<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

[X]    Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
       Act of 1934

       For the fiscal year ended March 31, 2001

[ ]    Transition report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934

       For the transition period from _______________ to _______________

                         Commission file number 0-22520

                            TERREMARK WORLDWIDE, INC.
-------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

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

                  2601 S. BAYSHORE DRIVE, MIAMI, FLORIDA 33133
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          (Address of Principal Executive Offices, Including Zip Code)

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

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

        COMMON STOCK, PAR VALUE $0.001 PER SHARE AMERICAN STOCK EXCHANGE
-------------------------------------------------------------------------------
             (Title of Class) (Name of Exchange on Which Registered)

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

                                      NONE
                 -----------------------------------------------

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

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (17CFR 229.405) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

         THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S VOTING STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT ON JULY 9, 2001, BASED UPON THE CLOSING MARKET
PRICE OF THE REGISTRANT'S VOTING STOCK ON THE AMERICAN STOCK EXCHANGE ON JULY 9,
2001, WAS APPROXIMATELY $276,918,829.

         THE REGISTRANT HAD 199,222,179 SHARES OF COMMON STOCK, $0.001 PAR
VALUE, OUTSTANDING AS OF JULY 9, 2001.


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                                TABLE OF CONTENTS
<TABLE>
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                                                                                                              PAGE NO.
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<S>              <C>                                                                                           <C>
PART I............................................................................................................2
   ITEM 1.        BUSINESS........................................................................................2
   ITEM 2.        PROPERTIES.....................................................................................10
   ITEM 3.        LEGAL PROCEEDINGS..............................................................................10
   ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................10

PART II..........................................................................................................10
   ITEM 5.        MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..........................10
   ITEM 6.        SELECTED FINANCIAL DATA........................................................................12
   ITEM 7.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........12
   ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.....................................21
   ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................................................21
   ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANICAL DISCLOSURE...........21

PART III.........................................................................................................22
   ITEM 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.............................................22
   ITEM 11.       EXECUTIVE COMPENSATION.........................................................................24
   ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................................25
   ITEM 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................................26

PART IV

   ITEM 14.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K...............................26
   SIGNATURES....................................................................................................27

</TABLE>

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                                     PART I

ITEM 1. BUSINESS.

OVERVIEW

         We are a multinational company that provides Internet infrastructure
and managed services. We are the owner and operator of the NAP of the Americas,
the fifth Tier-1 Network Access Point in the world, and as a result, we have
become an internationally recognized Internet infrastructure and managed
services provider. The NAP of the Americas, the first TerreNAP(SM) Data Center,
and the only carrier-neutral Tier-1 NAP, is located in Miami, Florida and
provides peering, colocation and managed services to carriers, Internet service
providers, other Internet companies and enterprises.

         We were founded in 1982. On April 28, 2000, Terremark Holdings, Inc.
completed a reverse merger with AmTec, Inc., a public company. Contemporaneous
with the reverse merger we changed our corporate name to Terremark Worldwide,
Inc. and adopted "TWW" as our trading symbol on the American Stock Exchange.
Historical information of the surviving company is that of Terremark Holdings,
Inc.

         This report and other written reports and oral statements made from
time to time by us may contain so-called "forward looking statements," all of
which are subject to risks and uncertainties. You can identify these
forward-looking statements by the use of words such as "expects," "plans,"
"will," "estimates," "forecasts," "projects" and other words of similar meaning.
You can also identify them by the fact that they do not relate strictly to
historical or current facts. These statements are likely to address our growth
strategy, financial results and development programs. You must carefully
consider any such statement and should understand that many factors could cause
actual results to differ from our forward-looking statements. These factors
could include inaccurate assumptions and a broad variety of other risks and
uncertainties, including some that are known and some that are not. No
forward-looking statement can be guaranteed and actual future results may vary
materially.

STRATEGY

         With miles of fiber optic cable laid, looped and recently put into
service around South America and the Caribbean, Internet and telecommunications
industry leaders joined together to create the NAP of the Americas Consortium,
with the goal of promoting the creation of the world's fifth Tier-1 tier-one NAP
in Florida. In September 2000, we were selected to own and operate the NAP of
the Americas by that Consortium, whose members currently consist of over 100
entities, including AT&T, Global Crossing, Level 3 Communications, Cable &
Wireless, Sprint, FPL FiberNet, PanAmSat, Williams Communications and EPIK
Communications. Since that time, the Consortium's role has transitioned to one
of an advisory group and a prospective customer base. In light of this unique
relationship, we have agreed with the Consortium that we will not price
discriminate, will maintain open access to all customers and will remain carrier
neutral.

         The NAP of the Americas provides a neutral connection point where
carriers can establish bilateral and multilateral connections between and among
their networks, a process known as peering, and purchase capacity from each
other. The NAP of the Americas also provides premium-class space where carriers,
Internet Service Providers, Application Service Providers, content providers,
Internet businesses, telecommunications providers and enterprises house their
equipment and their network facilities in order to be close to the peering
connections that take place at the NAP. This is known as colocation. In
addition, the NAP of the Americas provides a menu of related managed services,
such as a meet-me rooms, advanced network monitoring and management, and
performance monitoring. We expect that the NAP of the Americas will be a primary
channel of Internet traffic from Central and South America and the Caribbean to
North America, Asia and Europe.

         Our strategy is to leverage our experience as the owner and operator of
the NAP of the Americas to develop and operate TerreNAP(SM) Data Centers in
Latin America and Asia. TerreNAP(SM) Data Centers will provide peering,
colocation and managed services to carriers, Internet service providers, other
Internet companies and enterprises. We intend to use our 20 years of experience
in dealing with Latin America and Asia, the know-how gained through our
relationship with Telcordia, and the expertise of our employees, many of whom


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were formerly executives with GTE, Nortel, AT&T, BellSouth and Telcordia, for
example, to roll out additional TerreNAP(SM) Data Centers across Latin America
and Asia. To implement our strategy and meet our current obligations we will
need additional capital as more fully discussed in Item 7 Management Discussion
and Analysis of Financial Condition and Results of Operations.

OPERATIONAL STRUCTURE

         Our data center business is divided into three main operating units:
NAP of the Americas, Terremark Latin America and Terremark Asia. The role of
these units is to develop the TerreNAP brand of data centers in their respective
regions. The NAP of the Americas, our flagship unit, houses all of the
operations relating to the NAP of the Americas facility in Miami, Florida, and
serves as the operational template for the TerreNAP Data Centers that Terremark
Latin America and Terremark Asia plan to deploy in their geographic regions.

THE NAP OF THE AMERICAS

         A Tier-1 Network Access Point is one of several major Internet
interconnection points that serve to tie together Internet access providers.
Originally, four Tier-1 NAPs, in New York, Washington, D.C., Chicago, and San
Francisco, were created and supported by the National Science Foundation as part
of the transition from the original United States government-financed Internet
to a commercially operated Internet. The NAP of the Americas is the fifth Tier-1
NAP. It is the only one designed and built from the ground up as a
carrier-neutral facility that offers access to myriad connectivity options,
bilateral and multilateral peering, colocation and managed services, and which
routes Internet traffic between the Americas, the Caribbean, Europe and Africa.

         The NAP of the Americas, as a tenant, occupies 120,000 net usable
square feet of the Technology Center of the Americas (known as TECOTA), a
750,000 square foot telecommunications hotel recently constructed in downtown
Miami. TECOTA, managed by one of our subsidiaries, is located in an area of
numerous telecommunications carrier facilities, fiber loops, international cable
landings and multiple power grids. Our lease with TECOTA expires in 2020. The
NAP of the Americas, which received its temporary certificate of occupancy and
became operational on June 29, 2001, is expected to be completed during the
third calendar quarter of 2001.

     TECHNOLOGY

         The NAP of the AmericasSM has been designed to handle several times
more bandwidth than any of the existing Tier-1 NAPs and has been further
designed for additional scalability, utilizing advanced networking standards. In
order for data to travel over the Internet, it must be subdivided into small
parts, or "packets," whose size and configuration is predefined by the Internet
Protocol standard. The peering network architecture of the NAP of the Americas
has the capacity to transmit up to 12 Terabytes of these data packets per
second. On December 30, 2000, we launched the operation of the interim NAP of
the Americas. The interim facility, which has been live and operational since
that date and has been staffed 24-hours a day, seven days a week, is currently
being transitioned into the permanent NAP of the Americas. The interim NAP of
the Americas uses the same basic configuration for its peering network
architecture that is being used at the permanent NAP.

         The architecture of the NAP is a layered infrastructure based on
Ethernet technology, which helps ensure predictable, highly reliable operation
with virtually unlimited scalability. Switched Ethernet allows us to establish
Virtual Local Area Networks so that our customers can rapidly configure their
own private multiparty peering arrangements. In addition, Ethernet technologies
have a proven track record for performance, reliability, robust scalability and
operational maturity that permits the NAP to expand beyond a single facility, to
allow peering between providers at several sites without performance penalty.

         Telcordia Technologies, Inc., a wholly owned subsidiary of SAIC, is the
design and engineering consultant for the peering network and the operating
methods and procedures for two of the other Tier-1 NAPs, has worked together
with us on the design and operation of the NAP of the Americas.  Our strategy is
to continue to work with Telcordia Technologies and leverage their expertise and
resources to enable our in-house personnel to obtain the knowledge required to
operate the NAP and deploy additional TerreNAP(SM) Data Centers in emerging
markets.



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NETWORK SERVICES TEAM

         The role of the Network Services team is to provide network design and
engineering, provisioning, operational control and real time monitoring and
support to NAP of the Americas customers, 24 hours a day, 7 days a week, 365
days a year, by means of a Network Operations Center, or NOC. Network design and
engineering staff work with our customers to address any specific engineering
issues associated with installing equipment and network connectivity at our
facilities. Our Network Operations group is responsible for monitoring all
circuits, network and service center equipment, including routers, servers, and
physical layer security services under the direct management control of the NOC.
The NOC operates under the International Standards Organization (ISO) Model for
Network Management, a widely accepted telecommunications industry standard, and
its responsibilities include:

         o  Remotely configuring and/or controlling specific network elements to
            provide connectivity;

         o  Receiving health and status reports from all network elements;

         o  Conducting preliminary troubleshooting and determining resolution or
            dispatching;

         o  Providing fault detection, diagnostics, isolation and restoration;

         o  Responding to alarms generated by the monitoring tools;

         o  Resolving error and exception messages generated by network
            elements;

         o  Opening service tickets to track system events;

         o  Reviewing tickets for scheduled work (scheduled and preventative
            maintenance);

         o  Documenting network events via ticket notes; and

         o  Providing updates to other organizations, e.g. Customer Care Center,
            Accounting/Billing.

         In light of the importance of Network Services to the success of the
NAP of the Americas, as of March 31, 2001, we had 19 employees in Network
Services. As of June 30, 2001 that group has grown to 52 employees. Our staff
has worked in key network operations positions at such companies as BellSouth
Communications, Exodus Communication, Level3 Communications, Williams
Communications, Nortel Networks, WorldComm, Motorola, General Electric, AT&T,
Alcatel, EDS, and Citrix Systems.

     GLOBAL SALES TEAM

         We sell our services through an experienced sales force, which is
compensated, in part, through a quota-based program. We will continue to use our
direct sales force to sell directly to global and domestic carriers, members of
the Consortium, as well as telecom companies that utilize Tier-1 NAP
connectivity and Internet Data Center services. We plan to sell to other market
segments through indirect distribution channels, including our reseller program.
As of March 31, 2001, we had 22 employees in our Global Sales Team, of whom 15
focus on direct sales, and 7 on technical sales support. As of June 30, our
Global Sales Team had grown to 25 employees by hiring an additional 3 employees
to the technical sales support team.

         The Direct Sales team is divided into three regional groups responsible
for the European, the Global/Domestic and the Latin America Regions,
respectively. While our primary focus in each Region is the Tier 1 carriers,
each Region may be further subdivided into local markets and market segments,
depending on the maturity of the region. For example, our Latin America Region
is subdivided into three markets - Brazil, Mexico and the Southern Cone - with a
focus on two segments - International Local Exchange Carriers and Internet
Service Providers. In the Global/Domestic and European Regions, we are focusing
on the Local Exchange Carrier, Competitive Local Exchange Carrier, Content
Provider, International Local Exchange Carrier and Internet Service Provider
market segments. All sales managers have direct experience in their assigned
regions and speak at least one of the primary languages in their market area.

         Our sales strategy has a deliberate, phased approach to obtain new
customers:

         Phase I is to establish the critical mass of customer connectivity and
Tier-1 status for the NAP of the Americas. With 32 customer contracts as of July
9, 2001 for the NAP of the Americas, including many of the Tier-1 carriers, we
have successfully launched this Phase, which we anticipate completing during the
second quarter of fiscal year 2002.



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         Phase II is focused on selling colocation space by: (i) marketing to
the service divisions of the large Tier-1 carriers to expand their presence in
the NAP; (ii) targeting the Internet Service Providers, Application Service
Providers and content providers; and (iii) selling to Tier-2 carriers in Latin
America and Europe that rely on the Tier-1 carriers for access and services. We
anticipate commencing this Phase during second quarter of fiscal year 2002.

         Phase III will focus on selling managed services in two ways: (i) under
the TerreNAP brand to our customers; and (ii) on a wholesale basis for our
customers when they provide an integrated set of managed services to their
customers. We anticipate commencing this Phase during second quarter of fiscal
year 2002, in parallel with Phase II.

         Our Technical Sales Support Team directly supports our Regional Sales
Teams, providing technical consulting and solutions to our prospective
customers. Technical Sales Support representatives are primarily used to
establish technical relationships ensuring broader support and to position us at
multiple levels inside our customers' organization. Additionally, the Technical
Sales Support Team prepare proposals, develop technical sales documents, and
attend sales calls to answer technical questions presented by our customers.

         In addition to our direct sales efforts, subsequent to March 31, 2001,
we implemented a reseller program with companies that are customers of the NAP
of the Americas. We believe that this reseller program will allow us to greatly
enhance our reach in the marketplace as it allows our customers to bundle NAP of
the Americas services and space as part of their service offerings to their
customers.

     SERVICES

         We currently offer the following core services through the NAP of the
Americas:

         o  PEERING SERVICES: The NAP provides a peering service called Exchange
            Point Service, which is designed to facilitate both bilateral and
            multilateral peering among customers. Peering is the exchange of
            Internet traffic among service providers. Our customers' data is
            carried exclusively to those parties identified by our customers as
            their peering partners through this service.

         o  COLOCATION SERVICES: The NAP of the Americas provides the physical
            environment necessary to keep customers' Internet and
            telecommunications equipment up and running 24 hours a day, 7 days a
            week. This facility is custom designed to exceed local industry
            standards for electrical and environmental systems. In addition, it
            offers a wide range of physical security features, including
            state-of-the-art biometric scanners, man traps, smoke detection,
            fire suppression systems, motion sensors, secured access, video
            camera surveillance and security breach alarms. High levels of
            reliability are achieved through a number of redundant subsystems
            including power and fiber trunks from multiple sources.

