##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    March 31, 2008o

TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   Commission
    file number 001-12475
      Terremark Worldwide,
    Inc.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

84-0873124(State or Other Jurisdiction
    of

(IRS EmployerIncorporation or
    Organization)

Identification
    No.)   2 South
    Biscayne Blvd. Suite 2900 Miami, Florida 33131 (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

NASDAQ Stock Market LLC(Title of Class)

(Name of Exchange on Which
    Registered)   Securities registered pursuant to Section 12(g) of the
    Act:
 NONE
      o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller Reporting
    company o   Rule 12b-2 o þ
  The aggregate market value of the registrants common
    stock held by non-affiliates of the registrant on
    September 30, 2007 was approximately $419,307,644, based on
    the closing market price of the registrants common stock
    as reported on the Nasdaq Global Market. For purposes of the
    foregoing computation, all executive officers, directors and
    five percent beneficial owners of the registrant are deemed to
    be affiliates. Such determination should not be deemed to be an
    admission that such executive officers, directors or five
    percent beneficial owners are, in fact, affiliates of the
    registrant.
  The number of shares outstanding of the registrants
    common stock, par value $0.001 per share, as of May 31,
    2008 was 59,172,422.
  DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
  PagePart I


2Item 1.


Business


2Item 1A.


Risk Factors


11Item 1B.


Unresolved Staff Comments


18Item 2.


Properties


19Item 3.


Legal Proceedings


19Item 4.


Submission of Matters to a Vote of Security
    Holders


20Part II


21Item 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


21Item 6.


Selected Financial Data


24Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


26Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


41Item 8.


Financial Statements and Supplementary Data


42Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


42Item 9A.


Controls and Procedures


42Item 9B.


Other Information


43Part III


43Item 10.


Directors, Executive Officers and Corporate
    Governance


43Item 11.


Executive Compensation


43Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


43Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


44Item 14.


Principal Accountant Fees and Services


44Part IV


45Item 15.


Exhibits and Financial Statement Schedules


45Signatures


49EX-10.39 Form of Indemnification AgreementEX-10.40 Form of Restricted Stock AgreementEX-10.41 Employment Agreement with Adam T. SmithEX-10.42 Employment Agreement with Jose A. SegreraEX-10.43 Employment Agreement with Marvin WheelerEX-21.1 Subsidiaries of the CompanyEX-23.2 Consent of KPMG LLPEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO   1




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##### Table of Contents



PART I  ITEM 1.
    BUSINESS.  The words Terremark, we,
    our, ours, and us refer to
    Terremark Worldwide, Inc. All statements in this discussion that
    are not historical are forward-looking statements within the
    meaning of Section 21E of the Securities Exchange Act of
    1934, as amended, including statements regarding
    Terremarks expectations, beliefs,
    hopes, intentions,
    strategies or the like. Such statements are based on
    managements current expectations and are subject to a
    number of factors and uncertainties that could cause actual
    results to differ materially from those described in the
    forward-looking statements. Terremark cautions investors that
    actual results or business condition may differ materially from
    those projected or suggested in such forward-looking statements
    as a result of various factors, including, but not limited to,
    the risk factors discussed in this Annual Report on
    Form 10-K.
    Terremark expressly disclaims any obligation or undertaking to
    release publicly any updates or revisions to any forward-looking
    statements contained herein to reflect any change in
    Terremarks expectations with regard thereto or any change
    in events, conditions, or circumstances on which any such
    statements are based.
  Our
    Business
  TM ®
      Products
    and Services
  Managed
    Services
   2




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Colocation
  385,000 square-feet
  Network
    and Connectivity Services
    IP-based
 3




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zero-mile
  Our
    Primary Facilities
  NAP of
    the Americas
  ®
    24-hour
  NAP of
    the Capital Region
  50-mile
        NAP
    West
   4




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NAP do
    Brasil
    Our
    Strategy
    
    Maximize our expansion opportunities. Our expansion plans are
    strategic to our continued growth and enable us to broaden our
    geographic footprint, leverage our global technology
    relationships and provide COOP and disaster recovery services
    for our customers. We expect to complete the first phase of our
    NCR project in June 2008 and we are targeting the second half of
    Fiscal 2009 to break ground on our Silicon Valley expansion. Our
    NCR facility will consist of five, 50,000 square-foot
    independent datacenter structures with each additional pod being
    built on a success basis. Our Silicon Valley facility will
    consist of one 50,000 square foot data center facility. The
    added
    square-feet
    from the new facilities will enable us to sell additional
    colocation, managed services and disaster recovery solutions.
    Continue our focus on the Federal Government. We continue to
    broaden our reach with customers in federal government sector,
    resulting in further penetration of the civilian agencies and
    solidifying our relationships with the large federal
    integrators. We have focused on ramping up our collaboration
    with key federal government IT integrators, which has helped
    increase demand from both the federal and commercial sectors.
    Continue to upsell to our existing customers, including selling
    managed services to our colocation customers. For the year end
    March 31, 2008 approximately 70% of our bookings were from
    existing customers. By upselling our existing colocation
    customers to our managed service platform we expect to increase
    the amount of revenue per customer.
    Maximize revenue per square foot. Our ability to successfully
    deliver colocation and managed services enables us to maximize
    the revenue per square foot that we generate in our data
    centers. Maximizing revenue per square foot enables us to
    increase cash flow per square foot from the data center, thus
    increasing our return on investment.
    Continued investment in service delivery technology and products
    such as our digitalOps Enterprise Service Delivery Platform, our
    Infinistructure utility-computing platform and our Enterprise
    Cloud. Our service delivery platform enables us to speed
    response times, reduce human error, and increase systems
    availability through increased accuracy, comprehensive change
    control and rapid fault resolution. These automated processes
    allow us to leverage our technology to help drive efficiencies
    and lower our operating costs. Our consistent investment in the
    Infinistructure utility-computing platform and the development
    of the Enterprise Cloud have resulted in industry-leading
    platforms that provide reliable, cost-effective, and flexible
    solutions to our customers and a technological advantage over
    competitors.  Market
    Forces
   5




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Customers
    Sales and
    Marketing
  Sales
    Marketing
    
    Brand management and positioning  this includes brand
    identity and positioning at the corporate and product levels,
    the development of marketing assets and sales tools, brand
    awareness programs and industry analyst relations.
    Lead Generation   Utilizing online marketing,
    targeted advertising, direct marketing, event marketing, and
    public relations programs and strategies.
    Internal coordination and strategic alignment, including: Sales,
    Channels & Alliances, Product Line Management, and
    Corporate Communications.  Competition
    
    Internet data centers operated by established communications
    carriers such as at&t, Level 3, Qwest, Savvis, and
    Verizon Business. Unlike the major network providers, who
    constructed data centers primarily to help sell bandwidth, we
    have aggregated multiple networks in one location, providing
    superior diversity, pricing and performance. Telecommunications
    companies data centers generally only provide one choice
    of carrier and also prefer customers with high managed services
    needs as part of their pricing structures. Locating in our data
    centers provides access to top tier networks and allows
    customers to negotiate the best prices with a number of carriers
    resulting in better economics and redundancy. In 2003 and 2004,
    two major carriers who had built and operated their own data
    centers exited the U.S. colocation market. The disposition
    of these assets has been completed with various owners assuming
    the assets, including Savvis. Because these operators are not
    network neutral, we believe we have an advantage in gaining the
    business of those customers displaced by these carriers because
    access to their networks is also available in our data centers.
    Network access points (NAPs)
    and/or
    network-neutral colocation providers such as Equinix, Global
    Switch, Interxion and Switch and Data.NAPs, generally
    operated by carriers, are typically older facilities and lack
    the incentive to upgrade the infrastructure in order to scale
    with traffic growth. In contrast, we provide state- 6




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of-the-art, secure centers and geographic diversity with
    24-hour
    support and a full range of network and content provider
    offerings along with certain other network-neutral colocation
    providers.  
    Website hosting, colocation and information technology
    service providers such as IBM, Rackspace and Sunguard.Most
    managed service providers require that customers purchase their
    entire network and managed services directly from them. We are a
    network and service provider aggregator and allow customers the
    ability to contract directly with the networks and webhosting
    partner best for their business.
    Real Estate Investment Trusts (REITs) such as Digital Realty
    Trust and Dupont Fabros.Some REITs have leased or begun
    building data centers focused on meeting the outsourced data
    center needs of wholesale, or very large, customer deployments.
    These centers primarily provide space and power without
    additional services. These customers are not typically suited to
    the Terremark model as we focus on a large number of diverse
    customers on a per data center basis thereby creating a network
    effect for customers and maximizing the financial returns on a
    per site basis.  Employees
      Name

Age

Principal PositionManuel D. Medina


55


Chairman of the Board, President and Chief Executive OfficerJoseph R. Wright, Jr


69


Vice Chairman of the BoardGuillermo Amore


69


DirectorTimothy Elwes


72


DirectorAntonio S. Fernandez


68


DirectorArthur L. Money


68


DirectorMarvin S. Rosen


66


DirectorMiguel J. Rosenfeld


58


DirectorRodolfo A. Ruiz


59


DirectorJamie Dos Santos


46


Chief Executive Officer Terremark Federal GroupJose A. Segrera


37


Chief Financial OfficerMarvin Wheeler


54


Chief Operations OfficerAdam T. Smith


36


Chief Legal Officer   Manuel D. Medina
  Joseph R. Wright, Jr.
 7




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e-commerce
    Guillermo Amore
  Timothy Elwes
  Antonio S. Fernandez
  Arthur L. Money
  Marvin S. Rosen
 8




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Miguel J. Rosenfeld
  Rodolfo A. Ruiz
  Jamie Dos Santos
  Jose A. Segrera
  Marvin Wheeler
  Adam T. Smith
 9




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Where You
    Can Find Additional Information
  1-800-SEC-0330 http://www.sec.gov. http://www.terremark.com Form 10-K.
 10




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ITEM 1A.
    RISK
    FACTORS.    We
    have incurred substantial losses in the past and may continue to
    incur additional losses in the future.
    We may
    not be able to compete successfully against current and future
    competitors.
     11




