##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K/A





(Amendment No. 2)





|  |  |                                                                                             
|- |  | --------------------------------------------------------------------------------------------
|þ |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
| 
|  |  | For the fiscal year ended March 31, 2005                                                    
| 
|o |  | 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                                                           |  | 84-0873124                           
|(State or Other Jurisdiction of
    Incorporation or Organization) |  | (IRS 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





þ o





o





þ o





The aggregate market value of the registrants common
stock held by non-affiliates of the registrant on,
September 30, 2004, was approximately $155,145,610, based
on the closing market price of the registrants common
stock ($0.64 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 29, 2005 was 42,725,138. This number reflects a
one-for-ten reverse stock split the registrant implemented,
effective as of May 16, 2005.










---

TABLE OF CONTENTS



|                                                                    |                                                      |  |  |  |  |  |  | 
|------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  |  | 
|PART I 10-K/A EXPLANATORY NOTE                                     
|PART IV                                                            
|                                                                    | ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|SIGNATURES                                                         
|REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM  
|CONSOLIDATED BALANCE SHEETS                                        
|CONSOLIDATED STATEMENTS OF OPERATIONS                              
|CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
|CONSOLIDATED STATEMENTS OF CASH FLOWS                              
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         
|Consent of PricewaterhouseCoopers LLP                              
|Section 302 CEO Certification                                      
|Section 302 CFO Certification                                      
|Section 906 CEO Certification                                      
|Section 906 CFO Certification                                      



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##### Table of Contents






PART I


10-K/A EXPLANATORY NOTE












| |   |                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | amend and restate a Report of Independent Registered Certified
    Public Accounting Firm to provide for a date of August 4,
    2005 as opposed to the July 28, 2005 date which appeared in
    such report filed with the First Amendment;                        
|
|
|
| |  | include a Consent of Independent Registered Certified Public
    Accounting Firm required as a result of the revisions discussed
    above; and                                                                                                                     
|
|
|
| |  | include in Exhibit 23.1, Consent of Independent Registered
    Certified Public Accounting Firm, reference to the
    Companys Registration Statements on Form S-3 (Nos.
    333-123775, 333-102286 and 333-121133) which were filed after
    the Original Filing.
|

















1



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##### Table of Contents






PART IV







|         |                                            
|-------- | -------------------------------------------
|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.





| |    |                     
| | -- | --------------------
| | 1. | Financial Statements



| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | Report of Independent Registered Certified Public Accounting Firm                                                     
|
| |  | Consolidated Balance Sheets as of March 31, 2005 and 2004                                                             
|
| |  | Consolidated Statements of Operations for the Years Ended
    March 31, 2005, 2004 and 2003                           
|
| |  | Consolidated Statement of Changes in Stockholders Equity
    (Deficit) for the Three Year Period Ended March 31, 2005
|
| |  | Consolidated Statements of Cash Flows for the Years Ended
    March 31, 2005, 2004 and 2003                           
|
| |  | Notes to Consolidated Financial Statements                                                                            



| |    |                              
| | -- | -----------------------------
| | 2. | Financial Statement Schedules





| |    |         
| | -- | --------
| | 3. | Exhibits

|        |   |                     |  |                                                                                                                                                                                                                              
|------- | - | ------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |                    
|Number  |   | Exhibit Description
|        |   |                    
|        | 1 | .1                  |  | Form of Underwriting Agreement related to the Companys
    offering of common stock on March 14, 2005 (previously
    filed as an exhibit to the Companys registration statement
    filed on February 3, 2005)            
|        | 3 | .1                  |  | Certificate of Merger of Terremark Holdings, Inc. with and into
    AmTec, Inc. (previously filed as an exhibit to the
    Companys Registration Statement on Form S-3 filed on
    May 15, 2000)                           
|        | 3 | .2                  |  | Restated Certificate of Incorporation of the Company (previously
    filed as an exhibit to the Companys Registration Statement
    on Form S-3 filed on May 15, 2000)                                                      
|        | 3 | .3                  |  | Certificate of Amendment to Certificate of Incorporation of the
    Company (previously filed as an exhibit to the Companys
    Registration Statement on Form S-1 filed on
    December 21, 2004)                          
|        | 3 | .4                  |  | Restated Bylaws of the Company (previously filed as an exhibit
    to the Companys Quarterly Report on Form 10-Q filed
    on November 14, 2002)                                                                            
|        | 3 | .5                  |  | Certificate of Designations of Preferences of Series G
    Convertible Preferred Stock of the Company (previously filed as
    an exhibit to the Companys Registration Statement on
    Form S-3 filed on May 15, 2000)     
|        | 3 | .6                  |  | Certificate of Designations of Preferences of Series H
    Convertible Preferred Stock of the Company (previously filed as
    exhibit 3.5 to the Companys Annual Report on
    Form 10-K filed on July 16, 2001)           
|        | 3 | .7                  |  | Certificate of Designations of Preferences of Series I
    Convertible Preferred Stock of the Company (previously filed as
    an exhibit to the Companys Registration Statement on
    Form S-3/ A filed on March 17, 2004)
|        | 3 | .8                  |  | Certificate of Amendment to Certificate of Incorporation of the
    Company (previously files as an exhibit to the Companys
    current report on Form 8-K filed on May 18, 2005).                                          
|        | 4 | .1                  |  | Specimen Stock Certificate (previously filed as exhibit to the
    Companys current report on Form 8-K filed on
    May 18, 2005).                                                                                          
|        | 4 | .4                  |  | Form of Warrant for the Purchase of Common Stock (previously
    filed as exhibit 4.1 to the Companys Current Report
    on Form 8-K filed on April 15, 2003)                                                               
|        | 4 | .5                  |  | Indenture dated June 14, 2004 including form of
    9% Senior Convertible Note due 2009 (previously filed as an
    exhibit to the Companys Quarterly Report on Form 10-Q
    filed on August 9, 2004)                      

2



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##### Table of Contents



|        |    |                     |  |                                                                                                                                                                                                                                                                                                                                                   
|------- | -- | ------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                    
|Number  |    | Exhibit Description
|        |    |                    
|        | 10 | .1                  |  | 1995 Stock Option Plan (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)                                                                                                                                                                  
|        | 10 | .2                  |  | 1996 Stock Option Plan (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)                                                                                                                                                                  
|        | 10 | .3                  |  | Form of Indemnification Agreement for directors and officers of
    the Company (previously filed as an exhibit to the
    Companys Registration Statement on Form S-3, as
    amended, filed on March 11, 2003)                                                                                                                                 
|        | 10 | .4                  |  | Employment Agreement with Manuel Medina (previously filed as
    exhibit 10.6 to the Companys Annual Report on
    Form 10-K filed on July 16, 2001)                                                                                                                                                                                             
|        | 10 | .5                  |  | Amendment to Employment Agreement with Manuel Medina (previously
    filed as an exhibit to the Companys Quarterly Report on
    Form 10-Q filed on November 14, 2001)                                                                                                                                                                           
|        | 10 | .7                  |  | Net Premises Lease by and between Rainbow Property Management,
    LLC and Coloconnection, Inc. (previously filed as an exhibit to
    the Companys Current Report on Form 8-K filed on
    April 15, 2003)                                                                                                                                      
|        | 10 | .13                 |  | Non-qualified Stock Option Agreement with Brian K. Goodkind to
    purchase 1,278,205 shares of the Companys common
    stock (previously filed as an exhibit to the Companys
    Quarterly Report on Form 10-Q filed on August 14, 2003)                                                                                                       
|        | 10 | .14                 |  | Non-qualified Stock Option Agreement with Brian K. Goodkind to
    purchase 1,406,795 shares of the Companys common
    stock (previously filed as an exhibit to the Companys
    Quarterly Report on Form 10-Q filed on August 14, 2003)                                                                                                       
|        | 10 | .15                 |  | First Amendment to the Non-qualified Stock Option Agreement with
    Brian K. Goodkind to purchase 200,000 shares of the
    Companys common stock (previously filed as an exhibit to
    the Companys Quarterly Report on Form 10-Q filed on
    August 14, 2003)                                                                              
|        | 10 | .16                 |  | First Amendment to the Non-qualified Stock Option Agreement with
    Brian K. Goodkind to purchase 115,000 shares of the
    Companys common stock (previously filed as an exhibit to
    the Companys Quarterly Report on Form 10-Q filed on
    August 14, 2003)                                                                              
|        | 10 | .17                 |  | Amended and restated 2000 Stock Option Plan (previously filed as
    an exhibit to the Companys Registration Statement on
    Form S-8 filed on August 19, 2004)                                                                                                                                                                                 
|        | 10 | .18                 |  | 2000 Directors Stock Option Plan (previously filed as
    an exhibit to the Companys Registration Statement on
    Form S-8 filed on August 19, 2002)                                                                                                                                                                                           
|        | 10 | .19                 |  | Agreement between Fundacao De Amparo A Pesquisa Do Estado De Sao
    Paulo  FAPESP and Terremark Latin America (Brazil)
    Ltda. (previously filed as an exhibit to the Companys
    Registration Statement on Form S-3/ A filed on
    December 22, 2003)                                                                                     
|        | 10 | .20                 |  | Employment Agreement with Jose A. Segrera dated
    September 8, 2001 (previously filed as an exhibit to the
    Companys Annual Report on Form 10-K filed
    June 30, 2003)                                                                                                                                                                    
|        | 10 | .21                 |  | Employment Agreement with Jose E. Gonzalez dated November 2002
    (previously filed as an exhibit to the Companys Annual
    Report on Form 10-K filed June 30, 2003)                                                                                                                                                                           
|        | 10 | .23                 |  | Employment Agreement with Jamie Dos Santos dated
    November 1, 2002 (previously filed as an exhibit to the
    Companys Annual Report on Form 10-K filed
    June 14, 2004)                                                                                                                                                                    
|        | 10 | .24                 |  | Employment Agreement with Marvin Wheeler dated November 1,
    2002 (previously filed as an exhibit to the Companys
    Annual Report on Form 10-K filed June 14, 2004)                                                                                                                                                                          
|        | 10 | .26                 |  | Loan Agreement dated as of December 31, 2004 (the
    Loan Agreement), by and among Technology Center of
    the Americas, LLC, as Borrower, Citigroup Global Markets Realty
    Corp., as Agent and each Lender signatory thereto (previously
    filed as an exhibit to the Companys Current Report on
    Form 8-K filed on January 6, 2005)
|        | 10 | .27                 |  | Form of Warrant Certificate of Terremark Worldwide, Inc. issued
    to Citigroup Global Markets Realty Corp. (previously filed as an
    exhibit to the Companys Current Report on Form 8-K
    filed on January 6, 2005)                                                                                                                        