         MANAGED SERVICES: Managed services are designed to support a customer's
mission-critical needs. The NAP of the Americas' managed services currently
include:

         o  MEET-ME-ROOMS - All fiber optic cable enters the NAP of the Americas
            via conduits that terminate in specific locations called "meet-me"
            rooms. The NAP of the Americas owns and manages these "meet-me"
            rooms, so they are carrier-neutral, designed with full scalability,
            and provisioned with advanced optical cross-connect systems to
            facilitate increasing levels of connectivity.

         o  NETWORK MONITORING - We will monitor a customer's network to ensure
            the ongoing availability and performance of their servers, networks
            and applications. Our customers use this service to monitor their
            network infrastructure, their customers networks, past and present
            network performance, and project future network utilization.

         o  PERFORMANCE MONITORING - Our Network Operations Center (NOC) staff
            is able to monitor our customers' equipment and networks for
            performance related issues, providing our customers with updates



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            through e-mail or viewable website access. This allows our customers
            to know all the details of their networks performance without having
            to maintain and manage their own 24/7 facility, yet still have the
            security and experience of a world class NOC.

         o  NETWORK SECURITY - The NAP of the Americas will have advanced
            security services through our relationship with SAIC. Our staff will
            verify existing customer procedures, network topology, permissions
            and access controls, hardware, software, and utilities. We will then
            provide managed intrusion detection services to protect our
            customers' network elements from attack on a 24/7basis.

         o  SMART HANDS - The NAP of the Americas offers on-call and
            subscription-based services that provide on-site technical support
            on a billable basis to our customers.

         o  ENGINEERING SERVICES - The NAP of the Americas offers its customers
            full-service facility and equipment design and engineering services,
            including any structural, mechanical, electrical and network systems
            required by our telecommunications customers.

         During fiscal year 2002, the NAP of the Americas' managed services are
excepted to include: Security and Firewall Services; Billing Platform Services;
Network Storage and backup Services; Bandwidth Measuring Services; Content
Distribution Services; and Disaster Recovery Services. We also expect to add
other services as demand and technology dictate.

     CUSTOMERS

         As of July 9, 2001, we had 32 signed binding revenue generating
contracts with customers for the NAP for terms ranging from 3 to 20 years. The
more than 100 members of the Consortium, as well as telecommunication operators,
Internet service providers, educational institutions, Application Service
Providers, and content providers, represent principal potential customers for
the services provided by the NAP of the Americas.

TERREMARK LATIN AMERICA

         In August 2000, we formed Terremark Latin America and acquired 80% of
Spectrum Communications Telecommunications Corp., a privately held, Miami-based
provider of telecommunications services with operations in Brazil, Chile and
Peru. In January 2000, we exercised our option to acquire the remaining 20% of
Spectrum. Spectrum provided international long distance telephony through Voice
over Internet Protocol in Brazil and Peru, and basic telephony services via
wireless technologies in Chile. As part of our decision to concentrate on our
TerreNAP Data Center strategy, in the quarter ended March 31, 2001, we advised
our partners in Brazil, Chile and Peru of our desire to exit those respective
businesses. Subsequent to March 31, 2001, we sold our interest in the Brazil and
Chile operations to our local partners, and our interest in Peru to a third
party.

         Today we have operations in Brazil and Argentina, with core management
teams in place. Each group has two specific responsibilities: (i) work with the
Global Sales team to market NAP of the Americas services to regional customers
who need to peer and colocate at the NAP of the Americas; and (ii) prepare for
the deployment of TerreNAP Data Centers in their markets, including market
research and analysis, site selection and developing relations with local
customers and agencies.

TERREMARK ASIA

         We formed Terremark Asia through the acquisition of local providers,
such as IXS.NET and Asia Connect, have established relationships with local
partners by offering value-added Internet Protocol services, including unified
messaging services and fax over Internet Protocol, in the People's



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Republic of China, Hong Kong and Taiwan. In May 2001, as part of our plan to
focus on TerreNAP Data Centers, we sold the fax over Internet Protocol business
to the management of that company, which assumed the operating expenses of that
business and relieved us any future liabilities. On October 16, 2000, we
launched a unified messaging service in the People's Republic of China, which
allows users to receive faxes, voice-mail and e-mail from any mobile or
fixed-line phone or from a personal computer anywhere in the world. While a
technological success, the unified messaging service did not meet our new
criteria for core businesses. Therefore, in May 2001, we redeployed the base
hardware for that service, which constituted our largest investment for that
venture at the NAP of the Americas.

         As part of our analysis of our China business, and our strategy of
deploying TerreNAP(SM) Data Centers into emerging markets, on December 8, 2000,
we opened our first Asia-based TerreNAP(SM) Data Center in Beijing, China. This
4000 square foot facility, called TerreNAP(SM) Beijing, is a partnership between
us and BroadOnline, a wholly Chinese owned networking services provider.
TerreNAP(SM) Beijing is located within China Telecom's Beijing Inter-exchange
Center, a central hub where the fiber networks in Northern China connect with
domestic and international Internet gateways.

RESEARCH AND DEVELOPMENT

         On December 20, 2000, we entered into a Research and Development
Agreement with Florida International University to work together, through
Florida International University's Telecommunications and Information Technology
Institute, on research and development projects. We will use FIU's AMPATH
network to study current and emerging Internet and telecommunications
technologies, including Internet Protocol Version 6, quality of service,
multicasting and optical switching. These projects will enable us to study
advanced network technologies before introduction into production networks. As
part of the Research and Development Agreement, the NAP of the Americas will
serve as the home of the AMPATH Network and South Florida's Internet2 GigaPOP.
The goal of FIU's project AMPATH is to interconnect research and education
networks in South America, Central America, the Caribbean, Mexico and other
countries to United States and non-United States research and education networks
via the Internet2 Abilene network.

COMPETITION

         The market for Internet infrastructure services is extremely
competitive and subject to rapid technological change. Many companies have
announced that they will begin to provide or plan to expand their service
offerings to compete with our services. We expect to encounter increased
competition in the future due to increased consolidation and the development of
strategic alliances in the industry. In addition, we will compete with foreign
service providers as we expand internationally and as these service providers
increasingly compete in the United States market. The principal competitive
factors in our market include:

         o  Ability to deliver services when requested by the customer;

         o  Internet system engineering and other professional services
            expertise;

         o  Customer service;

         o  Network capability, reliability, quality of service and scalability;

         o  Variety of managed services offered;

         o  Access to network resources, including circuits, equipment and
            interconnection capacity to other networks;

         o  Broad geographic presence;

         o  Price;

         o  Ability to maintain and expand distribution channels;

         o  Brand name recognition;

         o  Timing of introductions of new services;

         o  Network security;

         o  Financial resources; and

         o  Customer base.



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         Our current and potential competitors include: providers of data center
services; global, regional and local telecommunications companies and Regional
Bell Operating Companies; and information technology outsourcing firms. Some of
our competitors, particularly the global telecommunications companies that have
begun, or intend to begin, providing data center services, have substantially
greater resources, more customers, longer operating histories, greater name
recognition, and may have more established relationships in the industry than we
do. As a result, these competitors may be able to develop and expand their
Internet infrastructure services faster, devote greater resources to the
marketing and sale of their products and adopt more aggressive pricing policies
than we can. In addition, these competitors have entered and will likely
continue to enter into business relationships to provide additional services
that compete with the services we provide.

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

         As we expand our operations in markets outside the United States, we
will also encounter new competitors and competitive environments. Our foreign
competitors may enjoy a government-sponsored monopoly on telecommunications
services essential to our business, and will generally have a better
understanding of their local industry and longer working relationships with
local infrastructure providers.

         We believe that we have certain competitive advantages. We are
recognized by industry members as one of five (5) owners/operators of a Tier-1
NAP in the United States. None of the other four Tier-1 NAPs offer Class A1+
space immediately adjacent to the peering point as well as managed services. In
addition, we are the only carrier-neutral NAP. Nevertheless, there are few
substantial barriers to entry to the colocation and managed services market, and
we expect to face additional competition from existing competitors and new
market entrants in the future.

TELECOM FACILITIES MANAGEMENT

         In North America, we previously emphasized infrastructure solutions,
such as telecom hoteling and colocation services. This segment of our operations
developed and managed facilities used by Internet companies and
telecommunications service providers to house equipment and their business
operations.

         In May 2000, we acquired Telecom Routing Exchange Developers (also
known as T-Rex Developers), a developer and manager of commercial buildings that
house telecommunications and Internet infrastructure, including switches,
routers and servers. These facilities, known as telecom hotels, provide the
unfinished space in which carriers, service providers, Internet service
providers, application service providers, colocation providers and e-commerce
companies install their equipment to connect directly to high capacity fiber
networks. Because of that transaction, we were able to begin development of
TECOTA.

         On November 8, 2000, we purchased a 0.5% general partnership interest
in a third party joint venture to construct the TECOTA building. That venture
obtained $48.0 million in partnership equity and $61.0 million in construction
financing to complete this project. As is common for complex development
projects, we guaranteed the construction financing.

         In connection with our stated plan of reviewing non-core operations, we
determined that development of telecom hotels was not core to the development
and operation of the NAP of the Americas and of TerreNAP(SM) Data Centers in
emerging markets. On February 23, 2001, we sold certain of our telecom
facilities management operations to MP Telecom, LLC, an entity owned by certain
of our officers and a director. As part of the transaction, those officers
resigned from our management team and Clifford Preminger resigned from our board
of directors. We retained our rights relating to the TECOTA, home of the NAP of
the Americas. MP Telecom in turn conveyed to us its rights to its contingent
profit and equity interests in TECOTA, including all management and leasing
agreements and the right to leasing commissions for TECOTA. Because of these
transactions, we now own 100% of the contingent profit, and 0.84% of the equity
interests in TECOTA. Assets sold to MP Telecom included the "T-Rex" name, and
all interests in the T-Rex branded "Telecom Hotel" projects located in



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Cleveland, Ohio; Boca Raton, Florida; Hartford, Connecticut; Sterling, Virginia;
and Chicago, Illinois, together with all of the assets owned by Telecom Routing
Exchange Developers, Inc., and its wholly owned subsidiaries.

         As part of the transaction, MP Telecom also conveyed to us a total of
1,400,000 shares of our common stock, representing a portion of the 8,000,000
shares we issued to MP Telecom and its affiliates in conjunction with our
acquisition, in June 2000, of certain of the assets sold to MP Telecom in this
transaction. MP Telecom also conveyed to us its rights to our colocation
business. We also paid $900,000 to MP Telecom in connection with the
transaction. The principals of MP Telecom and various of our executive officers
have mutually agreed that, until December 25, 2001, each group will limit, in
the aggregate, the number of our shares sold by them during any trading day.

         In September 2000, ColoConnection, our wholly-owned subsidiary signed a
20-year lease for a 43,000 square foot facility in Santa Clara, California which
we have guaranteed. This colocation facility has been finished to provide space
for multiple parties' telecommunications equipment, and will be operational in
the second quarter of fiscal 2002. In connection with our stated plan of
reviewing non-core operations, we are currently evaluating whether this facility
can be integrated into our core TerreNAP Data Center strategy or whether this
entity should be sold.

REAL ESTATE SERVICES

         Our management has over 20 years experience in concept development,
acquisition of land, project design, equity and debt financing arrangement,
construction, management, contract construction, property management, sales and
leasing, which we believe provides us with a competitive advantage in developing
and operating the NAP of the Americas and TerreNAP(SM) Data Centers. As part of
our strategic plan, we have refocused this segment of our operations to support
the development and operation of TerreNAP(SM) Data Centers.

         During October 2000, we merged Post-Shell Technology Contractors, Inc.
into Terremark Construction Services, Inc. and changed the name of the combined
entity to Terremark Technology Contractors, Inc. Terremark Technology
Contractors will direct its activities towards our internal building plan and
leasehold build outs for the telecommunications industry. In February 2001, we
sold for $4.75 million our rights, including the entitlement to a contingent
payment and related preferred return, under agreements entered into in
conjunction with a hotel development project in Miami, Florida, along with a
profit interest in another development in Miami, Florida.

         We have entered into a contract to sell Fortune House II, a proposed
condominium/hotel project in Ft. Lauderdale Beach, Florida for $17.2 million. We
anticipate the sale closing to occur on July 25, 2001. In connection with the
sale, $11.5 million of notes payable will be paid off, and we expect to receive
net cash proceeds of $3.2 million.

EMPLOYEES

         As of June 30, 2001, we had 209 full-time employees in the United
States and 24 full-time employees in emerging markets.

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


                                       9
<PAGE>   11


ITEM 2. PROPERTIES.

         Our corporate headquarters are located at 2601 S. Bayshore Drive,
Miami, Florida 33133. In fiscal 2001, we paid annual rent of $396,000. We also
maintain smaller offices in downtown Miami, Coral Gables, and South Miami,
Florida and New York. We also maintain temporary sales and construction offices.
We believe that our current space is adequate for our expected growth in the
next year.

ITEM 3. LEGAL PROCEEDINGS.

         We are, from time to time, involved in litigation relating to claims
arising out of our operations in the normal course of business. These claims
against us are generally covered by insurance. We are not currently subject to
any litigation which singularly or in the aggregate could reasonably be expected
to have a material adverse effect on our financial conditions or results of
operations.

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

         No matters were submitted to a vote of our stockholders during the
quarter ended March 31, 2001.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.


COMMON STOCK AND PREFERRED STOCK INFORMATION

         Our common stock, par value $.001 per share, is quoted under the symbol
"TWW" on the American Stock Exchange. As of March 31, 2001, our authorized
capital stock consisted of 300,000,000 shares of common stock and 10,000,000
shares of preferred stock. As of July 9, 2001, 199,222,179 shares of common
stock were outstanding, 20 shares of our series G convertible preferred stock
were outstanding and held by one holder of record and 294 shares of our series H
convertible preferred stock were outstanding and held by one holder of record.
We believe we have in excess of 6,400 beneficial owners of our common stock.

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

            FISCAL YEAR 2000                                                   PRICES
            ----------------                               ---------------------------------------------
             QUARTER ENDED                                 HIGH                                     LOW
             -------------                                 ----                                     ---
<S>                                                       <C>                                     <C>
         June 30, 1999                                    $1.4375                                 $1.2500
         September 31, 1999                                2.0625                                  1.0625
         December 31, 1999                                 2.3750                                   .8750
         March 31, 2000                                    5.9375                                  1.8125
</TABLE>

<TABLE>
<CAPTION>

            FISCAL YEAR 2001                                                   PRICES
            ----------------                               ---------------------------------------------
             QUARTER ENDED                                 HIGH                                     LOW
             -------------                                 ----                                     ---
<S>                                                       <C>                                     <C>
         June 30, 2000                                    $4.9375                                 $4.2500
         September 31, 2000                                2.9500                                  2.5500
         December 31, 2000                                 0.9000                                  0.6500
         March 31, 2001                                    2.5000                                  1.8000
</TABLE>

                                       10
<PAGE>   12

DIVIDEND POLICY

         We have never paid cash dividends on our common stock and do not plan
to pay cash dividends in the foreseeable future. See "Management's Discussion
and Analysis of Financial Condition and Results of Operation -- Liquidity and
Capital Resources."