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We
    anticipate that a significant portion of our revenues will be
    from contracts with agencies of the United States
    government, and uncertainties in government contracts could
    adversely affect our business.
    We
    derive a significant portion of our revenues from a few clients;
    accordingly, a reduction in our clients demand for our
    services or the loss of clients could impair our financial
    performance.
    A
    failure to meet customer specifications or expectations could
    result in lost revenues, increased expenses, negative publicity,
    claims for damages and harm to our reputation and cause demand
    for our services to decline.
    
    delayed or lost revenue;
    requirements to provide additional services to a customer at
    reduced charges or no charge;
    negative publicity about us, which could adversely affect our
    ability to attract or retain customers; and
    claims by customers for substantial damages against us,
    regardless of our responsibility for the failure, which may not
    be covered by insurance policies and which may not be limited by
    contractual terms of our engagement.  Our
    ability to successfully market our services could be
    substantially impaired if we are unable to deploy new
    infrastructure systems and applications or if new infrastructure
    systems and applications deployed by us prove to be unreliable,
    defective or incompatible.
   12




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Any
    interruptions in, or degradation of, our private transit
    Internet connections could result in the loss of customers or
    hinder our ability to attract new customers.
    Our
    network and computing infrastructure could fail, which would
    impair our ability to provide guaranteed levels of service and
    could result in significant operating losses.
    
    require us to spend substantial amounts of money to replace
    equipment or facilities;
    entitle customers to claim service credits or seek damages for
    losses under our service level guarantees;
    cause customers to seek alternate providers; or
    impede our ability to attract new customers, retain current
    customers or enter into additional strategic relationships.  Our
    dependence on third parties increases the risk that we will not
    be able to meet our customers needs for software, systems
    and services on a timely or cost-effective basis, which could
    result in the loss of customers.
    We
    could be subject to increased operating costs, as well as
    claims, litigation or other potential liability, in connection
    with risks associated with Internet security and the security of
    our systems.
  e-commerce
 13




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We may
    be subject to legal claims in connection with the information
    disseminated through our network, which could divert
    managements attention and require us to expend significant
    financial resources.
  e-mails
  We may
    become subject to burdensome government regulation and legal
    uncertainties that could substantially harm our business or
    expose us to unanticipated liabilities.
    Difficulties
    presented by international economic, political, legal,
    accounting and business conditions could harm our business in
    international markets.
    
    unexpected changes in regulatory, tax and political environments;
    longer payment cycles and problems collecting accounts
    receivable;
    fluctuations in currency exchange rates;
    our ability to secure and maintain the necessary physical and
    telecommunications infrastructure;
    challenges in staffing and managing foreign operations; and
    laws and regulations on content distributed over the Internet
    that are more restrictive than those currently in place in the
    United States.   14




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We
    have significant debt service obligations which will require the
    use of a substantial portion of our available
    cash.
    
    general economic and capital markets conditions, and in
    particular the non-investment grade debt market;
    conditions in the Internet infrastructure market;
    credit availability from banks or other lenders;
    investor confidence in the telecommunications industry generally
    and our company specifically; and
    the success of our facilities    Our
    Credit Facilities, Senior Convertible Notes, and Series B
    Notes contain numerous restrictive covenants.
    
    incur more debt;
    pay dividends, redeem or repurchase our stock or make other
    distributions;
    make acquisitions or investments;
    enter into certain transactions with affiliates;
    merge or consolidate with others;
    dispose of assets or use asset sale proceeds;
    create liens on our assets
    capital expenditures; and
    extend credit.    Our
    substantial leverage and indebtedness could adversely affect our
    financial condition, limit our growth and prevent us from
    fulfilling our debt obligations.
    
    limit our ability to obtain additional financing to fund our
    growth strategy, working capital, capital expenditures, debt
    service requirements or other purposes; 15




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
    limit our ability to use operating cash flow in other areas of
    our business because we must dedicate a substantial portion of
    these funds to make principal payments and fund debt service
    requirements;
    cause us to be unable to satisfy our obligations under our
    existing or new debt agreements;
    make us more vulnerable to adverse general economic and industry
    conditions;
    limit our ability to compete with others who are not as highly
    leveraged as we are; and
    limit our flexibility in planning for, or reacting to, changes
    in our business, industry and market conditions.  and/or
  If our
    financial condition deteriorates, we may be delisted by the
    NASDAQ and our stockholders could find it difficult to sell our
    common stock.
    
    our financial condition and operating results appear to be
    unsatisfactory;
    we have sustained losses that are so substantial in relation to
    our overall operations or our existing financial condition has
    become so impaired that it appears questionable whether we will
    be able to continue operations
    and/or meet
    our obligations as they mature.    Our
    business could be harmed by prolonged electrical power outages
    or shortages, or increased costs of energy.
    We are
    dependent on key personnel and the loss of these key personnel
    could have a material adverse effect on our
    success.
   16




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We may
    encounter difficulties implementing our expansion
    plan.
    
    identify and obtain the use of locations in which we believe
    there is sufficient demand for our services;
    generate sufficient cash flow from operations or through
    additional debt or equity financings to support these expansion
    plans;
    hire, train and retain sufficient additional financial reporting
    management, operational and technical employees; and
    install and implement new financial and other systems,
    procedures and controls to support this expansion plan with
    minimal delays.    Risk
    Factors Related to Our Common Stock
  Our
    stock price may be volatile, and you could lose all or part of
    your investment.
    
    actual or anticipated variations in our quarterly and annual
    results of operations;
    changes in market valuations of companies in our industry;
    changes in expectations of future financial performance or
    changes in estimates of securities analysts;
    fluctuations in stock market prices and volumes;
    future issuances of common stock or other securities;
    the addition or departure of key personnel; and
    announcements by us or our competitors of acquisitions,
    investments or strategic alliances.  We
    expect that the price of our common stock will be significantly
    affected by the availability of shares for sale in the
    market.
   17




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
    2,324,800 shares of our common stock reserved for issuance
    upon conversion of our 9% Senior Convertible Notes;
    4,575,200 shares of our common stock reserved for issuance
    upon conversion of our 6.625% Senior Convertible Notes;
    492,000 shares of our common stock reserved for issuance
    upon conversion of our Series B Notes;
    1,041,333 shares of our common stock reserved for issuance
    upon conversion of our Series I convertible preferred stock;
    2,303,138 shares of our common stock issuable upon exercise
    of options;
    976,245 shares of our nonvested stock; and
    2,364,187 shares of our common stock issuable upon exercise
    of warrants.    Our
    common shares are thinly traded and, therefore, relatively
    illiquid.
    Existing
    stockholders interest in us may be diluted by additional
    issuances of equity securities.
    We do
    not expect to pay dividends on our common stock, and investors
    will be able to receive cash in respect of the shares of common
    stock only upon the sale of the shares.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS.   18




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ITEM 2.
    PROPERTIES.    Lease Expires

Gross(reflecting

Areaall Options)

(Square


AnnualDescription

Location

(M/Yr)

Feet)


RentData Center

Miami, Florida

Owned


750,000


N/AData Center

Sao Paulo, Brazil

Oct-21


5,300


$652,780(1)Data Center

Santa Clara, California

Sep-20


40,000


$1,668,012(2)Data Center

Madrid, Spain

Dec-15


10,550


$1,521,592(3)Data Center

Frankfurt, Germany

Jun-08


80


$19,851Data Center

Amsterdam,

Dec-09 to Dec-10


2,493


$436,728The NetherlandsData Centers

Brussels, Belgium

Sep-08 to Feb-13


1,594


$374,668Data Center

Hong Kong, China

Jul-08


1 rack


$11,568Data Center

Singapore

Jul-08


39


$12,168Data Center

Hilversum,

Nov-08


18 racks


$178,560The NetherlandsData Center

Brussels, Belgium

Apr-10


1 rack


$15,810Data Center

Pleasanton, California

Oct-11


29,784


$495,683Data Center

Irving, Texas

Dec-09


4,603


$33,660Data Center

Dallas, Texas

Aug-09


5,376


$1,548,288Data Center

London, England

Aug-09


775


$225,892Principal executive offices

Miami, Florida

Dec-18


36,457


$1,248,835Office and Data Center

Herndon, Virginia

Mar-18


34,207


$833,622(1)Office

Irving, Texas

Jul-09


66,340


$1,067,000Office

SantoDomingo,

Jul-08


948


$29,424Dominican RepublicOffice

Culpepper, Virginia

Aug-08


1,152


$27,516Office

Sao Paulo, Brazil

Aug-08


1,500


$67,276     (1)
    
    We are also responsible for our share of common area maintenance
    expenses and real estate taxes.(2)
    
    We are also responsible for real estate taxes and property and
    casualty insurance expenses aggregating approximately $46,000
    annually.(3)
    
    Annual rent is exclusive of value added taxes.  ITEM 3.
    LEGAL
    PROCEEDINGS.   19




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Rule 10b-5
    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS.      Proposal 1:
  For


WithheldManuel D. Medina


31,889,775



4,763,312Joseph R. Wright, Jr.


