral forum  the airport  for
these companies to sell their connectivity and still maintain
direct

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relationships with their end-user customers.
Therefore, while our significant investment in the NAP of the
Americas has placed burdens on our financial resources, we
believe that our strategy will be successful.


Strategy

The NAP of the Americas created a new business
model for NAPs by providing customers with:



| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | the connectivity of a world-class NAP in a
    carrier-neutral facility;                                                                   
|
| |  | the ability to locate equipment next to other
    customers; and                                                                           
|
| |  | managed services meeting the design and
    operational specifications of multinational carriers,
    enterprises and government customers.




Our strategy is to leverage our major
connectivity hubs to sell services to customers within and
outside of our TerreNAP Centers. For example, we have been
retained by the Diplomatic Telecommunications Service Program
Office, under three publicly awarded contracts, to design,
implement and manage the system which will permit designated
overseas locations to have global Internet access. Although the
NAP of the Americas serves as the hub to manage this solution,
we are leveraging our international carrier relationships to
provide this customer with connectivity and technology solutions
to communicate with U.S. government locations around the world.




In an effort to limit the additional capital
required, our business model for expansion is best compared to
that of a management company model in the hospitality industry.
The model contemplates that a local in-country partner would own
and fund the development and build-out of the facility in which
the TerreNAP Center would be located. The facility would ideally
be a new development built to the exacting specifications
required for a top level NAP (as is the case in Miami), but it
may be located in an existing building that is retrofitted to
conform to those specifications. We intend to control the
operations of the NAP and be the primary tenant in our
partners building, sharing data center and services
revenue via a long-term lease or management contract.

In February 2002, we entered into an agreement
with Fundacao de Amparo a Pesquisa do Estado de Sao Paulo, the
research foundation for the State of Sao Paulo, to operate and
manage the NAP created by FAPESP, which we have renamed the NAP
do Brasil. Pursuant to the twenty year agreement, FAPESP turned
over the network access point to Terremark, which we intend to
enhance and intend to move to new facilities modeled after the
operational design of the NAP of the Americas by the end of
2003. Pre-existing FAPESP customers have the right to continue
to receive services at the then existing levels without payment
until February 2004. FAPESP will receive 6% of the revenue
generated by the enhanced NAP do Brazil for the first five years
of operation, 5% during the following five years, and 1% during
the last ten years. The term may be extended for an additional
ten-year period, during which FAPESP would again receive 1% of
the revenues. As of June 13, 2003, we have 30 customers in
Brazil. For the year ended March 31, 2003, our Brazilian
operations generated losses of approximately $605,000.

In June 2002, we entered into an exclusive
agreement with the Comunidad Autonoma de Madrid to develop and
operate carrier-neutral network access points in Spain. As part
of that agreement, the parties formed NAP de las
Americas  Madrid S.A. to own and operate
carrier-neutral NAPs in Spain, modeled after the NAP of the
Americas. The shareholders in this new company are the Comunidad
through its Instituto Madrileno de Desarrollo  IMADE,
the Camara Oficial de Comercio e Industria de Madrid, Red
Electrica Telecomunicaciones, S.A., Telvent Sistemas y Redes
S.A., a subsidiary of Abengoa S.A., and Centro de Transportes de
Coslada, S.A. (CTC). At the time the NAP de las
Americas  Madrid S.A. was formed, we owned 1% of its
equity, which we subsequently increased to 10%. We have the
option to purchase up to another 30% of the shares owned by the
Comunidad, CTC and the Camara at cost, plus LIBOR. We provided
the technical and operational know-how for the development of an
interim NAP which became operational in July 2002. We will work
with NAP de Las Americas  Madrid S.A. to select a
permanent site, design the Madrid NAP and operate the business
going forward. During the year ended March 31, 2003, we
recognized approximately $340,000 in revenues from services
billed to the NAP de Las Americas  Madrid S.A.

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When the facilities in Brazil and Madrid are
operational, we will have TerreNAP Centers located at three
major crossroads of Internet and data traffic. Miami, the home
of the NAP of the Americas, is ranked by Telegeography,
researcher and publisher of international telecom statistics, in
its Packet Geography 2002, as the number one International
Internet Hub City for Latin America and the Caribbean. Sao
Paulo, where the NAP do Brasil is located, is ranked second and
Madrid is ranked eighteenth of the Top 50 Interregional Internet
Hub Cities in the world. We believe the Madrid network access
point will also benefit from Madrids strategic geographic
location by serving as an Internet gateway to the European
Union, North Africa and the Americas.




We continue to explore other locations and have
targeted Mexico as a prospective hub city in Latin America.

Value Proposition

The combination of connectivity, neutrality and
quality of our facilities allows us to provide the following
value proposition to our customers at the NAP of the Americas:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Carrier-neutrality:Carriers and other customers are
    willing to locate their equipment within our facility because we
    neither discriminate against nor give preference to any
    individual or group of customers. Locating equipment at a NAP is
    known in the industry as colocation.                                                                                                                                                         
|
| |  | Connectivity:Our
    customers can access any of the more than 50 network providers
    present at the NAP of the Americas.                                                                                                                                                                                                                                                                                                                                  
|
| |  | Zero-Mile Access:Because the NAP of the Americas
    provides carrier-grade colocation space directly adjacent to the
    point at which the traffic is exchanged, there is effectively
    zero distance between the peering point and
    customers equipment, which reduces points of failure and
    cost and increases efficiency, and creates a new paradigm,
    connecting all participants at a distance of zero miles.                        
|
| |  | Service Level Agreements:The NAP of the Americas guarantees its
    customers 100% power availability and environmental stability.                                                                                                                                                                                                                                                                                                                           
|
| |  | Outsourcing of Services:Because of the NAP of the
    Americas staffs expertise, our customers find it
    more cost effective to contract the TerreNAP Team to design,
    deploy, operate and manage their equipment and networks at the
    NAP of the Americas than to hire dedicated staff to perform
    those functions.                                                                                                                            
|
| |  | Lower Costs, Increased Efficiency and Quality
    of Service:The combination of these
    attributes helps our customers reduce their total costs of
    providing services to their customers by eliminating local loop
    charges to connect their facility to the peering point, backhaul
    charges to and from connecting points, and the cost of
    redundancy to mitigate risks associated with increased points of
    failure along these routes.

Furthermore, in the wake of September 11 and
given the heightened focus on homeland security, we are focusing
on meeting the security sensitive technology needs of federal,
state and local governments, as well as large enterprises. Our
value proposition to this sector revolves around our security,
critical mass of Internet and data connectivity and carrier
neutrality.

Services

We currently offer the following core services:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Exchange Point Service:The NAP of the Americas provides a
    service called Exchange Point Service, which is designed to
    facilitate both peering and the purchase of transit, among
    customers.                                                                                                                                                                                                                                  
|
| | Colocation Services:The NAP of the Americas provides the
    physical environment necessary to keep a customers
    Internet and telecommunications equipment up and running 24
    hours a day, seven days a week. This facility is custom designed
    to exceed industry standards for electrical and environmental
    systems. In addition, it offers a wide range of physical
    security features, including biometric scanners,

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| |                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | man traps, smoke detection, fire suppression
    systems, motion sensors, secured access, video camera
    surveillance and security breach alarms. High levels of
    reliability are achieved through a number of redundant
    subsystems including power and fiber trunks from multiple
    sources.
|
| | Managed Services:Our managed services are designed to
    support our customers mission-critical needs that focus on
    producing faster network response times. The NAP of the Americas
    currently offers the following managed services:                                                         



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Add/ Drop Multiplexer Service
    (ADMS) This service
    provides customers maximum interconnection efficiency. ADMS
    leverages best in class operational support systems to provide
    rapid provisioning, monitoring and management of customer
    circuits.                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Network Deployment and Relocation
    Services This service
    leverages our team of engineers to assist customers with the
    deployment and relocation of critical systems both within and
    outside the NAP of the Americas. Our team will identify,
    schedule, document and monitor activities required for
    successful relocation of equipment as part of the overall
    network relocation project. Our engineers use QED (Quality,
    Efficiency, Delivery) best practices project management
    methodology, to minimize customer effort while maximizing
    efficient utilization of our resources, overall plan quality and
    information transfer to customer personnel.
|
| |  | Engineering
    Services We offer facility
    and equipment design and engineering services, including
    structural, mechanical, electrical and network systems, all
    provided by our staff of industry certified engineers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Installation
    Services Our installation
    services specialists provide basic installation of our
    customers equipment. This service reduces our
    customers implementation times, and increases the
    productivity of our customers technical personnel, by
    avoiding costly downtime due to lack of materials and equipment
    management and project coordination.                                                                                                                                                                                                                                                                                                            
|
| |  | Managed Router Service
    (MRS) This service offers
    customers cost savings and convenience by providing Internet
    access without the need to purchase or manage an Internet
    router. MRS leverages the mass of carriers at the our facility,
    offering access through the configuration of Border Gateway
    Protocol and the management of necessary hardware. Customer
    networks performance is optimized and multi-home configurations
    offer increased redundancy and reliability.                                                                                                                                                                                        
|
| |  | Network Management
    Services This service
    assists customers in achieving maximum uptime by enlisting our
    engineers at our facilitys Network Operations Center to
    monitor and manage their equipment located within and outside
    the facility.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Systems Monitoring
    Services This service
    assists customers in achieving maximum uptime by enlisting
    engineers to monitor their equipment located at our facilities
    or anywhere else on their network.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Professional Staging
    Service This service turns
    the implementation of any network or telecom environment into a
    simple plug and play process. Customers ship their equipment to
    the NAP or alternate destination for installation, and the
    Staging Services team gathers and inspects all the equipment
    components. The same team then assembles, configures, tests, and
    completes an inventory of the equipment, reducing the time
    required for a customer to install and load final configurations
    on site. The service also ensures that all ordered components
    are configured and installed properly in a controlled and stable
    environment.       
|
| |  | Reference
    Timing We offer a fully
    redundant managed timing reference source from our Datum NetSync
    Plus® SSU-2000 Rubidium system for delivering DS1/ E1
    synchronization and Network Time Protocol. This service allows
    our customers to save on equipment costs, installation times and
    maintenance of our customers network timing reference by
    using our on site Stratum source.                                                                                                                                                                                                                                                                                   

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Remote Hands
    Assistance Remote Hands
    assists customers that need to remotely access their equipment
    to perform simple troubleshooting or minor maintenance tasks on
    a 24x7x365 basis that do not require tools or equipment. Remote
    Hands services are available on demand or per contract.                                                                                                                                                                                                     
|
| |  | Smart Hands
    Assistance Smart Hands
    enhances the Remote Hands service with more complex remote
    assistance using industry certified engineers for
    troubleshooting and maintenance.                                                                                                                                                                                                                                                                                                                    
|
| |  | Turn Key
    Solution Our staff can
    provide full integration activities for all aspects of a
    turn key global project. Along with the planning,
    design and engineering related to the network and the general
    program management to control the project, we manage vendors,
    purchase equipment, receive, store and manage inventory,
    provision, test, ship, track, install, turn up, monitor and
    manage performance of the network and monitor and maintain
    equipment and services.

Customers

Our customer contracts have terms of between one
year and twenty years, with an average of four years. Our
customer contracts do not allow for early termination before the
stated maturity date and typically provide for penalties if they
are cancelled prior to their expiration. As of June 13,
2003, we have over 100 customers at the NAP of the Americas.
Latin American Nautilus USA Inc. and Progress Telecom accounted
for approximately $1.4 million (or 14%) and
$1.0 million (or 10%) in data center revenues,
respectively, for the twelve months ended March 31, 2003.
No customer accounted for more than 10% of data center revenues
for the twelve months ended March 31, 2002. Listed below
are the 17 of the 20 leading telecommunications carriers,
according to TeleGeography, Inc., a researcher and publisher of
international telecom statistics, which utilize our colocation
services:



| |   |                                            
| | - | -------------------------------------------
| |  | AT&T Corp.                                 
|
| |  | Deutsche Telekom (T-Systems)               
|
| |  | Embratel                                   
|
| |  | Emergia USA (Telefónica)                   
|
| |  | France Telecom                             
|
| |  | Genuity Inc.                               
|
| |  | Global Crossing                            
|
| |  | Latin America Nautilus USA (Telecom Italia)
|
| |  | Level 3 Communications, Inc.               
|
| |  | AboveNet Communications, Inc.              
|
| |  | Verio Inc.                                 
|
| |  | Progress Telecom                           
|
| |  | Qwest Communications International Inc.    
|
| |  | SBC Communications Inc.                    
|
| |  | Sprint Corporation                         

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| |   |                                    
| | - | -----------------------------------
| |  | Williams Communications Group, Inc.
|
| |  | MCI                                

Sales

Our sales strategy has a deliberate approach to
obtain new customers. Initially, we established the critical
mass of customer connectivity and Tier-1 status for the NAP of
the Americas. We accomplished this by signing contracts with the
Tier-1 telecommunications carriers and Internet service
providers that account for the majority of the worlds
Internet and data fiber backbone. This created the critical mass
of connectivity that differentiates the NAP of the Americas from
other facilities that offer a limited choice of carriers. We
successfully completed this phase during the second quarter of
fiscal year 2002 and have continued to add carrier customers to
our portfolio to ensure the best possible selection of
connectivity for our current and future customers.

With the NAP of the Americas positioned as the
major connectivity point in the southern United States and in
all of Latin America, in the third quarter of fiscal year 2002,
we started focusing on selling our services to enterprises and
government agencies by leveraging our critical mass of Internet
and data connectivity. We have developed offerings that address
the needs of large enterprises and government agencies that
benefit from colocating their information systems in a
carrier-neutral secure facility with access to multiple
carriers. We believe that this approach has been very successful.

During the third quarter of fiscal year 2002, we
also focused on leveraging our engineering and operations
expertise to provide a targeted portfolio of managed services,
particularly network and systems provisioning and operations
services. This program has been successful, and a number of
customers have entered into exclusive service agreements that
call for our staff to provide all needed managed services for
their equipment at the NAP of the Americas, including
engineering, installation and on-going operations. We intend to
continue introducing new services based on customer demand.

To execute our sales strategy, we have a staff of
experienced sales executives divided into a new sales group and
a service managers group. The new sales group is focused on
establishing new customer relationships. The service managers
group works with our existing customers to better understand how
we can add value to their operations, expand our services and
ensure customer satisfaction.