RECENT SALES OF UNREGISTERED SECURITIES

         On May 14, 2001, we sold 294 shares of our Series H Convertible
Preferred Stock to a third party for $500,000. The Series H Convertible
Preferred Stock accrues dividends when, as and if declared by the Board at an
annual rate of $102.00 per share and has preference over dividends paid on
common stock. The dividends are payable, in our sole discretion, in cash or
additional shares of Series H Convertible Preferred Stock. Each share of Series
H Convertible Preferred Stock is convertible at any time at the holder's
election into 1,000 shares of common stock.

         We may at any time redeem any or all outstanding shares of Series H
Convertible Preferred Stock at the original purchase price plus accrued but
unpaid dividends. Commencing on the earlier of June 1, 2005 and the date on
which the Service Agreement, dated as of May 14, 2001, between us and that third
party is terminated, the holders of a majority of the outstanding shares of
Series H Convertible Preferred Stock can cause us to redeem all, but not less
than all, of the outstanding shares of Series H Convertible Preferred Stock at
the original purchase price plus accrued but unpaid dividends.

         Holders of Series H Convertible Preferred Stock are entitled to one
vote for each share of common stock into which their shares of Series H
Convertible Preferred Stock are convertible and shall vote with the common stock
on all matters, except as otherwise required by law. The consent of holders of
more than 50% of the outstanding shares of Series H Convertible Preferred Stock
is required to alter or change the powers, preferences of special rights of the
Series H Convertible Preferred Stock.

         The offer and sale of the Series H Convertible Preferred Stock were
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Act") as the Series H Convertible Preferred Stock was sold to
accredited investors pursuant to Regulation D as promulgated under the Act.



                                       11
<PAGE>   13
ITEM 6. SELECTED FINANCIAL DATA.

          The selected financial statement data set forth below has been derived
from our financial statements, which have been audited by our independent
certified public accountants. The information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our Consolidated Financial Statements and the Notes thereto
included elsewhere in this report.

<TABLE>
<CAPTION>
                                                                               TWELVE MONTHS
                                                                              ENDED MARCH 31,
                                                                (Dollars in Thousands except per Share Data)
                                                        -----------------------------------------------------------
                                                           2001           2000         1999        1998        1997
                                                        ---------         ----         ----        ----        ----
<S>                                                       <C>          <C>          <C>         <C>          <C>
Results of operations:
Total revenue .......................................     $40,147      $15,930      $44,456     $37,632      $2,629
Total cost of sales .................................      23,705        9,422       31,148      22,667         742
Other expenses ......................................      37,815       12,541       12,684      13,869       1,925
(Loss) income from continuing operations ............     (21,373)      (6,033)         624       1,096         (38)
Loss - discontinued operations ......................     (82,627)          --           --          --          --
Net (loss) income ...................................   $(104,000)     $(6,033)        $624      $1,096        $(38)
 (Loss) income  from continuing operations per common
   share ............................................      $(0.11)      $(0.09)       $0.01       $0.02          --
Loss - discontinued operations per common share .....      $(0.44)          --           --          --          --
Net (loss) income per common share ..................      $(0.55)      $(0.09)       $0.01       $0.02          --

Financial condition:
Real estate inventory ...............................          --      $11,797      $12,888     $33,311      $9,483
Total assets ........................................     $78,069      $77,998      $17,598     $42,931     $15,258
Long term obligations(1) ............................     $17,189      $28,632       $8,731     $32,081     $11,928
Shareholders' equity (2) ............................     $11,163         $476       $6,510      $1,709        $612
</TABLE>

-----------------------
(1)  Long term obligations includes debt and capitalized lease obligations.
(2)  Stockholders equity as of March 31, 2000 and 1999 includes approximately
     $4,777 in convertible preferred stock.

         The quarterly selected financial statement data set forth below has
been derived from our unaudited financial statements. The information should be
read in conjunction with those financial statements and our Consolidated
Financial Statements and the Notes thereto included elsewhere in this report.

<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                   (Dollars in Thousands except per Share Data)
                                                       -----------------------------------------------------------------------
                                                       June 30, 2000   September 30, 2000   December 31, 2000   March 31, 2001
                                                       -------------   ------------------   -----------------   --------------
<S>                                                      <C>                <C>                <C>                <C>
Results of operations(1):
Total revenue .....................................      $  1,825           $  7,996           $ 14,469           $ 15,857
Total cost of sales ...............................           668              5,850              8,344              8,843
Other expenses ....................................         4,359              6,947             13,578             12,931
Loss from continuing operations ...................        (3,202)            (4,801)            (7,453)            (5,917)
Loss - discontinued operations ....................        (2,295)            (6,935)            (7,564)           (65,833)
Net loss ..........................................        (5,497)           (11,736)           (15,017)           (71,750)
Loss from continuing operations
  per common share ................................      $  (0.04)          $  (0.06)          $  (0.07)          $  (0.03)
Loss - discontinued operations per common share....            --                 --                 --           $  (0.33)
Net loss per common share .........................      $  (0.04)          $  (0.06)          $  (0.07)          $  (0.36)
</TABLE>

<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                                                   (Dollars in Thousands except per Share Data)
                                                       -----------------------------------------------------------------------
                                                       June 30, 1999   September 30, 1999   December 31, 1999   March 31, 2000
                                                       -------------   ------------------   -----------------   --------------
<S>                                                      <C>                <C>                <C>                <C>
Results of operations(2):
Total revenue .....................................      $  5,475           $  4,186           $  3,786           $  2,483
Total cost of sales ...............................         3,599              3,541              2,018                264
Other expenses ....................................         2,715              1,300              3,641              4,885
Net loss...........................................      $   (839)          $   (655)          $ (1,873)          $ (2,666)
Net loss per common share..........................      $  (0.01)          $  (0.01)          $  (0.03)          $  (0.04)
</TABLE>
-----------------------
(1)  Summary financial statement data includes discontinued operations as a
     separate component of net loss as compared to amounts previously reported
     in Form 10-Q.
(2)  The financial information for the quarters ended June 30, 1999, September
     30, 1999, December 31, 1999 and March 31, 2000, is that of Terremark
     Holdings, Inc., the predecessor entity. The periods subsequent to April
     28, 2000 represent that of the merged Company.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS.

         The following discussion of results of operations and financial
condition is based upon and should be read in conjunction with our Consolidated
Financial Statements and Notes thereto, the Selected Financial Data and other
financial data appearing elsewhere in this report.



                                       12
<PAGE>   14

OVERVIEW

         We are a multinational company that provides Internet infrastructure
and managed services. We were founded in 1982 and on April 28, 2000, Terremark
Holdings, Inc. completed a reverse merger with AmTec, Inc., a public company.
Contemporaneous with the reverse merger, we changed our corporate name to
Terremark Worldwide, Inc. and adopted "TWW" as our trading symbol. Historical
information of the surviving company is that of Terremark Holdings, Inc.

         The reverse acquisition was accounted for as a purchase business
combination in which Terremark is the accounting acquirer and AmTec was the
legal acquirer. As a result of the reverse acquisition, our financial statements
on an ongoing basis are of the accounting acquirer, Terremark. The net assets of
the legal acquirer, AmTec, were revalued and the purchase price allocated to the
assets acquired and liabilities assumed.

         We incurred $21,373,251 of losses from continuing operations and a net
loss of $103,999,662 for the year ended March 31, 2001. These losses were
primarily the result of sold and discontinued operations and start-up
costs associated with the NAP of the Americas. We expect that we will need a
significant infusion of cash to fund retained business operations and planned
expansion during the current fiscal year. To complete the NAP of the Americas
and fund existing operations through March 2001, our business plan indicates we
will need approximately $60.0 million in debt or equity financing exclusive of
interest costs, thereon. Failure to obtain adequate financing will result in
liquidity problems and will require us to curtail planned expansion of TerreNAP
Data Centers and current operations. As a result of these matters, substantial
doubt exists about our ability to continue as a going concern. Our plans
regarding this uncertainty are presented in Liquidity and Capital Resources.

RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2001 AS COMPARED TO THE YEAR
ENDED MARCH 31, 2000

         REVENUE. Total revenue grew $24.8 million, or 160.9%, to $ 40.1 million
for the year ended March 31, 2001 from $15.4 million for the year ended March
31, 2000.

         Data Center revenue was $0.3 million for the year ended March 31, 2001.
No data center revenue was recorded for the previous comparable period. The
increase was attributable to our peering and colocation services offered at the
interim NAP. We expect data center revenues to increase in future periods as
customers set up their operations in the NAP of the Americas. Future data center
revenues will be derived from peering, colocation and managed services.

         Revenue from real estate sales decreased $8.2 million, or 75.0%, from
$11.0 million for the year ended March 31, 2000 to $2.8 million for the year
ended March 31, 2001. Revenue for the year ended March 31, 2000 is attributable
to the sale of 45 condominium units. As a result of fewer units being available
for sale, only twelve units were sold in the year ended March 31, 2001.

         Development, commission and construction fees increased approximately
$9.9 million during the year ended March 31, 2001 as compared to the year ended
March 31, 2000. This increase resulted from increases of $4.0 million in
commissions from lease signings, primarily related to telecom facilities under
management, $1.1 million in management fees earned related to management of
telecom, commercial and residential properties and $4.75 million related to the
sale of certain rights under agreements entered into in conjunction with a hotel
development project. Since we sold a large portion of our telecom facilities
management operations in February 2001, related leasing commissions and
management fees are expected to decrease in future periods.

         Contract construction revenue increased $21.7 million; from $0.7
million for the year ended March 31, 2000 to $22.4 million for the year ended
March 31, 2001. During 2001, we obtained 19 third party contract construction
projects as a result of our acquisition of Post Shell Technology Contractors,
Inc., now known as Terremark Technology Contractors Inc. As of March 31, 2001,
we had 7 construction contracts in process.

         DATA CENTER OPERATIONS - Data center operations expenses were $1.2
million for the year ended March 31, 2001. No cost was recorded for the
comparable period ended March 31, 2000. The increase was attributable to costs
associated with the operations of the interim NAP Facility which became



                                       13
<PAGE>   15

operational in December 2000. We expect that data center operations costs will
increase in the future as customers set up their operations in the NAP of the
Americas.

          START-UP COSTS - DATA CENTERS. Start-up costs of data centers were
$6.5 million for the year ended March 31, 2001. No costs were recorded for the
comparable period during 2000. The increase was attributable to costs associated
with the interim NAP Facility and the NAP of the Americas.

         COST OF REAL ESTATE SOLD. Cost of real estate sold decreased by $6.7
million, or 75.9%, from $8.8 million for the year ended March 31, 2000 to $2.1
million for the year ended March 31, 2001. The decrease is primarily
attributable to the decrease in the number of condominium units sold as a result
of fewer units being available for sale.

         CONTRACT CONSTRUCTION EXPENSES. Contract construction expenses
increased $19.8 million from $0.5 million for the year ended March 31, 2000 to
$20.3 million for the year ended March 31, 2001. This increase is attributable
to an increase in the number of construction contracts in progress as a result
of our acquisition of Post Shell Technology Contractors during the period and
the percentage of completion of those projects. We do not currently anticipate
any losses on any of the individual contracts.

         GENERAL AND ADMINISTRATIVE EXPENSES. During fiscal 2001, our efforts
included the integration of our acquisitions and establishing internal
operations to support our Internet and telecom infrastructure services strategy.
General and administrative expenses increased by $12.0 million from
approximately $7.9 million for the year ended March 31, 2000 to $19.9 million
for the year ended March 31, 2001. This increase is attributable to our
investment in personnel and corporate infrastructure and the related additional
operating expenses resulting from the acquisitions of Telecom Routing Exchange
Developers and Post Shell Technology Contractors. Although we are currently
attempting to reduce expenses in activities not related to our core strategy, we
expect general and administrative expenses relating to TerreNAP(SM) Data Centers
to continue increasing over time as we continue to expand our operations.

          SALES AND MARKETING EXPENSES. Sales and marketing expenses decreased
$0.2 million or 5.6% for the year ended March 31, 2001. The decrease is
principally due to the decrease of marketing expenses associated with the sale
of real estate offset by the increase in marketing expenses associated with
marketing the new merged company and TerreNAP Data Centers including NAP of the
Americas. During the year ended March 31, 2000, expenses were incurred in
connection with the promotion of the sale of two Fortune House condominium
projects. During the year ended March 31,2001, all sales and marketing efforts
were terminated in the Fortune House projects.

         DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased from $81,000 for the year ended March 31, 2000 to $3.3 million
for the year ended March 31, 2001. The increase resulted primarily from
amortization of intangible assets associated the acquisitions of Telecom Routing
Exchange Developers and Post Shell Technology Contractors.

         INTEREST EXPENSE. Interest expense increased from $0.8 million for the
year ended March 31, 2000 to $1.1 million for the year ended March 31, 2000
primarily due to the issuance of our convertible debentures.

         INTEREST INCOME. Interest income increased from $0.2 million for the
year ended March 31, 2000 to $.5 million for the year ended March 31, 2001 due
to an increase in our average invested cash balances.

         DIVIDENDS ON PREFERRED STOCK. Dividends on our convertible preferred
stock were $0.4 million for the year ended March 31, 2000 compared to $35,000
for the year ended March 31, 2001. On April 28, 2000, the preferred stock was
converted to shares of our common stock.

         IMPAIRMENT OF LONG-LIVED ASSETS. During the year ended March 31, 2000,
we recorded a $0.4 million impairment related to real estate held. As a result
of our agreement to sell certain telecom facilities management operations during
the third quarter of the year ended March 31, 2001, we recognized a $4.1 million
impairment of intangible assets which were subsequently sold during the
following quarter.



                                       14
<PAGE>   16

         NET LOSS FROM CONTINUING OPERATIONS. Net loss from continuing
operations increased from $6.0 million for the year ended March 31, 2000 to
$21.4 million for the year ended March 31, 2001 as a result of the factors
discussed above. During the year ended March 31, 2001, our activities were
directed towards the integration of our acquisitions and establishing internal
operations to support Internet and telecom infrastructure services.

      LOSS FROM DISCONTINUED OPERATIONS AND LOSS ON DISPOSITION OF DISCONTINUED
OPERATIONS. In March 2001, we implemented our plan to dispose of certain
acquired businesses whose operations reflect Internet faxing, unified messaging
and telephony services. These operations were acquired earlier in the year ended
March 31, 2001 in association with the AmTec, Spectrum Communications, IXS.Net
and Asia Connect acquisitions. Since the operations represent a class of
customer and a major line of business, the results of these activities and
estimated loss on disposal are accounted for as discontinued operations. The
loss on disposition of discontinued operations of $61.1 million includes the
write-off of $54,381,681 in goodwill. For the year ended March 31, 2001,
discontinued operations had $1,760,640 of total revenues and a loss of
$11,346,447, net of $10,153,140 in goodwill amortization.

RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2000 AS COMPARED TO THE YEAR
ENDED MARCH 31, 1999

           REVENUE. Revenue from real estate sales decreased $31.0 million, or
73.8%, from $42.0 million in 1999 to $11.0 million in 2000. 1999 revenue of
$42.0 million from real estate sales is attributable to the sale of 223
condominium units while 2000 revenue of $11.0 million is attributable to the
sale of 54 condominium units.

         Commission income earned from lease signings increased $200,000, or
20.0%, from $1.0 million in 1999 to $1.2 million in 2000 due to the timing of
lease renewals.

         Development fees increased $720,000, or 115.2%, from $625,000 in 1999
to $1.35 million in 2000. The increase is due to the signing of development
agreements in 2000.

         Management fees charged with respect to the management of commercial
and residential property increased $301,000, or 39.2%, from $768,000 in fiscal
1999 to $1.1 million in 2000. The increase is a result of the acquisition of
various office building management contracts.

         Construction fees of $749,000 in 2000 pertained to the management of
various construction projects. Terremark did not generate any construction fees
in 1999.

         COST OF REAL ESTATE SOLD. Cost of real estate sold decreased by $22.2
million, or 71.4%, from $31.1 million for the year ended March 1999 to $8.9
million for the year ended March 2000, which is attributable to the decrease in
condominium unit sales. The decrease in gross margin as percentage of sales
revenue from 25.9% in 1999 to 19.4% in 2000 is mainly attributable to reduced
margins on the final sell-out of certain condominium units.

          GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased by $1.9 million, or 31.5%, from approximately $6.0 million in
1999 to approximately $7.9 million in 2000. This increase is attributable
primarily to increased costs related to hospitality and management services.

         SALES AND MARKETING EXPENSES. Sales and Marketing Expenses decreased
from $5.5 million in 1999 compared to $2.9 million in 2000, representing a
decrease of $2.6 million, or 46.5%. Sales and marketing expenses were used to
promote sales of condominium units.

         DEPRECIATION EXPENSE. Depreciation expense increased from $50,000 to
$81,000, an increase of 62.0%, which resulted from the increase in furniture and
computer equipment.

         INTEREST INCOME. Interest income decreased $41,000, or 15.6%, in 2000,
from $263,000 in 1999 to $222,000 in 2000, due to a decrease in cash balances.

         INTEREST EXPENSE, NET OF CAPITALIZED INTEREST. Interest expense
decreased $695,000, or 46.3%, in 2000, from $1.5 million in 1999 to $805,000 in
2000, due to a decrease in debt financing used to fund the completion of a
condominium project in 1999.



                                       15
<PAGE>   17


         OTHER (EXPENSE) INCOME. Other (expense) income decreased in 2000, from
income of $167,000 in 1999 to expense of $69,000 in 2000. This decrease is a
result of the net operating loss associated with carrying costs of real estate
held for sale.

         DIVIDEND ON PREFERRED STOCK. Dividend on convertible preferred stock
was $417,669 in fiscal 2000. The preferred stock was issued on March 31, 1999.

         NET (LOSS) INCOME. Overall net income was down $5.4 million, or 43.1%,
from $624,000 in 1999 to $(6.0) million in 2000. This was due to the decrease in
real estate revenue and increase in general and administrative expenses in 2000
as compared to 1999.

LIQUIDITY AND CAPITAL RESOURCES

         Cash used in continuing operations for the year ended March 31, 2001
was approximately $6.3 million compared to cash used in operations of $7.4
million for the year ended March 31, 2000, a decrease of $1.1 million. Cash
used in discontinued operations amounted to $22.2 million for the year ended
March 31, 2001. In the aggregate, cash used in operating activities was $28.6
million and $7.4 million for the years ended March 31, 2001 and 2000,
respectively.

         Cash provided by investing activities for the year ended March 31,
2001 was $28.6 million compared to cash used in investing activities of $735,000
for the year ended March 31, 2000, an increase of $29.4 million. Cash from
investing activities increased primarily due to proceeds received from the sale
of Terremark Centre of $55.8 million, offset by $24.4 million of cash used for
the purchase of property and equipment primarily related to the NAP of the
Americas and our facility in Santa Clara, California.

         Cash provided by financing activities for the year ended March 31,
2001 was $2.1 million compared to cash provided by financing activities of $8.7
million for the year ended March 31, 2000, a decrease of $6.6 million. The
increase in cash used in financing activities resulted primarily from payments
on loans of approximately $73.6 million, including approximately $55.2 million
in debt associated with Terremark Centre and $14.6 million related to a
cancelled line of credit. We also obtained $28.1 million from the sale of our
common stock, $17.9 million of new borrowings and $17.0 million of construction
payables relating to the NAP of the Americas and our facility in Santa Clara,
California.

         We incurred $21.4 million of losses from continuing operations and a
net loss of $104.0 million for the year ended March 31, 2001. These losses were
primarily the result of sold and discontinued operations and start-up costs
associated with the NAP of the Americas. We expect that we will need a
significant infusion of cash to fund retained business operations and planned
expansion during the next fiscal year. To complete the NAP of the Americas and
to fund existing operations during fiscal year 2002, we will need approximately
$60.0 million in debt or equity financing, exclusive of interest costs thereon.
Approximately $55 million of these funds will be used to fund the build-out and
working capital of the NAP of the Americas. Expectations of cash needs are based
on certain assumptions, the most significant being the signing of additional
customer contracts at NAP of the Americas during fiscal year 2002. The Company
has identified additional potential customers and is actively marketing to them
available services in the NAP of the Americas. The Company's plan is predicated
on obtaining additional new customer contacts through March 31, 2002, which on
an annual basis would generate revenues of approximately $45.0 million.

         We intend to allocate our financial resources to activities which are
consistent with our strategy of developing and operating TerreNAP(SM) Data
Centers, including the NAP of the Americas. We have therefore implemented a
policy of reducing expenditures in areas that are not consistent with that
objective. However, the development of the NAP of the Americas and other
TerreNAP(SM) Data Centers will require substantial capital resources. We have
assumed operating lease commitments, vendor financing agreements and other debt
obligations. As part of our business strategy, we intend to continue to evaluate



                                       16
<PAGE>   18

potential acquisitions, joint ventures and strategic alliances in or with
companies that provide services or operations that complement our existing
businesses. Such acquisitions may also require financing, which may not be
available to us on acceptable terms.

         Historically, we have funded operations and investing activities
primarily through short term and long term debt and equity transactions. During
fiscal 2001 we sold common stock to the Vistagreen group for $28.1 million and
$687,000 in stock options and warrants were exercised. Debt financing as of
March 31, 2001 primarily includes the following:

         (1)   $2.7 million under various vendor financing arrangements, with
               various terms, secured by equipment;

         (2)   $1.75 million under a loan from a commercial bank secured by
               certain assets and personal guarantees of some of our executives;

         (3)   $3.5 million drawn down on a $5.0 million line of credit secured
               by certain assets , interest accrues at a floating rate of Prime
               + 1% on drawn balances, payable monthly;

         (4)   $0.5 million loan from a commercial lender, secured by a first
               mortgage on real estate;

         (5)   $7.5 million first mortgage from an individual secured by certain
               real estate held for sale which matures on November 10, 2001 and
               accrues interest at 12.0% per annum payable monthly (this debt
               will be repaid with a portion of the proceeds from the
               anticipated sale of our Fortune House II project); and

         (6)   $15.9 million in principal amount of subordinated convertible
               debt issued during the year ended March 31, 2001. Interest
               accrues at 13%, and is payable quarterly beginning March 31,
               2001. The debt matures on December 31, 2005 and is convertible
               into shares of our common stock at 120% of the 20-day average
               trading price prior to its closing. We are permitted to prepay
               the debentures, which will entitle holders to warrants or a
               premium over their outstanding principal declining from 105% in
               2001 at the rate of 1% per year.

         Subsequent to March 31, 2001 we entered into the following financing
arrangements:

         (1)   $9.8 million of additional convertible debt was issued.

         (2)   $10.0 million was borrowed from a shareholder and officer in June
               2001. The loan is unsecured and is due on September 30, 2001.
               Interest accrues at 12% and is due monthly;

         (3)   $4.6 million was borrowed in June 2001, secured by a second
               mortgage on certain real estate. This debt is due upon the sale
               of the Fortune House II project;

         (4)   $0.5 million was raised from the issuance of 294 of our Series H
               preferred stock in May 2001; and

         (5)   $1.5 million of bridge financing was borrowed from some members
               of our executive management team.



          In addition to our operating commitments, we have made significant
guarantees. The Technology Center of the Americas, LLC, where the NAP of the
Americas is located, obtained $48.0 million of equity and $61.0 million of
construction financing to fund the construction of TECOTA during September 2000.
We have guaranteed the bank loans in the amount of $61.0 million and the timely
completion of TECOTA's construction.

         As of March 31, 2001, TECOTA had accounts payable and accrued expenses
of $6.0 million and construction related debt of $5.2 million. Currently we do
not expect to fund any amounts under our guarantee.



                                       17
<PAGE>   19
 Our plan to increase liquidity includes refinancing of the Technology Center of
the Americas' construction note payable to remove our guarantee, thereby
increasing our potential borrowing capacity, the sale of non-core assets,
entering into strategic relationships, asset based financing and the potential
sale of additional debt or equity securities sufficient to fund our 2002
business plan. There can be no assurance that such financing will be available
to us. Further, any additional equity financing may be dilutive to existing
shareholders.

         We have commenced a number of initiatives to improve liquidity
including:

         o  Discussions with creditors to restructure currently due construction
            payables into longer term promissory notes.

         o  Negotiating a contract to sell Fortune House II, a proposed
            condominium/hotel project in Ft. Lauderdale Beach, Florida for $17.2
            million. Upon closing, scheduled for July 25, 2001, $11.5 million of
            notes payable will be repaid, and we expect to receive net cash
            proceeds of $3.2 million.

         o  Discussions with financial institutions and corporate entities to
            provide financing.



         Failure to obtain adequate sources of debt or equity will result in
liquidity problems and will require us to curtail planned expansion of TerreNAP
Data Centers and current operations. Management is unable to assure that its
efforts described above will be successful. As a result of these matters,
substantial doubt exists about the our ability to continue as a going concern.

CERTAIN RISK FACTORS

         Although it is not possible to predict or identify all such factors,
they may include those listed below, which should not be considered an
exhaustive statement of all potential risks and uncertainties:

         The nature of our operations changed subsequent to our April 28, 2000
merger with AmTec, Inc. Our operations continue to evolve as we develop our
Internet infrastructure and managed services business. We began offering
Internet infrastructure and managed services in 2000. Due to our short operating
history, our business model is still evolving. Consequently, we believe that
period-to-period comparisons of our results of operation may not be necessarily
meaningful and should not be relied upon as indicators of future performance. We
have experienced revenue growth in the recent period, but this growth may not be
indicative of our future operating results. Many of the factors that could cause
our operating results to fluctuate significantly in the future are beyond our
control. We believe that we will continue to experience net losses on a
quarterly and annual basis for the foreseeable future. We may also use
significant amounts of cash and/or equity to acquire complementary businesses,
products, services or technologies.

         The market for Internet infrastructure services has only recently begun
to develop, is evolving rapidly and likely will be characterized by an
increasing number of market entrants. There is significant uncertainty regarding
whether this market ultimately will prove to be viable or, if it becomes viable,
that it will grow. Our future growth, if any, will be dependent on the
willingness of carriers to peer and collocate within our facilities, enterprises
to outsource the system and network management of their mission-critical
Internet operations and our ability to market our services in a cost-effective
manner to a sufficiently large number of those potential customers. There can be
no assurance that the market for our services will develop, that our services
will be adopted or that businesses, organizations or consumers will use the



                                       18
<PAGE>   20

Internet for commerce and communication. If this market fails to develop, or
develops more slowly than expected, or if the our services do not achieve market
acceptance, our business, results of operations and financial condition would be
materially and adversely affected.

         We intend to allocate our financial resources to activities that are
consistent with our strategy of developing and operating TerreNAP(SM) Data
Centers, including the NAP of the Americas. We have therefore implemented a
policy of reducing expenditures in areas that are not consistent with that
objective. However, the development of the NAP of the Americas and other
TerreNAP(SM) Data Centers will require substantial capital resources. We are
exploring various alternatives, including the raising of debt and equity both in
private and public markets and obtaining financing from our vendors. In the
event that we are unsuccessful in obtaining sufficient financial resources to
permit us to fully implement our proposed plans, we will consider various
alternatives, including possible joint ventures and reducing the scale or
deferring implementation of proposed projects. However, there is no assurance
that we will have the funds necessary to discharge our obligations associated
with developing the NAP of the Americas or any other TerreNAP(SM) Data Center.

         The expansion of our operations through the opening of additional
TerreNAP(SM) Data Centers in emerging markets is part of our strategy. To expand
successfully, we must be able to assess markets, locate and secure new
TerreNAP(SM) Data Center sites, install hardware, software and other equipment
in and develop TerreNAP(SM) Data Center facilities, and attract carriers,
Internet service providers and other customers to the new locations. To manage
this expansion effectively, we must continue to improve our operational and
financial systems and expand, train and manage our employee base and build a
menu of managed services. We anticipate continuing to make significant
investments in the NAP of the Americas and new TerreNAP(SM) Data Centers and
network infrastructure, product development, sales and marketing programs and
personnel. Our inability to establish additional TerreNAP(SM) Data Centers or
effectively manage our expansion would have a material adverse effect upon our
business. Furthermore, if we were to become unable to continue leveraging
third-party products in our services offerings, our product development costs
could increase significantly. Finally, several of our customers are emerging
growth companies that may have negative cash flows, and there is the possibility
that we will not be able to collect receivables on a timely basis.

         The deployment of our TerreNAP(SM) Data Center strategy will require us
to expend substantial resources for leases , the purchase of real estate,
improvements of facilities, purchase of complementary businesses, assets and
equipment, implementation of multiple telecommunications connections and hiring
of network, administrative, customer support and sales and marketing personnel.
In general, we expect that it may take us a significant period of time to select
the appropriate location for a new TerreNAP(SM) Data Center, construct the
necessary facilities, install equipment and telecommunications infrastructure
and hire operations and sales personnel. The failure to generate sufficient cash
flows or to raise sufficient funds may require us to delay or abandon some or
all of our development and expansion plans or otherwise forego market
opportunities, making it difficult for us to generate additional revenue and to
respond to competitive pressures.

         Expenditures commence well before a TerreNAP(SM) Data Center opens, and
it may take an extended period for us to approach break-even capacity
utilization. As a result, we expect that individual TerreNAP(SM) Data Centers
will experience losses for more than one year from the time they are opened. If
we do not attract customers to new TerreNAP(SM) Data Centers in a timely manner,
or at all, our business would be materially adversely affected. Growth in the
number of our TerreNAP(SM) Data Centers is likely to increase the amount and
duration of losses.