28,955,270



7,697,817Guillermo Amore


31,771,457



4,881,630Timothy Elwes


35,678,005



975,082Antonio S. Fernandez


35,681,857



971,230Arthur L. Money


28,770,021



7,883,066Marvin S. Rosen


28,770,021



7,883,066Miguel J. Rosenfeld


35,572,842



1,080,245Rodolfo A. Ruiz


29,216,811



7,436,276   Proposal 2:
  For


Against


AbstainShares voted


17,916,886



2,182,351



2,860  20




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PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES.  Common
    Stock and Preferred Stock Information
      
    100,000,000 shares of common stock, par value $0.001 per
    share; and
    10,000,000 shares of preferred stock, par value $0.001 per
    share, which are issuable in series on terms to be determined by
    our board of directors, of which 600 shares are designated
    as series I convertible preferred stock.    
    59,172,022 shares of our common stock were outstanding;
    312 shares of our series I convertible preferred stock
    were outstanding. Each share of series I convertible
    preferred stock may be converted into 3,333 shares of our
    common stock. In September, 2007, 11 shares of our
    series I convertible preferred stock was converted to
    6,667 shares of our common stock.
    In April 2007, we sold 608,500 shares in a public offering,
    at an offering price of $8.00 per share, pursuant to the
    underwriters exercise of their over-allotment option of
    the 11,000,000 shares sold in the March 2007 public
    offering.
    In May 2007, we issued 1,925,546 shares, valued at
    $15.0 million, based on the closing price of our common
    stock on May 11, 2007 of $7.79 per share, in connection
    with the acquisition of all of the outstanding common stock of a
    Data Return, LLC.
    In October 2007, the Company issued 61,237 shares, valued
    at $0.5 million, of its common stock to certain employees
    of the Company as settlement of share-based awards earned during
    fiscal year 2007.
    In January 2008, we issued 390,000 shares, valued at
    $2.1 million, based on the closing price of our common
    stock on January 24, 2008 of $5.26 per share, in connection
    with the acquisition of all of the outstanding common stock of
    Accris Corporation      PricesFiscal Year 2008 Quarter Ended

High


LowJune 30, 2007

$
8.79


$
6.34September 30, 2007


7.61



5.15December 31, 2007


8.14



5.14March 31, 2008


6.69



4.64Through June 11, 2008


7.30



5.37   21




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PricesFiscal Year 2007 Quarter Ended

High


LowJune 30, 2006

$
8.68


$
3.26September 30, 2006


6.10



3.60December 31, 2006


7.20



4.76March 31, 2007


9.15



6.41   Performance
    Graph
    
    Dividend
    Policy
   22




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Recent
    Sales of Unregistered Securities
      non-United
  Equity
    Compensation Plan Information
    Number of Securities


Weighted Averageto be Issued Upon


Exercise Price of


Number of SecuritiesExercise of Outstanding


Outstanding Options,


Available for FutureOptions, Nonvested Stock,


Nonvested Stock,


Issuance Under EquityPlan Category

Warrants and Rights


Warrants and Rights


Compensation PlansEquity compensation plans approved by security holders


5,643,570


$
8.64



2,342,778Equity compensation plans not approved by security holders





$




  23




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ITEM 6.
    SELECTED
    FINANCIAL DATA.    Twelve Months Ended March 31,2008


2007


2006


2005


2004(Dollars in thousands except per share data)Results of Operations:Revenues

$
187,414


$
100,948


$
62,529


$
46,818


$
17,034Real estate services














1,330



1,179Total revenues


187,414



100,948



62,529



48,148



18,213Cost of revenues


100,886



56,902



38,824



36,310



16,413Construction contract expenses














809



918Other expenses


128,756



58,998



60,854



20,888



23,373Total expenses


229,642



115,900



99,678



58,007



40,704Net loss


(42,228
)


(14,952
)


(37,149
)


(9,859
)


(22,491
)Non-cash preferred dividend


(794
)


(676
)


(727
)


(915
)


(1,158
)Net loss attributable to common stockholders

$
(43,022
)

$
(15,628
)

$
(37,876
)

$
(10,774
)

$
(23,649
)Net loss per common share  basic

$
(0.74
)

$
(0.35
)

$
(0.88
)

$
(0.31
)

$
(0.78
)Net loss per common share  diluted

$
(0.74
)

$
(0.36
)

$
(0.88
)

$
(0.40
)

$
(0.78
)   As of March 31,2008


2007


2006


2005


2004(Dollars in thousands)Financial condition:(1)Property and equipment, net

$
231,674


$
137,937


$
129,893


$
123,406


$
53,898Total assets


503,860



309,646



204,716



208,906



77,433Long term obligations(2)(3)


352,391



184,510



163,967



149,734



78,525Stockholders equity (deficit)


90,522



89,499



13,836



40,176



(22,720
)     (1)
    
    See Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Liquidity and
    Capital Resources.(2)
    
    Long term obligations as of March 31, 2004 through 2007
    include mortgage payable less current portion, convertible debt,
    estimated fair value of derivatives embedded within convertible
    debt, deferred rent, deferred revenue, unearned interest under
    capital lease obligations, capital lease obligations less
    current portion and notes payable less current portion. At
    March 31, 2008, the notes payable were paid off and there
    were no significant derivatives embedded within convertible debt.(3)
    
    Long term obligations as of March 31, 2005 and 2004 include
    approximately $600 in redeemable convertible preferred stock
    plus accrued dividends. 24




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##### Table of Contents



Three Months EndedMarch 31,


December 31,


September 30,


June 30,2008


2007


2007


2007(Dollars in thousands except per share data)Revenues

$
56,841


$
49,964


$
45,368


$
35,241Cost of revenues


30,276



26,358



25,304



18,948Other expenses


29,031



27,096



35,584



37,045Total expenses


59,307



53,454



60,888



55,993Net loss


(2,466
)


(3,490
)


(15,520
)


(20,752
)Non-cash preferred dividend


(195
)


(196
)


(201
)


(202
)Earnings allocation to participating stockholders














Net loss attributable to common stockholders

$
(2,661
)

$
(3,686
)

$
(15,721
)

$
(20,954
)Net loss per common share  basic

$
(0.04
)

$
(0.06
)

$
(0.27
)

$
(0.37
)Net loss per common share  diluted

$
(0.04
)

$
(0.06
)

$
(0.27
)

$
(0.37
)   Three Months EndedMarch 31,


December 31,


September 30,


June 30,2007


2006


2006


2006(Dollars in thousands except per share data)Revenues

$
30,692


$
24,669


$
24,184


$
21,403Cost of revenues


17,470



12,973



14,774



11,612Other expenses


17,484



22,472



18,853



263Total expenses


34,954



35,445



33,627



11,875Net (loss) income


(4,262
)


(10,776
)


(9,443
)


9,528Non-cash preferred dividend


(189
)


(162
)


(162
)


(164
)Earnings allocation to participating stockholders














(1,458
)Net (loss) income attributable to common stockholders

$
(4,451
)

$
(10,938
)

$
(9,605
)

$
7,906Net (loss) income per common share  basic

$
(0.10
)

$
(0.25
)

$
(0.22
)

$
0.18Net loss per common share  diluted

$
(0.10
)

$
(0.25
)

$
(0.22
)

$
(0.05
)  25




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS.  This report contains forward-looking statements
    within the meaning of the Private Securities Litigation Reform
    Act of 1995 based on our current expectations, assumptions, and
    estimates about us and our industry. These forward-looking
    statements involve risks and uncertainties. Words such as
    believe, anticipate,
    estimate, expect, intend,
    plan, will, may,  and other
    similar expressions identify forward-looking statements. In
    addition, any statements that refer to expectations, projections
    or other characterizations of future events or circumstances are
    forward-looking statements. All statements other than statements
    of historical facts, including, among others, statements
    regarding our future financial position, business strategy,
    projected levels of growth, projected costs and projected
    financing needs, are forward-looking statements. Our actual
    results could differ materially from those anticipated in such
    forward-looking statements as a result of several important
    factors including, without limitation, a history of losses,
    competitive factors, uncertainties inherent in government
    contracting, concentration of business with a small number of
    clients, the ability to service debt, substantial leverage,
    material weaknesses in our internal controls and our disclosure
    controls, energy costs, the interest rate environment, one-time
    events and other factors more fully described in Risk
    Factors and elsewhere in this report. The forward-looking
    statements made in this report relate only to events as of the
    date on which the statements are made. Because forward-looking
    statements are inherently subject to risks and uncertainties,
    some of which cannot be predicted or quantified, you should not
    rely upon forward-looking statements as predictions of future
    events. Except as required by applicable law, including the
    securities laws of the United States, and the rules and
    regulations of the Securities and Exchange Commission, we do not
    plan and assume no obligation to publicly update or revise any
    forward-looking statements contained herein after the date of
    this report, whether as a result of any new information, future
    events or otherwise.
  Critical
    Accounting Policies and Estimates
      
    revenue recognition and allowance for bad debt;
    derivatives;
    accounting for income taxes;
    impairment of long-lived assets;
    share-based compensation; and
    goodwill.  Revenue
    Recognition and Allowance for Bad Debts
   26




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##### Table of Contents



No. 00-21, EITF 00-21,
    EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent, Bulletin 90-1, Accounting for Separately Priced Extended Warranty and
    Product Contracts.
      Derivatives
     27




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##### Table of Contents



Accounting
    for Income Taxes
    Accounting for Uncertainty in
    Income Taxes  an Interpretation of FASB Statement
    No. 109
     28




---



##### Table of Contents



Impairment
    of Long-Lived Assets
      Goodwill
      Share-Based
    Compensation
   29




---



##### Table of Contents



Recent
    Accounting Pronouncements
    Recent
    Events
    
    On May 2, 2007, we completed a private exchange offer with
    a limited number of holders for $57.2 million aggregate
    principal amount of its outstanding 9% Senior Convertible
    Notes due 2009 (the Outstanding Notes) in exchange
    for an equal aggregate principal amount of the Companys
    newly issued 6.625% Senior Convertible Notes due 2013 (the
    New Notes). After completion of the private exchange
    offer, $29.1 million aggregate principal amount of the
    Outstanding Notes remain outstanding. We also announced our
    intention to complete a public exchange offer to the remaining
    holders of our Outstanding Notes to exchange any and all of
    their Outstanding Notes for an equal aggregate principal amount
    of New Notes.
    On May 14, 2007, we began trading on the NASDAQ Global
    market under the symbol TMRK.
    On May 24, 2007, we acquired privately-held Data Return,
    LLC (Data Return), a leading provider of
    enterprise-class technology hosting solutions, from Saratoga
    Partners, for an aggregate purchase price of $85.0 million,
    which is comprised of $70.0 million in cash and
    $15.0 million of our common stock. The acquisition of Data
    Returns technology, customers and team of employees
    complements our existing team and service delivery platforms,
    and, we believe, better positions us to capture the robust
    market demand we expect for virtualized IT solutions. The
    addition of Data Returns innovative virtualized hosting
    and service delivery platforms are a strategic fit with our
    network rich colocation and managed service business and should
    allow us to realize significant synergies. Some of the strategic
    value points are:  
    Accelerates growth of the managed web hosting business in the
    U.S. market by adding significant enterprise-class hosting
    capabilities to our existing service offerings
    In Gartners 2007 North American Web Hosting Industry
    report, Data Return was positioned in the Leaders Quadrant
    Complements our successful acquisition of Dedigate, N.V., in 2005
    Over 280 dedicated team members focused on delivering enterprise
    class hosting services
    Utility computing platform Infinistructure is highly scalable
    and can be easily deployed in new locations
    Proprietary service delivery platform
    digitalOps®
    can be leveraged across all of Terremarks managed services 30