3



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##### Table of Contents



|        |    |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | -- | ------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                    
|Number  |    | Exhibit Description
|        |    |                    
|        | 10 | .28                 |  | Purchase Agreement dated as of December 31, 2004, among
    Terremark Worldwide, Inc., as Issuer, the guarantors named
    therein, FMP Agency Services, LLC, as agent, and each of the
    purchasers named therein (previously filed as an exhibit to the
    Companys Current Report on Form 8-K filed on
    January 6, 2005)                                                                  
|        | 10 | .29                 |  | Security Agreement dated as of December 31, 2004, by
    Terremark Worldwide, Inc., as Issuer, the guarantors named
    therein and FMP Agency Services, LLC, as Agent (previously filed
    as an exhibit to the Companys Current Report on
    Form 8-K filed on January 6, 2005)                                                                                                                
|        | 10 | .30                 |  | Registration Rights Agreement dated as of December 31, 2004
    among Terremark Worldwide, Inc. and Falcon Mezzanine Partners,
    LP, Stichting Pensioenfonds ABP and Stichting Pensioenfonds Voor
    De Gezondheid, Geestelijke En Maatschappelijke Belangen (the
    Purchasers) (previously filed as an exhibit to the
    Companys Current Report on Form 8-K filed on
    January 6, 2005)
|        | 10 | .31                 |  | Form of Warrant Certificate of Terremark Worldwide, Inc. issued
    to the Purchasers (previously filed as an exhibit to the
    Companys Current Report on Form 8-K filed on
    January 6, 2005)                                                                                                                                                                                                 
|        | 10 | .32                 |  | Form of Note of Terremark Worldwide, Inc. issued to the
    Purchasers (previously filed as an exhibit to the Companys
    Current Report on Form 8-K filed on January 6, 2005)                                                                                                                                                                                                                    
|        | 10 | .33                 |  | Guaranty of Nonrecourse Obligations executed by the Company in
    favor of Citigroup Global Markets Realty Corp., as agent, for
    the benefit of the lenders to the Loan Agreement (previously
    filed as an exhibit to the Companys Registration Statement
    on Form S-1 filed on February 3, 2005)                                                                                        
|        | 10 | .34                 |  | Employment Agreement with John Neville dated April 18, 2005*                                                                                                                                                                                                                                                                                                                                        
|        | 21 |                     |  | Subsidiaries of the Company*                                                                                                                                                                                                                                                                                                                                                                        
|        | 23 | .1                  |  | Consent of PricewaterhouseCoopers LLP**                                                                                                                                                                                                                                                                                                                                                             
|        | 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 Chief Executive Officer pursuant to
    18 USC. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002**                                                                                                                                                                                                                                           
|        | 32 | .2                  |  | Certification of Chief Financial Officer pursuant to
    18 USC. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002**                                                                                                                                                                                                                                           






| |   |                                    
| | - | -----------------------------------
| | * | Previously filed with the Form 10-K

|   |                            
|-- | ---------------------------
|** | Filed with this Form 10-K/A

4



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##### Table of Contents






SIGNATURES






| |                                     
| | ------------------------------------
| | 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/ JOSE A.
    SEGRERA                         
| |                                                     
| | Jose A. Segrera                                     
| | Executive Vice President and Chief Financial Officer
| | (Principal Financial and Accounting Officer)        











5



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REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING
FIRM






Consolidated financial statements




Internal control over financial reporting


Internal
Control  Integrated Framework






F-1



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##### Table of Contents











| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. The Company did not maintain effective controls to
    restrict access to key financial applications and data.
    Specifically, the Company did not adequately segregate the
    duties of certain individuals in the information technology and
    accounting departments having access to key financial
    applications and data broader than that required by their roles
    and responsibilities, including an employee with check signing
    authority and another with responsibility over the custody and
    processing of customer payments received by mail. In addition,
    the Company did not have controls to monitor access to financial
    applications and data. This control deficiency did not result in
    an adjustment to the consolidated financial statements. However,
    this control deficiency could result in a misstatement in
    financial statement accounts or disclosures that would result in
    a material misstatement to annual or interim consolidated
    financial statements that would not be prevented or detected.
    Accordingly, this control deficiency represents a material
    weakness.
|
| | 2. The Company did not maintain effective controls over the
    billing function to ensure that invoices capture all services
    delivered to customers and that such services are invoiced and
    revenue is recorded accurately and timely. Specifically, the
    Company did not have effective controls to reconcile, review and
    monitor revenues recorded to amounts invoiced to customers, to
    data in customer contracts or to customer service delivery data.
    This control deficiency resulted in immaterial audit adjustments
    to the interim and annual consolidated financial statements. In
    addition, this control deficiency could result in a misstatement
    to revenues or receivables that would result in a material
    misstatement to the annual or interim consolidated financial
    statements that would not be prevented or detected. Accordingly,
    this control deficiency represents a material weakness.                                                                                                                                                                                             





F-2



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##### Table of Contents



Internal Control  Integrated Framework Internal Control  Integrated
Framework


PricewaterhouseCoopers
LLP


PRICEWATERHOUSECOOPERS LLP












F-3



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES







CONSOLIDATED BALANCE SHEETS


|                                                                                                                                                                          |                                                      |           |              |             |      |   |              |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | --------- | ------------ | ----------- | ---- | - | ------------ | ----------- | -
|                                                                                                                                                                          |                                                      | March 31, |             
|                                                                                                                                                                          |                                                      |           |             
|                                                                                                                                                                          |                                                      | 2005      |              |             | 2004 |  
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|ASSETS                                                                                                                                                                   
|Current assets:                                                                                                                                                           |                                                      |           |              |             |      |   |              |            
|Cash and cash equivalents                                                                                                                                                 |                                                      | $         | 44,001,144   |             |      | $ | 4,378,614    |            
|Restricted cash                                                                                                                                                           |                                                      |           | 2,185,321    |             |      |   |             |            
|Accounts receivable, net of allowance for doubtful accounts of
    $200,000 each year                                                                                     |                                                      |           | 4,388,889    |             |      |   | 3,577,144    |            
|Current portion of capital lease receivable                                                                                                                               |                                                      |           | 2,280,000    |             |      |   |             |            
|Note receivable                                                                                                                                                           |                                                      |           |             |             |      |   | 2,285,000    |            
|Prepaid and other current assets                                                                                                                                          |                                                      |           | 942,575      |             |      |   | 1,115,230    |            
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|                                                                                                                                                                          | Total current assets                                 |           |              | 53,797,929  |      |   |              | 11,355,988  |  
|Investment in unconsolidated entities, net                                                                                                                                |                                                      |           |             |             |      |   | 725,319      |            
|Restricted cash                                                                                                                                                           |                                                      |           | 5,641,531    |             |      |   | 789,476      |            
|Property and equipment, net                                                                                                                                               |                                                      |           | 123,406,321  |             |      |   | 53,897,716   |            
|Debt issuance costs, net of accumulated amortization of
    $1,007,734 and $121,691                                                                                       |                                                      |           | 8,797,296    |             |      |   | 175,363      |            
|Other assets                                                                                                                                                              |                                                      |           | 1,182,716    |             |      |   | 488,971      |            
|Capital lease receivable, net of current portion                                                                                                                          |                                                      |           | 6,080,001    |             |      |   |             |            
|Goodwill                                                                                                                                                                  |                                                      |           | 9,999,870    |             |      |   | 9,999,870    |            
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|                                                                                                                                                                          | Total assets                                         |           | $            | 208,905,664 |      |   | $            | 77,432,703  |  
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|                                                                                                                                                                         
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                                                                           
|Current liabilities:                                                                                                                                                      |                                                      |           |              |             |      |   |              |            
|Current portion of mortgage payable                                                                                                                                       |                                                      | $         | 692,570      |             |      | $ |             |            
|Current portion of notes payable                                                                                                                                          |                                                      |           | 4,489,945    |             |      |   | 9,194,145    |            
|Construction payables                                                                                                                                                     |                                                      |           | 427,752      |             |      |   | 1,363,554    |            
|Accounts payable and accrued expenses                                                                                                                                     |                                                      |           | 8,914,578    |             |      |   | 7,067,319    |            
|Current portion of capital lease obligations                                                                                                                              |                                                      |           | 1,037,459    |             |      |   | 1,799,726    |            
|Interest payable                                                                                                                                                          |                                                      |           | 2,680,882    |             |      |   | 1,952,978    |            
|Current portion of unearned interest                                                                                                                                      |                                                      |           | 724,686      |             |      |   |             |            
|Convertible debt                                                                                                                                                          |                                                      |           |             |             |      |   | 250,000      |            
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|                                                                                                                                                                          | Total current liabilities                            |           |              | 18,967,872  |      |   |              | 21,627,722  |  
|Mortgage payable, less current portion                                                                                                                                    |                                                      |           | 46,034,024   |             |      |   |             |            
|Convertible debt                                                                                                                                                          |                                                      |           | 53,972,558   |             |      |   | 36,895,239   |            
|Derivatives embedded within convertible debt, at estimated fair
    value                                                                                                 |                                                      |           | 20,116,618   |             |      |   |             |            
|Notes payable, less current portion                                                                                                                                       |                                                      |           | 23,664,142   |             |      |   | 31,311,894   |            
|Deferred rent                                                                                                                                                             |                                                      |           | 2,001,789    |             |      |   | 6,938,454    |            
|Unearned interest under capital lease receivables                                                                                                                         |                                                      |           | 898,778      |             |      |   |             |            
|Capital lease obligations, less current portion                                                                                                                           |                                                      |           | 434,441      |             |      |   | 105,886      |            
|Deferred revenue                                                                                                                                                          |                                                      |           | 1,994,598    |             |      |   | 2,686,396    |            
|Series H redeemable convertible preferred stock:
    $.001 par value, 294 shares issued and outstanding, at
    liquidation value                                         |                                                      |           | 616,705      |             |      |   | 586,718      |            
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|                                                                                                                                                                          | Total liabilities                                    |           |              | 168,701,525 |      |   |              | 100,152,309 |  
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|Minority interest                                                                                                                                                         |                                                      |           | 28,090       |             |      |   |             |            
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|Commitments and contingencies                                                                                                                                             |                                                      |           |             |             |      |   |             |            
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|Stockholders equity (deficit):                                                                                                                                           |                                                      |           |              |             |      |   |              |            
|Series G convertible preferred stock: $.001 par value,
    20 shares issued and outstanding                                                                               |                                                      |           |             |             |      |   | 1            |            
|Series I convertible preferred stock: $.001 par value,
    383 shares issued and outstanding
    (liquidation value of approximately $10.5 million and
    $10.0 million) |                                                      |           | 1            |             |      |   | 1            |            
|Common stock: $.001 par value, 100,000,000 shares
    authorized; 42,587,321 and 31,122,748 shares issued                                                                 |                                                      |           | 42,587       |             |      |   | 31,123       |            
|Common stock warrants                                                                                                                                                     |                                                      |           | 13,599,704   |             |      |   | 3,642,006    |            
|Common stock options                                                                                                                                                      |                                                      |           | 1,538,260    |             |      |   | 1,545,375    |            
|Additional paid-in capital                                                                                                                                                |                                                      |           | 279,063,085  |             |      |   | 213,876,605  |            
|Accumulated deficit                                                                                                                                                       |                                                      |           | (246,674,069 | )           |      |   | (236,814,717 | )          
|Accumulated other comprehensive loss                                                                                                                                      |                                                      |           | (172,882     | )           |      |   |             |            
|Treasury stock: 865,202 shares                                                                                                                                            |                                                      |           | (7,220,637   | )           |      |   |             |            
|Note receivable  related party                                                                                                                                           |                                                      |           |             |             |      |   | (5,000,000   | )          
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|                                                                                                                                                                          | Total stockholders equity (deficit)                 |           |              | 40,176,049  |      |   |              | (22,719,606 | )
|                                                                                                                                                                          |                                                      |           |              |             |      |  
|                                                                                                                                                                          | Total liabilities and stockholders equity (deficit) |           | $            | 208,905,664 |      |   | $            | 77,432,703  |  
|                                                                                                                                                                          |                                                      |           |              |             |      |  