         We expect to make additional significant investments in sales and
marketing and the development of new services as part of our expansion strategy.
We will incur further expenses from sales personnel hired to test market our
services in markets where there is no TerreNAP(SM) Data Center. In addition, we
typically experience a lengthy sales cycle for our services, particularly given
the importance to customers of securing Internet connectivity for
mission-critical operations and the need to educate certain customers regarding
TerreNAP(SM) Data Centers, and benefits of colocation and Internet connectivity
services. The rate of growth in our customer base and the length of the sales
cycle for our services may cause significant adverse results to our business,
and our financial condition would be materially and adversely affected. Due to
the typically lengthy sales cycle for our services, our expenses may occur prior
to customer commitments for our services. There can be no assurance that the
increase in our sales and marketing efforts will result in increased sales of
our services.



                                       19
<PAGE>   21

         Our success is substantially dependent on the continued growth of our
customer base and the retention of our customers. Our ability to attract new
customers will depend on a variety of factors, including the willingness of
carriers to peer at our facilities, the willingness of businesses to outsource
their mission-critical Internet operations, the reliability and
cost-effectiveness of our services and our ability to effectively market such
services. We intend to develop alternative distribution and lead generation
relationships with potential channel partners. Any failure by us to develop
these relationships could materially and adversely impact our ability to
generate increased revenues, which would have a material adverse effect on our
business, results of operations and financial condition.

         We depend on a limited number of third party suppliers for key
components of our infrastructure, and the loss of one or more suppliers may slow
our growth or cause us to lose customers. For example, the flywheel electrical
generators that we use for power backup at the NAP of the Americas and the
routers used as part of our peering infrastructure, that, are available only
from sole or limited sources in the quantities and quality demanded by us. We
purchase these components and technology assistance pursuant to short term
agreements with our infrastructure contractors. We do not carry inventories of
components and we have no guaranteed supply or service arrangements with any of
these vendors. Any failure to obtain required products or services on a timely
basis, at an acceptable cost would impede the growth of our business, causing
our financial condition to be materially and adversely affected. In addition,
any failure of our suppliers to provide products or components that comply with
evolving Internet standards, would materially and adversely affect our business,
results of operations and financial condition..

         We will need to accomplish a number of objectives in order to
successfully complete the development of the permanent NAP of the Americas
facility, on a timely basis or at all, including obtaining necessary permits and
approvals, passing required inspections and successfully commissioning the
facility. The successful development of the facility will require careful
management of various risks associated with significant construction projects,
including construction delay, cost estimation errors or overruns, equipment and
material delays or shortages, inability to obtain necessary permits on a timely
basis and other factors, many of which are beyond our control. Our inability to
complete the planned NAP of the Americas facility or to effectively manage its
expansion would have a material adverse effect upon our business, results of
operations and financial condition. Furthermore, the NAP of the Americas
facility will result in substantial expenses. If revenue levels do not increase
sufficiently to offset these new expenses, our operating results will be
materially adversely impacted in future periods.

         We conduct business internationally. Accordingly, our future operating
results could be materially adversely affected by a variety of factors, some of
which are beyond our control, including currency exchange fluctuation, longer
accounts receivable payment cycles and difficulty in collections, and in
managing operations, taxes, restrictions on repatriation of earnings,
regulatory, political or economic conditions in a specific country or region,
trade protection measures and other regulatory requirements.

         We need to obtain additional licenses and approvals in order to expand
our services and enter new markets. Proposed or actual regulations with respect
to the Internet could also adversely impact our business. In addition, in order
to be successful in emerging markets, we must be able to differentiate ourselves
from our competition through our service offerings. There is no assurance that
we will successfully differentiate ourselves or that the market will accept our
services, or that we will not experience difficulties that could delay or
prevent the successful development, introduction or marketing of these services.
If we incur increased costs or are unable, for technical or other reasons, to
develop and introduce new services or enhance existing services in a timely
manner, or our products or services do not achieve market acceptance in a timely
manner or at all, our business, results of operations and financial condition
could be materially adversely affected.

            To date, we have funded our operations through private debt and
equity offerings. In addition, as described elsewhere in this report, we have
altered our business plan to scale back our growth to reduce our cash needs and
to achieve profitability at an earlier stage than was possible under our
previous business plan. However, because we have not yet achieved positive cash
flow status for our operations, we will continue to require capital support
until we are cash flow positive. Because of the NAP of the Americas is critical
to our business strategy, we do not believe that we can alter our business plan
sufficiently to achieve profitability without raising substantial additional
capital.



                                       20
<PAGE>   22
         Our consolidated financial statements as of March 31, 2001 have been
prepared on the assumption that we will continue as a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. Our independent auditors have issued a report dated
July 9, 2001 stating that our recurring operating losses, negative cash flows,
and liquidity deficit, combined with our current lack of credit facilities,
raise substantial doubt as to our ability to continue as a going concern.
Investors in our securities should review carefully our financial statements and
the report of our independent accountants thereon. Our ability to continue as a
going concern is dependent on several factors, including our ability to raise
additional capital. There can be no assurance that any financing will be
available through bank borrowings, debt or equity issuances, vendor lines of
credit, or otherwise, on acceptable terms or at all. If future financing
requirements are satisfied through the issuance of equity securities, investors
may experience significant dilution both in terms of their percentage interest
in the Company and the net book value per share of common stock. While we are
actively seeking strategic solutions to our funding issue, there can be no
assurance that we will be able to continue as a going concern.

         Economic, interest rates and other conditions greatly impact our
business. It is possible that our operations will not generate income sufficient
to meet our operating expenses or will generate income and capital appreciation,
if any, at a rate less than that anticipated or available through comparable
real estate or other investments.

NEW ACCOUNTING PRONOUNCEMENTS

         On June 29, 2001, the FASB approved its proposed Statements of
Financial Accounting Standards No. 141 (FAS 141), BUSINESS COMBINATIONS, and No.
142, GOODWILL AND OTHER INTANGIBLE ASSETS. FAS 141 requires that all business
combinations subsequent to June 30, 2001 be accounted for under the purchase
method of accounting. FAS 142 requires cessation of goodwill amortization and
periodic evaluation of the goodwill carrying value. The provisions of FAS 142
will be effective for fiscal years beginning after December 15, 2001. Early
adoption of FAS 142 is permitted for the Company if it implements the Statement
during its next fiscal quarter. The Company currently is amortizing goodwill
over five years and has not determined if it is going to early adopt FAS 142.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         We have not entered into any financial instruments for trading or
hedging purposes.

         Our carrying values of cash and cash equivalents, accounts receivable,
accounts payable and accrued expenses is a reasonable approximation of their
fair value.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The financial statements required by this Item 8 are attached to hereto
as Exhibit (a)(1).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

         On April 28, 2000, Terremark Holdings, Inc. merged with and into AmTec,
Inc. AmTec was the surviving corporation in this merger and its name was changed
to Terremark Worldwide, Inc.

         Prior to this transaction, Deloitte & Touche LLP was engaged by AmTec
to perform the March 31, 2000 audit of AmTec, Inc. As a result of the
transaction with Terremark Holdings, PricewaterhouseCoopers, LLP was engaged by
us as our principal accountants to audit our financial statements for the year
ended March 31, 2001. The engagement of PricewaterhouseCoopers was made
effective April 28, 2000.

         Deloitte & Touche LLP was engaged to audit AmTec's March 31, 2000
financial statements. During AmTec's two most recent fiscal years ended March
31, 2000, there were no disagreements between management and Deloitte & Touche
LLP on any matter of accounting principles or practices, financial statement
disclosures, or auditing scope or procedures, which disagreements, if not
resolved to the satisfaction of Deloitte & Touche LLP, would have caused
Deloitte & Touche LLP to make reference to the subject matter of the
disagreement in connection with its report. In addition, the financial
statements of AmTec for such periods contained no adverse opinion or disclaimers
of opinion, and were not qualified or modified in any way. Also, during this
same period there were no reportable events as defined or listed in Item 304 of
Regulation S-K.



                                       21
<PAGE>   23


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         Our executive officers and directors, and their ages as of May 15,
2001, are as follows:
<TABLE>
<CAPTION>

      NAME                      AGE                   PRINCIPAL POSITION
      ----                      ---                   ------------------
<S>                              <C>     <C>
Manuel D. Medina                 48      Chairman of the Board, President and Chief Executive Officer
Joseph R. Wright, Jr.            62      Vice Chairman of the Board
Guillermo Amore                  63      Director
Timothy Elwes                    65      Director
Jose Maria Figueres-Olsen        46      Director
Marvin S. Rosen                  59      Director
Miguel J. Rosenfeld              51      Director
Joel A. Schleicher               48      Director
Kenneth I. Starr                 52      Director
Brian K. Goodkind                43      Executive Vice President and Chief Operating Officer
</TABLE>


         Manuel D. Medina has served as our Chairman of the Board, President and
Chief Executive Officer since April 28, 2000, the date of our merger, and as
that of Terremark since its founding in 1982. In addition, Mr. Medina is a
managing partner of Communications Investors Group, the holder of the Series G
preferred stock. Mr. Medina has been a director of Fusion Telecommunications
International since December 14, 1998. Before founding Terremark, Mr. Medina, a
certified public accountant, worked with PricewaterhouseCoopers LLP.
Subsequently, he established and operated an independent financial and real
estate consulting company. Mr. Medina earned a Bachelors of Science degree in
Accounting from Florida Atlantic University in 1974.

         Joseph R. Wright, Jr. has served as our Vice Chairman of the Board
since April 28, 2000. Prior to that, Mr. Wright served as Chairman of the Board
from May 1995 to April 2000. Mr. Wright also served as Chairman of the Board of
GRC International, Inc. a United States public company that provides technical
information technology support to government and private entities from 1996 to
2000. He is also Co-Chairman of Baker & Taylor Holdings, Inc., an international
book and video distribution company, and Vice Chairman of Jefferson Consulting
Group, a Washington D.C. consulting firm. From 1989 to 1994, Mr. Wright served
as Executive Vice President, Vice Chairman and Director of W.R. Grace & Co., an
international chemicals and health care company, President of Grace Energy
Corporation and Chairman of Grace Environmental Company. From 1982 to 1989, Mr.
Wright held the positions of Director and Deputy Director of the Office of
Management and Budget, The White House, and was a member of President Reagan's
cabinet. Before 1982, he served as Deputy Secretary, United States Department of
Commerce, President of Citicorp Retail Services and Retail Consumer Services,
held posts in the United States Department of Agriculture and the United States
Department of Commerce, and was Vice President and Partner of Booz Allen &
Hamilton, a management consulting firm. Mr. Wright also serves on the Boards of
Directors of PanAm Sat corporation, Fusion Telecommunications International,
Inc., Cereus Technology Partners, RealMed Corporation and serves on the AT&T
Government Markets Advisory Board. He is a former member of the President's
Export Council and a former member of the Board of Directors of Travelers,
Harcourt Brace Janovich, and Hampton University.

         Guillermo Amore has served as a member of our board of directors since
February 2001. From August 2000 to February 2001, Mr. Amore served as the
President and Chief Operating Officer of our wholly-owned subsidiary, Terremark
Latin America, Inc., prior to which, he served as Chairman and Chief Executive
Officer of Spectrum Telecommunications Corporation until its acquisition. Mr.
Amore has nearly 35 years of telecommunications experience, much of it focused
on the developing markets of Latin America and the Caribbean. During his tenure



                                       22
<PAGE>   24

at GTE Corporation he built an extensive network of contacts in the region.
These contacts served him well in business development and regulatory affairs
during his stewardship of Grupo Isacell S.A. of Mexico and of Spectrum
Telecommunications. Mr. Amore holds an MBA from Harvard University and a
Bachelors degree in Science in Electrical Engineering from Pontificia
Universidad Javeriana, Colombia.

         Timothy Elwes has served as a member of our board of directors since
April 2000. Mr. Elwes has also served as member of the board of directors of
Timothy Elwes & Partners Ltd., a financial services company, from May 1978 until
October 1994, the business of which was merged into Fidux Trust Co. Ltd. in
December 1995. Mr. Elwes is a director of Fidux Trust Co. Ltd. He is also a
non-executive director of Partridge Fine Arts plc, a public company since 1989.
He has served as a director of Makecater Ltd., a property-developing company,
since 1995. Since 1989 he has served as a director of Tagring Ltd., a financial
services company.

         Jose Maria Figueres-Olsen has served as a member of our board of
directors since October 2000. Mr. Figueres-Olsen is the former President of
Costa Rica, serving as the head of state of his native country from 1994 to
1998, during which he made sustainable development the cornerstone of his
administration and led his country into the digital economy through the
implementation of several IT programs and the attraction of foreign investment
including Intel. Since leaving office, President Figueres-Olsen has served as a
Director of the Digital Nations Consortium, launched by the MIT Media Lab to
develop a new generation of technologies and applications that enable people to
design, create, and learn new ways to become more active participants in
developing societies. President Figueres-Olsen also serves on the Board of
Directors of the World Resources Institute, the World Wildlife Fund, the
Stockholm Environment Institute, and Leadership in Environment and Development.
President Figueres-Olsen holds a degree in Industrial Engineering from the
United States Military Academy at West Point and a Masters degree in Public
Administration (Mason Fellow) from the John F. Kennedy School of Government at
Harvard University.

         Marvin S. Rosen has served as a member of our board of directors since
April 2000. Mr. Rosen is a co-founder of Fusion Telecommunications International
and has served as its Vice Chairman since December 1998. From September 1995
through January 1997, Mr. Rosen served as the Finance Chairman of the Democratic
National Committee. Mr. Rosen currently serves on the Board of Directors of the
Children's Health Fund (New York City), since 1994, the Robert F. Kennedy
Memorial, since 1995, Bio-Medical Disposal, Inc., since 1998 and Fusion
Telecommunications International, Inc., since 1997, where he has also been
Vice-Chairman since December 1998. Mr. Rosen received his Bachelor of Science
degree in Commerce from the University of Virginia, his LL.B. from Dickinson
School of Law and his LL.M. in Corporations from New York University Law School.

         Miguel J. Rosenfeld has served as a member of our board of directors
since April 2000. Since November 1991, he has also served as a Senior Vice
President of Delia Feallo Productions, Inc., where he has been responsible for
the development of soap opera productions in Latin America. From January 1995
until May 1998, he was the Director of Affiliates and Cable for Latin America
for Protele, a division of Televisa International LLC. From December 1984 until
September 1998, he was a sales manager for Capitalvision International
Corporation. Mr. Rosenfeld holds a Bachelors degree in Administration from the
University of Buenos Aires which he earned in 1975.