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##### Table of Contents




    Robust utility computing and disaster recovery capabilities
    Highly knowledgeable and experienced solution oriented sales
    force with a national footprint  
    On July 31, 2007, we completed a debt financing agreement
    with Credit Suisse and Tennenbaum Capital Partners for a total
    of $250.0 million. The first term loan, due July 2012, is a
    $150.0 million loan secured by a first priority lien on
    substantially all of our assets and bears annual cash interest
    at Eurodollar rate plus 3.75%. The second term loan, due January
    2013, is a $100.0 million loan secured by a second priority
    lien on substantially all of our assets and bears annual cash
    interest at Eurodollar rate plus 7.75%, including a
    payable-in-kind
    portion of 4.5% annually to be added to the principal. A portion
    of the proceeds was used to repay all of our outstanding secured
    debt and the remainder was used to fund capital expenditures to
    support our expansion plan and for working capital.
    On September 4, 2007, we acquired two parcels of real
    property, including two buildings, in Santa Clara,
    California that are adjacent to the Companys current
    facilities. We began construction of a data center on these two
    properties.
    On January 24, 2008, we entered into a stock purchase
    agreement to purchase the stock of Accris Corporation
    (Accris), a Florida corporation, for an aggregate
    price of $0.8 million in cash and 390,000 shares of
    Terremark common stock with a fair value of $2.1 million
    for a total purchase price of $2.9 million, including
    closing costs. Based in Boca Raton, Florida for over
    7 years, Accris is widely recognized as leader in the area
    of IT disaster recovery, business continuity, virtualization and
    data storage systems.  Results
    of Operations
  Results
    of Operations for the Year Ended March 31, 2008 as Compared
    to the Year Ended March 31, 2007.
  Revenue.
  For the YearEndedMarch 31,2008


2007U.S. Operations


87
%


84
%Outside U.S.


13
%


16
%100
%


100
%     For the Year Ended March 31,2008





2007Colocation

$
61,228,544



33
%

$
41,865,161



42
%Managed and professional services


110,933,378



59
%


43,793,652



43
%Exchange point services


12,691,169



7
%


9,031,100



9
%Equipment resales


2,560,708



1
%


6,258,268



6
%$
187,413,799



100
%

$
100,948,181



100
%     
    colocation services, such as licensing of space and provision of
    power;
    exchange point services, such as peering and cross connects;
    procurement and installation of equipment; and 31




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##### Table of Contents




    managed and professional services, such as network management,
    managed web hosting, outsourced network operating center
    services, network monitoring, procurement of connectivity,
    managed router services, secure information services, technical
    support and consulting.            Cost of Revenues.
    General and Administrative Expenses.
 32




---



##### Table of Contents



Sales and Marketing Expenses.
  Depreciation and Amortization
    Expenses.
  Change in Fair Value of Derivatives.
        Interest Expense.
  Interest Income.
 33




---



##### Table of Contents



Other financing charges.
  Early Extinguishment of Debt and Net Loss.
  Results
    of Operations for the Year Ended March 31, 2007 as Compared
    to the Year Ended March 31, 2006.
  Revenue.
  For the YearEndedMarch 31,2007


2006U.S. Operations


84
%


88
%Outside U.S.


16
%


12
%100
%


100
%     For the Year Ended March 31,2007





2006Colocation

$
41,865,161



42
%

$
28,126,193



45
%Managed and professional services


43,793,652



43
%


25,958,032



42
%Exchange point services


9,031,100



9
%


6,308,708



10
%Equipment resales


6,258,268



6
%


2,136,349



3
%$
100,948,181



100
%

$
62,529,282



100
%     
    colocation services, such as licensing of space and provision of
    power;
    exchange point services, such as peering and cross connects;
    procurement and installation of equipment; and
    managed and professional services, such as network management,
    managed web hosting, outsourced network operating center
    services, network monitoring, procurement of connectivity,
    managed router services, secure information services, technical
    support and consulting.     34




---



##### Table of Contents



Cost of Revenues.
    General and Administrative Expenses.
  Sales and Marketing Expenses.
  Depreciation and Amortization
    Expenses.
 35




---



##### Table of Contents



Change in Fair Value of Derivatives Embedded within
    Convertible Debt.
    Interest Expense.
  Interest Income.
  Liquidity
    and Capital Resources
    Sources
    and Uses of Cash
     36




---



##### Table of Contents



Liquidity
      Indebtedness
    New
    Senior Secured Credit Facilities
   37




---



##### Table of Contents



38




---



##### Table of Contents



Senior
    Convertible Notes
        6.625% Senior Convertible
    Notes
  Series B
    Notes
     39




---



##### Table of Contents



6.625% Senior
    Convertible Notes
      Debt
    Covenants
     40




---



##### Table of Contents



Guarantees
    and Commitments
      Capital Lease


Operating


Convertible


MortgageObligations


Leases


Debt


Payable


Total2009

$
1,574,056


$
10,607,068


$
6,404,190


$
18,044,792


$
36,630,1062010


1,111,712



8,910,257



38,224,806



20,697,283



68,944,0582011


530,676



7,052,212



3,788,970



23,136,361



34,508,2192012


155,719



6,576,767



3,788,970



23,063,975



33,585,4312013






6,384,546



3,788,970



267,745,743



277,919,259Thereafter






39,974,212



59,086,486







99,060,698$
3,372,163


$
79,505,062


$
115,082,392


$
352,688,154


$
550,647,771   ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.       41




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA.  Form 10-K
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.    ITEM 9A.
    CONTROLS
    AND PROCEDURES.  Evaluation
    of Disclosure Controls and Procedures
  Disclosure
      Rule 13a-15(e)
  Financial
    Reporting
  Rule 13a-15(f)
 42




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION.    Form 10-K
 PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.  Form 10-K
      ITEM 11.
    EXECUTIVE
    COMPENSATION.    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS.  Form 10-K
 43




---



##### Table of Contents



ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE.              ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES.   44




---



##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENTS SCHEDULES.    Financial Statements
  
    Managements Report on Internal Control over Financial
    Reporting.
    Report of Independent Registered Certified Public Accounting
    Firm on the Financial Statements  KPMG LLP.
    Report of Independent Registered Certified Public Accounting
    Firm on Internal Control Over Financial Reporting 
    KPMG LLP.
    Consolidated Balance Sheets as of March 31, 2008 and 2007.
    Consolidated Statements of Operations for the Years Ended
    March 31, 2008, 2007 and 2006.
    Consolidated Statement of Changes in Stockholders Equity
    for the Three Year Period Ended March 31, 2008.
    Consolidated Statements of Cash Flows for the Years Ended
    March 31, 2008, 2007 and 2006.
    Notes to Consolidated Financial Statements.  Financial Statement Schedules
    Exhibits
  ExhibitNumber

Exhibit Description1
.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).1
.2

Underwriting Agreement, dated March 22, 2007, by and among
    Terremark Worldwide, Inc. and Credit Suisse Securities (USA)
    LLC, as representative of the several underwriters named in
    Schedule A thereto (previously filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    filed on March 23, 2007).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

Second Amended and Restated Bylaws of the Company (previously
    filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on February 7, 2008).3
.5

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
.6

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 filed 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). 45




---



##### Table of Contents



ExhibitNumber

Exhibit Description4
.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).4
.6

Indenture dated as of January 5, 2007 by Terremark
    Worldwide, Inc. and Bank of New York Trust Company, N.A.,
    as trustee (previously filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    filed on January 11, 2007).4
.7

Indenture dated as of May 2, 2007 by Terremark Worldwide,
    Inc. and Bank of New York Trust Company, N.A., as trustee
    (previously filed as an exhibit to the Companys Current
    Report on
    Form 8-K
    filed on May 4, 2007).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

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
.4

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
.5

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
.6

Agreement between Fundacão 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
.7

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).10
.8

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
.9

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
.10

Dedigate Stock Purchase Agreement (previously filed as an
    exhibit to the Companys Quarter Report on
    Form 10-Q
    filed August 9, 2005).10
.11

Dedigate Registration Rights Agreement (previously filed as an
    exhibit to the Companys Quarter Report on
    Form 10-Q
    filed August 9, 2005).10
.12

2005 Executive Incentive Compensation Plan (previously filed as
    an exhibit to the Companys Definitive Proxy Statement
    relating to the Companys 2005 Annual Meeting of
    Stockholders).+10
.13

Amended and Restated Employment Letter Agreement between
    Terremark Worldwide, Inc. and Arthur J. Money (previously filed
    as an exhibit to the Companys Annual Report on
    Form 10-K
    filed on June 19, 2006).+#10
.14

Consulting Agreement, dated as of November 8, 2006, by and
    between Terremark Management Services, Inc. and Guillermo Amore
    (previously filed as an exhibit to the Companys Quarter
    Report on
    Form 10-Q
    filed on November 9, 2006).+#10
.15

Purchase Agreement dated as of January 5, 2007, by and
    among Terremark Worldwide, Inc., as issuer, the guarantors named
    therein, the agent named therein, 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 11, 2007).10
.16

Registration Rights Agreement dated as of January 5, 2007
    by and among Terremark Worldwide, Inc. and Credit Suisse
    International (previously filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    filed on January 11, 2007).10
.17

Capital Lease Facility Commitment Letter by and between TWW and
    Credit Suisse Securities (USA) LLC and Credit Suisse, Cayman
    Islands Branch dated January 5, 2007 (previously filed as
    an exhibit to the Companys Current Report on
    Form 8-K
    filed on January 11, 2007). 46




---



##### Table of Contents



ExhibitNumber

Exhibit Description10
.18

Form of Note of Terremark Worldwide, Inc. issued to Credit
    Suisse, International (previously filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    filed on January 11, 2007).10
.19