Competition

The NAP of the Americas is neither a traditional
data center, nor a traditional NAP. Unlike the other four Tier-1
NAPs in the United States, the NAP of the Americas combines
exchange point services (to facilitate peering) with
carrier-grade colocation space and managed services.
Consequently, we believe that the NAP of the Americas is
competitively unique and can only be replicated through the
expenditures of significant funds over a lengthy period, an
unlikely event in todays telecommunications environment.

We believe that carriers and Internet service
providers have no need to be in two different NAPs serving the
same geographic area. Therefore, to the extent that carriers are
located in the NAP of the Americas and have already invested
significant funds to establish their presence at the NAP of the
Americas, this is an incentive for them to remain our customers.
In addition, a competing NAP would require the backing of
carriers and Internet service providers serving this area, most
of which are already our customers.

However, our current and potential competition
includes:






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Internet data centers operated by established
    U.S., Brazilian and Spanish communications carriers such as
    AT&T, Qwest, Embratel and
    Telefonica.Unlike the major network
    providers, which constructed data centers primarily to help sell
    bandwidth, we have aggregated multiple networks in one location,
    which we believe provides diversity, competitive prices and high
    performance. Carrier operated data centers only provide one
    choice of carrier and generally require capacity minimums as
    part of their pricing structures. Our TerreNAP Data Centers
    provide access to a choice of carriers and allow our




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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   | customers to negotiate the best prices with a
    number of carriers resulting in better economics and redundancy.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
|
|
| |  | U.S. network access points such as MAE West
    and carrier operated NAPs.NAPs,
    generally operated by carriers, are typically older facilities
    and lack the incentive to upgrade the infrastructure in order to
    scale with traffic growth. In contrast, we provide secure
    facilities with 24-hour support and a full range of network and
    managed services.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
|
|
| |  | Vertically integrated web site hosting
    companies, colocation companies and Internet service providers
    such as Navisite and Globix.Some
    managed service providers require that customers purchase their
    entire network and managed services directly from them. We are a
    network and service provider aggregator and allow our customers
    to contract directly with the networks and web-hosting partner
    best suited for their business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
|
|
| |  | Neutral colocation and Internet exchange
    services companies such as Equinix.Geographic location tends to be an important factor in
    determining where networks will meet to create neutral points of
    connectivity. The location available may not be where potential
    buyers need capacity or where demand exists. Also, much of the
    older data center capacity cannot support current blade server
    technology that requires much more intensive cooling and power
    density. The NAP of the Americas and the NAP do Brasil are
    neutral connectivity points in their respective geographic
    areas. We believe that this creates a natural barrier to entry
    to competitors, as it is difficult that our large customers
    would relocate or deploy similar infrastructure in other centers
    within our geographic regions. For this reason, we believe that
    we have positioned our company as a leader in carrier neutral
    exchange points connecting the United States, Europe and Asia to
    Latin American markets.
|




Service Providers







We are not a telecommunications carrier, and as
such we rely on third parties to provide our customers with
carrier services. We have fiber available from most major land
and undersea network service providers. We also have multiple
connectivity options available in our two meet point rooms. We
limit our exposure to system downtime by using fully redundant
commercial power feeds and having backup power systems.




Employees

As of March 31, 2003, we had 131 full-time
employees in the United States and four full-time employees in
Brazil. Of these employees, 60 were in data center operations,
22 were in sales and marketing and 49 were in general and
administrative.

Our employees are not represented by a labor
union and are not covered by a collective bargaining agreement.
We believe that our relations with our employees are good.






|         |            
|-------- | -----------
|ITEM  2. | PROPERTIES.




We lease 120,000 square feet at the Technology
Center of the Americas for the NAP of the Americas. The term of
the lease commenced in October 2001 and is for 20 years.
Annual rent is approximately $2,500,000. We are also responsible
for some common area maintenance expenses and real estate taxes
which amount to approximately $40,000 per month.







We also lease approximately 40,000 square feet
for a colocation facility in Santa Clara, California. The term
of the lease commenced in January 2001 and is for 20 years.
Annual rent is approximately $1,400,000. We are also responsible
for real estate taxes and property and casualty insurance
expenses which in the aggregate amount to approximately $46,000
annually.







We also lease approximately 14,660 square feet
for our corporate office in Miami, Florida. The term of the
lease commenced in April 2000 and is for five years. Annual rent
is approximately $483,000. We are also responsible for our share
of common area maintenance expenses and real estate taxes.




9



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##### Table of Contents



We also lease approximately 12,000 square feet
for office space in Miami, Florida. Annual rent is approximately
$192,000. The term of the lease commenced in February 2001 and
is for five years.






|         |                   
|-------- | ------------------
|ITEM  3. | LEGAL PROCEEDINGS.

On November 8, 2002, Cupertino Electric,
Inc. filed a complaint against Terremark Worldwide, Inc.,
Terremark Technology Contractors, Inc. and Technology Center of
the Americas, Inc. in the Miami-Dade County Circuit Court
Eleventh Judicial Circuit. Cupertino Electric asserted a claim
of breach of contract and sought to foreclose on a construction
lien each in an amount of approximately $15 million,
including interest.

On December 2, 2002, Kinetics Mechanical
Services, Inc. filed a complaint against Terremark Worldwide,
Inc., Terremark Technology Contractors, Inc. and Technology
Center of the Americas, Inc. in the Miami-Dade County Circuit
Court Eleventh Judicial Circuit. Kinetics Mechanical Services
asserted a claim of breach of contract and sought to foreclose
on a construction lien each in an amount of approximately
$2.8 million, not including interest.

In May 2003, in connection with a series of
transactions among CRG LLC, Cupertino Electric and Kinetics
Mechanical Services, both of the Cupertino Electric and Kinetics
Mechanical Services actions were dismissed.




We are not currently subject to any litigation
which singularly or in the aggregate could reasonably be
expected to have a material adverse effect on our financial
condition or results of operations.









|         |                                                         
|-------- | --------------------------------------------------------
|ITEM  4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS.

No matters were submitted to a vote of our
stockholders during the year ended March 31, 2003.




PART II






|         |                                                                           
|-------- | --------------------------------------------------------------------------
|ITEM  5. | MARKET FOR REGISTRANTS COMMON EQUITY AND
    RELATED STOCKHOLDER MATTERS.

Common Stock and Preferred Stock
Information




Our common stock, par value $0.001 per share, is
quoted under the symbol TWW on the American Stock
Exchange. As of June 25, 2003, we had the authority to
issue:






| |   |                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 400,000,000 shares of common stock, par value
    $0.001 per share; and                                                                                                                                                                                                                                              
|
| |  | 10,000,000 shares of preferred stock, par value
    $0.001 per share, which are issuable in series on terms to be
    determined by our board of directors, of which 20 shares are
    designated as Series G Convertible Preferred Stock, and 294
    shares are designated as Series H Convertible Preferred Stock.

As of June 25, 2003:



| |   |                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 306,452,865 shares of our common stock were
    outstanding;                                                                                                                                                                                                                   
|
| |  | 20 shares of our Series G Convertible
    Preferred Stock were outstanding and held by an entity in which
    Manual Medina, our Chairman and Chief Executive Officer, owns a
    50% interest and could have been converted into 2,036,825 shares
    of our common stock; and
|
| |  | 294 shares of our Series H Convertible
    Preferred Stock were outstanding and held by one holder of
    record. Each share of Series H Convertible Preferred Stock
    may be converted into 1,000 shares of our common stock.                                               

We believe there are approximately 8,800
beneficial owners of our common stock.

10



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##### Table of Contents



The following table sets forth, for the fiscal
quarters indicated, the high and low sales prices for our common
stock on the American Stock Exchange. Quotations are based on
actual transactions and not bid prices.

|                   |  |        |        |     |  |   |        | 
|------------------ |  | ------ | ------ | --- |  | - | ------ | 
|                   |  |       
|                   |  | Prices
|Fiscal Year 2003   |  |       
|Quarter Ended      |  | High   |        | Low
|                   |  |        |        |    
|June 30, 2002      |  | $      | 0.7300 |     |  | $ | 0.2500 | 
|September 30, 2002 |  |        | 0.7700 |     |  |   | 0.3100 | 
|December 31, 2002  |  |        | 0.7100 |     |  |   | 0.2200 | 
|March 31, 2003     |  |        | 0.4900 |     |  |   | 0.2200 | 

|                   |  |        |        |     |  |   |        | 
|------------------ |  | ------ | ------ | --- |  | - | ------ | 
|                   |  |       
|                   |  | Prices
|Fiscal Year 2002   |  |       
|Quarter Ended      |  | High   |        | Low
|                   |  |        |        |    
|June 30, 2001      |  | $      | 2.3000 |     |  | $ | 1.4000 | 
|September 30, 2001 |  |        | 1.6500 |     |  |   | 0.4500 | 
|December 31, 2001  |  |        | 0.9000 |     |  |   | 0.4700 | 
|March 31, 2002     |  |        | 0.7400 |     |  |   | 0.2200 | 

Dividend Policy

Holders of our common stock are entitled to
receive dividends or other distributions when and if declared by
our board of directors. The right of our board of directors to
declare dividends, however, is subject to any rights of the
holders of other classes of our capital stock and the
availability of sufficient funds under Delaware law to pay
dividends. In accordance with a credit facility agreement with a
financial institution, we may not pay cash or stock dividends
without the written consent of the financial institution.

Recent Sales of Unregistered
Securities

During the quarter ended December 31, 2002,
debt holders entered into irrevocable agreements to convert
approximately $17.1 million of debt and accrued interest into
our common stock at $0.75 per share. The debt holders included
Miguel Rosenfeld and Joseph Wright, members of our board of
directors, each converting $517,000 in debt. This transaction
closed in January 2003 and resulted in a $4.9 million inducement
charge. At closing, we issued 22.8 million shares of our common
stock.

In August 2002, we issued warrants to purchase
100,000 shares of our common stock in a private offering to
accredited investors for an aggregate purchase price of $61,000
pursuant to Section 4(2) and/or 3(b) of the Securities Act
and Regulation D promulgated thereunder. The warrants were
subsequently converted into 100,000 shares of our common stock.

In June 2002, the NAP de las Americas-Madrid
purchased 5 million shares of our common stock at $1.00 per
share. The shares were sold pursuant to Section 4(2) and/or
3(b) of the Securities Act and Regulation S promulgated
thereunder. As a result of subsequent sales of our common
shares, we are obligated to issue an additional 3.6 million
shares to NAP de Las Americas-Madrid S.A. As of June 25,
2003, these additional shares have not yet been issued. We
anticipate issuing these shares in the quarter ended
September 30, 2003.

In April 2002, we received a binding commitment
from a group, including Miguel Rosenfeld and Guillermo Amore,
members of our board of directors, and Manuel D. Medina, our
Chairman and Chief Executive Officer, for the purchase of $7.5
million of common stock at $0.75 per share. The shares were sold
pursuant to Section 4(2) and/or 3(b) of the Securities Act
and Regulation D promulgated thereunder. In May 2002, we
issued 10 million shares of our common stock for $3.6 million in
cash and the conversion of $3.9 million in short term promissory
notes to equity. Mr. Rosenfeld purchased
1,668,000 shares for $1,251,000, Mr. Amore purchased
1,501,502 shares for $1,126,127 and Mr. Medina
purchased 1,134,667 shares for $851,000.

11



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##### Table of Contents



In April 2002, we entered into a Put and Warrant
purchase agreement with TD Global Finance (TDGF). In
July 2002, we exercised our right to sell to TDGF 17,648,842
common shares for $0.58 per share for a total of $10.2 million.
During August 2002, we received $10.2 million in related cash.
In conjunction with the sale, we issued three call warrants,
each granting TDGF the right to purchase 1,176,588 shares of our
common stock. The shares and the warrants were sold pursuant to
Section 4(2) and/or 3(b) of the Securities Act and
Regulation D promulgated thereunder. The warrants expired
without exercise on January 16, 2003.












|         |                                                                                           
|-------- | ------------------------------------------------------------------------------------------
|ITEM  7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of results of operations
and financial condition is based upon and should be read in
conjunction with our Consolidated Financial Statements and Notes
thereto contained elsewhere in this filing.

Our Going Concern Uncertainty

Our consolidated financial statements as of and
for the year ended March 31, 2003 were prepared on the
assumption that we will continue as a going concern, which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. Our independent
auditors have issued a report dated June 30, 2003 stating
that our recurring operating losses, negative cash flows, and
liquidity deficit raise substantial doubt as to our ability to
continue as a going concern. Investors in our securities should
review carefully our financial statements and the report of our
independent accountants thereon. See  Liquidity
and Capital Resources below for a description of our plans
to mitigate the effect of our going concern uncertainty.

Critical Accounting Policies and
Estimates

Our consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the U.S. The preparation of these financial
statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
the 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. On an on-going basis,
management evaluates its estimates and judgments. Management
bases its estimates and judgments on historical experience and
on various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different
assumptions or conditions.

Management believes the following significant
accounting policies, among others, affect its more significant
judgments and estimates used in the preparation of its
consolidated financial statements:



| |   |                                                
| | - | -----------------------------------------------
| |  | revenue recognition and allowance for bad debt;
|
| |  | accounting for income taxes; and               
|
| |  | impairment of long-lived assets.               



| |                                                    
| | ---------------------------------------------------
| | Revenue recognition and allowance for bad
    debts

Currently, we derive our revenues from monthly
recurring fees for colocation and exchange point services and
some managed services. We also receive income from non-recurring
installation, managed services and construction activities,
primarily from technology construction work. Revenues from
colocation, exchange point services and some managed services
are billed monthly and recognized ratably over the term of the
contract. Installation fees are generally billed in the period
in which the installation is performed but deferred and
recognized ratably over the term of the related contract.
Managed services fees are billed and recognized in the period in
which the services are provided. Construction activities are
billed in accordance with contract terms, but revenues are
recognized on the percentage-of-completion method.

12



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Revenue is recognized as service is provided when
there is persuasive evidence of an arrangement, the fee is fixed
or determinable and collection of the receivable is reasonably
assured. We assess collection based on a number of factors,
including transaction history with the customer and the
credit-worthiness of the customer. We do not request collateral
from customers. If we determine that collection is not
reasonably assured, we defer the fee and recognize revenue at
the time collection becomes reasonably assured, which is
generally upon receipt of cash. As of March 31, 2003 and
2002, our accounts receivable amounted to $494,736 and
$1,621,978, respectively, and were net of allowance for doubtful
accounts of approximately $120,340 and $270,316, respectively.