F-4



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES







CONSOLIDATED STATEMENTS OF OPERATIONS


|                                             |                                                                          |                               |                          |             |            |             |             |             |            |             |             |             |             |             |  
|-------------------------------------------- | ------------------------------------------------------------------------ | ----------------------------- | ------------------------ | ----------- | ---------- | ----------- | ----------- | ----------- | ---------- | ----------- | ----------- | ----------- | ----------- | ----------- | -
|                                             |                                                                          | For the Year Ended March 31,  |                         
|                                             |                                                                          |                               |                         
|                                             |                                                                          | 2005                          |                          |             | 2004       |             |             | 2003        |           
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|Revenues                                     |                                                                          |                               |                          |             |            |             |             |             |            |             |             |            
|                                             | Data center  services                                                   |                               | $                        | 34,985,343  |            |             | $           | 17,034,377  |            |             | $           | 11,032,985  |            
|                                             | Data center  technology infrastructure build-out                        |                               |                          | 11,832,745  |            |             |             |            |            |             |             |            |            
|                                             | Construction contracts and fees                                          |                               |                          | 1,329,526   |            |             |             | 1,179,362   |            |             |             | 3,660,718   |            
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|                                             |                                                                          | Operating revenues            |                          |             | 48,147,614 |             |             |             | 18,213,739 |             |             |             | 14,693,703  |            
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|Expenses                                     |                                                                          |                               |                          |             |            |             |             |             |            |             |             |            
|                                             | Data center operations  services, excluding
    depreciation            |                               |                          | 26,377,861  |            |             |             | 16,413,021  |            |             |             | 11,234,833  |            
|                                             | Data center operations  technology infrastructure
    build-out         |                               |                          | 9,711,022   |            |             |             |            |            |             |             |            |            
|                                             | Construction contract expenses, excluding depreciation                   |                               |                          | 809,372     |            |             |             | 918,022     |            |             |             | 2,968,142   |            
|                                             | General and administrative                                               |                               |                          | 13,243,073  |            |             |             | 13,336,400  |            |             |             | 12,507,121  |            
|                                             | Sales and marketing                                                      |                               |                          | 5,402,886   |            |             |             | 3,424,411   |            |             |             | 4,200,858   |            
|                                             | Depreciation and amortization                                            |                               |                          | 5,697,071   |            |             |             | 4,698,292   |            |             |             | 5,092,749   |            
|                                             | Impairment of long-lived assets and goodwill                             |                               |                          | 813,073     |            |             |             |            |            |             |             | 4,020,300   |            
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|                                             |                                                                          | Operating expenses            |                          |             | 62,054,358 |             |             |             | 38,790,146 |             |             |             | 40,024,003  |            
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|                                             |                                                                          |                               | Loss from operations     |             |            | (13,906,744 | )           |             |            | (20,576,407 | )           |             |             | (25,330,300 | )
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|Other income (expenses)                      |                                                                          |                               |                          |             |            |             |             |             |            |             |             |            
|                                             | Change in fair value of derivatives embedded within convertible
    debt |                               |                          | 15,283,500  |            |             |             |            |            |             |             |            |            
|                                             | Gain on debt restructuring and extinguishment, net                       |                               |                          | 3,420,956   |            |             |             | 8,475,000   |            |             |             |            |            
|                                             | Inducement on debt conversion                                            |                               |                          |            |            |             |             |            |            |             |             | (4,871,245  | )          
|                                             | Interest expense                                                         |                               |                          | (15,493,610 | )          |             |             | (14,624,922 | )          |             |             | (11,007,683 | )          
|                                             | Interest income                                                          |                               |                          | 666,286     |            |             |             | 131,548     |            |             |             | 136,278     |            
|                                             | Other, net                                                               |                               |                          | 170,260     |            |             |             | 4,104,204   |            |             |             | (154,355    | )          
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|                                             |                                                                          | Total other income (expenses) |                          |             | 4,047,392  |             |             |             | (1,914,170 | )           |             |             | (15,897,005 | )          
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|                                             |                                                                          |                               | Loss before income taxes |             |            | (9,859,352  | )           |             |            | (22,490,577 | )           |             |             | (41,227,305 | )
|                                             | Income taxes                                                             |                               |                          |            |            |             |             |            |            |             |             |            |            
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|                                             |                                                                          |                               | Net loss                 |             |            | (9,859,352  | )           |             |            | (22,490,577 | )           |             |             | (41,227,305 | )
|Preferred dividend                           |                                                                          |                               | (915,250                 | )           |            |             | (1,158,244  | )           |            |             | (160,000    | )          
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|Net loss attributable to common shareholders |                                                                          | $                             | (10,774,602              | )           |            | $           | (23,648,821 | )           |            | $           | (41,387,305 | )          
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|Basic and diluted net loss per common share  |                                                                          | $                             | (0.31                    | )           |            | $           | (0.78       | )           |            | $           | (1.76       | )          
|                                             |                                                                          |                               |                          |             |            |             |             |             |           
|Weighted average common shares outstanding   |                                                                          |                               | 35,147,503               |             |            |             | 30,502,819  |             |            |             | 23,520,931  |            
|                                             |                                                                          |                               |                          |             |            |             |             |             |           



F-5



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES







CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS
EQUITY (DEFICIT)


|                                                                        |  |           |    |           |  |                  |   |              |  |          |            |   |  |   |        |   |  |   |            |  
|----------------------------------------------------------------------- |  | --------- | -- | --------- |  | ---------------- | - | ------------ |  | -------- | ---------- | - |  | - | ------ | - |  | - | ---------- | -
|                                                                        |  |           |    |           |  | Common Stock Par |   |             
|                                                                        |  | Preferred |    | Preferred |  | Value $.001      |   |             
|                                                                        |  | Stock     |    | Stock     |  |                  |   | Common Stock
|                                                                        |  | Series G  |    | Series I  |  | Issued Shares    |   | Amount       |  | Warrants
|                                                                        |  |           |    |           |  |                  |   |              |  |         
|Balance at March 31, 2002                                               |  | $         | 1  |           |  | $                |  |              |  |          | 20,088,225 |   |  | $ | 20,088 |   |  | $ | 2,879,413  |  
|Sale of Common stock                                                    |  |           |   |           |  |                  |  |              |  |          | 3,314,882  |   |  |   | 3,315  |   |  |   |           |  
|Retirement of treasury shares                                           |  |           |   |           |  |                  |  |              |  |          | (140,000   | ) |  |   | (140   | ) |  |   |           |  
|Warrants issued                                                         |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   | 1,221,979  |  
|Exercise of warrants                                                    |  |           |   |           |  |                  |  |              |  |          | 81,800     |   |  |   | 82     |   |  |   | (364,738   | )
|Warrants expired                                                        |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   | (1,879,073 | )
|Conversion of debt                                                      |  |           |   |           |  |                  |  |              |  |          | 2,282,779  |   |  |   | 2,283  |   |  |   |           |  
|Forfeiture of stock options                                             |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|Net loss                                                                |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|                                                                        |  |           |    |           |  |                  |   |              |  |          |            |   |  |   |        |   |  |   |            |  
|Balance at March 31, 2003                                               |  |           | 1  |           |  |                  |  |              |  |          | 25,627,686 |   |  |   | 25,628 |   |  |   | 1,857,581  |  
|Conversion of debt                                                      |  |           |   |           |  |                  |  |              |  |          | 5,121,183  |   |  |   | 5,121  |   |  |   |           |  
|Exercise of stock options                                               |  |           |   |           |  |                  |  |              |  |          | 7,727      |   |  |   | 8      |   |  |   |           |  
|Warrants issued                                                         |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   | 644,597    |  
|Exercise of warrants                                                    |  |           |   |           |  |                  |  |              |  |          | 950        |   |  |   | 1      |   |  |   | (3,971     | )
|Warrants expired                                                        |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   | (528,449   | )
|Beneficial conversion feature on issuance of convertible
    debentures |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|Stock Options issued                                                    |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   | 1,672,248  |  
|Series I Preferred stock issued                                         |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|Common stock issued                                                     |  |           |   |           |  |                  | 1 |              |  |          | 365,202    |   |  |   | 365    |   |  |   |           |  
|Net loss                                                                |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|                                                                        |  |           |    |           |  |                  |   |              |  |          |            |   |  |   |        |   |  |   |            |  
|Balance at March 31, 2004                                               |  |           | 1  |           |  |                  | 1 |              |  |          | 31,122,748 |   |  |   | 31,123 |   |  |   | 3,642,006  |  
|Sale of Common stock                                                    |  |           |   |           |  |                  |  |              |  |          | 6,301,778  |   |  |   | 6,302  |   |  |   |           |  
|Conversion of debt                                                      |  |           |   |           |  |                  |  |              |  |          | 5,524,927  |   |  |   | 5,525  |   |  |   |           |  
|Conversion of preferred stock                                           |  |           | (1 | )         |  |                  |  |              |  |          | 281,089    |   |  |   | 281    |   |  |   |           |  
|Exercise of stock options                                               |  |           |   |           |  |                  |  |              |  |          | 33,667     |   |  |   | 33     |   |  |   |           |  
|Warrants issued                                                         |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   | 10,365,483 |  
|Exercise of warrants                                                    |  |           |   |           |  |                  |  |              |  |          | 35,162     |   |  |   | 35     |   |  |   | (261,640   | )
|Warrants expired                                                        |  |           |   |           |  |                  |   |              |  |          |           |   |  |   |       |   |  |   | (146,145   | )
|Preferred stock issuance costs                                          |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|Dividends on preferred stock                                            |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|Issuance of common stock in lieu of cash  preferred
    stock dividend |  |           |   |           |  |                  |   |              |  |          | 61,685     |   |  |   | 62     |   |  |   |           |  
|Stock tendered in payment of loan and retired                           |  |           |   |           |  |                  |  |              |  |          | (773,735   | ) |  |   | (774   | ) |  |   |           |  
|Net assets acquired from NAP Madrid                                     |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|Forfeiture of stock options                                             |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|Foreign currency translation adjustment                                 |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|Net loss                                                                |  |           |   |           |  |                  |  |              |  |          |           |   |  |   |       |   |  |   |           |  
|                                                                        |  |           |    |           |  |                  |   |              |  |          |            |   |  |   |        |   |  |   |            |  
|Balance at March 31, 2005                                               |  | $         |   |           |  | $                | 1 |              |  |          | 42,587,321 |   |  | $ | 42,587 |   |  | $ | 13,599,704 |  
|                                                                        |  |           |    |           |  |                  |   |              |  |          |            |   |  |   |        |   |  |   |            |  