Participation Agreement, dated as of February 15, 2007, by
    and among Culpeper Lessor
    2007-1 LLC,
    as Lessor, NAP of the Capital Region, LLC, as Lessee and
    Terremark Worldwide, Inc., as Guarantor (previously filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    filed on February 20, 2007).10
.20

Lease Agreement, dated as of February 15, 2007, by and
    between Culpeper Lessor
    2007-1 LLC
    and NAP of the Capital Region, LLC (previously filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    filed on February 20, 2007).10
.21

Guaranty, dated as of February 15, 2007 by Terremark
    Worldwide, Inc. in favor of Culpeper Lessor
    2007-1 LLC
    (previously filed as an exhibit to the Companys Current
    Report on
    Form 8-K
    filed on February 20, 2007).10
.22

Lease Supplement, Memorandum of Lease Agreement and Remedies,
    dated as of February 15, 2007, by and among Culpeper Lessor
    2007-I LLC, as Lessor, NAP of the Capital Region, LLC, as Lessee
    and James W. DeBoer, as Trustee (previously filed as an exhibit
    to the Companys Current Report on
    Form 8-K
    filed on February 20, 2007).10
.23

Appendix I to Participation Agreement, Lease Agreement and
    Other Operative Documents  Definitions and
    Interpretation (previously filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    filed on February 20, 2007).10
.24

Interest Purchase Agreement, dated May 11, 2007, by and
    among the Company and the Sellers (previously filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    filed on May 16, 2007).10
.25

Registration Rights Agreement, dated May 11, 2007, by and
    among the Company and the Sellers (previously filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    filed on May 16, 2007).10
.26

First Lien Senior Secured Credit Agreement, dated as of
    July 31, 2007, by and among the Company, each lender from
    time to time party thereto, Credit Suisse, as administrative
    agent and collateral agent and Societe Generale, as syndication
    agent (previously filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    filed on August 6, 2007).10
.27

Form of First Lien Term Note (previously filed as an exhibit to
    the Companys Current Report on
    Form 8-K
    filed on August 6, 2007).10
.28

Second Lien Senior Secured Credit Agreement, dated as of
    July 31, 2007, by and among the Company, each lender from
    time to time party thereto and Credit Suisse, as administrative
    agent and collateral agent (previously filed as an exhibit to
    the Companys Current Report on
    Form 8-K
    filed on August 6, 2007).10
.29

Form of Second Lien Term Note (previously filed as an exhibit to
    the Companys Current Report on
    Form 8-K
    filed on August 6, 2007).10
.30

First Lien Security Agreement, dated as of July 31, 2007,
    by and among the Company, the other Persons listed on the
    signature pages thereto, the Additional Grantors and Credit
    Suisse, as collateral agent for the Secured Parties (previously
    filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on August 6, 2007).10
.31

Second Lien Security Agreement, dated as of July 31, 2007,
    by and among the Company, the other Persons listed on the
    signature pages thereto, the Additional Grantors and Credit
    Suisse, as collateral agent for the Secured Parties (previously
    filed as an exhibit to the Companys Current Report on
    Form 8-K
    filed on August 6, 2007).10
.32

First Lien Subsidiary Guaranty, dated as of July 31, 2007,
    by and among the Subsidiary Guarantors and the Additional
    Guarantors in favor of the Secured Parties (previously filed as
    an exhibit to the Companys Current Report on
    Form 8-K
    filed on August 6, 2007).10
.33

Second Lien Subsidiary Guaranty, dated as of July 31, 2007,
    by and among the Subsidiary Guarantors and the Additional
    Guarantors in favor of the Secured Parties (previously filed as
    an exhibit to the Companys Current Report on
    Form 8-K
    filed on August 6, 2007).10
.34

Intercreditor Agreement, dated as of July 31, 2007, by and
    among the Company, Credit Suisse, Cayman Islands Branch, in its
    capacity as collateral agent for the First Lien Lenders,
    including its successors and assigns from time to time, and
    Credit Suisse, in its capacity as collateral agent for the
    Second Lien Lenders, including its successors and assigns from
    time to time (previously filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    filed on August 6, 2007). 47




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##### Table of Contents



ExhibitNumber

Exhibit Description10
.35

Amendment to Terremark Worldwide, Inc. 2005 Executive Incentive
    Compensation Plan (previously filed on September 6, 2007 as
    an exhibit to the Companys Proxy Statement Mailed to
    Stockholders in Connection with the Companys 2007 Annual
    Meeting of stockholders).10
.36

Real Property Purchase Agreement, dated March 9, 2007, by
    and between DPJV II, LLC, BDP Partners, L.P., EJLJ Mathews
    Family Partners, L.P. and EGP Partners, L.P. and NAP of the
    Americas/West, Inc. (previously filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    filed on September 10, 2007).10
.37

Lease Termination Agreement, dated July 2, 2007, by and
    between NAP of the Americas/West, Inc. and Equant, Inc.
    (previously filed as an exhibit to the Companys Current
    Report on
    Form 8-K
    filed on September 10, 2007).10
.38

Employment Agreement with Manuel D. Medina dated
    February 7, 2008 (previously filed as an exhibit to the
    Companys Quarterly Report on
    Form 10-Q
    filed on February 8, 2008).10
.39

Form of Indemnification Agreement for directors and officers of
    the Company.*+#10
.40

Form of Restricted Stock Agreement.*+#10
.41

Employment Agreement with Adam T. Smith dated June 13,
    2008.*+#10
.42

Employment Agreement with Jose A. Segrera dated June 13,
    2008.*+#10
.43

Employment Agreement with Marvin Wheeler dated June 13,
    2008.*+#10
.44

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).+#21
.1

Subsidiaries of the Company*23
.2

Consent of KPMG 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 U.S.C. 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 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002*     *
    
    Filed herewith+
    
    Compensation Plan or Arrangement#
    
    Management Contract 48




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##### Table of Contents



SIGNATURES    TERREMARK WORLDWIDE, INC.
  By:
    /s/  MANUEL
    D. MEDINA   Chairman of the Board, President and
 Chief Executive Officer
 (Principal Executive Officer)
    By:
    /s/  JOSE
    A. SEGRERA   Executive Vice President and Chief Financial Officer
 (Principal Financial and Accounting Officer)
      Signature

Title

Date/s/  MANUEL
    D. MEDINAManuel
    D. Medina

Chairman of the Board, President
    and Chief Executive Officer
    (Principal Executive Officer)

June 16, 2008/s/  GUILLERMO
    AMOREGuillermo
    Amore

Director

June 16, 2008/s/  TIMOTHY
    ELWESTimothy
    Elwes

Director

June 16, 2008/s/  ANTONIO
    S. FERNANDEZAntonio
    S. Fernandez

Director

June 16, 2008/s/  HON.
    ARTHUR L. MONEYHon.
    Arthur L. Money

Director

June 16, 2008/s/  MARVIN
    S. ROSENMarvin
    S. Rosen

Director

June 16, 2008/s/  MIGUEL
    J. ROSENFELDMiguel
    J. Rosenfeld

Director

June 16, 2008/s/  RODOLFO
    A. RUIZRodolfo
    A. Ruiz

Director

June 16, 2008/s/  JOSEPH
    R. WRIGHT, JR.Joseph
    R. Wright, Jr.

Director

June 16, 2008/s/  JOSE
    A. SEGRERAJose
    A. Segrera

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

June 16, 2008  49




---



##### Table of Contents



EXHIBIT SCHEDULE
  ExhibitNumber

Description10
.39

Form of Indemnification Agreement for directors and officers of
    the Company.*10
.40

Form of Restricted Stock Agreement.*10
.41

Employment Agreement with Adam T. Smith dated June 13,
    2008.*10
.42

Employment Agreement with Jose A. Segrera dated June 13,
    2008.*10
.43

Employment Agreement with Marvin Wheeler dated June 13,
    2008.*21
.1

Subsidiaries of the Company*23
.2

Consent of KPMG LLP*31
.1

Certification of Chief Executive Officer, pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002*31
.2

Certification of Chief Financial Officer, pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002*32
.1

Certification of Chief Executive Officer, pursuant to
    18 U.S.C. 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 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002*     *
    
    Filed herewith. 50




---



##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Rule 13a-15(f)
      page F-3,
 F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
           Accounting for Uncertainty in Income Taxes  an
    Interpretation of FASB No. 109
  Internal Control  Integrated
    Framework
  KPMG
    LLP
     F-2




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control 
    Integrated Framework
        Internal Control  Integrated
    Framework
    KPMG
    LLP
     F-3




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  March 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
96,989,932


$
105,090,779Restricted cash


755,386



832,178Accounts receivable, net


44,048,075



23,586,471Current portion of capital lease receivable


1,860,745



2,616,175Prepaid expenses and other current assets


8,493,424



5,085,263Total current assets


152,147,562



137,210,866Restricted cash


1,585,234



1,602,963Property and equipment, net


231,674,274



137,936,954Debt issuance costs, net


9,869,503



5,898,355Other assets


6,901,083



5,439,708Capital lease receivable, net of current portion


345,074



1,885,646Intangibles, net


15,417,502



2,900,000Goodwill


85,919,431



16,771,189Total assets

$
503,859,663


$
309,645,681LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of debt and capital lease obligations

$
2,999,741


$
2,221,677Accounts payable and other current liabilities


57,947,054



33,415,886Total current liabilities


60,946,795



35,637,563Mortgage payable, less current portion


249,222,856



45,531,211Convertible debt


86,284,017



69,914,065Derivatives embedded with convertible debt, at estimated fair
    value






16,796,865Notes payable






42,279,711Deferred rent and other liabilities


9,729,736



5,245,487Deferred revenue


7,154,424



4,742,258Total liabilities


413,337,828



220,147,160Commitments and contingencies






Stockholders equity:Series I convertible preferred stock: $.001 par value,
    312 and 323 shares issued and outstanding (liquidation
    value of approximately $7.8 million and $8.3 million)


1



1Common stock: $.001 par value, 100,000,000 shares
    authorized; 59,172,022 and 55,813,129 shares issued


59,172



55,813Common stock warrants


11,216,638



12,596,638Additional paid-in capital


420,550,532



377,138,006Accumulated deficit


(342,425,836
)