Revenues from construction contracts are
recognized on the percentage-of-completion method, measured by
the percentage of costs incurred to date to total estimated
costs for each contract. This method is used because management
considers cost incurred to be the best measure of progress on
these contracts. The duration of a construction contract
generally exceeds one year. Billings in excess of costs and
estimated earnings on uncompleted contracts are classified as
other liabilities and represent billings in excess of revenues
recognized. Construction contract expense costs include all
direct material and labor costs and indirect costs related to
contract performance such as indirect labor, supplies, tools,
repairs, bad debt and depreciation. Provisions for estimated
losses on uncompleted contracts are made in the period in which
losses are determined. Changes in job performance, job
conditions and estimated profitability, including those arising
from contract penalty provisions and final contract settlements
may result in revisions to costs and income and are recognized
in the period in which the revisions can be reasonably
estimated. Accordingly, it is possible that our current
estimates relating to completion cost and profitability of our
uncompleted contracts will vary from actual results. Excluding
depreciation, profit margins (construction contract revenue less
construction contract expenses) on construction contracts for
the years ended March 31, 2003, 2002 and 2001 were
$315,658, $857,163 and $2,097,991, respectively.

We analyze current economic news and trends,
historical bad debts, customer concentrations, customer
credit-worthiness and changes in customer payment terms when
evaluating revenue recognition and the adequacy of our allowance
for bad debts.



| |                            
| | ---------------------------
| | Accounting for Income Taxes

Income taxes are accounted for under the asset
and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between financial statement carrying amounts of
existing assets and liabilities and their respective tax bases
and operating loss and tax credit carryforwards. Deferred tax
assets 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. Valuation allowances are established when
necessary to reduce tax assets to the amounts expected to be
realized.

We currently have provided for a full valuation
allowance against our net deferred tax assets. We have
considered future taxable income and tax planning strategies in
assessing the need for the valuation allowance. Based on the
available objective evidence, management believes it is more
likely than not that the net deferred tax assets will not be
fully realizable. Should we determine that we would be able to
realize our deferred tax assets in the foreseeable future, an
adjustment to the deferred tax assets would increase income in
the period such determination is made.



| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets

We account for impairment of long-lived assets in
accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which we
adopted in fiscal 2003. This standard requires that long-lived
assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. Such events and circumstances include, but
are not limited to, prolonged industry downturns, significant
decline in our market value and significant reductions in our
projected cash flows. Recoverability of assets to be held and
used is measured by comparing the carrying

13



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##### Table of Contents



amount of an asset to estimated undiscounted
future net cash flows expected to be generated by the asset.
Significant judgments and assumptions are required in the
forecast of future operating results used in the preparation of
the estimated future cash flows, including long-term forecasts
of the number of additional customer contracts, profit margins,
terminal growth rates and discounted rates. If the carrying
amount of the asset exceeds its estimated future cash flows, an
impairment charge is recognized for the amount by which the
carrying amount of the asset exceeds the fair value of the
asset. Prior to adoption of SFAS No. 144, we accounted for
long-lived assets in accordance with SFAS No. 121,
Accounting for Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of.


As of March 31, 2003 and 2002, our
long-lived assets, including property and equipment and
identifiable intangible assets and goodwill, totaled $64,482,834
and $74,309,157, respectively. For the years ended
March 31, 2003, 2002 and 2001, we recognized impairment
charges amounting to $4,020,300, $18,973,670 and $4,155,178,
respectively.

Results of Operations



| |         
| | --------
| | Overview

For the year ended March 31, 2003,
approximately 75% of our total revenues were generated from data
center operations. The remainder was substantially related to
technology construction work. For the year ended March 31,
2002 approximately 20% of total revenues were generated from
data center operations, approximately 52% was from real estate
projects and technology construction work, and approximately 28%
was from property and construction management. For the year
ended March 31, 2001, approximately 1.0% of total revenues
were generated from data center operations, approximately 60%
was from real estate projects and technology construction work,
and approximately 39% was from property and construction
management. During the past three years, our results of
operations have been significantly impacted by:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our shift in focus to the housing and management
    of Internet infrastructure after the NAP of the Americas became
    operational in July 2001;                                                                                                                                                                                                                                                                                       
|
| |  | the sale of our telecom facilities management
    operations in February 2001; and                                                                                                                                                                                                                                                                                                                                                       
|
| |  | our exit from non-core real estate activities by
    March 31, 2002. Non-core real estate activities included
    real estate development, property management, financing and
    other ancillary businesses which complemented the development
    operations. Our real estate activities currently include
    technology infrastructure construction work and management of
    the property where the NAP of the Americas is located.



| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | Results of Operations for the Year Ended
    March 31, 2003 as Compared to the Year Ended March 31,
    2002

Revenue.Total
revenue decreased $1.2 million, or 7.5%, to
$14.7 million for the year ended March 31, 2003 from
$15.9 million for the year ended March 31, 2002. The
decrease is due to a reduction in our development, management
and construction contracts revenue of approximately
$9.0 million partially offset by an increase in data center
revenue, including contract termination fee, of approximately
$7.8 million.

Data center revenue increased $6.7 million
to $9.9 million for the year ended March 31, 2003 from
$3.2 million for the year ended March 31, 2002.
Revenues consisted of recurring revenues of $8.4 million
and $2.9 million respectively, for the years ended
March 31, 2003 and 2002, primarily from charges for
colocation, power, peering and some managed services.
Non-recurring revenues were $1.5 million and $355,000,
respectively, for the years ended March 31, 2003 and 2002,
primarily related to managed services and the recognized portion
of deferred installation revenue. Installation fees are
recognized ratably over the term of the contract. The increase
in revenues was primarily the result of an increase in orders
from existing customers and growth in our deployed customer base
from 40 customers as of March 31, 2002 to 86 customers as
of March 31, 2003. We anticipate an increase in revenues
from colocation, power and peering and revenues from managed
services as we add more customers to the NAP of the Americas,
sell additional services to existing customers and introduce new
products and services.

14



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##### Table of Contents






Data center services revenues consist of
colocation services, such as leasing of space and provisioning
of power; exchange point services, such as peering and
interconnection; and managed and professional services, such as
network management, procurement and installation of equipment
and procurement of connectivity, managed router services,
technical support and consulting. We anticipate an increase in
revenue from colocation and exchange point services as we add
more customers to our network of NAPs, sell additional services
to existing customers and introduce new products and services.
We also expect managed and professional services to become an
important source of revenue and increase as a percentage of data
center- services. For the years ended March 31, 2003 and
2002, data center services revenues consisted of the following:







|                                     |  |      |           |      |  |  |     |   |  |   |           |  |  |  |     |  
|------------------------------------ |  | ---- | --------- | ---- |  |  | --- | - |  | - | --------- |  |  |  | --- | -
|                                     |  |      |           |      |  | 
|                                     |  | 2003 |           | 2002
|                                     |  |      |           |     
|Colocation & exchange point services |  | $    | 8,146,149 |      |  |  | 82  | % |  | $ | 2,967,207 |  |  |  | 92  | %
|Managed & professional services      |  |      | 1,791,750 |      |  |  | 18  | % |  |   | 248,690   |  |  |  | 8   | %
|                                     |  |      |           |      |  |  |     |   |  |   |           |  |  |  |     |  
|                                     |  | $    | 9,937,899 |      |  |  | 100 | % |  | $ | 3,215,897 |  |  |  | 100 | %
|                                     |  |      |           |      |  |  |     |   |  |   |           |  |  |  |     |  




Data center  contract termination fee
was $1.1 million for the year ended March 31, 2003 and
represents amounts received from two customers for the
termination of their contracted services with the NAP of the
Americas. No fees were received during the year ended
March 31, 2002. Contract termination fees are recognized
upon contract termination when there are no remaining
contingencies or obligations on our part.

Development, commission and construction fees
decreased $3.0 million, or 93.8%, to $197,000 for the year
ended March 31, 2003 from $3.2 million for the year
ended March 31, 2002. The decrease in development,
commission and construction fees is primarily the result of our
exiting of the underlying non-core real estate activities. We do
not expect any significant amount of revenues from development,
commission and construction fees.

Management fees decreased $1.0 million, or
83.3%, to $200,000 for the year ended March 31, 2003 from
$1.2 million for the year ended March 31, 2002. The
decrease is a result of our exiting the management of commercial
and residential properties. The only facility we currently
manage is TECOTA, the property in which the NAP of the Americas
is located. We collect from TECOTA a monthly management fee of
approximately $8,000 or 3% of cash collected by TECOTA,
whichever is greater. During the fiscal year ended
March 31, 2002, we managed approximately 10 properties.
Because we do not plan to manage properties other than TECOTA,
we anticipate that management fees will not be a significant
source of revenues in the future.

Construction contract revenue decreased
$5.0 million, or 60.2%, to $3.3 million for the year ended
March 31, 2003 from $8.3 million for the year ended
March 31, 2002. During the year ended March 31, 2003
we completed eleven contracts and, as of March 31, 2003,
had two construction contracts in process. During the year ended
March 31, 2002, we completed two contracts and, as of
March 31, 2002, we had five construction contracts in
process. The decrease in revenues from construction contracts is
due to a decrease in the average revenue per contract, which
went from average revenue per contract of $3.6 million in fiscal
year 2002 to average revenue per contract of $500,000 in fiscal
year 2003. Due to our opportunistic approach to our construction
business, we expect revenues from construction contracts to
significantly fluctuate from quarter to quarter. We anticipate
focusing our efforts on obtaining construction contracts for
projects related to technology infrastructure.

Data Center Operations
Expenses.Data center operations
expenses remained constant at $11.2 million for the years
ended March 31, 2003 and 2002. Data center operations
consist mainly of rent, operations personnel, electricity,
chilled water and security services. With the exception of
electricity and chilled water, the majority of these expenses
are fixed in nature. However, commencing in fiscal year 2004, we
anticipate that certain data center expenses, principally costs
related to managed services, will increase as we provide
additional services to existing customers and introduce into the
market new products and services. We also expect that our costs
of electricity and chilled water costs will increase in the
future as we add more customers to the NAP of the Americas. The
number of employees whose salaries are included in data center
operations remained constant at 60 during the years ended
March 31, 2003 and 2002.

15



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##### Table of Contents



Contract Construction Expenses.Contract construction expenses
decreased $4.4 million, or 59.5%, to $3.0 million for
the year ended March 31, 2003 from $7.4 million for
the year ended March 31, 2002. This decrease is a result of
the decrease in number of contracts and dollar amount of those
projects as discussed above in revenues from construction
contracts. We do not currently anticipate losses on any of
the individual contracts.

Start-up Costs  Data Centers.There were no start-up costs for the
year ended March 31, 2003.Start-up costs for the
year ended March 31, 2002 primarily relate to the NAP of
the Americas in Miami, Florida, and were approximately
$3.4 million.

General and Administrative Expenses.General and administrative expenses
decreased $3.1 million, or 19.9%, to $12.5 million for
the year ended March 31, 2003 from $15.6 million for
the year ended March 31, 2002. General and administrative
expenses consist primarily of salaries and related expenses,
professional service fees, rent and other general corporate
expenses. The decrease in general and administrative expenses is
mainly due to decreases in rent of $1.9 million and payroll
of $1.0 million.

Carrying costs, including rent, for our Corvin
facility in Santa Clara, California for the year ended
March 31, 2003 were reflected in the facilitys
impairment charge in the previous year. In accordance with SFAS
No. 121, we recognized as of March 31, 2002 an
impairment charge of $5.5 million, including
$1.5 million in expected lease carrying costs for the
period of time until the facility could be sublet. During the
second quarter ended September 30, 2002, an additional
$350,000 in expected lease carrying costs were recognized and
included as part of impairment of long-lived assets. During the
year ended March 31, 2002, the rent for the Corvin facility
for that year was included in general and administrative
expenses.

The decrease in payroll is mainly attributable to
staff reductions. The number of employees whose salaries are
included in general and administrative expenses decreased from
63 for the year ended March 31, 2002 to 50 for the year
ended March 31, 2003.

The remaining period over period decrease in
general and administrative expenses is mainly attributable to a
decrease in general corporate overhead resulting from our exit
of non-core real estate activities in the year ended
March 31, 2002.

Sales and Marketing Expenses.Sales and marketing expenses increased
$600,000, or 16.7%, to $4.2 million for the year ended
March 31, 2003 from $3.6 million for the year ended
March 31, 2002. The significant components of sales and
marketing expenses are salaries, commissions, provision for bad
debt expenses and marketing. The increase in sales and marketing
expenses was mainly attributable to an increase in investor
relations expense of $442,000 and an increase in provision for
bad debt expenses of approximately $265,000. We issued warrants
valued at approximately $442,000 to a third party for investor
relations services. Provision for bad debt expense consists of
full provisions related to eight customers. We have commenced
legal action against many of these customers. The number of
employees whose salaries are included in sales and marketing
expenses increased slightly from 21 as of March 31, 2002 to
22 as of March 31, 2003.

Depreciation and Amortization Expense.Depreciation and amortization expense
decreased $2.2 million, or 30.1%, to $5.1 million for
the year ended March 31, 2003 from $7.3 million for
the year ended March 31, 2002. This decrease in
depreciation and amortization expense was mainly due to the
cessation of $3.5 million in amortization of goodwill and
intangible assets in accordance with current accounting
standards and a decrease in depreciation of approximately
$0.4 million related to our colocation facility in Santa
Clara, California and non core assets. The decrease was
partially offset by an increase in depreciation of approximately
$1.7 million primarily from assets of the NAP of the
Americas that were put in service during fiscal year 2002 and
had a full year of depreciation in fiscal year 2003.