         Joel A. Schleicher has served as a member of our board of directors
since April 2000. Mr. Schleicher has been President and Chief Executive Officer
for Exp@nets since June 1998. Exp@nets is a leading nationwide provider of
networked communication solutions to business. His previous communications
industry experience started as the Chief Operating Officer, President and
director of Nextel Communications, Inc. from 1989 to 1995 and subsequently with
ProCommunications, Inc. from 1996 to 1997. He has been a member of the board of
directors of NovAtel, Inc., a global GPS provider, since 1997, Fusion
Telecommunications, an international long distance service provider, since 1998,
and TechTronic Industries, a Hong Kong based manufacturer of consumer
appliances, since 1998. Before Nextel, Mr. Schleicher spent 10 years in the
consumer durables and energy sectors of industry and four years with KPMG Peat
Marwick in various capacities. He is a graduate of the Carlson School of the
University of Minnesota.

         Kenneth I. Starr has served as a member of our board of directors since
April 2000. Mr. Starr has also served as the Chairman and Chief Executive
Officer of Starr & Company, a New York City-based accounting and business
management firm, since he founded this firm in 1986.


                                       23
<PAGE>   25


         Brian K. Goodkind has served as our Executive Vice President and Chief
Operating Officer since April 2000. Prior to that, since April 1998, Mr.
Goodkind served as the Vice-Chairman, Executive Vice President, and General
Counsel to Terremark. In this capacity, Mr. Goodkind oversaw the operations,
risk management, systems development, and legal matters for Terremark. Mr.
Goodkind has been a member of the Florida Bar since 1982, and was in private
practice for 16 years, specializing in commercial litigation, employment law,
international transactions and real estate. His experience includes over 11
years, from 1986 to 1998, as one of two founding partners of a seventy-attorney
full-service law firm, for which he served as managing partner for over five
years. Mr. Goodkind received his Bachelor of Arts degree from the University of
Alabama and his J.D. from the University of Florida.

EMPLOYMENT AGREEMENTS

         We have entered into employment agreements with Manuel D. Medina,
Joseph R. Wright Jr. and Brian K. Goodkind.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires our
officers and directors, and persons who own more than ten percent of a
registered class of our equity securities, to file reports of ownership and
changes in ownership with the SEC. Officers, directors and greater than ten
percent shareholders are required by SEC regulations to furnish us with copies
of all Section 16(a) forms they file.

         Based solely on our review of the copies of the forms furnished to us
and written representations of the reporting persons, we believe that during
the fiscal year ended March 31, 2001 all Section 16(a) filing requirements
applicable to our officers, directors and greater than ten percent beneficial
owners were complied with, except: (i) Clifford J. Preminger filed a Form 3 on
February 12, 2001 which Form 3 should have been filed no later than May 10,
2000; (ii) Vistagreen Holdings (Bahamas) Limited filed a Form 3 on April 16,
2001 which Form 3 should have been filed no later than May 10, 2000; (iii)
Paradise Stream (Bahamas) Limited filed a Form 4 on June 11, 2001 reporting the
transfer of an aggregate of 200,000 shares which Form 4 should have been filed
no later than February 10, 2001; and (iv) Marvin S. Rosen filed a Form 4 on June
11, 2001 reporting the purchase of an aggregate of $75,000 of convertible
debentures during March 2001 which Form 4 should have been filed no later than
April 10, 2001.

ITEM 11. EXECUTIVE COMPENSATION.

         The following tables set forth certain information concerning
compensation for the fiscal years ended March 31, 2001, 2000 and 1999 of our
executive officers, including the Chief Executive Officer and four executive
officers whose total annual salary and bonus exceeded $100,000, for the fiscal
year ended March 31, 2001.

                          LONG TERM COMPENSATION AWARDS
<TABLE>
<CAPTION>

   NAME AND PRINCIPAL                                                  OTHER ANNUAL        STOCK        OPTIONS SARS
        POSITION             YEAR       SALARY ($)       BONUS($)      COMPENSATION      AWARDS($)          (#)
   -------------------       ----       ----------       --------      ------------      ---------      -------------
<S>                          <C>         <C>             <C>           <C>               <C>            <C>
Manuel D. Medina             2001        $350,000
Chairman of the Board &      2000        $350,000
President                    1999        $350,000

Joseph R. Wright             2001        $250,000
Vice Chairman &              2000        $285,000                       35,000 (1)         87,500         200,000
President TerreNap Data      1999        $483,333                       35,000 (1)
Centers, Inc.

Brian K. Goodkind            2001        $250,000                                                         150,000
Chief Operating              2000        $250,000
Officer & Executive Vice     1999        $250,000
President

Michael L. Katz              2001        $250,000                                                         150,000
President TerreNAP           2000        $250,000
Services, Inc.               1999        $250,000

William J. Biondi            2001        $250,000                                                         150,000
President Terremark          2000        $250,000
Realty, Inc.                 1999        $250,000

</TABLE>

                                       24
<PAGE>   26
--------------
(1)  During fiscal 1999 and 2000, we paid approximately $30,000 per year on
     behalf of Mr. Wright for certain personal tax and accounting services
     rendered by third parties for Mr. Wright.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table shows the amount of common stock beneficially owned
as of July 9, 2001, by (i) each of our directors, (ii) each of our executive
officers named in the Summary Compensation Table, (iii) all of our directors and
executive officers as a group and (iv) each person known by us to beneficially
own more than 5% of our outstanding common stock. Unless otherwise provided, the
address of each holder is c/o Terremark Worldwide, Inc., 2601 S. Bayshore Drive,
Miami, Florida 33133. As of July 9, 2001, there were 199,222,179 shares of our
common stock outstanding.
<TABLE>
<CAPTION>
                                                    AMOUNT AND NATURE OF       PERCENTAGE OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER              BENEFICIAL OWNERSHIP(1)         COMMON SHARES OWNED
------------------------------------              -----------------------         -------------------
<S>                                                    <C>                                 <C>
Manuel D. Medina ......................                 32,197,913(2)                      16.16%
Guillermo Amore .......................                  1,216,807(3)                      *
Brian K. Goodkind .....................                  2,518,693(4)                      *
Timothy Cyprian George Elwes ..........                          0                             0
Jose Maria Figueres-Olsen .............                    100,000                         *
Marvin S. Rosen .......................                  1,217,150(5)                      *
Miguel J. Rosenfeld ...................                  1,286,709(6)                      *
Joel A. Schleicher ....................                     50,000                         *
Kenneth J. Starr ......................                    100,000                         *
Joseph R. Wright, Jr ..................                    492,500                         *
Vistagreen Holdings (Bahamas)
   Limited ............................                 31,909,128(7)                      16.02%
Paradise Stream (Bahamas)
   Limited ............................                 25,000,000(8)                      12.55%
TCO Company Limited ...................                 34,094,139(9)                      17.11%
All directors and executive officers as
   a group (10 persons) ...............                 39,179,772                         19.39%
</TABLE>

---------------
*    Represents less than 1%.

(1)  A person is deemed to be the beneficial owner of securities that can be
     acquired by such person within 60 days from July 9, 2001 upon the exercise
     of options or warrants. Each beneficial owner's percentage ownership is
     determined by assuming that options and warrants that are held by such
     person, but not those held by any other person, and that are exercisable
     within 60 days from the applicable date have been exercised.

(2)  These include shares to which the holder has sole voting and investment
     power or shares such power with his spouse.

(3)  Includes 1,131,807 shares of common stock underlying convertible debentures
     which are exercisable within 60 days from July 9, 2001.

(4)  Includes 150,000 stock options and 98,892 shares of common stock underlying
     convertible debentures which are exercisable within 60 days from July 9,
     2001.

(5)  Includes 305,810 stock options exercisable within 60 days from July 9,
     2001.

(6)  Includes 100,000 stock options which are exercisable within 60 days from
     July 9, 2001. Includes 1,186,709 shares of common stock underlying
     convertible debentures which are exercisable within 60 days from July 9,
     2001which are owned indirectly by Mr. Rosenfeld.

(7)  Vistagreen Holdings (Bahamas) Limited, Charlotte House, Charlotte Street,
     P.O. Box N-65, Nassau Bahamas, is the beneficial owner of 31,909,128 shares
     of our common stock.

(8)  Paradise Stream Holdings (Bahamas) Limited, Charlotte House, Charlotte
     Street, P.O. Box N-65, Nassau Bahamas, is the beneficial owner of
     25,000,000 shares of our common stock.

(9)  TCO Company Limited, Charlotte House, Charlotte Street, P.O. Box N-65,
     Nassau Bahamas. As reported in this holder's Schedule 13D, and any
     amendments thereto, filed with the Securities Exchange Commission on June
     18, 2001.



                                       25
<PAGE>   27

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Mr. Medina, our Chairman, President and Chief Executive Officer is a
member of the board of directors of Fusion and, through his interest in a
general partnership, owns approximately 695,500 shares of Fusion common stock,
along with options and warrants. There are also interlocking directors between
us and Fusion. The interlocking directors consist of Messrs. Medina, Rosen,
Schleicher and Wright.

         Prior to the merger, some of our officers and directors owned
partnership interests in One Merrick Way and Galloway Medical Associates, Ltd.,
which owns Alhambra Center and Galloway Medical Park, respectively. We provided
management services to both partnerships for a fee. These management fees
totaled $35,000, for the year ended March 31, 2001. During the fiscal 2000
year, Terremark also provided management services to the Fortune House
Condominium Association and recorded as income $54,000 relating to services
performed.

                                     PART IV

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

         (a) 1 and 2. The financial statements listed in the accompanying Table
of Contents to Consolidated Financial Statements and Financial Statement
Schedule on page F-1 herein are filed as part of this report.

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

         (b) The following Report was filed on Form 8-K during the fourth
quarter of the fiscal year ended March 31, 2001:

         The Company filed a Form 8-K with respect to completion of the sale of
certain of its telecom facilities management operations to MP Telecom, LLC,
pursuant to an agreement dated January 12, 2001.

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

EXHIBIT NUMBER         EXHIBIT DESCRIPTION
--------------         -------------------

     2.1               Agreement for Sale of Assets by and between ITV
                       Communications, Inc. and Netmatics, Inc., dated January
                       11, 1996, and Promissory Note and Security Agreement
                       dated January 16, 1996 (1)

     2.2               Agreement of Merger between AVIC Group International,
                       Inc., a Colorado corporation, with and into AVIC Group
                       International, Inc., a Delaware corporation dated July
                       10, 1996 (2)

     2.3               Agreement and Plan of Merger by and between Terremark
                       Holdings, Inc. and AmTec, Inc., dated as of November 24,
                       1999, as amended by that certain Amendment to Agreement
                       and Plan of Merger, dated as of February 11, 2000 (3)

     2.4               Letter agreement dated January 12, 2001 among MP Telecom,
                       LLC, Terremark Worldwide, Inc., Clifford J. Preminger,
                       Thomas M. Mulroy and Manuel Medina (4)

     3.1               Certificate of Merger of Terremark Holdings, Inc. with
                       and into AmTec, Inc. (5)

     3.2               Restated Certificate of Incorporation of the Company (5)

     3.3               Restated Bylaws of the Company (5)

     3.4               Certificate of Designations of Preferences of Series G
                       Convertible Preferred Stock of the Company (5)

     3.5               Certificate of Designations of Preferences of Series H
                       Convertible Preferred Stock of the Company

     4.2               Specimen Stock Certificate (1)

                                       26
<PAGE>   28
EXHIBIT NUMBER         EXHIBIT DESCRIPTION
--------------         -------------------

     4.3               Form of 13% Subordinated Convertible Debenture, due
                       December 31, 2005 (6)

     4.4               Form of Warrant for the Purchase of Shares of Common
                       Stock (6)

     10.1              1995 Stock Option Plan (7)

     10.2              1996 Stock Option Plan (7)

     10.3              Real Property Lease between Lexreal Associates and the
                       Company dated May 8, 1995 (7)

     10.4              Form of Indemnification Agreement for directors and
                       officers of the Company (2)

     10.5              Employment Agreement with Joseph R. Wright(8)

     10.6              Employment Agreement with Manuel Medina

     10.7              Employment Agreement with Brian Goodkind (9)

     10.8              Employment Agreement with Irving Padron Jr. (10)

     10.9              Employment Agreement with Michael Katz (11)

     21                Subsidiaries of the Company

----------------

(1)    Previously filed as part of the Company's Current Report on Form 8-K
       dated March 6, 1997.

(2)    Previously filed as part of the Company's Definitive Proxy Statement
       filed on April 18, 1996.

(3)    Previously filed as part of the Company's Definitive Proxy Statement
       filed on March 24, 2000.

(4)    Previously filed as part of the Company's Current Report on Form 8-K
       dated February 28, 2001.

(5)    Previously filed as an exhibit to the Company's Registration Statement on
       Form S-3 filed May 15, 2000.

(6)    Previously filed as part of the Company's Quarterly Report on Form 10-Q
       filed on February 14, 2001.

(7)    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.

(8)    Previously filed as exhibit 10.6 to the Company's Annual Report on Form
       10-KSB filed June 29, 2000.

(9)    Previously filed as exhibit 10.2 to the Company's Quarterly Report on
       Form 10-Q filed on November 14, 2000.

(10)   Previously filed as exhibit 10.3 to the Company's Quarterly Report on
       Form 10-Q filed on November 14, 2000.

(11)   Previously filed as exhibit 10.4 to the Company's Quarterly Report on
       Form 10-Q filed on November 14, 2000.



                                       27
<PAGE>   29
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 13th day of
July 2001.

                                     Terremark Worldwide, Inc.


                                     By:  /s/ MANUEL D. MEDINA
                                        --------------------------------------
                                         Manuel D. Medina, Chairman of the
                                         Board, President and Chief Executive
                                         Officer

                                     By: /s/ JOSE A. SEGRERA
                                        --------------------------------------
                                         Acting  Chief Financial Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>

                SIGNATURE                                        TITLE                                 DATE
                ---------                                        -----                                 ----
<S>                                               <C>                                              <C>
   /s/ MANUEL D. MEDINA                          Chairman of the Board, President and              July 13,2001
 -------------------------------------                  Chief Executive Officer
 Manuel D. Medina                                    (principal executive officer)


   /s/ JOSEPH R. WRIGHT, JR.                                   Director                            July 13,2001
 -------------------------------------
 Joseph R. Wright, Jr.