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                        |  |               |           |               |  |            |          |             |  |               |             |          |  |            |              |   |  |   |          |   |  |   |            |   |  |   |            |  
|----------------------------------------------------------------------- |  | ------------- | --------- | ------------- |  | ---------- | -------- | ----------- |  | ------------- | ----------- | -------- |  | ---------- | ------------ | - |  | - | -------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                        |  |               |           |               |  |            |          |             |  | Accumulated   |             |          |  | Notes     
|                                                                        |  |               |           | Common        |  | Additional |          |             |  | Other         |             |          |  | Receivable
|                                                                        |  | Common        |           | Stock         |  | Paid-In    |          | Accumulated |  | Comprehensive |             | Treasury |  | Related   
|                                                                        |  | Stock Options |           | Subscriptions |  | Capital    |          | Deficit     |  | Loss          |             | Stock    |  | Party     
|                                                                        |  |               |           |               |  |            |          |             |  |               |             |          |  |           
|Balance at March 31, 2002                                               |  | $             | 1,566,801 |               |  | $          | 950,000  |             |  | $             | 125,832,913 |          |  | $          | (173,096,835 | ) |  | $ |         |   |  | $ | (2,428,125 | ) |  | $ | (5,000,000 | )
|Sale of Common stock                                                    |  |               |          |               |  |            | (950,000 | )           |  |               | 21,424,995  |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Retirement of treasury shares                                           |  |               |          |               |  |            |         |             |  |               | (2,427,985  | )        |  |            |             |   |  |   |         |   |  |   | 2,428,125  |   |  |   |           |  
|Warrants issued                                                         |  |               |          |               |  |            |         |             |  |               |            |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Exercise of warrants                                                    |  |               |          |               |  |            |         |             |  |               | 372,836     |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Warrants expired                                                        |  |               |          |               |  |            |         |             |  |               | 1,879,073   |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Conversion of debt                                                      |  |               |          |               |  |            |         |             |  |               | 22,331,599  |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Forfeiture of stock options                                             |  |               | (21,426   | )             |  |            |         |             |  |               | 21,426      |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Net loss                                                                |  |               |          |               |  |            |         |             |  |               |            |          |  |            | (41,227,305  | ) |  |   |          |   |  |   |           |   |  |   |            |  
|                                                                        |  |               |           |               |  |            |          |             |  |               |             |          |  |            |              |   |  |   |          |   |  |   |            |   |  |   |            |  
|Balance at March 31, 2003                                               |  |               | 1,545,375 |               |  |            |         |             |  |               | 169,434,857 |          |  |            | (214,324,140 | ) |  |   |         |   |  |   |           |   |  | $ | (5,000,000 | )
|Conversion of debt                                                      |  |               |          |               |  |            |         |             |  |               | 24,303,755  |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Exercise of stock options                                               |  |               |          |               |  |            |         |             |  |               | 38,397      |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Warrants issued                                                         |  |               |          |               |  |            |         |             |  |               | (309,998    | )        |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Exercise of warrants                                                    |  |               |          |               |  |            |         |             |  |               | 8,529       |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Warrants expired                                                        |  |               |          |               |  |            |         |             |  |               | 528,449     |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Beneficial conversion feature on issuance of convertible
    debentures |  |               |          |               |  |            |         |             |  |               | 9,500,000   |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Stock Options issued                                                    |  |               |          |               |  |            |         |             |  |               | 2,185,463   |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Series I Preferred stock issued                                         |  |               |          |               |  |            |         |             |  |               | 8,187,518   |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Common stock issued                                                     |  |               |          |               |  |            |         |             |  |               | (365        | )        |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Net loss                                                                |  |               |          |               |  |            |         |             |  |               |            |          |  |            | (22,490,577  | ) |  |   |         |   |  |   |           |   |  |   |           |  
|                                                                        |  |               |           |               |  |            |          |             |  |               |             |          |  |            |              |   |  |   |          |   |  |   |            |   |  |   |            |  
|Balance at March 31, 2004                                               |  |               | 1,545,375 |               |  |            |         |             |  |               | 213,876,605 |          |  |            | (236,814,717 | ) |  |   |         |   |  |   |           |   |  | $ | (5,000,000 | )
|Sale of Common stock                                                    |  |               |          |               |  |            |         |             |  |               | 42,587,192  |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Conversion of debt                                                      |  |               |          |               |  |            |         |             |  |               | 28,030,500  |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Conversion of preferred stock                                           |  |               |          |               |  |            |         |             |  |               | 1,448       |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Exercise of stock options                                               |  |               |          |               |  |            |         |             |  |               | 122,720     |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Warrants issued                                                         |  |               |          |               |  |            |         |             |  |               |            |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Exercise of warrants                                                    |  |               |          |               |  |            |         |             |  |               | 263,603     |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Warrants expired                                                        |  |               |          |               |  |            |         |             |  |               | 146,145     |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Preferred stock issuance costs                                          |  |               |          |               |  |            |         |             |  |               | (587,858    | )        |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Dividends on preferred stock                                            |  |               |          |               |  |            |         |             |  |               | (795,249    | )        |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Issuance of common stock in lieu of cash  preferred
    stock dividend |  |               |          |               |  |            |         |             |  |               | 361,997     |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Stock tendered in payment of loan and retired                           |  |               |          |               |  |            |         |             |  |               | (4,951,133  | )        |  |            |             |   |  |   |         |   |  |   |           |   |  |   | 5,000,000  |  
|Net assets acquired from NAP Madrid                                     |  |               |          |               |  |            |         |             |  |               |            |          |  |            |             |   |  |   |         |   |  |   | (7,220,637 | ) |  |   |           |  
|Forfeiture of stock options                                             |  |               | (7,115    | )             |  |            |         |             |  |               | 7,115       |          |  |            |             |   |  |   |         |   |  |   |           |   |  |   |           |  
|Foreign currency translation adjustment                                 |  |               |          |               |  |            |         |             |  |               |            |          |  |            |             |   |  |   | (172,882 | ) |  |   |           |   |  |   |           |  
|Net loss                                                                |  |               |          |               |  |            |         |             |  |               |            |          |  |            | (9,859,352   | ) |  |   |         |   |  |   |           |   |  |   |           |  
|                                                                        |  |               |           |               |  |            |          |             |  |               |             |          |  |            |              |   |  |   |          |   |  |   |            |   |  |   |            |  
|Balance at March 31, 2005                                               |  | $             | 1,538,260 |               |  | $          |         |             |  | $             | 279,063,085 |          |  | $          | (246,674,069 | ) |  | $ | (172,882 | ) |  | $ | (7,220,637 | ) |  | $ |           |  
|                                                                        |  |               |           |               |  |            |          |             |  |               |             |          |  |            |              |   |  |   |          |   |  |   |            |   |  |   |            |  