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Impairment of Long-Lived
Assets.Due principally to the decline
and uncertainty of the telecommunications and Internet
infrastructure markets, we recognized the following impairment
charges:

|                                    |  |                      |           |      |  |   |            | 
|----------------------------------- |  | -------------------- | --------- | ---- |  | - | ---------- | 
|                                    |  |                     
|                                    |  | Year ended March 31,
|                                    |  |                     
|Asset                               |  | 2003                 |           | 2002
|                                    |  |                      |           |     
|Facility in Santa Clara, California |  | $                    | 350,000   |      |  | $ | 11,983,670 | 
|Post Shell goodwill                 |  |                      | 2,315,336 |      |  |   | 3,190,000  | 
|TECOTA promote interest             |  |                      | 904,964   |      |  |   | 3,800,000  | 
|Equipment                           |  |                      | 450,000   |      |  |   |           | 
|                                    |  |                      |           |      |  |   |            | 
|                                    |  | $                    | 4,020,300 |      |  | $ | 18,973,670 | 
|                                    |  |                      |           |      |  |   |            | 

As a result of impairment charges in the years
ended March 31, 2003 and 2002, the long-lived assets
described in the table above became fully impaired.

Due to our unsuccessful efforts to lease space at
our colocation facility in Santa Clara, California, during the
quarter ended September 30, 2001, we granted an option to
one of our vendors (a contractor involved with the
facilitys build-out) to purchase the leasehold
improvements and assume the existing lease for approximately
$4.0 million. Based on this option, we recorded a
$6.6 million impairment charge in the quarter ended
September 30, 2001 to write the improvements down to the
option amount. Subsequently, we continued to search for
alternatives, which included subleasing or selling our leasehold
improvements . In the quarter ended March 31, 2002, upon
expiration of the option, we listed our leasehold improvements
for sale, indicating a definite change in the strategy. We are
now actively looking for a buyer to assume the existing lease or
sublease all or a substantial portion of the space. The existing
lease is $118,000 per month, with scheduled annual increases,
for a twenty-year term ending in 2020. We believe that the most
likely outcome is that the property will be subleased or leased
from the landlord to a third party and that we will receive no
consideration for the leasehold improvements. Based on this most
likely scenario, in the quarter ended March 31, 2002, we
recorded an additional $5.5 million impairment, resulting
in the asset being fully reserved. We also established as of
March 31, 2002 reserves for leasehold carrying costs, consisting
primarily of monthly rent. As of March 31, 2003, we had
approximately $1.4 million in related reserves which we
anticipate will carry the facility through March 2004.

The decline in the telecommunications industry
and resulting decline in related real estate construction and
leasing activities caused us to perform, during the years ended
March 31, 2003 and 2002, impairment analyses of our promote
interests in TECOTA acquired in the telecom facilities
management operations and the goodwill related to the Post Shell
acquisition. Our analyses were based on estimated fair value
determined by the discounted future expected cash flows method.
The analyses anticipated obtaining additional construction
contracts for Post Shell and additional tenants for TECOTA. We
determined that the assets, which are included in our telecom
facilities management and real estate services segments, were
impaired as of March 31, 2002 by approximately
$3.8 million and $3.2 million, respectively. During
the year ended March 31, 2003, no significant contracts
were awarded to Post Shell and no tenants were added to TECOTA.
As a result, we impaired the remaining $905,000 in TECOTA
promote interests and $2.3 million in Post Shell goodwill.

During the fiscal year ended March 31, 2003,
we wrote off $450,000 related to equipment that has been held
for installation for more than one year and is considered
obsolete.

On October 15, 2002, we entered into a joint
venture agreement to develop and operate a HIPPA compliant
network access point at the NAP of the Americas in Miami,
Florida. We acquired a 10% interest in the joint venture company
by issuing a $1.0 million promissory note. As the joint
venture was not fully funded by December 31, 2002, we
determined that our joint venture interest was impaired.
Therefore, we recognized a $1.0 million impairment as of
December 31, 2002. Effective March 31, 2003, we and the
other joint venture partner entered into an agreement to declare
void all the then current agreements and contracts, including
the joint venture agreement. As a result, we were no longer
obligated under the promissory note. The results of operations
present, on a net basis, the effects of the formation and the
dissolution of the joint venture and accordingly no gain or loss
was recognized as a result of these transactions.

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Interest Income.Interest income increased $39,000, or
40.2%, to $136,000 for the year ended March 31, 2003 from
$97,000 for the year ended March 31, 2002. The increase was
due to the recording of interest income on a $5.0 million note
receivable from our Chief Executive Officer which began accruing
interest in September 2002.

Inducement on Debt Conversion.During the year ended March 31,
2003, we incurred a non-cash expense of $5.0 million
related to the $15.8 million of our convertible debt that
was converted into 22.0 million shares of our common stock.
The debt was converted at $0.75 per share, which was
approximately 50% below the stated conversion price. This
expense represents the fair value of the additional common
shares issued by us as a result of the lower conversion price.

Interest Expense.Interest expense increased
$1.2 million, or 12.2%, to $11.0 million for the year
ended March 31, 2003 from $9.8 million for year ended
March 31, 2002. The increase was due to an increase of
$33.0 million in the average debt balance outstanding. The
increase was offset by the conversion of $15.8 million in
convertible debt during the quarter ended December 31, 2002
and reduction in the interest rate of the Ocean Bank loan from
9.25% to 7.50%. Based on the April 30, 2003 transactions,
we expect cash interest payments to be reduced by approximately
$900,000 for the year ended March 31, 2004.

Gain On the Sale of Real Estate Held for Sale.In July 2001, we sold Fortune House II
for $17.2 million and recorded a gain of approximately $3.9
million. During the year ended March 31, 2002, we also sold
six condominium units and recorded a net gain of
$0.3 million. The last condominium unit was sold in the
quarter ended March 31, 2002.




Net loss (income) for our reportable segments was
as follows:







|                              |  |                              |            |      |  |   |            | 
|----------------------------- |  | ---------------------------- | ---------- | ---- |  | - | ---------- | 
|                              |  |                             
|                              |  | For the Year Ended March 31,
|                              |  |                             
|                              |  | 2003                         |            | 2002
|                              |  |                              |            |     
|Data center operations        |  | $                            | 37,565,136 |      |  | $ | 34,971,359 | 
|Telecom facilities management |  |                              |           |      |  |   | 16,682,059 | 
|Real estate services          |  |                              | 3,662,169  |      |  |   | 5,718,797  | 
|                              |  |                              |            |      |  |   |            | 
|                              |  | $                            | 41,227,305 |      |  | $ | 57,372,215 | 
|                              |  |                              |            |      |  |   |            | 







The net loss for the year ended March 31,
2003 is mainly due to non-cash items, including impairment
charges of long-lived assets of approximately $4.0 million
and depreciation and amortization expense of approximately
$5.1 million, interest expense of approximately
$11.0 million, and approximately $11.2 million of
expenses generated from the operations of the NAP of the
Americas. The net loss for our data center operations segment is
primarily the result of insufficient revenues at the NAP of the
Americas to cover our operating and interest expenses. We expect
to continue generating net losses from the data center
operations segment until we reach required levels of monthly
revenues. The net loss from our telecom facilities management
segment for the year ended March 31, 2002 resulted
primarily from impairment, interest and general expenses from
our collocation facility in Santa Clara, California. There were
no revenues generated from the facility during the period. For
the year ended march 31, 2003, the losses related to the
facility were insignificant and included in data center
operations. The net loss from real estate activities for the
years ended March 31, 2003 and 2002 resulted from
insufficient revenues to support general and interest costs and
impairments. Due to our exit of real estate activities not
related to our TerraNAP Center strategy, we anticipate that the
significance of the real estate activities to our overall
operations will decrease.






| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | Results of Operations for the Year Ended
    March 31, 2002 as Compared to the Year Ended March 31,
    2001

Revenue.Total
revenue decreased $24.2 million, or 60.3%, to $ 15.9
million for the year ended March 31, 2002 from
$40.1 million for the year ended March 31, 2001,
reflecting our exit of the real estate development business.

Data center revenue increased $2.9 million
to $3.2 million for the year ended March 31, 2002 from
$0.3 million for the year ended March 31, 2001. The
increase in data center revenue was attributable to our

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peering, colocation and managed services offered
at the NAP of the Americas, which became operational in July
2001. The data center revenue in the prior year was derived from
our peering and colocation services offered at the interim NAP
which became operational in December 2000. Our deployed customer
base increased from four as of March 31, 2001 to 40 as of
March 31, 2002. We expect data center revenues to increase
in future periods as customers set up their operations in the
NAP of the Americas. Future data center revenues will be derived
from peering, colocation and managed services.


Revenue from real estate sales was
$2.8 million for the year ended March 31, 2001 and was
attributable to the sale of twelve condominium units. We exited
our real estate development business as of March 31, 2001.
Accordingly, the real estate sales during year ended
March 31, 2002, consisting of six condominium units sold,
were recorded net of their related cost and included in gain on
the sale of real estate held for sale.

Development, commission and construction fees
decreased $9.3 million to $3.2 million for the year
ended March 31, 2002 from $12.5 million for the year
ended March 31, 2001. This decrease is primarily the result
of our exiting the real estate development business and telecom
facilities management operations as of March 31, 2001.

Management fees decreased $1.0 million, or
45.5%, to $1.2 million for the year ended March 31,
2002 from $2.2 million for the year ended March 31,
2001. The decrease is a result of our exiting the management of
commercial and residential properties.

Revenues from construction contracts decreased
$14.1 million, from $22.4 million for the year ended
March 31, 2001 to $8.3 million for the year ended
March 31, 2002. The decrease is attributable to the
reduction in the number of contracts. During the year ended
March 31, 2002, we completed two contracts and, as of
March 31, 2002, we had five construction contracts in
process. During the year ended March 31, 2001, we completed
twelve contracts and, as of March 31, 2001, we had seven
contracts in process.

Data Center Operations Expenses.Data center operations expenses
increased $10.0 million to $11.2 million for the year
ended March 31, 2002 from $1.2 million for the year ended
March 31, 2001. The increase was attributable to us moving
to our permanent facilities, the NAP of the Americas, which
became operational in July 2001. The data center operations
expense in the prior year was derived from operations of the
interim NAP facility, which became operational in December 2000.
Data center operations consist mainly of rent, operations
personnel, electricity, chilled water and security services.
With the exception of electricity and chilled water, the
majority of these expenses are fixed in nature.

Construction Contract Expenses.Contract construction expenses
decreased $12.9 million to $7.4 million for year ended
March 31, 2002 from $20.3 million for the year ended
March 31, 2001. The decrease is in line with the decrease
in revenues from construction contracts. Construction contract
expenses are primarily the result of the number of contracts in
process, stage of completion and dollar amount of those projects.

Start-up Costs  Data Centers.Start-up costs decreased
$3.1 million to $3.4 million for the year ended
March 31, 2002 from $6.5 million for the year ended
March 31, 2001. The decrease is mainly attributable to our
permanent facilities, the NAP of the Americas, becoming
operational in July 2001. Start-up costs in fiscal year 2001
also included costs of the interim NAP facility.

General and Administrative Expenses.General and administrative expenses
decreased by $4.3 million to $15.6 million for the
year ended March 31, 2002 from approximately
$19.9 million for the year ended March 31, 2001. The
decrease is attributable to staff reductions and corporate
infrastructure related to non-core assets. During fiscal year
2002, our efforts included establishing internal operations to
support our Internet infrastructure services strategy. The
significant components of these expenses include personnel,
insurance, office expenses and professional fees. In addition,
during the year ended March 31, 2002, we implemented
several cost-savings initiatives, including staff reductions and
an overall decrease in discretionary spending.

Sales and Marketing Expenses.Sales and marketing expenses increased
$0.8 million, or 28.6%, to $3.6 million for the year ended
March 31, 2002 from $2.8 million for the year ended
March 31, 2001. The increase is principally due to
$3.1 million in marketing expenses for our TerreNAP Data
Centers including

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NAP of the Americas, partially offset by a
$2.2 million decrease in marketing expenses associated with
the sale of real estate.


Depreciation and Amortization Expense.Depreciation and amortization expense
increased $4.0 million to $7.3 million for the year
ended March 31, 2001 from $3.3 million for the year
ended March 31, 2002. The increase resulted primarily from
the depreciation of the leasehold improvements and equipment
used in the NAP of the Americas, which were placed in service on
July 1, 2001. Therefore, no similar expenses were recorded for
the comparable period during 2001.

Impairment of Long-lived Assets.During the year ended March 31,
2002, in accordance with SFAS No. 121, we evaluated the
carrying value of our leasehold improvements related to our
colocation facility in Santa Clara and our goodwill related to
Post Shell and our TECOTA promote interests. Our investment in
our Santa Clara facility was impaired due to a decline in the
technology sector and general economic conditions. Accordingly,
we recorded an impairment charge of approximately
$12.0 million. In addition, changes in business conditions
in the telecommunications industry and resulting decline in
related construction projects caused us to record an impairment
to Post Shells goodwill of approximately
$3.2 million. Furthermore, the decline in real estate
leasing activities caused us to record an impairment of
$3.8 million to the TECOTA promote interests. As a result
of our agreement to sell certain telecom facilities management
operations, during the year ended March 31, 2001, we
recognized a $4.2 million impairment of intangible assets
relating to management contracts sold.

Interest Income.Interest income decreased
$0.4 million to $0.1 million for the year ended
March 31, 2002 from $0.5 million for the year ended
March 31, 2001 due to a decrease in our average cash balances
invested and a decline in short-term interest rates.

Interest Expense.Interest expense increased
$8.7 million to $9.8 million for the year ended
March 31, 2002 from $1.1 million for the year ended
March 31, 2001 due to an increase in our average debt
balance outstanding.

Gain On the Sale of Real Estate Held for Sale.During the year ended March 31, 2002,
we sold Fortune House II for $17.2 million and recorded a
gain of $3.9 million. We also sold six condominium units
and recorded a net gain of $0.3 million.