(300,197,561
)Accumulated other comprehensive income


1,169,241



89,991Note receivable


(47,913
)


(184,367
)Total stockholders equity


90,521,835



89,498,521Total liabilities and stockholders equity

$
503,859,663


$
309,645,681   The accompanying notes are an
    integral part of these consolidated financial statements.
 F-4




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  For the Year Ended March 31,2008


2007


2006Revenues

$
187,413,799


$
100,948,181


$
62,529,282ExpensesCost of revenues, excluding depreciation and amortization


100,886,124



56,902,374



38,823,880General and administrative


32,266,578



17,613,604



15,624,516Sales and marketing


20,886,849



11,440,703



8,548,049Depreciation and amortization


18,685,257



11,010,862



8,678,168Gain on sale of asset










(499,388
)Operating expenses


172,724,808



96,967,543



71,175,225Income (loss) from operations


14,688,991



3,980,638



(8,645,943
)Other income (expenses)Interest expense


(32,105,034
)


(28,214,563
)


(25,048,519
)Interest income


5,230,434



1,222,028



1,306,288Loss on early extinguishment of debt


(26,949,577
)






Change in fair value of derivatives


(1,106,625
)


8,276,712



(4,761,000
)Other financing charges


(1,173,079
)






Total other expenses


(56,103,881
)


(18,715,823
)


(28,503,231
)Loss before income taxes


(41,414,890
)


(14,735,185
)


(37,149,174
)Income taxes


813,385



216,981



Net loss


(42,228,275
)


(14,952,166
)


(37,149,174
)Preferred dividend


(794,063
)


(676,150
)


(726,889
)Net loss attributable to common stockholders

$
(43,022,338
)

$
(15,628,316
)

$
(37,876,063
)Net loss per common share:Basic

$
(0.74
)

$
(0.35
)

$
(0.88
)Diluted

$
(0.74
)

$
(0.36
)

$
(0.88
)Weighted average common shares outstanding  basic


58,134,269



44,151,259



42,973,114Weighted average common shares outstanding  diluted


58,134,269



44,267,041



42,973,114   The accompanying notes are an
    integral part of these consolidated financial statements.
 F-5




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##### Table of Contents






TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
  AccumulatedPreferred

Common Stock Par

Common

Common

Additional



OtherStock

Value $.001

Stock

Stock

Paid-In

Accumulated

Comprehensive

Treasury

NotesSeries I

Issued Shares

Amount

Warrants

Options

Capital

Deficit

Income (loss)

Stock

Receivable

TotalBalance at March 31, 2005

$
1


42,587,321

$
42,587

$
13,599,704

$
1,538,260

$
279,063,085

$
(246,674,069
)
$
(172,882
)
$
(7,220,637
)



$
40,176,049Components of comprehensive loss:Net loss




















(37,149,174
)










(37,149,174
)Foreign currency translation adjustment























(144,874
)







(144,874
)Total comprehensive loss
































(37,294,048
)Conversion of preferred stock





146,655


147








(147
)













Exercise of stock options





113,456


113








185,869














185,982Warrants issued for services











45,226




















45,226Accrued dividends on preferred stock

















(726,889
)













(726,889
)Exercise of warrants





15,000


15


(41,070
)




94,555














53,500Forfeiture of stock options














(956,256
)

956,256














Warrants expired











(352,200
)




352,200














Share-based compensation

















755,644














755,644Issuance of common stock in lieu of cash-preferred stock dividend





27,920


28








173,355














173,383Common stock issued in acquisition





1,600,000


1,600








10,753,600














10,755,200Loans issued to employees, net of repayments





























(287,730
)

(287,730
)Balance at March 31, 2006


1


44,490,352


44,490


13,251,660


582,004


291,607,528


(283,823,243
)

(317,756
)

(7,220,637
)

(287,730
)

13,836,317   The accompanying notes are an
    integral part of these consolidated financial statements.
 F-6




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 (Continued)
  AccumulatedPreferred


Common Stock Par


Common


Common


Additional





OtherStock


Value $.001


Stock


Stock


Paid-In


Accumulated


Comprehensive


Treasury


NotesSeries I


Issued Shares


Amount


Warrants


Options


Capital


Deficit


Income (loss)


Stock


Receivable


TotalBalance at March 31, 2006


1



44,490,352



44,490



13,251,660



582,004



291,607,528



(283,823,243
)


(317,756
)


(7,220,637
)


(287,730
)


13,836,317Components of comprehensive loss:Net loss


























(14,952,166
)














(14,952,166
)Foreign currency translation adjustment






























407,747







(24,957
)


382,790Total comprehensive loss










































(14,569,376
)Conversion of preferred stock






53,637



54











2,225



















2,279Exercise of stock options






57,655



58











292,732



















292,790Warrants issued in exchange for services














92,988



























92,988Accrued dividends on preferred stock






















(676,029
)


















(676,029
)Expiration of warrants














(748,010
)






748,010



















Stock tendered in payment of services






211,485



211











1,313,868



















1,314,079Share-based compensation






















491,507



















491,507Sale of treasury stock


























(1,422,152
)






7,220,637







5,798,485Issuance of common stock






11,000,000



11,000











82,776,161



















82,787,161Repayments of loans issued to employees






































128,320



128,320Adoption of SFAS No. 123R


















(582,004
)


582,004



















Balance at March 31, 2007


1



55,813,129



55,813



12,596,638







377,138,006



(300,197,561
)


89,991







(184,367
)


89,498,521Components of comprehensive loss:Net loss


























(42,228,275
)














(42,228,275
)Foreign currency translation adjustment






























1,079,250







(17,633
)


1,061,617Total comprehensive loss










































(41,166,658
)Conversion of preferred stock






36,667



36











(36
)


















Common stock issued in connection with acquisition






2,315,544



2,316











16,743,618



















16,745,934Exercise of stock options






117,922



118











613,252



















613,370Accrued dividends on preferred stock






















(794,063
)


















(794,063
)Expiration of warrants














(1,380,000
)






1,380,000



















Issuance of nonvested stock






218,023



218











(218
)


















Share-based compensation






















2,569,871



















2,569,871Issuance of common stock






670,737



671











4,864,278



















4,864,949Repayments of loans issued to employees






































154,087



154,087Premium on issuance of convertible debt






















13,727,707



















13,727,707Expiration of early conversion incentive feature within
    convertible debt






















4,308,117



















4,308,117Balance at March 31, 2008

$
1



59,172,022


$
59,172


$
11,216,638


$



$
420,550,532


$
(342,425,836
)

$
1,169,241


$



$
(47,913
)

$
90,521,835   The accompanying notes are an
    integral part of these consolidated financial statements.
 F-7




---



##### Table of Contents





TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Year Ended March 31,2008


2007


2006Cash flows from operating activities:Net loss

$
(42,228,275
)

$
(14,952,166
)

$
(37,149,174
)Adjustments to reconcile net loss to net cash used in operating
    activitiesDepreciation and amortization


18,685,257



11,010,862



8,678,168Loss on early extinguishment of debt


26,949,577







Change in fair value of derivatives


1,106,625



(8,276,712
)


4,761,000Accretion on debt, net


3,972,044



8,327,261



6,769,030Amortization of debt issue costs


1,518,927



2,042,999



1,814,480Provision for doubtful accounts


1,555,144



1,068,478



249,425Interest payment in kind on notes and mortgage payable


4,151,508



1,625,440



823,039Share-based compensation


3,962,657



766,957



975,644Disposal of property and equipment










(324,641
)Other, net










(317,549
)Warrants issued for services






92,988



45,226(Increase) decrease in:Accounts receivable


(17,298,342
)


(14,099,965
)


(5,835,215
)Capital lease receivable, net of unearned interest


2,042,201



1,866,867



1,365,713Restricted cash


94,522



(13,341
)


1,754,981Prepaid expenses and other assets


(3,147,002
)


(2,467,328
)


(2,879,615
)Increase (decrease) in:Accounts payable and other current liabilities


(7,810,510
)


6,160,368



2,776,463Deferred revenue


4,179,777



3,983,935



3,800,060Deferred rent and other liabilities


393,053



408,351



770,295Net cash used in operating activities


(1,872,837
)


(2,455,006
)


(11,922,670
)Cash flows from investing activities:Restricted cash






2,199,945



1,782,956Purchase of property and equipment


(80,036,387
)


(18,463,769
)


(8,483,784
)Proceeds from sale of assets










762,046Acquisition of Dedigate, net of cash acquired










203,308Acquisition of Data Return, LLC, net of cash acquired


(68,625,297
)






Acquisition of Accris Corporation, net of cash acquired


(681,808
)






Issuance of notes receivable










(344,530
)Repayments of notes receivable


154,087



103,363



56,800Net cash used in investing activities


(149,189,405
)


(16,160,461
)


(6,023,204
)Cash flows from financing activities:Payment on loans and mortgage payable


(100,545,487
)


(744,630
)


(4,938,566
)Issuance of convertible debt






4,000,000



Sale of treasury stock






5,798,485



Payment of debt issuance costs


(8,835,232
)


(966,412
)


(4,111
)Proceeds from issuance of common stock


4,404,727



82,787,161



Proceeds from issuance of mortgage payable


249,500,000







Redemption of preferred stock






(646,693
)


Payments of preferred stock dividends


(598,813
)


(673,533
)


(383,834
)Issuance of senior subordinated secured notes






10,000,000



Proceeds from capital lease facility






4,403,573Payments under capital lease obligations


(1,577,171
)


(946,429
)


(566,307
)Proceeds from exercise of stock options and warrants


613,371



292,790



239,482Net cash provided by (used in) financing activities


142,961,395



103,304,312



(5,653,336
)Net (decrease) increase in cash and cash equivalents


(8,100,847
)


84,688,845



(23,599,210
)Cash and cash equivalents at beginning of period


105,090,779



20,401,934



44,001,144Cash and cash equivalents at end of period

$
96,989,932


$
105,090,779


$
20,401,934   The accompanying notes are an
    integral part of these consolidated financial statements.
 F-8