F-6



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES







CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                      |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |            |            |             |             |           |           |             |  
|----------------------------------------------------- | ------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------- | -------------------------------------------------- | ----------------------------------------- | ----------- | ---------- | ----------- | ----------- | ---------- | ---------- | ----------- | ----------- | --------- | --------- | ----------- | -
|                                                      |                                                                                | For the Year Ended March 31,                                                            |                                                   
|                                                      |                                                                                |                                                                                         |                                                   
|                                                      |                                                                                | 2005                                                                                    |                                                    |                                           | 2004        |            |             | 2003        |           
|                                                      |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |           
|Cash flows from operating activities:                 |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |            |            |             |            
|                                                      | Net loss                                                                       |                                                                                         | $                                                  | (9,859,352                                | )           |            | $           | (22,490,577 | )          |            | $           | (41,227,305 | )        
|                                                      | Adjustments to reconcile net loss to net cash used in operating
    activities |                                                                                         |                                                    |                                           |             |            |             |             |            |            |             |             |          
|                                                      |                                                                                | Depreciation and amortization of long-lived assets                                      |                                                    |                                           | 5,697,071   |            |             |             | 4,698,292  |            |             |             | 5,092,749 |          
|                                                      |                                                                                | Change in estimated fair value of embedded derivatives                                  |                                                    |                                           | (15,283,500 | )          |             |             |           |            |             |             |          |          
|                                                      |                                                                                | Accretion on convertible debt and mortgage payable                                      |                                                    |                                           | 3,303,168   |            |             |             |           |            |             |             |          |          
|                                                      |                                                                                | Amortization of beneficial conversion feature on issuance of
    convertible debentures |                                                    |                                           | 904,761     |            |             |             | 8,595,239  |            |             |             |          |          
|                                                      |                                                                                | Amortization of debt issue costs                                                        |                                                    |                                           | 1,402,010   |            |             |             | 130,483    |            |             |             | 908,321   |          
|                                                      |                                                                                | Provision for bad debt                                                                  |                                                    |                                           | 317,603     |            |             |             | 167,135    |            |             |             | 197,774   |          
|                                                      |                                                                                | Equity issued for services                                                              |                                                    |                                           |            |            |             |             |           |            |             |             | 313,968   |          
|                                                      |                                                                                | Impairment of long-lived assets                                                         |                                                    |                                           | 813,073     |            |             |             |           |            |             |             | 4,020,300 |          
|                                                      |                                                                                | Stock-based compensation                                                                |                                                    |                                           |            |            |             |             | 2,185,463  |            |             |             |          |          
|                                                      |                                                                                | Inducement on debt conversion expense                                                   |                                                    |                                           |            |            |             |             |           |            |             |             | 4,871,245 |          
|                                                      |                                                                                | Gain on debt restructuring and extinguishment                                           |                                                    |                                           | (3,626,956  | )          |             |             | (8,475,000 | )          |             |             |          |          
|                                                      |                                                                                | Other, net                                                                              |                                                    |                                           | (44,425     | )          |             |             | 74,034     |            |             |             | 312,252   |          
|                                                      |                                                                                | Warrants issued for services                                                            |                                                    |                                           | 202,550     |            |             |             |           |            |             |             |          |          
|                                                      |                                                                                | (Increase) decrease in:                                                                 |                                                    |                                           |             |            |             |             |            |            |             |             |           |          
|                                                      |                                                                                |                                                                                         | Accounts receivable                                |                                           |             | (1,129,348 | )           |             |            | (3,220,339 | )           |             |           | 2,263,100 |            
|                                                      |                                                                                |                                                                                         | Capital lease receivable, net of unearned interest |                                           |             | (6,736,537 | )           |             |            |           |             |             |           |          |            
|                                                      |                                                                                |                                                                                         | Restricted cash                                    |                                           |             | (1,355,975 | )           |             |            |           |             |             |           |          |            
|                                                      |                                                                                |                                                                                         | Other assets                                       |                                           |             | (984,947   | )           |             |            | 279,530    |             |             |           | (123,369  | )          
|                                                      |                                                                                | Increase (decrease) in:                                                                 |                                                    |                                           |             |            |             |             |            |            |             |             |           |          
|                                                      |                                                                                |                                                                                         | Accounts payable and accrued expenses              |                                           |             | (1,857,528 | )           |             |            | (1,166,016 | )           |             |           | 649,006   |            
|                                                      |                                                                                |                                                                                         | Interest payable                                   |                                           |             | 1,001,428  |             |             |            | (1,526,664 | )           |             |           | 2,947,252 |            
|                                                      |                                                                                |                                                                                         | Deferred revenue                                   |                                           |             | (691,798   | )           |             |            | 1,715,246  |             |             |           | 155,324   |            
|                                                      |                                                                                |                                                                                         | Net assets/liabilities of discontinued operations  |                                           |             |           |             |             |            | (1,170,980 | )           |             |           | 175,521   |            
|                                                      |                                                                                |                                                                                         | Construction payables                              |                                           |             | (820,146   | )           |             |            |           |             |             |           |          |            
|                                                      |                                                                                |                                                                                         | Deferred rent                                      |                                           |             | 4,387,360  |             |             |            | 4,327,831  |             |             |           | 1,135,448 |            
|                                                      |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |           
|                                                      |                                                                                |                                                                                         |                                                    | Net cash used in operating activities     |             |            | (24,361,488 | )           |            |            | (15,876,323 | )           |           |           | (18,308,414 | )
|                                                      |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |           
|Cash flows from investing activities:                 |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |            |            |             |            
|                                                      | Restricted cash                                                                |                                                                                         |                                                    | (4,000,000                                | )           |            |             | (20,571     | )          |            |             | (11,332     | )        
|                                                      | Purchase of property and equipment                                             |                                                                                         |                                                    | (10,508,261                               | )           |            |             | (4,054,741  | )          |            |             | (994,892    | )        
|                                                      | Investment in unconsolidated entities                                          |                                                                                         |                                                    |                                          |             |            |             |            |            |            |             | (337,812    | )        
|                                                      | Acquisition of a majority interest in NAP Madrid                               |                                                                                         |                                                    | (2,537,627                                | )           |            |             |            |            |            |             |            |          
|                                                      | Acquisition of TECOTA, net of cash acquired                                    |                                                                                         |                                                    | (73,936,374                               | )           |            |             |            |            |            |             |            |          
|                                                      | Acquisition of interest rate cap agreement                                     |                                                                                         |                                                    | (100,000                                  | )           |            |             |            |            |            |             |            |          
|                                                      | Proceeds from notes receivable                                                 |                                                                                         |                                                    | 50,000                                    |             |            |             |            |            |            |             |            |          
|                                                      |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |           
|                                                      |                                                                                |                                                                                         |                                                    | Net cash used in investing activities     |             |            | (91,032,262 | )           |            |            | (4,075,312  | )           |           |           | (1,344,036  | )
|                                                      |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |           
|Cash flows from financing activities:                 |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |            |            |             |            
|Increase in restricted cash                           |                                                                                |                                                                                         | (1,681,401                                         | )                                         |             |            |            |             |            |            |            |            
|Proceeds from mortgage loan and warrants              |                                                                                |                                                                                         | 49,000,000                                         |                                           |             |            | 750,000     |             |            |            | 10,032,220  |            
|Issuance of senior secured notes and warrants         |                                                                                |                                                                                         | 30,000,000                                         |                                           |             |            |            |             |            |            |            |            
|Increase (decrease) in construction payables          |                                                                                |                                                                                         |                                                   |                                           |             |            | 1,215,505   |             |            |            | (2,948,554  | )          
|Payments on loans                                     |                                                                                |                                                                                         | (36,667,782                                        | )                                         |             |            | (2,996,517  | )           |            |            | (2,295,138  | )          
|Issuance of convertible debt                          |                                                                                |                                                                                         | 86,257,312                                         |                                           |             |            | 19,550,000  |             |            |            |            |            
|Payments on convertible debt                          |                                                                                |                                                                                         | (10,131,800                                        | )                                         |             |            | (1,605,000  | )           |            |            |            |            
|Debt issuance costs                                   |                                                                                |                                                                                         | (6,007,370                                         | )                                         |             |            |            |             |            |            |            |            
|Proceeds from issuance of common stock                |                                                                                |                                                                                         | 42,593,594                                         |                                           |             |            |            |             |            |            |            |            
|Proceeds from sale of preferred stock                 |                                                                                |                                                                                         | 2,131,800                                          |                                           |             |            | 7,309,765   |             |            |            |            |            
|Preferred stock issuance costs                        |                                                                                |                                                                                         | (587,860                                           | )                                         |             |            |            |             |            |            |            |            
|Payments of preferred stock dividends                 |                                                                                |                                                                                         | (433,253                                           | )                                         |             |            |            |             |            |            |            |            
|Other borrowings                                      |                                                                                |                                                                                         | 850,262                                            |                                           |             |            |            |             |            |            |            |            
|Payments under capital lease obligations              |                                                                                |                                                                                         | (433,712                                           | )                                         |             |            | (1,334,325  | )           |            |            | (975,433    | )          
|Proceeds from exercise of stock options and warrants  |                                                                                |                                                                                         | 124,760                                            |                                           |             |            | 32,631      |             |            |            | 9,180       |            
|Sale of common stock and warrants                     |                                                                                |                                                                                         |                                                   |                                           |             |            |            |             |            |            | 16,955,287  |            
|Proceeds from exercise of preferred stock conversions |                                                                                |                                                                                         | 1,730                                              |                                           |             |            |            |             |            |            |            |            
|                                                      |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |           
|                                                      |                                                                                |                                                                                         |                                                    | Net cash provided by financing activities |             |            | 155,016,280 |             |            |            | 22,922,059  |             |           |           | 20,777,562  |  
|                                                      |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |           
|                                                      |                                                                                |                                                                                         |                                                    | Net increase in cash                      |             |            | 39,622,530  |             |            |            | 2,970,424   |             |           |           | 1,125,112   |  
|                                                      | Cash and cash equivalents at beginning of period                               |                                                                                         |                                                    | 4,378,614                                 |             |            |             | 1,408,190   |            |            |             | 283,078     |          
|                                                      |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |           
|                                                      | Cash and cash equivalents at end of period                                     |                                                                                         | $                                                  | 44,001,144                                |             |            | $           | 4,378,614   |            |            | $           | 1,408,190   |          
|                                                      |                                                                                |                                                                                         |                                                    |                                           |             |            |             |             |           



F-7



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                          
|-- | -------------------------
|1. | Business and Organization





|   |                                           
|-- | ------------------------------------------
|2. | Summary of Significant Accounting Policies







| |               
| | --------------
| | Loss per share









| |                 
| | ----------------
| | Use of estimates





| |                  
| | -----------------
| | Reclassifications



F-8



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                          
| | -------------------------
| | Cash and cash equivalents





| |                
| | ---------------
| | Restricted cash





| |                       
| | ----------------------
| | Property and equipment



|                                 |  |  |               | 
|-------------------------------- |  |  | ------------- | 
|Building                         |  |  | 40 years      | 
|Improvements                     |  |  | 5 - 20  years | 
|Computer software                |  |  | 3 years       | 
|Furniture, fixture and equipment |  |  | 5 - 20  years | 





| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | Goodwill and Impairment of long-lived assets and
    long-lived assets to be disposed of







F-9



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |             
| | ------------
| | Rent expense





| |                                    
| | -----------------------------------
| | Fair value of financial instruments





|                                           |  |                |            |  |                |   |            |            |  |   |            |  |  |   |            | 
|------------------------------------------ |  | -------------- | ---------- |  | -------------- | - | ---------- | ---------- |  | - | ---------- |  |  | - | ---------- | 
|                                           |  | March 31, 2005 |            |  | March 31, 2004 |  
|                                           |  |                |            |  |                |  
|                                           |  | Book Value     |            |  | Fair Value     |   |            | Book Value |  |   | Fair Value | 
|                                           |  |                |            |  |                |   |            |            |  |   |            | 
|Mortgage payable including current portion |  | $              | 46,726,594 |  |                | $ | 48,822,510 |            |  | $ |           |  |  | $ |           | 
|Notes payable, including current portion   |  |                | 28,154,087 |  |                |   | 25,572,448 |            |  |   | 40,506,039 |  |  |   | 30,978,196 | 
|Convertible debt                           |  |                | 53,972,558 |  |                |   | 75,350,377 |            |  |   | 37,145,239 |  |  |   | 36,895,239 | 







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





F-10



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
















| |             
| | ------------
| | Income taxes



F-11



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                              
| | -----------------------------
| | Beneficial conversion feature





| |            
| | -----------
| | Derivatives













| |                           
| | --------------------------
| | Significant concentrations



F-12



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Stock-based compensation





|                                                                               |  |                             |             |   |      |   |             |      |  |   |             |  
|------------------------------------------------------------------------------ |  | --------------------------- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                               |  | For the Year Ended March 31 |            
|                                                                               |  |                             |            
|                                                                               |  | 2005                        |             |   | 2004 |   |             | 2003 | 
|                                                                               |  |                             |             |   |      |   |             |      | 
|Net loss attributable to common shareholders as reported                       |  | $                           | (10,774,602 | ) |      | $ | (23,648,821 | )    |  | $ | (41,387,305 | )
|Stock-based compensation expense included in net loss                          |  |                             |            |   |      |   | 2,185,463   |      |  |   |            |  
|Stock-based compensation expense if the fair value method had
    been adopted |  |                             | (2,112,914  | ) |      |   | (3,288,790  | )    |  |   | (4,028,184  | )
|                                                                               |  |                             |             |   |      |   |             |      | 
|Pro forma net loss attributable to common shareholders                         |  |                             | (12,887,516 | ) |      |   | (24,752,148 | )    |  |   | (45,415,489 | )
|                                                                               |  |                             |             |   |      |   |             |      | 
|Loss per common share  as reported                                            |  | $                           | (0.31       | ) |      | $ | (0.78       | )    |  | $ | (1.76       | )
|                                                                               |  |                             |             |   |      |   |             |      | 
|Loss per common share  pro forma                                              |  |                             | (0.37       | ) |      |   | (0.81       | )    |  |   | (1.93       | )
|                                                                               |  |                             |             |   |      |   |             |      | 



|                   |  |      |               |  |      |  |               |      |  |  |               | 
|------------------ |  | ---- | ------------- |  | ---- |  | ------------- | ---- |  |  | ------------- | 
|                   |  | 2005 |               |  | 2004 |  |               | 2003 | 
|                   |  |      |               |  |      |  |               |      | 
|Risk Free Rate     |  |      | 2.87% - 4.33% |  |      |  | 2.14% - 3.50% |      |  |  | 2.65% - 4.84% | 
|Volatility         |  |      | 126% - 137%   |  |      |  | 150%          |      |  |  | 135% - 150%   | 
|Expected Life      |  |      | 5 years       |  |      |  | 5 years       |      |  |  | 5 years       | 
|Expected Dividends |  |      | 0%            |  |      |  | 0%            |      |  |  | 0%            | 



| |               
| | --------------
| | Stock warrants





| |                  
| | -----------------
| | Minority interest





| |                         
| | ------------------------
| | Other comprehensive loss