Net Loss From Continuing Operations.Net loss from continuing operations
for our reportable segments was as follows:







|                              |  |                              |            |      |  |   |            | 
|----------------------------- |  | ---------------------------- | ---------- | ---- |  | - | ---------- | 
|                              |  |                             
|                              |  | For the Year Ended March 31,
|                              |  |                             
|                              |  | 2002                         |            | 2001
|                              |  |                              |            |     
|Data center operations        |  | $                            | 34,971,359 |      |  | $ | 9,219,416  | 
|Telecom facilities management |  |                              | 16,682,059 |      |  |   | 8,383,329  | 
|Real estate services          |  |                              | 5,718,797  |      |  |   | 3,770,506  | 
|                              |  |                              |            |      |  |   |            | 
|                              |  | $                            | 57,372,215 |      |  | $ | 21,373,251 | 
|                              |  |                              |            |      |  |   |            | 







The increase in the total net loss from
continuing operations was primarily due to non-cash items, which
include impairment of long-lived assets of approximately
$19 million, and depreciation and amortization expense of
approximately $7.3 million. Also contributing to the loss
were interest expense of approximately $9.8 million and
$14.6 million of expenses generated from the start-up and
operations of the NAP of the Americas. The net loss for our data
center operations segment is primarily the result of
insufficient revenues at the NAP of the Americas, which became
operational in July 2001, to cover our operating and interest
expenses. We expect to continue generating net losses from the
data center operations segment until we reach required levels of
monthly revenues. The net loss from our telecom facilities
management segment for the year ended March 31, 2002
resulted primarily from impairments, interest and general
expenses from our collocation facility in Santa Clara,
California. There were no revenues generated from the facility
during the period. For the year ended March 31, 2001, the
net loss from our telecom facilities management segment resulted
primarily from insufficient revenues, impairment charges and
general expenses. The net loss from real




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estate activities for the years ended
March 31, 2002 and 2001 resulted from insufficient revenues
to support general and interest costs, along with impairments
related to Post Shell.





Loss From Discontinued Operations and Loss on
Disposition of Discontinued Operations.In March 2001, we implemented our plan
to dispose of acquired businesses whose operations reflect
Internet faxing, unified messaging and telephony services. These
operations were acquired earlier in the year ended
March 31, 2001 in association with the AmTec, Spectrum
Communication, IXS.Net and Asia Connect acquisitions. Since the
operations represent a class of customer and a major line of
business, the results of these activities and estimated loss on
disposal are accounted for as discontinued operations. The loss
on disposition of discontinued operations of $61.1 million
includes write-off of approximately $54.4 million in
goodwill. For the year ended March 31, 2001, discontinued
operations had $1.8 million of total revenues and a loss of
$11.4 million, net of $10.2 million in goodwill
amortization. For the year ended March 31, 2002, there were
no losses from discontinued operations or loss on disposition of
discontinued operations.

Liquidity and Capital Resources

Recent
events

On April 30, 2003, Ocean Bank revised its
$44.0 million credit facility with us by converting
$15.0 million of the outstanding principal balance into
equity and extending the term of the remaining
$29.0 million until April 30, 2006. Concurrent with
this transaction, we paid all past due interest as of
March 31, 2003, plus accrued interest through
April 28, 2003 totaling approximately $1.6 million and
prepaid approximately $900,000 of interest.

On April 30, 2003, CRG LLC completed the
purchase, at a discount, of our $22.6 million construction
payables (including accrued interest) to Cupertino Electric,
Inc. and Kinetics Mechanical Services, Inc. and Kinetics Systems
Inc. Cupertino and Kinetics were construction contractors for
the NAP of the Americas. At the closing, the construction
payables were converted into 30,133,334 shares of our common
stock.

On April 30, 2003, we issued 10%
Subordinated Secured Convertible Debentures due April 30,
2006 for an aggregate principal amount of $25.0 million. The
debt is convertible into shares of our stock at $0.50 per share.
Interest is payable quarterly beginning July 31, 2003. The
debentures were issued in exchange for $10.3 million in
cash, $9.5 million in a promissory note due in full
May 30, 2003 and $5.2 million of notes payable which
were converted into the Subordinated Debentures. Included in the
$5.2 million is $2.0 million of cash received in March
2003 in anticipation of the transaction.




Supra Group, Inc., the maker of the
$9.5 million promissory note, failed to pay but agreed on
June 16, 2003 to assign the note and the debenture to an
entity newly formed by Paolo Amore, the son of a director of the
Company. Payments received as of June 30, 2003 aggregated
approximately $5.8 million and the remaining
$3.7 million is due no later than August 15, 2003. Two
of the Companys directors, Guillermo Amore and Miguel
Rosenfeld, have guaranteed payment and performance in accordance
with the amended terms of the note. Management believes that
collection on the remaining balance is reasonably assured. In
connection with this transaction, the Company will recognize a
beneficial conversion feature of $9.5 million, based on the
June 16, 2003 measurement date.




The following condensed pro forma balance sheet
gives effect to the following transactions as if they had
occurred on March 31, 2003:



| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Ocean Bank debt conversion of $15.0 million
    in debt to equity;                                                                                                                                    
|
| |  | payment of $1.6 million past due and accrued
    interest and $0.9 million in prepaid interest to Ocean Bank;                                                                                         
|
| |  | CRG transaction whereby $21.6 million in
    construction payables plus $1.0 million in accrued interest
    was converted to equity;                                                                 
|
| |  | issuance of Subordinated Debentures for
    $16.1 million in cash, $5.2 million in conversion of
    notes payable and $3.7 million in amounts receivables under
    the $9.5 million promissory note.

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|                                               |                                  |                                       |             |             |             |                |             |             |   |   |            |            |            | 
|---------------------------------------------- | -------------------------------- | ------------------------------------- | ----------- | ----------- | ----------- | -------------- | ----------- | ----------- | - | - | ---------- | ---------- | ---------- | 
|                                               |                                  | March 31,                             |             | Proforma    |             | Proforma      
|                                               |                                  | 2003                                  |             | Adjustments |             | March 31, 2003
|                                               |                                  |                                       |             |             |             |               
|                                               |                                  | Assets                                |             |             |             |                |             |             |   |   |            |            |            | 
|Current assets:                                |                                  |                                       |             |             |             |                |             |             |   |   |            |           
|                                               | Cash and cash equivalents        |                                       | $           | 1,408,190   |             |                | $           | 13,600,000  |   |   | $          | 15,008,190 |           
|                                               | Notes receivable                 |                                       |             |            |             |                |             | 3,700,000   |   |   |            | 3,700,000  |           
|                                               | Other current assets             |                                       |             | 523,940     |             |                |             | 900,000     |   |   |            | 1,423,940  |           
|                                               |                                  |                                       |             |             |             |                |             |             |   |   |            |           
|Total current assets                           |                                  |                                       | 1,932,130   |             |             |                |             |             |   |   | 20,132,130 |           
|Long term assets                               |                                  |                                       | 67,669,383  |             |             |                |             |             |   |   | 67,669,383 |           
|                                               |                                  |                                       |             |             |             |                |             |             |   |   |            |           
|                                               |                                  | Total assets                          |             | $           | 69,601,513  |                |             |             |   |   |            | $          | 87,801,513 | 
|                                               |                                  |                                       |             |             |             |                |             |             |   |   |            |           
|                                               |                                  | Liabilities and Stockholders Deficit |             |             |             |                |             |             |   |   |            |            |            | 
|Current liabilities:                           |                                  |                                       |             |             |             |                |             |             |   |   |            |           
|                                               | Current portion of notes payable |                                       |             | 1,464,963   |             |                |             |             |   |   |            | 1,464,963  |           
|                                               | Construction payables            |                                       |             | 22,012,162  |             |                |             | (21,602,343 | ) |   |            | 409,819    |           
|                                               | Accounts payable and other       |                                       |             | 13,011,371  |             |                |             |             |   |   |            | 13,011,371 |           
|                                               | Interest payable                 |                                       |             | 4,492,805   |             |                |             | (2,597,657  | ) |   |            | 1,895,148  |           
|                                               |                                  |                                       |             |             |             |                |             |             |   |   |            |           
|Total current liabilities                      |                                  |                                       | 40,981,301  |             |             |                |             |             |   |   | 16,781,301 |           
|                                              
|Notes payable                                  |                                  |                                       | 56,174,938  |             |             |                | (14,800,000 | )           |   |   | 41,374,938 |           
|Convertible debt, net of beneficial conversion |                                  |                                       | 14,005,000  |             |             |                | 15,500,000  |             |   |   | 29,505,000 |           
|Other long term debt                           |                                  |                                       | 4,344,243   |             |             |                |             |             |   |   | 4,344,243  |           
|                                               |                                  |                                       |             |             |             |                |             |             |   |   |            |           
|                                               |                                  | Total liabilities                     |             |             | 115,505,482 |                |             |             |   |   |            |            | 92,005,482 | 
|                                               |                                  |                                       |             |             |             |                |             |             |   |   |            |           
|                                              
|Redeemable convertible preferred stock         |                                  |                                       | 556,729     |             |             |                |             |             |   |   | 556,729    |           
|                                               |                                  |                                       |             |             |             |                |             |             |   |   |            |           
|                                              
|Total stockholders deficit                    |                                  |                                       | (46,460,698 | )           |             |                | 41,700,000  | (1)         |   |   | (4,760,698 | )         
|                                               |                                  |                                       |             |             |             |                |             |             |   |   |            |           
|Total liabilities and stockholders deficit    |                                  | $                                     | 69,601,513  |             |             |                |             |             |   | $ | 87,801,513 |           
|                                               |                                  |                                       |             |             |             |                |             |             |   |   |            |           



---

(1) Includes $9.5 million from
beneficial conversion, $9.6 million and $14.1 million
in common stock and paid in capital from the Ocean Bank debt
conversion and CRG transaction, respectively, and
$8.5 million in gain from CRG transaction.

Liquidity

From the time of the merger through
March 31, 2003, we have incurred net operating losses of
approximately $202.6 million. Our cash flows from
operations for the years ended March 31, 2003 and 2002 were
negative and our working capital deficit was approximately
$39.0 million and $88.3 million as of March 31,
2003 and 2002, respectively. Due to our recurring losses from
operations, the uncertainty surrounding the anticipated increase
in revenues and the lack of committed sources of additional debt
or equity, substantial doubt exists about our ability to
continue as a going concern.

Historically, we have met our liquidity needs
primarily through obtaining additional debt financing and the
issuance of equity interests. Some of our debt financing was
either provided by or guaranteed by Manuel D. Medina, our Chief
Executive Officer and Chairman of the Board. In prior periods we
also successfully shut down or disposed of non-core operations
and implemented a series of expense reductions to reduce our
liquidity needs.

Based on customer contracts signed as of
June 13, 2003, our monthly cash deficit from operations is
approximately $1.4 million. In order to eliminate this
current monthly cash deficit from operations, the new monthly
revenues required range from $2.0 million to
$3.0 million. This range of new revenue depends on the mix
of the services sold and their corresponding margin. Our
required revenues are based on existing contracts, including
those recently announced with the U.S. Government and
enterprises, and expected future contracts from potential
customers currently in the sales pipeline. We have identified
additional potential customers, including the federal, state and
local governments, and are actively offering available services
to them. However, our projected revenues and planned cash needs
depend on several factors, some of which are beyond

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our control, including the rate at which our
services are sold to the government sector and the commercial
sector, the ability to retain our customer base, the willingness
and timing of potential customers outsourcing the housing and
management of their technology infrastructure to us, the
reliability and cost-effectiveness of our services and our
ability to market our services.


The majority of our planned operating cash
improvement is expected to come from an increase in revenues and
cash collections from customers. If we fail to achieve planned
revenues we will require additional financing. There can be no
assurance that additional financing will be available, or that,
if available the financing will be obtainable on terms
acceptable to us or that any additional financing would not be
substantially dilutive to existing shareholders. If we need to
obtain additional financing and fail to do so, it may have a
material adverse effect on our ability to meet financial
obligations and operate as a going concern. Consequently, the
uncertainty surrounding the anticipated increase in revenues,
including the rate at which services are sold, raises
substantial doubt about our ability to continue as a going
concern.

We will continually evaluate opportunities to
sell additional equity or debt securities, obtain credit
facilities from lenders, or restructure our debt to further
strengthen our financial condition or for strategic reasons.

Sources
and uses of cash

Cash used in operations for the year ended
March 31, 2003 was approximately $18.3 million
compared to cash used in continuing operations of $35.7 million
for the year ended March 31, 2002, a decrease of
$17.4 million. This period over period decrease was
primarily due to a $16.2 million decrease in our net loss
to $41.2 million in fiscal year 2003 when compared to $57.4
million in fiscal year 2002.

Cash used in investing activities for the year
ended March 31, 2003 was $1.3 million compared to cash
used in investing activities of $29.4 million for the year
ended March 31, 2002, a decrease of $28.1 million. The
amount of cash used in investing activities has decreased as we
have now completed the build out of the NAP of the Americas and
a portion of our colocation facility in Santa Clara, California.
For the year ended March 31, 2003, cash of
$1.0 million was used primarily for the purchase of
property and equipment related to the NAP of the Americas. For
the year ended March 31, 2002, cash of $45.8 million
was used primarily for the purchase of property and equipment
related to the NAP of the Americas and our colocation facility
in Santa Clara, California.

Cash provided by financing activities for the
year ended March 31, 2003 was $20.8 million compared
to cash provided by financing activities of $59.9 million for
the year ended March 31, 2002, a decrease of
$39.1 million. The period over period decrease in cash
provided by financing activities resulted primarily from a
decrease of $56.8 million of new borrowings partially
offset by an increase in sale of common stock and warrants of
$17.0 million.

We had a net working capital deficit of
approximately $39.0 million and stockholders deficit
of approximately $46.5 million at March 31, 2003 and
incurred a net loss of approximately $41.2 million for the
year then ended. This loss is principally the result of:



| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | non-cash items, including impairment charges of
    long-lived assets of approximately $4.0 million, and
    depreciation and amortization expense of approximately
    $5.1 million;
|
| |  | interest expense of approximately
    $11.0 million;                                                                                                                                 
|
| |  | approximately $11.2 million of expenses
    generated from the operations of the NAP of the Americas; and                                                                            
|
| |  | not generating sufficient revenue during the year
    to support the increase in infrastructure.                                                                                     

Debt
and equity activity




As of March 31, 2003, our total indebtness,
including interest from notes payable, construction payables,
capital lease obligations, convertible debt and Series H
preferred stock was approximately $115.5 million.