   /s/ JOEL A. SCHLEICHER                                      Director                            July 13,2001
 -------------------------------------
 Joel A. Schleicher

   /s/ MARVIN S. ROSEN                                         Director                            July 13,2001
 -------------------------------------
 Marvin S. Rosen

   /s/ KENNETH I. STARR                                        Director                            July 13,2001
 -------------------------------------
 Kenneth I. Starr

   /s/ TIMOTHY ELWES                                           Director                            July 13,2001
 -------------------------------------
 Timothy Elwes

   /s/ MIGUEL J. ROSENFELD                                     Director                            July 13,2001
 -------------------------------------
 Miguel J. Rosenfeld

   /s/ JOSE MARIA FIGUERES-OLSEN                               Director                            July 13,2001
 -------------------------------------
 Jose Maria Figueres-Olsen

   /s/ JOSE A. SEGRERA                         Acting Chief Financial Officer (principal           July 13,2001
 -------------------------------------             financial and accounting officer)
 Jose A. Segrera

   /s/ GUILLERMO AMORE                                         Director                            July 13,2001
 -------------------------------------
 Guillermo Amore


</TABLE>

                                       28
<PAGE>   30

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




To the Board of Directors and Shareholders of
Terremark Worldwide, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Terremark Worldwide, Inc. and its subsidiaries at March 31, 2001 and 2000, and
the results of their operations and their cash flows for each of the three years
in the period ended March 31, 2001, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses from operations and has a
net liquidity deficit that raise substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are also
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

PRICEWATERHOUSECOOPERS LLP
Fort Lauderdale, Florida
July 9, 2001


<PAGE>   31



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                     MARCH 31,
                                                                         ---------------------------------
                                                                              2001                2000
                                                                         -------------       -------------
<S>                                                                      <C>                 <C>
             ASSETS
Cash and cash equivalents                                                $   5,574,687       $   3,391,977
Restricted cash                                                                 32,039             506,776
Accounts receivable                                                          2,871,119             777,307
Contracts receivable                                                         4,637,916                  --
Real estate inventories                                                             --          11,797,306
Investment in TECOTA                                                           489,855                  --
Notes receivable                                                               601,721           2,755,413
Property and equipment, net                                                 25,065,989           1,010,735
Other assets                                                                 2,221,858           1,977,373
Identifiable intangible assets and goodwill, net of accumulated
    amortization of $2,849,018 and $0, respectively                         23,712,737                  --
Real estate held for sale                                                   12,860,657          55,781,259
                                                                         -------------       -------------
      TOTAL ASSETS                                                       $  78,068,578       $  77,998,146
                                                                         =============       =============

             LIABILITIES AND STOCKHOLDERS' EQUITY

Notes payable                                                            $  13,680,843       $  72,784,079
Construction payables - leasehold improvements                              16,960,452                  --
Trade payables and other liabilities                                        17,100,365           4,664,722
Convertible debt                                                            15,855,382                  --
Deferred revenue                                                               284,693                  --
Interest payable                                                               323,153              72,914
Net liabilities of discontinued operations (Note 5)                          2,700,847                  --
                                                                         -------------       -------------
      TOTAL LIABILITIES                                                     66,905,735          77,521,715
                                                                         -------------       -------------

Convertible preferred stock: $1 par value, -0- and 4,176,693 shares
    authorized, issued and outstanding, respectively                                --           4,176,693
Series G convertible preferred stock: $.001 par value, 20 and -0-
    shares authorized, issued and outstanding, respectively                          1                  --
Common stock: $.001 par value, 300,000,000 shares authorized;
    200,507,179 and 70,685,845 shares issued, of which
    1,400,000 and -0- shares are held in treasury,
    respectively                                                               200,507              70,686
Paid in capital                                                            125,339,544           7,954,010
Retained deficit                                                          (115,724,620)        (11,724,958)
Common stock warrants                                                        2,059,398                  --
Common stock options                                                         1,716,138                  --
Less cost of shares of common stock in treasury                             (2,428,125)                 --
Commitments and contingencies (Note 16)
                                                                         -------------       -------------
      TOTAL STOCKHOLDERS' EQUITY                                            11,162,843             476,431
                                                                         -------------       -------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $  78,068,578       $  77,998,146
                                                                         =============       =============

</TABLE>



        The accompanying notes are an integral part of these consolidated
                             financial statements.



                                      F-2
<PAGE>   32



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                  FOR THE TWELVE MONTHS ENDED MARCH 31,
                                                         ----------------------------------------------------
                                                              2001                2000                1999
                                                         -------------       -------------       -------------
<S>                                                      <C>                 <C>                 <C>
 Revenues
    Data center                                          $     252,906       $          --       $          --
    Real estate sales                                        2,752,748          11,008,332          42,041,391
    Development, commission and construction fees           12,484,272           2,563,647           1,646,560
    Management fees                                          2,212,326           1,069,176             768,161
    Construction contracts                                  22,445,156             749,262                  --
                                                         -------------       -------------       -------------
        Operating revenues                                  40,147,408          15,390,417          44,456,112
                                                         -------------       -------------       -------------
Expenses
    Data center operations                                   1,223,112                  --                  --
    Start up costs - data centers                            6,507,517                  --                  --
    Cost of real estate sold                                 2,134,572           8,867,641          31,147,530
    Construction contract expenses                          20,347,165             554,610                  --
    General and administrative                              19,929,438           7,917,793           6,091,519
    Sales and marketing                                      2,768,890           2,933,125           5,479,561
    Depreciation and amortization                            3,257,292              81,264              50,012
                                                         -------------       -------------       -------------
        Operating expenses                                  56,167,986          20,354,433          42,768,622
                                                         -------------       -------------       -------------
    (Loss) income from operations                          (16,020,578)         (4,964,016)          1,687,490
                                                         -------------       -------------       -------------
Other income (expense)
    Interest income                                            505,743             222,062             263,179
    Interest expense                                        (1,097,683)           (804,785)         (1,493,539)
    Other (expense) income                                    (570,749)            374,803             167,056
    Dividend on preferred stock                                (34,806)           (417,669)                 --
    Impairment of long-lived assets                         (4,155,178)           (443,627)                 --
                                                         -------------       -------------       -------------
        Total other expense                                 (5,352,673)         (1,069,216)         (1,063,304)
                                                         -------------       -------------       -------------
    (Loss) income from continuing operations before
     income taxes                                          (21,373,251)         (6,033,232)            624,186

Income taxes
    Current tax expense                                             --                  --                  --
    Deferred tax                                                    --                  --                  --
                                                         -------------       -------------       -------------
      Total income tax expense                                      --                  --                  --
                                                         -------------       -------------       -------------
    (Loss) income from continuing operations               (21,373,251)         (6,033,232)            624,186
                                                         -------------       -------------       -------------
Loss from discontinued operations, net of income
 taxes of $-0-                                             (21,499,587)                 --                  --

Loss on disposition of discontinued operations,
 net of income taxes of $-0-                               (61,126,824)                 --                  --
                                                         -------------       -------------       -------------
    Net (loss) income                                    $(103,999,662)      $  (6,033,232)      $     624,186
                                                         =============       =============       =============
Basic and diluted (loss) earnings per common share:
    Continuing operations                                $        (.11)      $        (.09)      $         .01
    Discontinued operations                                       (.44)                 --                  --
                                                         -------------       -------------       -------------
    Net (loss) income                                    $        (.55)      $        (.09)      $         .01
                                                         =============       =============       =============
Weighted average common shares outstanding                 188,550,498          70,685,845          70,685,845
                                                         =============       =============       =============

</TABLE>



        The accompanying notes are an integral part of these consolidated
                             financial statements.



                                      F-3
<PAGE>   33



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                STOCKHOLDERS' EQUITY
                                    --------------------------------------------------------------------------------
                                                            COMMON STOCK
                                                           PAR VALUE $.001
                                                     ----------------------------      ADDITIONAL       COMMON
                                      PREFERRED          ISSUED                         PAID-IN          STOCK
                                        STOCK            SHARES          AMOUNT         CAPITAL         WARRANTS
                                    -------------    -------------   -------------   -------------   -------------
<S>                                 <C>                 <C>          <C>             <C>             <C>
Balance at March 31, 1998           $          --       70,685,845   $      70,686   $   7,954,010   $          --

Preferred stock issued in
    conversion of
    debt (4,176,693
    shares $1/share)                    4,176,693               --              --              --              --
Net income                                     --               --              --              --              --
                                    -------------    -------------   -------------   -------------   -------------

Balance at March 31, 1999               4,176,693       70,685,845          70,686       7,954,010              --

Net loss                                       --               --              --              --              --
                                    -------------    -------------   -------------   -------------   -------------
Balance at March 31, 2000               4,176,693       70,685,845          70,686       7,954,010              --

Effect of AmTec merger:
    conversion of preferred stock      (4,176,693)       7,853,985           7,854       4,168,839              --
    assumption of AmTec equity                  1       38,289,500          38,289      46,923,782       1,687,038
Sale of common stock                           --       68,722,349          68,722      28,054,203              --
Common stock issued in
    acquisitions                               --       14,412,500          14,413      37,531,045              --
Exercise of warrants                           --           54,000              54         190,161         (21,640)
Exercise of stock options                      --          489,000             489         517,504              --
Warrants issued                                --               --              --              --         394,000
Stock options issued                           --               --              --              --              --
Treasury stock acquisitions                    --               --              --              --              --
Net loss                                       --               --              --              --              --
                                    -------------    -------------   -------------   -------------   -------------
Balance at March 31, 2001                       1    $ 200,507,179   $     200,507   $ 125,339,544   $   2,059,398
                                    =============    =============   =============   =============   =============

</TABLE>




<TABLE>
<CAPTION>

                                                  STOCKHOLDERS' EQUITY
                                    ------------------------------------------------


                                         COMMON
                                         STOCK         TREASURY          RETAINED
                                         OPTIONS         STOCK            DEFICIT
                                      -------------   -------------    -------------
<S>                                   <C>             <C>              <C>
Balance at March 31, 1998             $          --   $          --    $  (6,315,912)

Preferred stock issued in
    conversion of
    debt (4,176,693
    shares $1/share)                             --              --               --
Net income                                       --              --          624,186
                                      -------------   -------------    -------------

Balance at March 31, 1999                        --              --       (5,691,726)

Net loss                                         --              --       (6,033,232)
                                      -------------   -------------    -------------
Balance at March 31, 2000                        --              --      (11,724,958)

Effect of AmTec merger:
    conversion of preferred stock                --              --               --
    assumption of AmTec equity                   --              --               --
Sale of common stock                             --              --               --
Common stock issued in
    acquisitions                                 --              --               --
Exercise of warrants                             --              --               --
Exercise of stock options                        --              --               --
Warrants issued                                  --              --               --
Stock options issued                      1,716,138              --               --
Treasury stock acquisitions                      --      (2,428,125)              --
Net loss                                         --              --     (103,999,662)
                                      -------------   -------------    -------------
Balance at March 31, 2001             $   1,716,138   $  (2,428,125)   $(115,724,620)
                                      =============   =============    =============

</TABLE>




        The accompanying notes are an integral part of these consolidated
                             financial statements.



                                      F-4
<PAGE>   34



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                               FOR THE TWELVE MONTHS ENDED
                                                                                       MARCH 31,
                                                                    -----------------------------------------------
                                                                         2001             2000             1999
                                                                    -------------    -------------    -------------
<S>                                                                 <C>              <C>              <C>
Cash flows from operating activities:
    Net (loss) income                                               $(103,999,662)   $  (6,033,232)   $     624,186
    Adjustments to reconcile net (loss) income to net cash
      (used in) provided by operating activities
        Discontinued operations                                        82,626,411               --               --
        Depreciation and amortization of capital leases                   408,274           81,264           50,012
        Amortization of intangible assets and goodwill                  2,849,018               --               --
        Amortization of loan costs to interest expense                    132,481          137,749          118,362
        Amortization of prepaid compensation                              164,167               --               --
        Write off of bad debt                                                  --               --           71,472
        Impairment of long-lived assets                                 4,155,178          443,627               --
        (Increase) decrease in:
           Real estate inventories                                     (1,063,351)         929,786       20,422,734
           Restricted cash                                                504,737         (212,335)         (14,317)
           Accounts receivable                                         (3,982,744)         164,172         (598,887)
           Contracts receivable                                        (2,312,896)              --               --
           Shareholder receivable                                              --               --          548,795
           Notes receivable                                             1,809,254       (2,418,363)         387,592
           Other assets                                                  (315,198)        (263,702)         973,703
        Increase (decrease) in:
           Trade payable and other liabilities                          9,463,524           79,562       (4,223,874)
           Interest payable                                               250,239         (351,312)      (2,286,367)
           Deferred revenue                                               284,693           22,721         (217,934)
           Net liabilities of discontinued operations                   2,700,847               --               --
                                                                    -------------    -------------    -------------
             Net cash (used in) provided by continuing operations      (6,325,028)      (7,420,063)      15,855,477
             Net cash used in discontinued operations                 (22,236,555)              --               --
                                                                    -------------    -------------    -------------
             Net cash (used in) provided by operating activities      (28,561,583)      (7,420,063)      15,855,477
                                                                    -------------    -------------    -------------
Cash flows from investing activities:
    Purchase and development of property and equipment                (24,412,720)        (745,409)        (194,496)
    Cash paid in dispositions                                            (900,000)              --               --
    Investment in unconsolidated entities, net                         (4,202,004)              --               --
    Proceeds from sale of real estate held for sale                    55,781,259               --               --
    Cash acquired in acquisitions                                       2,368,273           10,250               --
                                                                    -------------    -------------    -------------
             Net cash provided by (used in) investing activities       28,634,808         (735,159)        (194,496)
                                                                    -------------    -------------    -------------
Cash flows from financing activities:
    Construction payables - leasehold improvements                     16,960,452               --               --
    New borrowings                                                     17,947,892       17,861,701       18,136,761
    Payments on loans                                                 (73,563,352)      (9,122,535)     (37,410,591)
    Convertible debt                                                   11,955,000               --               --
    Exercise of stock options                                             517,993               --               --
    Sale of common stock                                               28,122,925               --               --
    Exercise of warrants                                                  168,575               --               --
    Cash overdraft                                                             --               --           44,704
                                                                    -------------    -------------    -------------
             Net cash (used in) provided by financing activities        2,109,485        8,739,166      (19,229,126)
                                                                    -------------    -------------    -------------
               Net increase (decrease) in cash                          2,182,710          583,944       (3,568,145)

Cash and cash equivalents at beginning of year                          3,391,977        2,808,033        6,376,178
                                                                    -------------    -------------    -------------
Cash and cash equivalents at end of year                            $   5,574,687    $   3,391,977    $   2,808,033
                                                                    =============    =============    =============


</TABLE>

        The accompanying notes are an integral part of these consolidated
                             financial statements.



                                      F-5
<PAGE>   35



TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
--------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURE:
<TABLE>
<CAPTION>

                                                           FOR THE TWELVE MONTHS ENDED
                                                                   MARCH 31,
                                                     ------------------------------------------
                                                         2001            2000            1999
                                                     ----------      ----------      ----------
<S>                                                  <C>             <C>             <C>
      Interest paid (net of amount capitalized)      $  178,718      $  366,707      $  990,245
      Taxes paid                                             --              --         320,375
      Assets acquired under capital leases            1,578,882         216,412         111,654
</TABLE>



During the year ended March 31, 2001, the Company reclassified approximately
$12,860,657 in real estate inventories to real estate held for sale.

During the year ended March 31, 2001, the Company reclassified approximately
$3,900,382 from notes and accounts payable to convertible debt.

During the year ended March 31, 2001, the Company issued $394,000 in warrants to
a third party in lieu of cash compensation for a one year consulting agreement.

See Notes 4 and 5 in the accompanying notes for additional discussion of
non-cash acquisitions and dispositions.










        The accompanying notes are an integral part of these consolidated
                             financial statements.