F-13



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                            
| | ---------------------------
| | Recent accounting standards











|   |             
|-- | ------------
|3. | Acquisitions



| |       
| | ------
| | TECOTA



F-14



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                             |  |   |             |  
|------------------------------------------------------------ |  | - | ----------- | -
|Assets                                                      
|Cash                                                         |  | $ | 1,574,000   |  
|Other current assets                                         |  |   | 383,000     |  
|Land and building                                            |  |   | 64,973,000  |  
|Liabilities                                                 
|Accounts payable                                             |  |   | (462,000    | )
|                                                             |  |   |            
|Fair value of net assets acquired                            |  |   | 66,468,000  |  
|Adjustments:                                                 |  |   |             |  
|Write off of Terremarks deferred rent liability to TECOTA   |  |   | 9,324,000   |  
|Terremarks partnership interest in TECOTA under cost method |  |   | (392,000    | )
|Repayment of mortgage                                        |  |   | (35,736,000 | )
|                                                             |  |   |            
|Cash paid to former TECOTA partners                          |  | $ | 39,664,000  |  
|                                                             |  |   |            



|                                            |  |      |            |   |      |   |            |  
|------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                            |  | 2004 |            |   | 2003 |  
|                                            |  |      |            |   |      |  
|Revenues                                    |  | $    | 50,200,000 |   |      | $ | 20,900,000 |  
|                                            |  |      |            |   |      |  
|Net loss                                    |  | $    | 11,800,000 |   |      | $ | 28,500,000 |  
|                                            |  |      |            |   |      |  
|Basic and diluted net loss per common share |  | $    | (0.35      | ) |      | $ | (0.94      | )
|                                            |  |      |            |   |      |  





| |           
| | ----------
| | NAP Madrid



F-15



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                      |  |   |            |  
|------------------------------------- |  | - | ---------- | -
|Assets                                |  |   |            |  
|Equipment                             |  | $ | 204,040    |  
|Terremark stock                       |  |   | 7,220,637  |  
|Liabilities                           |  |   |            |  
|Notes payable, current                |  |   | (3,708,705 | )
|Accounts payable and accrued expenses |  |   | (677,444   | )
|Minority Interests                    |  |   | (167,466   | )
|                                      |  |   |           
|Net Assets                            |  | $ | 2,871,062  |  
|Previous equity ownership             |  |   | (333,435   | )
|                                      |  |   |           
|Cash paid for acquisition             |  | $ | 2,537,627  |  
|                                      |  |   |           



|   |                             
|-- | ----------------------------
|4. | Restricted cash consists of:

|                                              |  |           |            |   |      |   |         | 
|--------------------------------------------- |  | --------- | ---------- | - | ---- | - | ------- | 
|                                              |  | March 31, |           
|                                              |  |           |           
|                                              |  | 2005      |            |   | 2004 |  
|                                              |  |           |            |   |      |  
|Capital improvements reserve                  |  | $         | 4,000,000  |   |      | $ |        | 
|Security deposits under bank loan agreement   |  |           | 1,681,400  |   |      |   |        | 
|Security deposits under operating leases      |  |           | 1,641,531  |   |      |   | 789,476 | 
|Escrow deposits under mortgage loan agreement |  |           | 503,921    |   |      |   |        | 
|                                              |  |           |            |   |      |  
|                                              |  |           | 7,826,852  |   |      |   | 789,476 | 
|Less: current portion                         |  |           | (2,185,321 | ) |      |   |        | 
|                                              |  |           |            |   |      |  
|                                              |  | $         | 5,641,531  |   |      | $ | 789,476 | 
|                                              |  |           |            |   |      |  

F-16



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                       
|-- | ----------------------
|5. | Property and Equipment



|                                                                                           |  |           |             |   |      |   |             |  
|------------------------------------------------------------------------------------------ |  | --------- | ----------- | - | ---- | - | ----------- | -
|                                                                                           |  | March 31, |            
|                                                                                           |  |           |            
|                                                                                           |  | 2005      |             |   | 2004 |  
|                                                                                           |  |           |             |   |      |  
|Land                                                                                       |  | $         | 10,393,877  |   |      | $ |            |  
|Building and improvements                                                                  |  |           | 96,643,573  |   |      |   | 50,992,419  |  
|Furniture, equipment and software, including $958,230 and
    $4,530,101 in capital leases |  |           | 34,479,387  |   |      |   | 15,472,428  |  
|                                                                                           |  |           |             |   |      |  
|                                                                                           |  |           | 141,516,837 |   |      |   | 66,464,847  |  
|Less accumulated depreciation, including $192,959 and $3,205,036
    in capital leases     |  |           | (18,110,516 | ) |      |   | (12,650,402 | )
|                                                                                           |  |           |             |   |      |  
|                                                                                           |  |           | 123,406,321 |   |      |   | 53,814,445  |  
|Equipment held for installation                                                            |  |           |            |   |      |   | 83,271      |  
|                                                                                           |  |           |             |   |      |  
|                                                                                           |  | $         | 123,406,321 |   |      | $ | 53,897,716  |  
|                                                                                           |  |           |             |   |      |  





|   |                 
|-- | ----------------
|6. | Mortgage Payable





F-17



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                 
|-- | ----------------
|7. | Convertible Debt



|                                                                                                                                                                                                                                                         |  |           |            |  |      |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ---------- |  | ---- | - | ---------- | -
|                                                                                                                                                                                                                                                         |  | March 31, |           
|                                                                                                                                                                                                                                                         |  |           |           
|                                                                                                                                                                                                                                                         |  | 2005      |            |  | 2004 |  
|                                                                                                                                                                                                                                                         |  |           |            |  |      |  
|Senior Convertible Notes, face value of $86.25 million, due
    June 15, 2009, and convertible into shares of the
    Companys common stock at $12.50 per share. Interest
    at 9% is payable semi-annually, on December 15 and June 15                |  | $         | 53,972,558 |  |      | $ |           |  
|Subordinated secured 10% convertible debentures due
    April 30, 2006; converted into shares of the Companys
    common stock at $0.50 per share during May 2004 (face value
    of $25.0 million)                                                     |  |           |           |  |      |   | 24,095,239 |  
|Subordinated secured 13% convertible debentures due
    December 31, 2005; converted into shares of the
    Companys common stock at a weighted average conversion
    price of $21.40 per share during June 2004                                       |  |           |           |  |      |   | 10,300,000 |  
|Subordinated secured 13.125% convertible debentures due
    August 30, 2004; repaid or converted into shares of the
    Companys common stock at a weighted average conversion
    price of $6.60 per share during the period from May to July
    2004 |  |           |           |  |      |   | 2,750,000  |  
|                                                                                                                                                                                                                                                         |  |           |            |  |      |  
|                                                                                                                                                                                                                                                         |  | $         | 53,972,558 |  |      | $ | 37,145,239 |  
|Less: Current portion of convertible debt                                                                                                                                                                                                                |  |           |           |  |      |   | (250,000   | )
|                                                                                                                                                                                                                                                         |  |           |            |  |      |  
|Convertible debentures, less current portion                                                                                                                                                                                                             |  | $         | 53,972,558 |  |      | $ | 36,895,239 |  
|                                                                                                                                                                                                                                                         |  |           |            |  |      |  





F-18



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














|   |            
|-- | -----------
|8. | Derivatives







F-19



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | 5.0% per annum, starting January 4, 2005;                                                                       
|
| |  | 5.75% per annum, starting August 11, 2005;                                                                      
|
| |  | 6.5% per annum, starting February 11, 2006;                                                                     
|
| |  | 7.25% per annum, starting August 11, 2006; and                                                                  
|
| |  | 7.72% per annum, starting February 11, 2007 until the
    termination date of the rate cap protection agreement.



|   |              
|-- | -------------
|9. | Notes Payable







| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| |  | incur more debt;                                                              
|
| |  | pay dividends, redeem or repurchase its stock or make other
    distributions;
|
| |  | make acquisitions or investments;                                             
|
| |  | enter into transactions with affiliates;                                      
|
| |  | merge or consolidate with others;                                             
|
| |  | dispose of assets or use asset sale proceeds;                                 
|
| |  | create liens on our assets; and                                               
|
| |  | extend credit.                                                                





F-20



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                               
|--- | ------------------------------
|10. | Stockholders Equity (Deficit)



| |                
| | ---------------
| | Preferred stock



| |                                                
| | -----------------------------------------------
| | Series H redeemable convertible preferred stock





| |                                     
| | ------------------------------------
| | Series I convertible preferred stock





| |             
| | ------------
| | Common stock



| |                         
| | ------------------------
| | Issuance of Common Stock







F-21



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                             
| | ----------------------------
| | Conversion of debt to equity







| |                                                       
| | ------------------------------------------------------
| | Conversion of preferred stock and debt to common stock

















| |                                
| | -------------------------------
| | Grant of employee stock options



F-22



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                          
| | -------------------------
| | Exercise of stock options







| |                     
| | --------------------
| | Exercise of warrants









| |                                  
| | ---------------------------------
| | Stock tendered in payment of loan





| |                         
| | ------------------------
| | Preferred stock dividend