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##### Table of Contents






Our notes payable consist of the following:







|                                                                                                                                                                                                                                                                                                                                                   |                                      |                |            |            | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | -------------- | ---------- | ---------- | 
|                                                                                                                                                                                                                                                                                                                                                   |                                      | March 31, 2003
|                                                                                                                                                                                                                                                                                                                                                   |                                      |               
|Notes payable to third parties:                                                                                                                                                                                                                                                                                                                    |                                      |                |            |           
|Note payable to Ocean Bank, collateralized by
    substantially all assets of the NAP of the Americas and a
    personal guaranty of the Chief Executive Officer. On
    April 30, 2003, the credit facility was revised to convert
    $15 million of principal to equity and extend the terms of
    the remaining balance until April 30, 2006. |                                      | $              | 43,974,553 |           
|Unsecured note payable to SBP Investments, Inc.
    and Caerulea, Ltd., interest accrues at 10%. In April 30,
    2003, $1,000,000 was converted to Subordinated Debentures and
    remaining principal and interest is due on April 1, 2004.                                                                                                      |                                      |                | 4,450,000  |           
|Note payable to a financial institution,
    collateralized by certain assets of a director and certain
    shareholders of the Company Interest accrues at 1% over prime,
    due on December 31, 2003.                                                                                                                                           |                                      |                | 667,178    |           
|Unsecured note payable to a corporation, interest
    accrues at 9%. Due on demand                                                                                                                                                                                                                                                                 |                                      |                | 518,501    |           
|Unsecured note payable to a corporation, interest
    accrues at 10% Principal and interest due on May 30, 2003.
    In April 30, 2003, amount was converted to Subordinated
    Debentures                                                                                                                                                        |                                      |                | 1,500,000  |           
|Unsecured note payable to a corporation, interest
    accrues at 15%. Principal and interest due on April 1, 2004.                                                                                                                                                                                                                                 |                                      |                | 1,000,000  |           
|Unsecured notes payable to individuals, interest
    accrues at 10% Principal and interest due on March 31,
    2003. On April 30, 2003, amounts were converted to
    Subordinated Debentures                                                                                                                                                     |                                      |                | 1,000,000  |           
|Unsecured note payable to a corporation in
    seventy-five monthly installments of principal and interest
    which began January 1, 1999. Interest accrues at 9.5%                                                                                                                                                                               |                                      |                | 198,385    |           
|Unsecured notes payable to individuals, interest
    accrues at 8%, with interest due monthly. Matured and currently
    due                                                                                                                                                                                                                       |                                      |                |           |           
|Unsecured note payable to a corporation, interest
    accrues at 13% Principal and interest due on June 30, 2002.                                                                                                                                                                                                                                  |                                      |                |           |           
|Unsecured notes payable to corporations. Interest
    ranges from 10%  15%. Principal and interest
    generally due in monthly installments                                                                                                                                                                                                      |                                      |                | 63,284     |           
|Unsecured note payable to a corporation, interest
    accrues at 10%. Due on demand                                                                                                                                                                                                                                                                |                                      |                | 30,000     |           
|                                                                                                                                                                                                                                                                                                                                                   |                                      |                |            |           
|                                                                                                                                                                                                                                                                                                                                                   | Total notes payable to third parties |                |            | 53,401,901 | 
|                                                                                                                                                                                                                                                                                                                                                   |                                      |                |            |           
|Notes payable to related parties:                                                                                                                                                                                                                                                                                                                  |                                      |                |            |           
|Unsecured note payable to certain directors and a
    shareholder of the Company. Interest accrues at 8.25%, with
    principal installments of $150,000 and interest due quarterly
    commencing March 31, 2002 and maturing on June 23,
    2003.                                                                                               |                                      |                |           |           
|Unsecured note payable to a corporation
    controlled by a shareholder, interest accrues at 15%. Principal
    and interest due on April 1, 2004.                                                                                                                                                                                                 |                                      |                | 1,600,000  |           
|Note payable to the Chief Executive Officer.
    Interest accrues at 10%. Principal and interest due on
    June 30, 2003. On April 30, 2003, amount was converted
    to Subordinated Debentures                                                                                                                                                  |                                      |                | 1,000,000  |           
|Unsecured notes payable to certain executives and
    directors of the Company and third party corporations, interest
    accrues at 13%. On April 30, 2003, $700,000 of principal
    was converted to Subordinated Debentures and remaining principal
    and interest is due on April 1, 2004.                                                  |                                      |                | 1,500,000  |           




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|                                                                                                                                                                                                                                              |                                        |                |            |           | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------- | -------------- | ---------- | --------- | 
|                                                                                                                                                                                                                                              |                                        | March 31, 2003
|                                                                                                                                                                                                                                              |                                        |               
|Unsecured note payable to the Chief Executive
    Officer. Interest accrues at 7.5%, payable monthly, with
    principal installments of $50,000 due on a quarterly basis
    commencing on June 26, 2002, and maturing on June 26,
    2003. |                                        |                | 100,000    |          
|Unsecured note payable to a shareholder, interest
    accrues at 10%. Due on demand                                                                                                                                                           |                                        |                | 38,000     |          
|                                                                                                                                                                                                                                              |                                        |                |            |          
|                                                                                                                                                                                                                                              | Total notes payable to related parties |                |            | 4,238,000 | 
|                                                                                                                                                                                                                                              |                                        |                |            |          
|                                                                                                                                                                                                                                              |                                        | $              | 57,639,901 |          
|Less: current portion of notes payable                                                                                                                                                                                                        |                                        |                | 1,464,963  |          
|                                                                                                                                                                                                                                              |                                        |                |            |          
|Notes payable, less current portion                                                                                                                                                                                                           |                                        |                | 56,174,938 |          
|                                                                                                                                                                                                                                              |                                        |                |            |          




Ocean Bank Credit Facility:On September 5, 2001, we
borrowed $48.0 million from Ocean Bank. The Ocean Bank credit
facility is secured by all of our assets and allows for up to a
$25.0 million junior lien position on the assets of our NAP
of the Americas, Inc. subsidiary. To obtain the original loan,
we paid a $720,000 commitment fee to Ocean Bank. The proceeds of
the original credit facility were used to:



| |   |                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | repay a $10.0 million short-term loan from
    Manuel D. Medina, our Chief Executive Officer, the proceeds of
    which we had used to fund the build out of the NAP of the
    Americas (Mr. Medina, in turn, used the $10.0 million
    to repay a personal $10.0 million short-term loan from
    Ocean Bank);
|
| |  | repay $3.5 million of debt that we owed to
    Ocean Bank under a line of credit personally guaranteed by
    Mr. Medina;                                                                                                                                                                                        
|
| |  | pay $1.2 million in loan costs related to
    the $48.0 million credit facility (including a $720,000
    commitment fee); and                                                                                                                                                                                   
|
| |  | fund the NAP of the Americas build out costs.                                                                                                                                                                                                                                                                    

Mr. Medina has personally guaranteed the
credit facility. In addition to Mr. Medinas personal
guarantee of the credit facility, and in order to obtain the
facility, the bank required Mr. Medina, prior to the bank
disbursing funds under the credit facility, to (i) provide
$5.0 million certificate of deposit to the bank as
collateral on certain personal loans that Mr. Medina has
with the bank and (ii) commit to accelerate the maturity
date of those personal loans to December 31, 2001.
Subsequent to September 2001, Mr. Medina and the bank
changed the maturity date on the personal loans, first to
December 31, 2001 and later to July 1, 2002. In the
event of our default under the credit facility, Mr. Medina
also agreed to subordinate debt that we owed to Mr. Medina.
Mr. Medina has repaid part of those personal loans to the
bank through liquidation of the $5.0 million certificate of
deposit in January 2002 leaving an outstanding principal balance
of approximately $4.8 million. In addition, he exercised
his right under the personal loan agreements to extend their
maturity date from July 1, 2002 to June 30, 2003. As
of June 30, 2003, such personal loans have matured and are
unpaid. Accordingly, and as further discussed below,
Mr. Medina could demand the Company to provide cash
collateral for Mr. Medinas outstanding loan balances
aggregating approximately $4.8 million. Mr. Medina has
an option under the relevant loan documents to extend the loan
to December 31, 2003 that requires a principal payment of
$300,000. Although the option to extend expires June 30,
2003, Mr. Medina is currently in discussions with Ocean
Bank regarding extending the loan, and believes that Ocean Bank
will agree to extend the loan.

In consideration of Mr. Medinas
agreeing to repay his indebtedness to Ocean Bank earlier than
otherwise required, pledging the certificate of deposit to the
bank and personally guaranteeing our credit facility and
approximately $21.0 million of construction payables, we
entered into an amended and restated employment agreement with
him. Under the terms of the amended and restated employment
agreement, we will indemnify Mr. Medina from any personal
liability related to his guarantees of our debt, use
commercially reasonable efforts to relieve Mr. Medina of
all his guarantees of our debt, provide up to $6.5 million of
cash collateral to the bank should Mr. Medina be unable to
repay the personal loans when due and provide a non
interest-bearing $5.0 million loan to Mr. Medina for
as long as his guarantees of our debt exist. If the loan to Mr.
Medina becomes in default, we have a right of offset against all
amounts payable by us to Mr. Medina, the

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aggregate of which is approximately $3.0 million
as of March 31, 2003. Subsequent to March 31, 2003,
the amount was reduced to $1.5 million. Mr. Medina
agreed that we have the right to withhold payment to him of
$1,375,000 in convertible debentures owned by him until the note
receivable is repaid. The note receivable from Mr. Medina
is shown as an adjustment to equity. The $48.0 million
credit facility and the note receivable from Mr. Medina
were approved by our board of directors.


In July 2002, we and Mr. Medina modified the
terms of his $5.0 million non-interest bearing note payable
to us. As amended, the note has a maturity date of
December 5, 2004 and bears interest subsequent to
September 5, 2002 at 2%, the applicable federal rate.
Interest is due in bi-annual installments. We will review the
collectibility of this note on a quarterly basis.

In August 2002, we amended the terms of our
credit facility. The modified credit facility reduced the annual
interest rate to 7.50%. Under the terms of the amended facility,
the initial maturity date was extended to September 2003 and we
had the option to exercise two six-month extension periods each
at a cost of 0.5% of the principal balance outstanding together
with a principal repayment of $2.5 million. During each
extension period, a $250,000 monthly principal repayment
plus interest would have been due. At closing, the total amount
of the loan was disbursed except for approximately
$6.6 million that was held as an interest reserve. Through
June 2002, the interest reserve was disbursed monthly to make
interest payments. We commenced making monthly interest payments
in July 2002. All other material provisions of the credit
facility remained unchanged.

On April 30, 2003, Ocean Bank revised its
$44.0 million credit facility with us by converting
$15.0 million of the outstanding principal balance into
20 million shares of our common stock and extending the
term of the remaining $29.0 million until April 30, 2006.
Under the new terms, interest will be payable monthly at an
annual rate of 5.25% for the first twelve months and 7.5%
thereafter. Concurrent with this transaction, we paid all past
due interest.

Construction Payables:On November 8, 2002, CRG, LLC
entered into an agreement with Cupertino to purchase our entire
$18.5 million construction payable (including accrued
interest) to Cupertino. Under the terms of their agreement, CRG
was to pay Cupertino $8.4 million for the
$18.5 million of our debt. On November 11, 2002, we
entered into an agreement with CRG that provided us with the
option, upon the closing of the purchase of our debt by CRG from
Cupertino, to repay the entire debt at a discount by either
issuing shares of our common stock valued at $0.75 per share or
making a cash payment.

On December 5, 2002, CRG entered into an
agreement with Kinetics to purchase our entire $4.1 million
construction payable (including accrued interest) to Kinetics.
Under the terms of their agreement CRG was to pay Kinetics
$1.9 million. On December 5, 2002, we also entered
into an agreement with CRG that provided us the option, upon the
closing of the purchase of the debt by CRG from Kinetics
Mechanical Services, Inc. and Kinetics Systems Inc., to repay
the entire debt at a discount by either issuing shares of our
common stock valued at $0.75 per share or making a cash payment.

On April 30, 2003, CRG completed the
purchase of the obligations to Cupertino and Kinetics in
accordance with the agreements dated November 11, 2002 and
December 5, 2002, respectively. Upon closing, the
construction payables were converted into equity in accordance
with the November 11, 2002 and December 5, 2002 option
agreements.

CRG was created by Mr. Christian Altaba, one
of our shareholders, for the purpose of buying our debt from
Cupertino Electric and Kinetics Mechanical Services. None of the
participants in CRG were or currently are our officers or
directors. There is no affiliation between CRG and Cupertino or
Kinetics. CRG is managed by Mr. Altaba.

Convertible Debentures:As of March 31, 2003, we had
not paid approximately $1,242,000 of accrued interest on our
convertible debt due on or before March 31, 2003.
Subsequent to March 31, 2003, we paid such amounts. During
November 2002, we made an offer to all of the holders of the
convertible debentures to convert their debentures, including
accrued interest as of September 30, 2002, into our common
shares at the lower of their current conversion price or $0.75.
Approximately $26.4 million of the convertible debentures
had stated conversion prices in excess of $0.75 per share. As of
December 31, 2002, approximately

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$15.8 million of the convertible debt and
accrued interest of approximately $520,000 was converted to
equity. As a result, we recognized $5.0 million inducement
on debt conversion expense which represents the fair value of
the additional common shares issued as a result of the lower
conversion price. The holders of the convertible debt had a
30 day period during January 2003 to require us to repay
the outstanding principal balance. During April 2003 and May
2003, we made payments totaling approximately $1.0 million
to five holders of the convertible debentures who exercised
their right to request an acceleration of payment.


Other:In
August 2002, we modified the terms of a note payable to a
financial institution. The maturity date was extended until
December 2002 with some principal payments to be made monthly
and the remaining principal and interest due at maturity. In
conjunction with the modification and extension of this note, we
issued 400,000 shares of our common stock valued at $180,000 to
a shareholder, who formerly guaranteed the note. On
March 31, 2003, the principal balance of the note was
$667,178. On March 31, 2003, we entered into a forbearance
agreement with the lender and modified the terms of our note.
Under the modified agreement terms, we made principal payments
of $100,000 and $125,000 in April 2003 and May 2003,
respectively and the financial institution retained the right to
enforce accelerated remedies if we default on the modified note.
We are also required to make seven consecutive monthly principal
payments of $25,000 commencing on June 1, 2003, with
interest on the outstanding balance to be paid monthly, and a
balloon payment on or before December 31, 2003,
representing full and final payment of outstanding principal and
accrued interest. We made the required payment on June 1,
2003.

As of March 31, 2003, we had not paid
approximately $602,740 relating to a lease. We have negotiated a
payment plan with the vendor where partial payments are to be
made.

Between April 2002 and June 2003, we borrowed an
aggregate of $9.9 million of short-term debt bearing
interest between 9% and 10%, including $1.6 million from
Manuel D. Medina, our Chief Executive Officer and $80,000 from
Guillermo Amore, a member of our board of directors. During the
same period, we repaid $2.8 million of short-term debt,
including $740,500 to Mr. Medina, $117,000 to
Mr. Amore and $37,500 to Miguel Rosenfeld, who is also a
member of our board of directors.