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Business
    and Organization    2.
    Summary
    of Significant Accounting Policies    Reclassifications
    Use of
    estimates
    Revenue
    recognition and allowance for bad debts
    No. 00-21,
 F-9




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  EITF 00-21,
    EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent, Bulletin 90-1, Accounting for Separately Priced Extended Warranty and
    Product Contracts.
      Significant
    concentrations
    Derivatives
     F-10




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Share-based
    compensation
  Share-Based Payment
    Accounting for Stock Issued
    to Employees Accounting for Stock-Based Compensation
 F-11




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006Net loss attributable to common stockholders  as
    reported

$
(37,876,063
)Employee related share-based compensation expense included in
    net loss


975,644Incremental share-based compensation expense if the fair value
    method had been adopted


(3,691,670
)Net loss attributable to common stockholders  pro
    forma

$
(40,592,089
)Basic loss per common share  as reported

$
(0.88
)Basic loss per common share  pro forma

$
(0.94
)Diluted loss per common share  as reported

$
(0.88
)Diluted loss per common share  pro forma

$
(0.94
)   Stock
    warrants
    Earnings
    (loss) per share
     F-12




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other
    comprehensive loss
      Cash
    and cash equivalents
    Restricted
    cash
    Property
    and equipment
      Capitalized
    Software
  98-1, Accounting for the Cost of Software Developed or
    Obtained for Internal Use, (SOP 98-1). SOP 98-1
 F-13




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill
    and Impairment of long-lived assets and long-lived assets to be
    disposed of
        Rent
    expense
    Fair
    value of financial instruments
   F-14




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    March 31, 2008


March 31, 2007Book Value


Fair Value


Book Value


Fair ValueMortgage payable, including current portion

$
250,722,856


$
247,811,706


$
46,322,515


$
48,177,123Notes payable










42,279,711



50,551,949Convertible debt


86,284,017



86,717,644



69,914,065



86,771,627     Income
    taxes
    Accounting for
    Uncertainty in Income Taxes  an Interpretation of
    FASB Statement No. 109
   F-15




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Recent
    Accounting Pronouncements
  Accounting
    for Certain Hybrid Instruments, Accounting for Derivative
    Instruments and Hedging Activities Accounting for Transfers and
    Servicing of Financial Assets and Extinguishments of
    Liabilities  a replacement of FASB Statement
    No. 125
  Fair Value Measurements
  No. 06-7, Issuers Accounting for a Previously Bifurcated
    Conversion Option in a Convertible Debt Instrument When the
    Conversion Option No Longer Meets the Bifurcation Criteria in
    FASB Statement No. 133, Accounting for Derivative
    Instruments and Hedging Activities (EITF 06-7). 00-19, Accounting for Derivative Financial Instruments Indexed
    to, and Potentially Settled in, a Companys Own
    Stock, (EITF 00-19). EITF 00-19 EITF 06-7, EITF 06-7 EITF 06-7. EITF 06-7
 F-16




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  EITF 06-7,
  EITF 00-19-2, Accounting for Registration Payment
    Arrangements (FSP 00-19-2). FSP 00-19-2 Accounting for
    Contingencies. FSP 00-19-2 FSP 00-19-2. FSP 00-19-2 FSP 00-19-2
  The Fair Value Option for Financial Assets and
    Financial Liabilities  Including an Amendment of FASB
    Statement No. 115
  Business Combinations Business Combinations,
  Noncontrolling Interests in Consolidated Financial
    Statements, an Amendment of ARB No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities Derivative Instruments and Hedging Activities
 F-17




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. FAS 142-3, Determination of the Useful Life of Intangible Assets No. FAS 142-3 No. FAS 142-3
  3.
    Acquisitions  five-day
  Cash and cash equivalents

$
109,248Accounts receivable


2,172,035Inventory


763,970Goodwill


2,964,769Accounts payable and accrued expenses


(3,141,827
)Net assets acquired

$
2,868,195   five-day
 F-18




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Cash and cash equivalents

$
41,095Accounts receivable


2,546,372Property and equipment


9,786,000Other assets


950,813Intangible assets, including goodwill


80,825,287Accounts payable and accrued expenses


(6,894,281
)Other liabilities


(3,849,216
)Net assets acquired

$
83,406,070     Gross Carrying


Amortization


AccumulatedAmount


Period


AmortizationIntangibles no longer amortized:Goodwill

$
66,125,287






$
Trademarks


4,100,000







Amortizable intangibles:Customer base


6,500,000



8 years



690,625Technology


4,000,000



5 years



680,000Other


100,000



3 years



28,333     For the Years EndedMarch 31,(unaudited)2008


2007Revenues  pro forma

$
197,751,889


$
156,985,181Net loss  pro forma

$
(42,303,283
)

$
(17,934,166
)Net loss per common share:Basic and diluted  pro forma

$
(0.74
)

$
(0.40
)  F-19




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    Restricted
    Cash  March 31,2008


2007Restricted cash consists of:Security deposits under operating leases

$
2,340,620


$
1,599,710Escrow deposits under mortgage loan agreement






832,178Capital improvements reserve






3,2532,340,620



2,435,141Less: current portion


(755,386
)


(832,178
)$
1,585,234


$
1,602,963   5.
    Accounts
    Receivable  March 31,2008


2007Accounts receivable consists of:Accounts receivable

$
36,371,552


$
22,752,676Unbilled revenue


8,667,031



2,034,303Allowance for doubtful accounts


(990,508
)


(1,200,508
)$
44,048,075


$
23,586,471     6.
    Prepaid
    Expenses and Other Assets  March 31,2008


2007Prepaid expenses and other assets consists of:Prepaid expenses

$
3,090,786


$
1,311,820Deferred installation costs


5,571,544



4,327,300Deposits


3,646,384



1,703,757Deferred rent receivable


1,085,872



832,733Interest and other receivables


424,355



499,788Other assets


1,575,566



1,849,57315,394,507



10,524,971Less: current portion


(8,493,424
)


(5,085,263
)$
6,901,083


$
5,439,708  F-20




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    Property
    and Equipment  March 31,2008


2007Property and equipment consists of:Land

$
24,172,193


$
14,575,176Building


55,335,724



55,335,724Building and leasehold improvements


68,652,594



50,442,331Machinery and equipment


52,274,739



38,296,663Construction in progress


54,677,025



3,682,770Office equipment, furniture and fixtures


29,793,591



12,125,967284,905,866



174,458,631Less accumulated depreciation and amortization


(53,231,592
)


(36,521,677
)$
231,674,274


$
137,936,954   8.
    Intangibles  March 31,2008


2007Intangibles consist of:Customer base

$
8,300,000


$
1,800,000Technology


6,400,000



2,400,000Trademarks


4,100,000



Non-compete agreements


100,000



18,900,000



4,200,000Accumulated amortization


(3,482,498
)


(1,300,000
)$
15,417,502


$
2,900,000     Non-CompeteCustomer Base


Technology


Agreements2009

$
992,500


$
1,400,000


$
33,3332010


992,500



1,295,714



33,3332011


992,500



800,000



5,0002012


992,500



800,000



2013


992,500



120,000



Thereafter


1,867,622







$
6,830,122


$
4,415,714


$
71,666    F-21




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    Accounts
    Payable and Other Current Liabilities  March 31,2008


2007Accounts payable and other current liabilities consists of:Accounts payable

$
29,383,405


$
11,721,406Accrued expenses


17,246,649



12,994,896Current portion of deferred revenue


6,320,659



2,766,984Interest payable


2,884,780



3,663,248Customer prepayments


2,111,561



2,269,352$
57,947,054


$
33,415,886   10.
    Mortgage
    Payable  March 31,2008


2007Mortgage Payable consists of:First Lien Credit Agreement, face value of $150 million,
    due August 15, 2012. Principal of $375,000 is payable
    quarterly. Interest is payable monthly at Eurodollar rate plus
    3.75% at the election of the Company. (Effective interest rate
    of 7.6)%

$
148,188,463


$
Second Lien Credit Agreement, face value of $100 million,
    due February 2, 2013. Interest is payable at Eurodollar
    rate plus 7.75% at the election of the Company. (Effective
    interest rate of 12.1)%


102,534,393



Citigroup Global Markets, face value of $49 million, due
    February 2009. Interest is payable annually at greater of
    6.75% or LIBOR plus 4.75%. (Effective interest rate of 10.7)%






46,322,516250,722,856



46,322,516Less: current portion


(1,500,000
)


(791,305
)$
249,222,856


$
45,531,211    F-22




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        No. 96-19, Debtors Accounting for a Modification or Exchange
    of Debt Instruments (EITF 96-19), EITF 96-19,
     F-23




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       F-24




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    Convertible
    Debt  March 31,2008


2007Convertible debt consists of:9% Senior Convertible Notes, face value of $29.1 and
    $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 (Effective interest rate of 26.5% and 23.4%)

$
24,834,645


$
65,510,1916.625% Senior Convertible Notes, face value of
    $57.2 million, due June 15, 2013, and convertible into
    shares of the Companys common stock at $12.50 per share.
    Interest at 6.625% is payable semi-annually, on December 15 and
    June 15 (Effective interest rate of 6.6%)


57,192,000



0.5% Senior Subordinated Convertible Notes, face value of
    $4.0 million, due June 30, 2009, and convertible into
    shares of the Companys common stock at $8.14 per share.
    Interest at 0.5% is payable semi-annually, on December 1 and
    July 1 (Effective interest rate of 0.72% and 0.74%)


4,257,372



4,403,874$
86,284,017


$
69,914,065     No. 96-19, Debtors Accounting for a Modification or Exchange
    of Debt Instruments (EITF 96-19). EITF 96-19,
   F-25




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             F-26




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             F-27




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Convertible


MortgageDebt


Payable


Total2009

$



$
1,500,000


$
1,500,0002010


33,092,966



1,500,000



34,592,9662011






1,500,000



1,500,0002012






1,500,000



1,500,0002013






245,964,477



245,964,477Thereafter


57,192,000







57,192,00090,284,966



251,964,477



342,249,443Less: Unamortized premiums and discounts


(4,000,949
)


(1,241,621
)