F-23



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |               
| | --------------
| | Stock Warrants



|              |  |                  |           |  |          |  |           |                 |  |               |  |   |            | 
|------------- |  | ---------------- | --------- |  | -------- |  | --------- | --------------- |  | ------------- |  | - | ---------- | 
|              |  |                  |           |  |          |  |           | Estimated       | 
|              |  | No. of shares    |           |  | Exercise |  |           |                 |  | Fair Value at | 
|Issuance Date |  | able to purchase |           |  | Price    |  |           | Expiration Date |  | Issuance      | 
|              |  |                  |           |  |          |  |           |                 |  |               | 
|March 2005    |  |                  | 10,000    |  |          |  | 7.20      |                 |  | March 2007    |  | $ | 29,900     | 
|December 2004 |  |                  | 2,000,000 |  |          |  | 6.80-8.80 |                 |  | March 2009    |  |   | 8,782,933  | 
|June 2004     |  |                  | 181,579   |  |          |  | 9.50      |                 |  | June 2007     |  |   | 1,380,000  | 
|April 2004    |  |                  | 5,000     |  |          |  | 7.00      |                 |  | April 2009    |  |   | 32,450     | 
|March 2004    |  |                  | 285,397   |  |          |  | 9.00      |                 |  | March 2009    |  |   | 1,672,248  | 
|February 2004 |  |                  | 1,210     |  |          |  | 9.00      |                 |  | February 2009 |  |   | 8,652      | 
|January 2004  |  |                  | 5,000     |  |          |  | 7.10      |                 |  | January 2009  |  |   | 33,750     | 
|October 2003  |  |                  | 5,000     |  |          |  | 7.30      |                 |  | October 2008  |  |   | 33,700     | 
|July 2003     |  |                  | 10,000    |  |          |  | 6.20      |                 |  | July 2008     |  |   | 114,400    | 
|June 2003     |  |                  | 30,000    |  |          |  | 5.00      |                 |  | June 2006     |  |   | 220,200    | 
|June 2003     |  |                  | 25,000    |  |          |  | 7.50      |                 |  | June 2006     |  |   | 177,750    | 
|March 2003    |  |                  | 30,000    |  |          |  | 7.50      |                 |  | March 2007    |  |   | 110,400    | 
|December 2002 |  |                  | 30,000    |  |          |  | 7.50      |                 |  | March 2007    |  |   | 110,400    | 
|July 2002     |  |                  | 10,000    |  |          |  | 5.40      |                 |  | July 2005     |  |   | 20,900     | 
|April 2002    |  |                  | 27,000    |  |          |  | 4.00      |                 |  | March 2007    |  |   | 99,360     | 
|June 2001     |  |                  | 1,300     |  |          |  | 17.20     |                 |  | June 2011     |  |   | 22,490     | 
|January 2002  |  |                  | 950       |  |          |  | 4.80      |                 |  | June 2011     |  |   | 3,971      | 
|March 2001    |  |                  | 30,000    |  |          |  | 20.00     |                 |  | March 2006    |  |   | 352,200    | 
|November 2000 |  |                  | 25,000    |  |          |  | 27.60     |                 |  | November 2008 |  |   | 394,000    | 
|              |  |                  |           |  |          |  |           |                 |  |               | 
|              |  |                  | 2,712,436 |  |          |  |           |                 |  |               |  | $ | 13,599,704 | 
|              |  |                  |           |  |          |  |           |                 |  |               | 







| |              
| | -------------
| | Stock Options



F-24



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|                                                                  |                     |        |           |          |                |   |       |       | 
|----------------------------------------------------------------- | ------------------- | ------ | --------- | -------- | -------------- | - | ----- | ----- | 
|                                                                  |                     |        |           | Weighted |               
|                                                                  |                     |        |           | Average  |               
|                                                                  |                     | Number |           |          | Exercise Price |  
|                                                                  |                     |        |           |          |                |  
|Outstanding at March 31, 2003                                     |                     |        | 1,486,396 |          |                | $ | 13.70 |      
|Granted                                                           |                     |        | 551,577   |          |                |   | 5.60  |      
|Expired/ Terminated                                               |                     |        | (71,977   | )        |                |   | 7.30  |      
|Exercised                                                         |                     |        | (7,060    | )        |                |   | 4.90  |      
|                                                                  |                     |        |           |          |                |  
|Outstanding at March 31, 2004                                     |                     |        | 1,958,936 |          |                | $ | 11.70 |      
|Granted                                                           |                     |        | 519,128   |          |                |   | 6.20  |      
|                                                                  | Expired/ Terminated |        |           | (51,549  | )              |   |       | 13.50 | 
|                                                                  | Exercised           |        |           | (33,667  | )              |   |       | 3.70  | 
|                                                                  |                     |        |           |          |                |  
|Outstanding at March 31, 2005                                     |                     |        | 2,392,848 |          |                | $ | 10.60 |      
|                                                                  |                     |        |           |          |                |  
|Options exercisable at:                                           |                     |        |           |          |                |   |       |      
|March 31, 2005                                                    |                     |        | 1,744,419 |          |                |   | 1.23  |      
|                                                                  |                     |        |           |          |                |  
|March 31, 2004                                                    |                     |        | 1,444,245 |          |                |   | 1.39  |      
|                                                                  |                     |        |           |          |                |  
|Weighted average fair value of options granted during year ended: |                     |        |           |          |                |   |       |      
|March 31, 2005                                                    |                     | $      | 0.54      |          |                |   |       |      
|                                                                  |                     |        |           |          |                |  
|March 31, 2004                                                    |                     | $      | 0.51      |          |                |   |       |      
|                                                                  |                     |        |           |          |                |  



|                                        |  |                |           |             |              |  |          |       |  |             |            |  |  |  |           | 
|--------------------------------------- |  | -------------- | --------- | ----------- | ------------ |  | -------- | ----- |  | ----------- | ---------- |  |  |  | --------- | 
|                                        |  |                |           | Average     |              |  |          |       | 
|                                        |  |                |           | Remaining   |              |  | Average  |       |  | Number      |           
|                                        |  |                |           | Contractual |              |  | Exercise |       |  | Exercisable |           
|Range of Exercise Prices March 31, 2005 |  | Outstanding at |           |             | Life (Years) |  |          | Price |  |             | Options at | 
|                                        |  |                |           |             |              |  |          |       |  |             |            | 
|$0.25-0.50                              |  |                | 592,108   |             |              |  | 7.6      |       |  | $           | 3.50       |  |  |  | 532,460   | 
|$0.51-1.00                              |  |                | 1,251,261 |             |              |  | 8.1      |       |  |             | 6.40       |  |  |  | 662,507   | 
|$1.01-1.50                              |  |                | 85,156    |             |              |  | 4.3      |       |  |             | 12.70      |  |  |  | 85,156    | 
|$1.51-2.00                              |  |                | 36,171    |             |              |  | 5.8      |       |  |             | 17.50      |  |  |  | 36,171    | 
|$2.01-3.00                              |  |                | 139,790   |             |              |  | 5.6      |       |  |             | 24.80      |  |  |  | 139,763   | 
|$3.01-5.00                              |  |                | 288,362   |             |              |  | 5.2      |       |  |             | 33.30      |  |  |  | 288,362   | 
|                                        |  |                |           |             |              |  |          |       |  |             |            | 
|                                        |  |                | 2,392,848 |             |              |  | 7.1      |       |  |             | 12.40      |  |  |  | 1,744,419 | 
|                                        |  |                |           |             |              |  |          |       |  |             |            | 

F-25



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                              
|--- | -----------------------------
|11. | Commitments and Contingencies



| |                   
| | ------------------
| | Leasing activities













|           |                              |                                             |           |           |           |   |            |            |  | 
|---------- | ---------------------------- | ------------------------------------------- | --------- | --------- | --------- | - | ---------- | ---------- |  | 
|           |                              | Capital                                     |           |           | Operating |  
|           |                              | Leases                                      |           |           | Leases    |  
|           |                              |                                             |           |           |           |  
|2006       |                              | $                                           | 1,117,962 |           |           | $ | 3,198,752  |           
|2007       |                              |                                             | 300,807   |           |           |   | 3,167,573  |           
|2008       |                              |                                             | 181,541   |           |           |   | 3,129,655  |           
|2009       |                              |                                             |          |           |           |   | 3,087,242  |           
|2010       |                              |                                             |          |           |           |   | 3,172,557  |           
|Thereafter |                              |                                             |          |           |           |   | 31,172,525 |           
|           |                              |                                             |           |           |           |  
|           | Total minimum lease payments |                                             | $         | 1,600,310 |           |   | $          | 46,928,304 | 
|           |                              |                                             |           |           |           |  
|           | Amount representing interest |                                             |           | (128,410  | )         |   |            |            | 
|           |                              |                                             |           |           |           |  
|           |                              | Present value of net minimum lease payments |           | $         | 1,471,900 |   |            |            |  | 
|           |                              |                                             |           |           |           |  

F-26



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##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |           
| | ----------
| | Litigation





|    |                           
|--- | --------------------------
|12. | Related Party Transactions





|                                                    |  |                              |           |  |      |   |            |      |  |   |           | 
|--------------------------------------------------- |  | ---------------------------- | --------- |  | ---- | - | ---------- | ---- |  | - | --------- | 
|                                                    |  | For the Year Ended March 31, |          
|                                                    |  |                              |          
|                                                    |  | 2005                         |           |  | 2004 |   |            | 2003 | 
|                                                    |  |                              |           |  |      |   |            |      | 
|Rent expense                                        |  | $                            | 5,818,784 |  |      | $ | 5,308,272  |      |  | $ | 3,558,196 | 
|Services purchased from related parties             |  |                              | 957,483   |  |      |   | 501,080    |      |  |   |          | 
|Property management and construction fees           |  |                              | 144,826   |  |      |   | 198,000    |      |  |   | 510,000   | 
|Revenues from NAP de las Americas  Madrid          |  |                              |          |  |      |   | 43,000     |      |  |   | 340,000   | 
|Interest income on notes receivable  related party |  |                              | 50,278    |  |      |   | 76,284     |      |  |   | 61,000    | 
|Interest income from shareholder                    |  |                              | 28,944    |  |      |   | 32,489     |      |  |   | 37,000    | 
|Interest expense                                    |  |                              | 670,649   |  |      |   | 2,065,695  |      |  |   | 1,198,076 | 
|Services provided to a related party                |  |                              | 2,475     |  |      |   |            |      |  |   |           | 
|Other assets                                        |  | $                            | 477,846   |  |      | $ | 499,009    |      |  |   |           | 
|Note receivable  related party                     |  |                              |          |  |      |   | 5,000,000  |      |  |   |           | 
|Notes payable to related parties                    |  |                              |          |  |      |   | 35,516,977 |      |  |   |           | 
|Convertible debt                                    |  |                              |          |  |      |   | 4,150,000  |      |  |   |           | 