On October 30, 2002, we entered into an
agreement with Mr. Arturo Ehrlich to assist us in raising
capital. We issued warrants to purchase 1.2 million shares
of our common stock at $0.75 per share to Mr. Ehrlich
together with a cash payment of $180,000 as an advance for
future expenses. Mr. Ehrlich is a director of SBP
Investments, Inc., a corporation that lent us $3.0 million
in October 2002.




In May 2001, we issued 294 shares of
Series H redeemable convertible preferred stock for
$500,000. The preferred stock provides for a preferential annual
dividend of $102 per share and is initially convertible into
294,000 shares of common stock. The preferred stock is
redeemable at $1,700 per share plus unpaid dividends at the
request of One Vision Worldwide on June 1, 2005.

Guaranties and Commitments

The Technology Center of the Americas, LLC,
(TECOTA), an entity in which we have a 0.84%
membership interest, owns the building that leases the space to
us for the NAP of the Americas under a 20 year lease. The
construction of TECOTA was funded with $48.0 million in
equity and $61.0 million in construction financing from a
consortium of banks. We guaranteed these construction loans
during development and construction of TECOTA. After TECOTA was
built, some of the banks released us from the guarantee, the
result of which was to reduce the guarantee to
$5.5 million. As of March 31, 2003, the TECOTA debt
outstanding under the construction loan was $35.4 million.
We do not expect to fund any amounts under our guaranty.

We guarantee up to $6.5 million in personal
debt of Manuel D. Medina, our Chief Executive Officer and
Chairman. See  Liquidity and Capital
Resources for details.

We lease space for our operations, office
equipment and furniture under non-cancelable operating leases.
Some equipment is also leased under capital leases, which are
included in leasehold improvements, furniture and equipment. The
following table represents the minimum future operating and
capital lease payments for

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these commitments, as well as the combined
aggregate maturities for the following obligations for each of
the twelve months ended March 31:


|           |  |               |           |                  |  |               |            |                  |  |       |            |  |  |   |            |  |  |   |             | 
|---------- |  | ------------- | --------- | ---------------- |  | ------------- | ---------- | ---------------- |  | ----- | ---------- |  |  | - | ---------- |  |  | - | ----------- | 
|           |  | Capital lease |           |                  |  |               |            |                  |  |      
|           |  | obligations   |           | Operating leases |  | Notes payable |            | Convertible debt |  | Total
|           |  |               |           |                  |  |               |            |                  |  |      
|2004       |  | $             | 2,192,252 |                  |  | $             | 6,024,471  |                  |  | $     | 1,464,963  |  |  |   | 900,000    |  |  | $ | 10,581,686  | 
|2005       |  |               | 1,021,260 |                  |  |               | 6,011,946  |                  |  |       | 6,898,000  |  |  |   | 2,750,000  |  |  |   | 16,681,206  | 
|2006       |  |               | 9,724     |                  |  |               | 5,581,098  |                  |  |       | 48,000     |  |  |   | 11,255,000 |  |  |   | 16,893,822  | 
|2007       |  |               | 11,394    |                  |  |               | 5,548,701  |                  |  |       | 49,222,553 |  |  |   |           |  |  |   | 54,782,648  | 
|2008       |  |               | 5,307     |                  |  |               | 5,347,842  |                  |  |       | 6,385      |  |  |   |           |  |  |   | 5,359,534   | 
|Thereafter |  |               |          |                  |  |               | 70,406,223 |                  |  |       |           |  |  |   |           |  |  |   | 70,406,223  | 
|           |  |               |           |                  |  |               |            |                  |  |       |            |  |  |   |            |  |  |   |             | 
|           |  | $             | 3,239,937 |                  |  | $             | 98,920,281 |                  |  | $     | 57,639,901 |  |  | $ | 14,905,000 |  |  | $ | 174,705,119 | 
|           |  |               |           |                  |  |               |            |                  |  |       |            |  |  |   |            |  |  |   |             | 

As a result of our sale of common shares in
August 2002 at $0.58 per share, we are committed to issue an
additional 3.6 million shares to NAP de las Americas-Madrid
S.A. As of June 25, 2003, these shares had not yet been
issued.

New Accounting Pronouncements

In March 2003, the FASB reached a consensus on
Emerging Issues Task Force (EITF) Issue No. 00-21,
Revenue Arrangements with Multiple Deliverables. The
consensus provides guidance on the accounting for multiple
element revenue arrangements. It also provides guidance on how
to separate multiple element revenue arrangements into its
separate units of accounting and how to measure and allocate the
arrangements total consideration to each unit. The
effective date of EITF 00-21 is for revenue arrangements entered
into in fiscal periods (interim or annual) beginning after
June 15, 2003. Early application is permitted. We do not
expect the adoption of EITF 00-21, effective July 1, 2003,
to have a material effect on our financial statements.

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest Entities,
an Interpretation of ARB No. 51: This Interpretation
provides guidance for determining a primary beneficiary period.
The effective date of Interpretation No. 46 is the first
interim period beginning after June 15, 2003 for variable
interest entities acquired before February 1, 2003 and
immediately to variable interest entities created after
January 31, 2003. NAP de las Americas  Madrid
S.A. may be a variable interest entity in accordance with
FIN 46. Our maximum related exposure to loss is
approximately $500,000 at March 31, 2003. We do not expect
the adoption of FIN 46, effective July 1, 2003, to
have a material effect on our financial statements.

On December 31, 2002, the FASB issued FASB
Statement No. 148 (SFAS 148), Accounting for
Stock-Based Compensation  Transition and Disclosure,
amending FASB Statement No. 123 (SFAS 123), Accounting for
Stock-Based Compensation. This Statement amends SFAS 123
to provide alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting
for stock-based employee compensation. It also amends the
disclosure provisions of that Statement to require prominent
disclosure about the effects on reported net income of an
entitys accounting policy decisions with respect to
stock-based employee compensation. Finally, SFAS 148 amends APB
Opinion No. 28, Interim Financial Reporting, to require
disclosure about those effects in interim financial information.
For entities that voluntarily change to the fair value based
method of accounting for stock-based employee compensation, the
transition provisions are effective for fiscal years ending
after December 15, 2002. For all other companies, the
disclosure provisions and the amendment to APB No. 28 are
effective for interim periods beginning after December 15,
2002. We do not plan to change to the fair value based method of
accounting for stock-based employee compensation. We have
complied with the disclosure required in the March 31, 2003
financial statements.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. For guarantees issued or modified
after December 31, 2002, a liability shall be recognized
for the fair value of the obligation undertaken in issuing the
guarantee. The disclosure requirements were effective for
interim and annual financial statements for periods ending after
December 15, 2002. We currently guarantee the aggregate

28



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##### Table of Contents



amount of approximately $12.0 million in
debt. See  Guarantees and Commitments for
details. FIN 45 will impact our financial position or
results of operations in subsequent periods if these guarantees
are modified.


In April 2002, the Financial Accounting Standards
Board (FASB) approved SFAS 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement
No. 13 and Technical Corrections. In addition to
rescinding SFAS 4, 44, and 64 and amending SFAS 13, SFAS145
establishes a financial reporting standard for classification of
extinguishment of debt in the financial statements in accordance
with APB 30. SFAS 145 will be effective for our fiscal year
ended March 31, 2004. We do not expect the adoption of SFAS
145 to have a material effect on our financial position or
results of operations. However, SFAS 145 will have an impact on
the presentation of our results of operations for the quarter
ended June 30, 2003. On April 30, 2003, we entered
into financing transactions that will result in debt
restructuring gains. See  Liquidity and Capital
Resources.




Risk Factors




Our recurring losses from operations and the
lack of committed sources of additional debt or equity to
support working capital deficits raises substantial doubt about
our ability to continue as a going concern.From the time of the merger through
March 31, 2003, we have incurred net operating losses of
approximately $202.6 million. Our cash flows from
operations for the years ended March 31, 2003 and 2002 were
negative and our working capital deficit was approximately
$39.0 million and $88.3 million as of March 31,
2003 and 2002, respectively.




The majority of our planned operating cash
improvement during our fiscal year 2004 is expected to come from
an increase in revenues and cash collections from customers. If
we fail to achieve planned revenues of $2.0 million to
$3.0 million a month, then we will require additional
financing. Our revenues may not increase and additional
financing may not be available and, if available the financing
may not be obtainable on terms acceptable to us. Additional
financing may be substantially dilutive to existing
shareholders. If we need to obtain additional financing and fail
to do so, it may have a material adverse effect on our ability
to meet financial obligations and operate as a going concern.
Consequently, recurring losses from operations, the uncertainty
surrounding the anticipated increase in revenues, including the
rate at which services are sold and the lack of committed
sources of additional debt or equity, raises substantial doubt
about our ability to continue as a going concern.







We have significant debt service obligations
which will require the use of a substantial portion of our
available cash.As of March 31,
2003, our total liabilities were approximately
$115.5 million, obligations guaranteed by us were
$10.3 million and our total shareholders deficit was
$46.5 million. Our substantial debt and guarantees could
have important consequences to you, including the following:






| |   |                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our substantial leverage increases our
    vulnerability to economic downturns and adverse competitive and
    industry conditions and could place us at a competitive
    disadvantage compared to those of our competitors that are less
    leveraged;                                                              
|
| |  | our debt service obligations could limit our
    flexibility in planning for, or reacting to, changes in our
    business and our industry and could limit our ability to pursue
    other business opportunities, borrow more money for operations
    or capital in the future and implement our business strategies;
|
| |  | our level of debt may restrict us from raising
    additional financing on satisfactory terms to fund working
    capital, capital expenditures, product development efforts,
    strategic acquisitions, investments and alliances, and other
    general corporate requirements;                                     
|
| |  | covenants in our debt instruments limit our
    ability to pay dividends or make other restricted payments and
    investments; and                                                                                                                                                                                    
|
| |  | our total guarantees are approximately
    $10.3 million and if we are required to fund under these
    guarantees our liquidity and cash flows would be adversely
    affected.                                                                                                                                       

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We may be unable to raise the funds necessary
to repay or refinance our indebtness.We are obligated to make principal and
interest payments on our credit facility with Ocean Bank each
year until it matures in 2006. Additionally, $49.2 million
of our credit facilities mature in 2007. Each of these
obligations requires significant amounts of liquidity. We may
need additional capital to fund those obligations. Our ability
to arrange financing and the cost of this financing will depend
upon many factors, including:



| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | general economic and capital markets conditions,
    and in particular the non-investment grade debt market;
|
| |  | conditions in the Internet infrastructure market;                                                           
|
| |  | credit availability from banks or other lenders;                                                            
|
| |  | investor confidence in the telecommunications
    industry generally and our company specifically; and      
|
| |  | the success of our TerreNAP Centers.                                                                        

If we need additional funds, our inability to
raise them will have an adverse effect on our operations. If we
decide to raise additional funds by incurring debt, we may
become subject to additional or more restrictive financial
covenants and ratios.




If we do not locate financial or strategic
partners, we may have to delay or abandon expansion
plans.Expenditures commence well
before a TerreNAP Center opens, and it may take an extended
period to approach break-even capacity utilization. It takes a
significant period of time to select the appropriate location
for a new TerreNAP Center, construct the necessary facilities,
install equipment and telecommunications infrastructure and hire
operations and sales personnel. As a result, we expect that
individual TerreNAP Centers will experience losses for more than
one year from the time they are opened. As a part of our
TerreNAP Center strategy, we intend to rely on third-party
financial or strategic partners to fund the development costs.
If we are unable to establish such third-party relationships, we
may delay or abandon some or all of our development and
expansion plans or otherwise forego market opportunities, making
it difficult for us to generate additional revenue and to
respond to competitive pressures.









| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | Brazilian political and economic conditions
    may have an adverse impact on our operations.







We commenced operations in Brazil in February
2002. The Brazilian governments actions to control
inflation and effect other policies have often involved wage and
price controls, currency devaluations, capital controls and
limits on imports, among other things. Luiz Inacio Lula da
Silva, the left-wing candidate, was elected president of Brazil
on October 27, 2002. The economic and fiscal policies of
Mr. Lula da Silva could have an adverse effect on the
Brazilian economy and our results of operation.







Our business, financial condition and results of
operations in Brazil may be adversely affected by changes in
policy involving factors outside of our control, such as:






| |   |                                                                              
| | - | -----------------------------------------------------------------------------
|
| |  | monetary and fiscal policies;                                                
|
|
|
| |  | currency fluctuations;                                                       
|
|
|
| |  | energy shortages; and                                                        
|
|
|
| |  | other political, social and economic developments
    in or affecting Brazil.
|




In early 1999, the Brazilian government allowed
the realto float freely, resulting in a significant
devaluation against the U.S. dollar. Since that time,
Brazils currency has experienced further significant
devaluations against the U.S. dollar. The devaluation of the
realand the decline in growth in the Brazilian economy
have been caused in part by the continued recession in the
region, a general aversion to emerging markets by foreign direct
and financial investors and the overall decline in worldwide
economy.







We may not be able to compete effectively in
the market for data center services.The market for data center services is
extremely competitive and subject to rapid technological change.
Our current and potential competitors include providers of data
center services, global, regional and local telecommunications
companies




30



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##### Table of Contents



and Regional Bell Operating Companies, and
information technology outsourcing firms. Many of our existing
competitors have greater market presence and financial and
personnel resources than we do. Our competitors include Internet
data centers operated by established communications carriers
such as AT&T, Level 3, MCI and Qwest. We also compete
with providers of data services centers, regional Bell operating
companies that offer Internet access and information technology
outsourcing firms. The principal competitive factors in our
market include:




| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | ability to deliver services when requested by the
    customer;                                               
|
| |  | Internet system engineering and other
    professional services expertise;                                    
|
| |  | customer service;                                                                                             
|
| |  | network capability, reliability, quality of
    service and scalability;                                      
|
| |  | variety of managed services offered;                                                                          
|
| |  | access to network resources, including circuits,
    equipment and interconnection capacity to other networks;
|
| |  | broad geographic presence;                                                                                    
|
| |  | price;                                                                                                        
|
| |  | ability to maintain and expand distribution
    channels;                                                     
|
| |  | brand name recognition;                                                                                       
|
| |  | timing of introductions of new services;                                                                      
|
| |  | physical and network security;                                                                                
|
| |  | financial resources; and                                                                                      
|
| |  | customer base.                                                                                                

Some of our competitors may be able to develop
and expand their data center services faster, devote greater
resources to the marketing and sale of their products and adopt
more aggressive pricing policies than we can. In addition, these
competitors have entered and will likely continue to enter into
business relationships to provide additional services that
compete with the services we provide.