(5,242,570
)$
86,284,017


$
250,722,856


$
337,006,873   12.
    Derivatives  No. 06-7 Issuers Accounting for a Previously Bifurcated
    Conversion Option in a Convertible Debt Instrument When the
    Conversion Option No Longer Meets the Bifurcation Criteria in
    FASB Statement No. 133
   F-28




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        13.
    Notes
    Payable    March 31,2008


2007Senior Secured Notes, face value of $30.0 million, due
    March 2009

$



$
28,488,987Series A Notes, face value of $10.0 million, due
    June 30, 2009






10,106,281Capital Lease Facility, due June 30, 2009






3,684,443$



$
42,279,711     2007-1
 F-29




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        14.
    Deferred
    Rent and Other Liabilities  March 31,2008


2007Deferred rent and other liabilities consists of:Deferred rent

$
3,704,038


$
3,180,435Interest rate swap, at fair value


2,466,370



Deferred tax liability


1,781,159



127,013Other liabilities


1,778,169



1,938,039$
9,729,736


$
5,245,487   15.
    Changes
    in Stockholders Equity  Series I
    convertible preferred stock
   F-30




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Common
    stock
  Issuance
    of Common Stock
              Exercise
    of employee stock options
        Conversion
    of preferred stock
       F-31




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Issuance
    of nonvested stock
    Expiration
    of warrants
    Stocks
    tendered in payment of services
        Loans
    issued to employees
   F-32




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock
    warrants
    EstimatedNo. of Shares


Exercise




Fair Value atIssuance Date

Able to Purchase


Price


Expiration Date

IssuanceApril 2006


12,500


$
4.80


April 2011

$
92,988April 2005


7,200



6.90


April 2011


25,056December 2004


2,003,378



6.80-8.80


December 2011


8,782,933April 2004


5,000



7.00


April 2009


32,450March 2004


248,841



9.00


March 2009


1,672,248February 2004


8,210



9.00


February 2009


8,652January 2004


36,808



7.10-9.00


January 2009


33,750December 2003


10,000



6.20


July 2008


114,400October 2003


5,000



7.30


October 2008


33,700June 2001


1,300



17.20


June 2011


22,490January 2003


950



4.80


June 2011


3,971November 2000


25,000



27.60


November 2008


394,0002,364,187








$
11,216,638     Sale
    of Treasury Shares
    16.
    Loss Per
    Share    March 31,2008


2007


2006Net loss attributable to common stockholders

$
(43,022,338
)

$
(15,628,316
)

$
(37,876,063
)Adjustments:Interest expense, including amortization of discount and debt
    issue costs






(28,701
)


Change in fair value of derivatives embedded within convertible
    debt






(112,827
)


Numerator for diluted loss per share:

$
(43,022,338
)

$
(15,769,844
)

$
(37,876,063
)  F-33




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    March 31,2008


2007


2006Basic:Weighted average common shares outstanding  basic


58,134,269



44,151,259



42,973,114Diluted:Weighted average common shares outstanding


58,134,269



44,151,259



42,973,114Series B Notes






115,782



Weighted average common shares outstanding  diluted


58,134,269



44,267,041



42,973,114     March 31,2008


2007


20069% Senior Convertible Notes


2,724,817



6,900,000



6,900,000Common stock warrants


2,364,187



2,545,766



2,679,636Common stock options


2,303,138



2,437,249



2,257,700Early conversion incentive


191,603



1,540,772



2,677,471Nonvested stock


798,222



532,800



15,000Series I convertible preferred stock


1,058,507



1,084,477



1,130,0006.625% Senior Convertible Notes


4,175,183







0.5% Senior Subordinated Convertible Notes


491,400







Series H redeemable preferred stock






12,324



29,400   17.
    Share-Based
    Compensation     F-34




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Option
    Awards
    WeightedWeighted


AverageAverage


Remaining


AggregateShares


Exercise Price


Contractual Term


Intrinsic ValueOutstanding at April 1, 2007


2,426,249


$
9.82Granted


50,000



7.39Exercised


(117,922
)


5.18Forfeited


(55,189
)


8.25Outstanding at March 31, 2008


2,303,138



10.05



5.44


$
(10,518,217
)Exercisable at March 31, 2008


2,019,792


$
10.63



5.00


$
(10,401,716
)     WeightedAverage


Weighted





WeightedRemaining


Average





AverageOutstanding


Contractual Life


Exercise Price


Options


Exercise PriceRange of Exercise Prices

Options


(Years)


(Outstanding)


Exercisable


(Exercisable)$2.50-5.00


281,550



6.18


$
4.00



281,550


$
4.00$5.01-10.00


1,592,630



6.16



6.20



1,309,284



6.26$10.00-20.00


101,071



2.58



15.45



101,071



15.45$20.01-30.00


13,260



2.81



24.71



13,260



24.71$30.01-50.00


314,627



2.14



32.59



314,627



32.592,303,138



5.44


$
10.05



2,019,792


$
10.63  F-35




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair
    Value Assumptions
    
    the Companys expected stock price volatility over the term
    of the awards;
    actual and projected employee stock option exercise behaviors,
    which is referred to as expected term;
    risk-free interest rate and
    expected dividends      2008

2007

2006Risk Free Rate

4.11%

4.54%

3.63% - 4.83%Volatility

102%

118%

112% - 121%Expected Term

6 years

6 years

5 yearsExpected Dividends

0%

0%

0%Expected Dividends

0%

0%

0%   Nonvested
    Awards
   F-36




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted AverageGrant DateShares


Fair ValueOutstanding at April 1, 2007


470,300


$
5.61Granted


727,122



6.83Vested


(281,500
)


5.87Forfeited


(116,177
)


6.38Outstanding at March 31, 2008


799,745


$
6.52   18.
    Commitments
    and Contingencies  Leasing
    activities
           F-37




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    As Lessee


As LessorCapital


Operating


Sales-Type


OperatingLeases


Leases


Leases


Leases2009

$
1,830,766


$
10,607,068


$
1,964,974


$
3,235,4302010


1,306,526



8,910,257



254,980



2,681,4622011


589,409



7,052,212



123,229



2,740,7712012


156,083



6,576,767







2,622,6332013






6,384,546







2,105,915Thereafter






39,974,212







9,695,469Total minimum lease payments

$
3,882,784


$
79,505,062


$
2,343,183


$
23,081,680Amount representing interest and maintenance


(836,052
)






(345,464
)Net minimum lease payments

$
3,046,732






$
1,997,719     Litigation
  Rule 10b-5
    19.
    Related
    Party Transactions   F-38




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year Ended March 31,2008


2007


2006Services purchased from related party

$



$
497,948


$
1,270,504Services provided to related party


71,335



87,321



23,698Interest income from shareholder


18,685



25,800



29,728Services from directors


536,476



712,503



442,500Other assets


387,658



422,467Note receivable  related party


52,981



191,525       20.
    Revenues  For the Year Ended March 31,2008


2007


2006Revenues consist of:Colocation

$
61,228,544


$
41,865,161


$
28,126,193Managed and professional services


110,933,378



43,793,652



25,958,032Exchange point services


12,691,169



9,031,100



6,308,708Equipment resales


2,560,708



6,258,268



2,136,349Total revenues

$
187,413,799


$
100,948,181


$
62,529,282     21.
    Income
    Taxes   F-39




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year Ended March 31,2008


2007


2006United States

$
(42,674,575
)

$
(14,219,056
)

$
(34,201,581
)International


1,259,685



(516,129
)


(2,947,593
)$
(41,414,890
)

$
(14,735,185
)

$
(37,149,174
)     March 31,2008


2007Deferred tax assets:Net operating loss carryforwards

$
81,858,671


$
66,747,512Net operating loss carryforwards retained from discontinued
    operations


17,280,709



17,280,709Embedded derivatives


21,960



6,188,256Allowances and other


11,216,600



8,030,356Total deferred tax assets


110,377,940



98,246,833Valuation allowance


(104,776,430
)


(81,868,281
)Deferred tax liabilities:Intangibles with indefinite lives


(1,558,000
)


Convertible debt


(1,484,228
)


(7,804,425
)Depreciation and amortization


(4,082,750
)


(8,749,723
)Other


(257,688
)


(47,561
)Total deferred tax liability


(7,382,666
)


(16,601,709
)Net deferred tax liability

$
(1,781,156
)

$
(223,157
)          F-40




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Year Ended March 31,2008


2007


2006Statutory tax rate


(34.0
)%


(34.0
)%


(34.0
)%State income taxes, net of federal income tax benefit


(2.9
)


(4.0
)


(4.0
)Foreign income tax


0.1



(0.9
)


Permanent differences


(0.9
)


0.5



0.3Increase in valuation allowance


39.9



39.9



37.7Effective tax rate


2.2
%


1.5
%



%     22.
    Information
    About the Geographic Segments    March 31,2008


2007


2006Revenues:United States

$
163,278


$
85,167


$
54,837International


24,136



15,781



7,692$
187,414


$
100,948


$
62,529Cost of revenues:United States

$
86,416


$
47,175


$
32,893International


14,470



9,727



5,931$
100,886


$
56,902


$
38,824Income (loss) from operations:United States

$
13,676


$
4,831


$
(5,854
)International


1,013



(850
)


(2,792
)$
14,689


$
3,981


$
(8,646
)     March 31,2008


2007United States

$
327,048


$
152,623International


5,963



4,985$
333,011


$
157,608  F-41




---



##### Table of Contents



TERREMARK
    WORLDWIDE, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  23.
    Supplemental
    Cash Flow Information  For the Year Ended March 31,2008


2007


2006Supplemental disclosures of cash flow information:Cash paid for interest

$
21,385,504


$
16,407,077


$
14,489,566Non-cash operating, investing and financing activities:Warrants issued






92,988



45,226Assets acquired under capital leases


1,528,340



1,897,465



889,012Stock tendered in payment of services






1,038,579



Establishment of Series B derivative asset






342,534



Net assets acquired in exchange for common stock


16,745,934







10,755,200Expiration of warrants


1,380,000



748,010



1,308,456Non-cash preferred dividend










173,355Conversion of preferred stock to equity






2,279



804,000Changes in accrued property and equipment


18,258,644



2,445,152



5,238,532Cash paid for taxes


216,981







  F-42