F-27



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                     
|--- | --------------------
|13. | Data Center Revenues



|                                    |  |                              |            |  |      |   |            | 
|----------------------------------- |  | ---------------------------- | ---------- |  | ---- | - | ---------- | 
|                                    |  | For the Year Ended March 31, |           
|                                    |  |                              |           
|                                    |  | 2005                         |            |  | 2004 |  
|                                    |  |                              |            |  |      |  
|Colocation                          |  | $                            | 21,402,860 |  |      | $ | 9,861,638  | 
|Exchange point services             |  |                              | 4,564,283  |  |      |   | 3,571,709  | 
|Managed and professional services   |  |                              | 9,017,282  |  |      |   | 3,179,264  | 
|Other                               |  |                              | 918        |  |      |   | 421,766    | 
|                                    |  |                              |            |  |      |  
|                                    |  | $                            | 34,985,343 |  |      | $ | 17,034,377 | 
|Technology infrastructure buildouts |  |                              | 11,832,745 |  |      |   |           | 
|                                    |  |                              |            |  |      |  
|Total data center revenues          |  | $                            | 46,818,088 |  |      | $ | 17,034,377 | 
|                                    |  |                              |            |  |      |  



|    |                        
|--- | -----------------------
|14. | Other Income (Expenses)





|    |             
|--- | ------------
|15. | Income Taxes





|                                                                           |  |           |             |   |      |   |             |  
|-------------------------------------------------------------------------- |  | --------- | ----------- | - | ---- | - | ----------- | -
|                                                                           |  | March 31, |            
|                                                                           |  |           |            
|                                                                           |  | 2005      |             |   | 2004 |  
|                                                                           |  |           |             |   |      |  
|Deferred tax assets:                                                       |  |           |             |   |      |   |             |  
|Charitable contributions                                                   |  | $         | 225,055     |   |      | $ | 223,947     |  
|Capitalized start-up costs                                                 |  |           | 1,163,296   |   |      |   | 2,063,736   |  
|Allowances and other                                                       |  |           | 2,234,326   |   |      |   | 11,246,433  |  
|Net operating loss carryforwards                                           |  |           | 47,796,808  |   |      |   | 34,211,590  |  
|Net operating loss carryforwards retained from discontinued
    operations |  |           | 17,280,709  |   |      |   | 17,280,709  |  
|Tax credits                                                                |  |           | 245,780     |   |      |   | 245,780     |  
|                                                                           |  |           |             |   |      |  
|Total deferred tax assets                                                  |  |           | 68,945,974  |   |      |   | 65,272,195  |  
|                                                                           |  |           |             |   |      |  
|Valuation allowance                                                        |  |           | (65,949,914 | ) |      |   | (63,283,833 | )
|                                                                           |  |           |             |   |      |  
|Deferred tax liability:                                                    |  |           |             |   |      |   |             |  
|Other                                                                      |  |           | (2,996,060  | ) |      |   | (1,988,362  | )
|                                                                           |  |           |             |   |      |  
|Total deferred tax liability                                               |  |           | (2,996,060  | ) |      |   | (1,988,362  | )
|                                                                           |  |           |             |   |      |  
|Net deferred tax asset                                                     |  | $         |            |   |      | $ |            |  
|                                                                           |  |           |             |   |      |  

F-28



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                                      |  |                              |       |    |      |  |       |      |  |  |       |   
|----------------------------------------------------- |  | ---------------------------- | ----- | -- | ---- |  | ----- | ---- |  |  | ----- | --
|                                                      |  | For the Year Ended March 31, |      
|                                                      |  |                              |      
|                                                      |  | 2005                         |       |    | 2004 |  |       | 2003 | 
|                                                      |  |                              |       |    |      |  |       |      | 
|Rate reconciliation                                   |  |                              |       |    |      |  |       |      |  |  |       |   
|Statutory rate                                        |  |                              | (34.0 | )% |      |  | (34.0 | )%   |  |  | (34.0 | )%
|State income taxes, net of federal income tax benefit |  |                              | (2.9  | )  |      |  | (3.2  | )    |  |  | (3.2  | ) 
|Permanent differences                                 |  |                              | 9.0   |    |      |  | 14.0  |      |  |  | 6.8   |   
|Increase in valuation allowance                       |  |                              | 27.9  |    |      |  | 23.2  |      |  |  | 30.4  |   
|                                                      |  |                              |       |    |      |  |       |      | 
|Effective tax rate                                    |  |                              |      | %  |      |  |      | %    |  |  |      | % 
|                                                      |  |                              |       |    |      |  |       |      | 





|    |                                                   
|--- | --------------------------------------------------
|16. | Information About the Companys Operating Segments





F-29



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                             |  |             |             |   |             |   |            |       |  |   |             |  
|---------------------------- |  | ----------- | ----------- | - | ----------- | - | ---------- | ----- |  | - | ----------- | -
|                             |  | Data center |             |   | Real Estate |   |            |      
|For the year ended March 31, |  | operations  |             |   | services    |   |            | Total | 
|                             |  |             |             |   |             |   |            |       | 
|2005                         |  |             |             |   |             |   |            |       |  |   |             |  
|                             |  |             |             |   |             |   |            |       | 
|Revenue                      |  |             | 46,818,088  |   |             |   | 1,329,526  |       |  |   | 48,147,614  |  
|Loss from operations         |  |             | (13,506,734 | ) |             |   | (400,010   | )     |  |   | (13,906,744 | )
|Net loss                     |  |             | (9,490,543  | ) |             |   | (368,809   | )     |  |   | (9,859,352  | )
|                            
|2004                         |  |             |             |   |             |   |            |       |  |   |             |  
|                             |  |             |             |   |             |   |            |       | 
|Revenue                      |  | $           | 17,034,377  |   |             | $ | 1,179,362  |       |  | $ | 18,213,739  |  
|Loss from operations         |  |             | (20,237,820 | ) |             |   | (338,587   | )     |  |   | (20,576,407 | )
|Net loss                     |  |             | (22,152,261 | ) |             |   | (338,316   | )     |  |   | (22,490,577 | )
|                            
|2003                         |  |             |             |   |             |   |            |       |  |   |             |  
|                             |  |             |             |   |             |   |            |       | 
|Revenue                      |  | $           | 11,032,984  |   |             | $ | 3,660,719  |       |  | $ | 14,693,703  |  
|Loss from operations         |  |             | (21,658,738 | ) |             |   | (3,671,562 | )     |  |   | (25,330,300 | )
|Net loss                     |  |             | (37,565,136 | ) |             |   | (3,662,169 | )     |  |   | (41,227,305 | )
|                            
|Assets, as of                |  |             |             |   |             |   |            |       |  |   |             |  
|                             |  |             |             |   |             |   |            |       | 
|March 31, 2005               |  |             | 208,905,664 |   |             |   |           |       |  |   | 208,905,664 |  
|March 31, 2004               |  | $           | 77,101,579  |   |             | $ | 331,124    |       |  | $ | 77,432,703  |  



|                                    |                          |                              |             |            |      |   |             |             |   |   |             |             |  
|----------------------------------- | ------------------------ | ---------------------------- | ----------- | ---------- | ---- | - | ----------- | ----------- | - | - | ----------- | ----------- | -
|                                    |                          | For the Year Ended March 31, |            
|                                    |                          |                              |            
|                                    |                          | 2005                         |             |            | 2004 |   |             | 2003        |  
|                                    |                          |                              |             |            |      |   |             |             |  
|Total segment loss from operations  |                          |                              | (13,906,744 | )          |      | $ | (20,576,407 | )           |   | $ | (25,330,300 | )          
|Change in fair value of derivatives |                          |                              | 15,283,500  |            |      |   |            |             |   |   |            |            
|Debt restructuring                  |                          |                              | 3,420,956   |            |      |   | 8,475,000   |             |   |   |            |            
|Inducement on debt conversion       |                          |                              |             |            |      |   |            |             |   |   | (4,871,245  | )          
|Interest income                     |                          |                              | 666,286     |            |      |   | 131,548     |             |   |   | 136,278     |            
|Interest expense                    |                          |                              | (15,493,610 | )          |      |   | (14,624,922 | )           |   |   | (11,007,683 | )          
|Gain on real estate held for sale   |                          |                              |             |            |      |   |            |             |   |   |            |            
|Other income (expense)              |                          |                              | 170,260     |            |      |   | 4,104,204   |             |   |   | (154,355    | )          
|                                    |                          |                              |             |            |      |   |             |             |  
|                                    | Loss before income taxes |                              | $           | (9,859,352 | )    |   | $           | (22,490,577 | ) |   | $           | (41,227,305 | )
|                                    |                          |                              |             |            |      |   |             |             |  

F-30



---



##### Table of Contents



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                   
|--- | ----------------------------------
|17. | Supplemental Cash Flow Information

|                                                        |                                                                                             |                              |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ---------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                        |                                                                                             | For the Year Ended March 31, |  
|                                                        |                                                                                             |                              |  
|                                                        |                                                                                             | 2005                         |   |            | 2004 |  |   | 2003       |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|Supplemental disclosures of cash flow information:      |                                                                                             |                              |   |            |      |  |   |            |   |  |   |           
|                                                        | Cash paid for interest                                                                      |                              | $ | 6,399,840  |      |  | $ | 7,349,467  |   |  | $ | 7,321,545  |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|Non-cash operating, investing and financing activities: |                                                                                             |                              |   |            |      |  |   |            |   |  |   |           
|                                                        | Warrants issued                                                                             |                              |   | 1,380,000  |      |  |   | 644,597    |   |  |   | 612,500    |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Conversion of notes payable to convertible debt                                             |                              |   |           |      |  |   | 5,450,000  |   |  |   |           |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Beneficial conversion feature on issuance of convertible
    debentures and preferred stock |                              |   |           |      |  |   | 10,472,021 |   |  |   |           |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Assets acquired under capital leases                                                        |                              |   |           |      |  |   | 196,211    |   |  |   |           |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Warrants exercised and converted to equity                                                  |                              |   | 261,640    |      |  |   | 3,971      |   |  |   |           |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Conversion of accounts payable to equity                                                    |                              |   |           |      |  |   | 229,588    |   |  |   | 361,491    |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Conversion of debt and related accrued interest to equity                                   |                              |   | 262,500    |      |  |   | 9,420,004  |   |  |   | 4,205,686  |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Conversion of construction payables and accrued interest to
    equity                      |                              |   |           |      |  |   | 14,400,977 |   |  |   |           |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Conversion of liabilities of discontinued operations to equity                              |                              |   |           |      |  |   |           |   |  |   | 370,000    |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Forgiveness of construction payables                                                        |                              |   |           |      |  |   |           |   |  |   | 1,290,013  |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Conversion of convertible debt and related accrued interest to
    equity                   |                              |   | 27,773,524 |      |  |   | 258,306    |   |  |   | 17,080,476 |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Settlement of note receivable through extinguishment of
    convertible debt                |                              |   | 418,200    |      |  |   |           |   |  |   |           |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Issuance of note payable for other asset                                                    |                              |   |           |      |  |   |           |   |  |   | 1,000,000  |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Cancellation and expiration of warrants                                                     |                              |   | 146,145    |      |  |   | 26,575     |   |  |   |           |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Settlement of notes receivable  related party by
    tendering Terremark Stock             |                              |   | 4,951,904  |      |  |   |           |   |  |   |           |  
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  
|                                                        | Non-cash preferred dividend                                                                 |                              |   | 481,947    |      |  |   | (1,158,244 | ) |  |   | (160,000   | )
|                                                        |                                                                                             |                              |   |            |      |  |   |            |  

F-31