Our products and services have a long sales
cycle that may materially adversely affect our business,
financial condition and results of
operations.A customers decision
to purchase services at a TerreNAP Center typically involves a
significant commitment of resources and will be influenced by,
among other things, the customers confidence in our
financial strength. As a result, we have a long sales cycle.
Delays due to the length of our sales cycle may materially
adversely affect our business, financial condition and results
of operations.

We believe our market is likely to consolidate
in the near future, which could result in increased price and
other competition.Some of our
competitors who sell bandwidth may be able to provide customers
with additional benefits relating to the customers
Internet system and network management solutions, including
reduced local and long distance communications costs, which
could reduce the overall costs of their services relative to
ours. We may not be able to offset the effects of any price
reductions.

We are dependent on key personnel and the loss
of these key personnel could have a material adverse effect on
our success.We are highly dependent
on the services of Manuel D. Medina, our Chairman. In an attempt
to reduce costs, we have eliminated some management positions.
Our potential growth and expansion and the merger and
integration of separate businesses, are expected to place
increased demands on our management skills and resources.
Therefore, our success also depends upon our ability to hire and
retain additional skilled and experienced management personnel.
Employment and retention of qualified personnel is important due
to the competitive nature of our industry.

Our President, Chairman and Chief Executive
Officer, cannot be removed without cause which could delay,
defer or prevent change in control of our company or impede a
merger, consolidation, takeover or other business combination.Under the terms of our agreement with
Manuel D. Medina, our President, Chairman and Chief Executive
Officer, as long as Mr. Medinas guarantees of our
debt exist, we have agreed to nominate

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Mr. Medina to our board of directors and not
remove Mr. Medina, unless for good cause, or remove any of
our officers without Mr. Medinas consent. This could
delay, defer or prevent change in control of our company or
impede a merger, consolidation, takeover or other business
combination that you, as a stockholder, may otherwise view
favorably.


If the price of our shares remains low or our
financial condition deteriorates, we may be delisted by the
American Stock Exchange.Our common
stock currently trades on the American Stock Exchange (Amex).
The Amex requires companies to fulfill specific requirements in
order for their shares to continue to be listed. Our securities
may be considered for delisting if:

(i) our financial condition and operating
results appear to be unsatisfactory;

(ii) it appears that the extent of public
distribution or the aggregate market value of the securities has
become so reduced as to make further dealings on the Amex
inadvisable; or

(iii) we have sustained losses which are so
substantial in relation to our overall operations or our
existing financial condition has become so impaired that it
appears questionable whether we will be able to continue
operations and/or meet our obligations as they mature.

For example, the Amex may consider suspension or
delisting of a stock if the stock has been selling for a
substantial period of time at a low price per share. Our common
stock has been trading at relatively low prices for the past
eighteen months and we have sustained net losses for the past
three fiscal years. Therefore, our common stock is at risk of
being delisted by the Amex. If our shares are delisted from the
Amex, our stockholders could find it difficult to sell our
stock. To date we have had no communication from the Amex
regarding delisting. If our common stock is delisted from the
Amex, we may apply to have our shares quoted on NASDAQs
Bulletin Board or in the pink sheets maintained by
the National Quotation Bureau, Inc. The Bulletin Board and the
pink sheets are generally considered to be less
efficient markets than the Amex. In addition, if our shares are
no longer listed on the Amex or another national securities
exchange in the United States, our shares may be subject to the
penny stock regulations. If our common stock
were to become subject to the penny stock rules it is likely
that the price of our common stock would decline and that our
stockholders would find it difficult to sell their shares. If
our stock were to become delisted we could be in default of
various agreements, including the Ocean Bank credit facility.

Our business could be harmed by prolonged
electrical power outages or shortages, or increased costs of
energy.Our NAP facilities are
susceptible to regional costs of power, electrical power
shortages and planned or unplanned power outages caused by these
shortages. A power shortage may result in an increase of the
cost of energy, which we may not be able to pass on to our
customers. We attempt to limit exposure to system downtime by
using backup generators and power supplies. Power outages, which
last beyond our backup and alternative power arrangements, could
harm our customers and our business.




PART IV






|          |                                                                     
|--------- | --------------------------------------------------------------------
|ITEM  16. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
    REPORTS ON FORM 8-K.




(a) The exhibits listed in the
Exhibit Index are filed with or incorporated by reference
as part of this report.




(b) No reports were filed on Form 8-K
during the fourth quarter of the fiscal year ended
March 31, 2003.

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(c) The following exhibits, which are
furnished with this Annual Report or incorporated herein by
reference, are filed as part of this Annual Report.

|        |       |                     |  |                                                                                                                                                                                                                                            
|------- | ----- | ------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                    
|Number  |       | Exhibit Description
|        |       |                    
|        | 2.1   |                     |  | Agreement for Sale of Assets by and between ITV
    Communications, Inc. and Netmatics, Inc., dated January 11,
    1996, and Promissory Note and Security Agreement dated
    January 16, 1996(1)                                         
|        | 2.2   |                     |  | Agreement of Merger between AVIC Group
    International, Inc., a Colorado corporation, with and into AVIC
    Group International, Inc., a Delaware corporation dated
    July 10, 1996(2)                                                
|        | 2.3   |                     |  | Agreement and Plan of Merger by and between
    Terremark Holdings, Inc. and AmTec, Inc., dated as of
    November 24, 1999, as amended by that certain Amendment to
    Agreement and Plan of Merger, dated as of February 11,
    2000(3)
|        | 2.4   |                     |  | Letter Agreement dated January 12, 2001
    among MP Telecom, LLC, Terremark Worldwide, Inc., Clifford J.
    Preminger, Thomas M. Mulroy and Manuel Medina(4)                                                                             
|        | 3.1   |                     |  | Certificate of Merger of Terremark Holdings, Inc.
    with and into AmTec, Inc.(5)                                                                                                                                                         
|        | 3.2   |                     |  | Restated Certificate of Incorporation of the
    Company(5)                                                                                                                                                                                
|        | 3.3   |                     |  | Restated Bylaws of the Company(5)                                                                                                                                                                                                          
|        | 3.4   |                     |  | Certificate of Designations of Preferences of
    Series G Convertible Preferred Stock of the Company(5)                                                                                                                                   
|        | 3.5   |                     |  | Certificate of Designations of Preferences of
    Series H Convertible Preferred Stock of the Company(6)                                                                                                                                   
|        | 4.1   |                     |  | Specimen Stock Certificate(1)                                                                                                                                                                                                              
|        | 4.2   |                     |  | Form of 13% Subordinated Convertible Debenture,
    due December 31, 2005(7)                                                                                                                                                               
|        | 4.3   |                     |  | Form of 13.125% Subordinated Convertible
    Debenture, due December 31, 2005(8)                                                                                                                                                           
|        | 4.4   |                     |  | Form of 9% Subordinated Convertible Debenture,
    due April 30, 2006                                                                                                                                                                      
|        | 4.5   |                     |  | Form of Warrant for the Purchase of Common
    Stock(9)                                                                                                                                                                                    
|        | 4.6   |                     |  | Form of 10% Subordinated Convertible Debenture,
    due April 30, 2006                                                                                                                                                                     
|        | 10.1  |                     |  | 1995 Stock Option Plan(10)                                                                                                                                                                                                                 
|        | 10.2  |                     |  | 1996 Stock Option Plan(10)                                                                                                                                                                                                                 
|        | 10.3  |                     |  | Real Property Lease between Lexreal Associates
    and the Company dated May 8, 1995(10)                                                                                                                                                   
|        | 10.4  |                     |  | Form of Indemnification Agreement for directors
    and officers of the Company(2)                                                                                                                                                         
|        | 10.5  |                     |  | Employment Agreement with Joseph R. Wright(11)                                                                                                                                                                                             
|        | 10.6  |                     |  | Employment Agreement with Manuel Medina(12)                                                                                                                                                                                                
|        | 10.7  |                     |  | Amendment to Employment Agreement with Manuel
    Medina(13)                                                                                                                                                                               
|        | 10.8  |                     |  | Employment Agreement with Brian Goodkind(14)                                                                                                                                                                                               
|        | 10.9  |                     |  | Amended and Restated Credit Agreement between the
    Company and Ocean Bank, dated September 5, 2001(15)                                                                                                                                  
|        | 10.10 |                     |  | Net Premises Lease by and between Rainbow
    Property Management, LLC and Coloconnection, Inc.(16)                                                                                                                                        
|        | 10.11 |                     |  | Basic Lease Information Rider T-Rex Technology
    Center of the Americas @ Miami, dated October 16, 2000,
    between Technology Center of the Americas, LLC and NAP of the
    Americas, Inc.(16)                                        
|        | 10.12 |                     |  | Agreements between the Company and Telcordia
    Technologies, Inc.(16)                                                                                                                                                                    
|        | 10.13 |                     |  | Agreement between Terremark Technology
    Contractors Inc., and Cupertino Electric, Inc., dated
    November 1, 2000(16)                                                                                                                  
|        | 10.14 |                     |  | Amended and Restated Debt Satisfaction Agreement
    between the Registrant and CRG, LLC, dated December 5,
    2002(16)                                                                                                                   
|        | 10.15 |                     |  | Debt Satisfaction Agreement between the Company
    and CRG, LLC, dated November 11, 2002(16)                                                                                                                                              

33



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|        |       |                     |  |                                                                                                                                                                                        
|------- | ----- | ------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                    
|Number  |       | Exhibit Description
|        |       |                    
|        | 10.16 |                     |  | Agreement between Terremark Technology
    Contractors Inc., and Kinetics Systems, Inc., dated
    December 28, 2000(16)                                                               
|        | 10.17 |                     |  | Collateral Agent Agreement between the Company,
    NAP of the Americas, Inc. and Bank of New York Trust Company of
    Florida, N.A., dated April 30, 2003(17)                        
|        | 10.18 |                     |  | Second Leasehold Mortgage and Security Agreement
    between NAP of the Americas, Inc. and Bank of New York Trust
    Company of Florida, N.A., dated April 30, 2003(17)               
|        | 10.19 |                     |  | Subordination Agreement between Bank of New York
    Trust Company of Florida, N.A. and Ocean Bank, dated
    April 30, 2003(17)                                                       
|        | 10.20 |                     |  | Second Assignment of Leases and Rents and
    Security Deposits between NAP of the Americas, Inc. and Bank of
    New York Trust Company of Florida, N.A., dated April 30,
    2003(17)
|        | 10.21 |                     |  | Debt Conversion Agreement between the Company,
    NAP of the Americas and Ocean Bank, dated April 30, 2003(17)                                                                        
|        | 21    |                     |  | Subsidiaries of the Company(17)                                                                                                                                                        
|        | 31.1  |                     |  | Certification of Chief Executive Officer pursuant
    to Rule 13a-14(a) and 15d-14(a).*                                                                                                
|        | 31.2  |                     |  | Certification of Chief Financial Officer pursuant
    to Rule 13a-14(a) and 15d-14(a).*                                                                                                
|        | 32.1  |                     |  | Certification of the Chief Executive Officer
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002(17)                  
|        | 32.2  |                     |  | Certification of the Chief Financial Officer
    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002(17)                      









| |   |               
| | - | --------------
| | * | Filed herewith

| |     |                                                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------
| | (1) | Previously filed as part of the Companys
    Current Report on Form 8-K dated March 6, 1997.                     
| | (2) | Previously filed as part of the Companys
    Definitive Proxy Statement filed on April 18, 1996.                 
| | (3) | Previously filed as part of the Companys
    Definitive Proxy Statement filed on March 24, 2000.                 
| | (4) | Previously filed as part of the Companys
    Current Report on Form 8-K dated February 28, 2001.                 
| | (5) | Previously filed as an exhibit to the
    Companys Registration Statement on Form S-3 filed
    May 15, 2000.    
| | (6) | Previously filed as exhibit 3.5 to the
    Companys Annual Report on Form 10-K filed on
    July 16, 2001.       
| | (7) | Previously filed as exhibit 4.1 to the
    Companys Quarterly Report on Form 10-Q filed on
    February 14, 2001.
| | (8) | Previously filed as exhibit 4.5 to the
    Companys Annual Report on Form 10-K filed on
    July 15, 2002.       
| | (9) | Previously filed as exhibit 4.1 to the
    Companys Current Report on Form 8-K filed on
    April 15, 2003.      

|     |                                                                                                                                                     
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Previously filed as part of the Companys
    Transition Report on Form 10-KSB for the transition period from
    October 1, 1994 to March 31, 1995.
|(11) | Previously filed as exhibit 10.6 to the
    Companys Annual Report on Form 10-KSB filed
    June 29, 2000.                                         
|(12) | Previously filed as exhibit 10.6 to the
    Companys Annual Report on Form 10-K filed on
    July 16, 2001.                                        
|(13) | Previously filed as exhibit 10.1 to the
    Companys Quarterly report on Form 10-Q filed on
    November 14, 2001.                                 
|(14) | Previously filed as exhibit 10.2 to the
    Companys Quarterly Report on Form 10-Q filed on
    November 14, 2000.                                 
|(15) | Previously filed as exhibit 10.2 to the
    Companys Quarterly report on Form 10-Q filed on
    November 14, 2001.                                 
|(16) | Previously filed as an exhibit to the
    Companys Current Report on Form 8-K filed on
    April 15, 2003.                                         
|    
|(17) | Previously filed as an exhibit to the
    Companys Annual Report on Form 10-K filed on June 30,
    2003.                                          
|    

34



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SIGNATURES




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, on the 4th day of March
2004.






| |                          
| | -------------------------
| | TERREMARK WORLDWIDE, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ MANUEL D. MEDINA

| |                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                         
| | Manuel D. Medina, Chairman of the Board, 
     President and Chief Executive Officer 
     (Principal Executive Officer)



| |     |                    
| | --- | -------------------
| | By: | /s/ JOSÉ A. SEGRERA

| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| |                                                                                                
| | Executive Vice President and 
     Chief Financial Officer 
     (Principal Accounting Officer)

35