                                      F-6
<PAGE>   36


TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


1.     BUSINESS AND ORGANIZATION

       Terremark Worldwide, Inc. and its subsidiaries (the "Company") is a
       multinational corporation that provides Internet infrastructure and
       managed services. It is the owner and operator of the NAP of the
       Americas, the fifth Tier-1 Network Access Point ("NAP") in the world. The
       Company's strategy is to leverage its experience as the owner and
       operator of the NAP of the Americas by developing and operating
       TerreNAPSM Data Centers in Latin America and Asia. TerreNAPSM Data
       Centers provide peering, colocation and managed services to carriers,
       Internet service providers, other Internet companies and enterprises. The
       NAP of the Americas in Miami, Florida, which at March 31, 2001 is under
       construction, will be the premier TerreNAPSM Data Center.

       On April 28, 2000, the predecessor to the Company, Terremark Holdings,
       Inc. ("THI"), which was founded in 1982, completed a reverse merger with
       AmTec Inc. ("AmTec"). AmTec's operations consisted of equity investments
       and other alliances that provided long distance international
       telecommunications services, including telephony and data in Asia, and
       Internet Protocol ("IP") fax services in Hong Kong, Guangdong Province of
       the People's Republic of China and Taiwan. Historical information of the
       surviving company is that of THI.

       In addition to the AmTec merger, the Company made five additional
       acquisitions (Note 3) during the first two quarters of the year ended
       March 31, 2001. These acquisitions expanded the Company's operations, as
       a complement to AmTec's and the Company's historical businesses, to
       include providing: 1) IP fax services and unified messaging services in
       Asia, 2) telephony services in South America, 3) development expertise
       for telecommunications facilities, and 4) telecommunications facilities
       construction services.

       Changes in business conditions, including market changes in the
       telecommunications industry and the availability of debt and equity
       financing vehicles to fund other business expansion, caused the Company
       during the third quarter of the year ended March 31, 2001 to redefine its
       strategy to focus on TerreNAP Data Centers, and begin implementing a plan
       to exit all lines of business not directly related to that strategy.
       Lines of business discontinued include IP fax services, unified messaging
       services, and telephony. Key components of the Company's strategy are to
       complete the NAP of the Americas, and roll out similar data centers in
       Latin America and Asia under the TerreNAP brand. Consequently, subsequent
       to year-end, the Company continues to divest of identified operations
       that were part of the acquisitions made during the year ended March 31,
       2001, and wind up components of its traditional real estate development
       business (Notes 4 and 5).

2.     LIQUIDITY

       The accompanying financial statements have been prepared on a going
       concern basis, which contemplates the realization of assets and the
       satisfaction of liabilities in the normal course of business. The Company
       incurred $21,373,251 of losses from continuing operations and a net loss
       of $103,999,662 for the year ended March 31, 2001. These losses were
       primarily the result of sold and discontinued operations and start-up
       costs associated with the NAP of the Americas. Additionally, a
       substantial portion of the Company's obligations are due prior to March
       31, 2002.



                                      F-7
<PAGE>   37
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


       Management expects the Company will need a significant infusion of cash
       to fund retained business operations and planned expansion during the
       year ended March 31, 2002. To support existing operations through the
       year ended March 31, 2002, as of July 9, 2001, the Company believes it
       will need approximately $60.0 million in debt or equity financing,
       exclusive of interest costs thereon. These expectations are based on
       certain assumptions, the most significant being the signing of additional
       customer contracts at NAP of the Americas. The Company has identified
       additional potential customers and is actively marketing to them
       available services in the NAP of the Americas. The Company's plan is
       predicated on obtaining additional customer contracts through March 31,
       2002, which on an annual basis will generate revenues of approximately
       $45.0 million. The Company's failure to obtain adequate financing and
       meet its plan will result in liquidity problems and require the Company
       to curtail its planned expansion of TerreNAP Data Centers and current
       operations. As a result of these matters, substantial doubt exists about
       the Company's ability to continue as a going concern. The consolidated
       financial statements do not include any adjustments that might result
       from the outcome of this uncertainty.

       The Company's plan to fund its current obligations and fund activities
       necessary to complete NAP of the Americas and current operations is based
       upon obtaining additional debt and equity financing. The plan includes
       entering into strategic relationships, sale of Fortune House II (Note
       19), and restructuring construction payables currently due. Debt
       financing from businesses, individuals and financial institutions is also
       being pursued. The Company is attempting to refinance the Technology
       Center of the Americas' construction note payable in order to remove its
       guarantee. There can be no assurance that the Company's plan will be
       adequately implemented even if sufficient funds are obtained. Further,
       any additional equity financing if obtained may be dilutive to existing
       stockholders.

3.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      A summary of significant accounting principles and practices used by the
      Company in preparing its consolidated financial statements follows.

      The Company's consolidated financial statements include the accounts of
      the Company's wholly owned subsidiaries. All significant inter-company
      balances and transactions are eliminated in consolidation.

      Certain acquired businesses whose operations reflect IP fax, unified
      messaging and telephony services were approved for disposition during
      March 2001. Since the operations represent a class of customer and a major
      line of business as contemplated in Accounting Principles Board Opinion 30
      "Reporting the Results of Operations - Reporting the Effects of Disposal
      of a Segment of a Business, and Extraordinary, Unusual and Infrequently
      Occurring Events and Transactions" ("APB 30"), their operations are
      accounted for as discontinued operations. Included in discontinued
      operations are AmTec's, Spectrum's, Asia Connect's and IXS.NET's
      businesses. In addition, disposal of certain activities not representing
      an operating segment as contemplated under APB 30 are accounted for in
      current operations.



                                      F-8
<PAGE>   38
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


       USE OF ESTIMATES

       The Company prepares its financial statements in conformity with
       generally accepted accounting principles. These principles require
       management to make estimates and assumptions that affect the reported
       amounts of assets and liabilities, disclosure of contingent assets and
       liabilities at the date of the financial statements and reported amounts
       of revenue and expenses during the reporting period. Actual results could
       differ from those estimates. Significant estimates include loss on
       disposition of discontinued operations.

       RECLASSIFICATIONS

       Certain reclassifications have been made to the prior periods' financial
       statements to conform with current presentation.

       OTHER COMPREHENSIVE INCOME

       The Company has adopted Statement of Financial Accounting Standards No.
       130, "Reporting Comprehensive Income." Accordingly, gains and losses on
       translation of accounts of the Company's non-U.S. operations are
       accumulated and reported as a component of accumulated other
       comprehensive income in stockholders' equity. At March 31, 2001 and 2000,
       the Company had no comprehensive income

       NEW ACCOUNTING STANDARDS

       On June 29, 2001, the FASB approved its proposed Statements of Financial
       Accounting Standards No. 141 (FAS 141), BUSINESS COMBINATIONS, and No.
       142, GOODWILL AND OTHER INTANGIBLE ASSETS. FAS 141 requires that all
       business combinations subsequent to June 30, 2001 be accounted for under
       the purchase method of accounting. FAS 142 requires cessation of goodwill
       amortization and periodic evaluation of the goodwill carrying value. The
       provisions of FAS 142 will be effective for fiscal years beginning after
       December 15, 2001. Early adoption of FAS 142 is permitted for the Company
       if it implements the Statement during its next fiscal quarter. The
       Company currently is amortizing goodwill over five years and has not
       determined if it is going to early adopt FAS 142.

       In June 1998, the Financial Accounting Standards Board issued Statement
       of Financial Accounting Standards No. 133, "Derivative Instruments and
       Hedging Activities," which is effective for fiscal years beginning after
       June 15, 2000. The Company has no derivative instruments.

       LOSS PER SHARE

       The Company has adopted Statement of Financial Accounting Standards No.
       128, "Earnings Per Share." Basic earnings per share ("EPS") equals net
       income divided by the number of weighted average common shares. Diluted
       EPS includes potentially dilutive securities such as stock options and
       convertible securities. The effect of shares issuable upon exercise of


                                      F-9
<PAGE>   39
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


       convertible preferred stock, warrants and stock options is anti-dilutive,
       therefore diluted earnings per share is not presented in a comparative
       format.

       REVENUE AND PROFIT RECOGNITION

       Revenues from data centers and telecom facilities management are
       recognized at the time services are provided.

       Revenues from construction contracts are recognized on the
       percentage-of-completion method, measured by the percentage of costs
       incurred to date to total estimated costs for each contract. This method
       is used because management considers cost incurred to be the best measure
       of progress on these contracts. The duration of a construction contract
       generally exceeds one year.

       Contract costs include all direct material and labor costs and indirect
       costs related to contract performance such as indirect labor, supplies,
       tools, repairs and depreciation. General and administrative costs are
       charged to expense as incurred.

       Provisions for estimated losses on uncompleted contracts are made in the
       period in which losses are determined. Changes in job performance, job
       conditions and estimated profitability, including those arising from
       contract penalty provisions and final contract settlements may result in
       revisions to costs and income and are recognized in the period in which
       the revisions can be reasonably estimated. Accordingly, it is possible
       that the Company's current estimates relating to completion cost and
       profitability of its uncompleted contracts will vary from actual results.

       Billings in excess of costs and estimated earnings on uncompleted
       contracts are classified as other liabilities and represent billings in
       excess of revenues recognized.

       Revenues from development, commission and construction fees are
       recognized when earned.

       REAL ESTATE INVENTORIES AND COST OF REAL ESTATE SOLD

       Real estate inventories consist of completed condominiums and
       condominiums under development. Real estate inventories, including
       capitalized interest and real estate taxes, are carried at the lower of
       cost or fair value determined by evaluation of individual projects.
       Acquisition, development and other indirect costs related to acquisition
       and development of real estate projects are capitalized. Interest and
       real estate taxes incurred relating to the construction of condominiums
       are capitalized during the active development period. The capitalized
       costs are relieved from inventory on the relative sales value method for
       each project as the related revenue is recognized.

       The Company subcontracts construction to third parties and the
       construction contracts require subcontractors to repair or replace
       deficiencies related to their trade.



                                      F-10
<PAGE>   40
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      Whenever events or circumstances indicate that the carrying value of the
      real estate inventories may not be recoverable, impairment losses are
      recorded and the related assets are adjusted to their estimated fair
      market value, less selling costs.

      CASH, CASH EQUIVALENTS AND RESTRICTED CASH

      The Company considers all amounts held in highly liquid instruments with
      an original purchased maturity of three months or less to be cash
      equivalents. Cash and cash equivalents include cash balances maintained in
      the operating and interest-bearing money market accounts at the Company's
      banks. Restricted cash includes escrowed cash balances for tenant security
      and customer purchase deposits.

      ALLOWANCE FOR UNCOLLECTIBLE RECEIVABLES

      Management regularly evaluates factors affecting collectibility of
      receivable balances. Management believes all accounts at March 31, 2001
      and 2000 are collectible, therefore, no allowance for uncollectible
      receivables is maintained.

      PROPERTY AND EQUIPMENT, NET

      Property and equipment, net includes acquired assets and those accounted
      for under a capital lease. Purchased assets are recorded at cost and
      depreciated on the straight-line method over their estimated remaining
      useful lives. Capital leased assets are recorded at the net present value
      of minimum lease payments and are depreciated on the straight-line method
      over the term of the lease, as follows:

           Leasehold improvements                                5 years
           Computer software                                     3 years
           Furniture, fixtures and equipment                     5 years
           Capital lease assets                                 3-5 years

      INTANGIBLE ASSETS AND GOODWILL

      Identifiable intangible assets consist primarily of certain rights,
      customer relationships and contracts. The identifiable intangible assets
      are amortized on the straight-line method over periods ranging from one to
      five years. Goodwill represents the excess of the purchase price over the
      fair value of identifiable net assets acquired in conjunction with
      business acquisitions and is amortized on the straight-line basis over a
      five year period.

      LONG LIVED ASSETS

      The Company evaluates long-lived assets and identifiable intangibles for
      impairment whenever events or changes in circumstances indicate that the
      net carrying amount may not be recoverable. When such events occur, the
      Company measures impairment by comparing the carrying value of the



                                      F-11
<PAGE>   41
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      long-lived asset to the estimated undiscounted future cash flows expected
      to result from the use of the assets and their estimated remaining lives.
      Impairment reserves are provided for the excess of the carrying amount of
      an asset exceeds the fair market value of the asset.

      CONSTRUCTION PAYABLES - LEASEHOLD IMPROVEMENTS

      Construction payables - leasehold improvements includes liabilities
      related to construction of NAP of the Americas and a colocation facility
      in Santa Clara, California.

      TRADE PAYABLES AND OTHER LIABILITIES

      Trade payables and other liabilities includes liabilities incurred during
      the normal course of business.

4.    ACQUISITIONS

      AMTEC, INC.

      On April 28, 2000, the predecessor to the Company, Terremark Holdings,
      Inc. (THI) merged with and into AmTec, Inc., a publicly traded
      international telecommunications and services company. As a result of the
      merger, each share of THI common stock was converted into approximately 63
      shares of the Company's common stock. The stockholders' equity in the
      historical financial statements reflects this conversion as if it had
      occurred at the beginning of each period.

      The AmTec merger was accounted for using the purchase method of
      accounting, with THI treated as the acquirer for accounting purposes. As a
      result, the assets and liabilities of THI are recorded at historical
      values and the assets and liabilities of AmTec are recorded at their
      estimated fair values at the date of the merger. The purchase price was
      based on market capitalization of AmTec using $0.99 per AmTec common
      share, the average closing price of AmTec shares, for a period immediately
      before and after announcement on November 9, 1999 of the proposed merger,
      plus certain merger related costs.

      The following unaudited condensed results of operations for the twelve
      months ended March 31, 2001 and 2000 were prepared assuming the merger
      occurred on April 1, 2000 and 1999, respectively, and assumes AmTec's
      operations are a part of continuing operations.
<TABLE>
<CAPTION>

                                                   FOR THE TWELVE MONTHS ENDED
                                                             MARCH 31,
                                                ---------------------------------
                                                     2001                2000
                                                -------------       -------------
<S>                                             <C>                 <C>
      Revenue                                   $  40,147,000       $  15,390,000
      Net loss                                  $(106,030,000)      $ (17,868,000)
      Basic and diluted net loss per share      $       (0.47)      $       (0.07)

</TABLE>

                                      F-12
<PAGE>   42
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      The amounts for the twelve months ended March 31, 2001 include AmTec's
      actual results for the period April 1, 2000 to April 28, 2000. The amounts
      for the twelve months ended March 31, 2000 include AmTec's actual results
      for the twelve months ended March 31, 2000. In preparing the pro forma
      information, various assumptions were made. This information is not
      necessarily indicative of what would have occurred had these transactions
      occurred on April 1, 2000 and 1999, nor is it indicative of the results of
      future combined operations.

      OTHER ACQUISITIONS

      During the year ended March 31, 2001, the Company acquired five
      businesses. The Company accounted for each acquisition as a purchase. When
      consideration included common stock, its value was determined using the
      average closing price of the Company's stock for a period immediately
      before and after each acquisition's announcement. The effect of each
      acquisition individually and in the aggregate on the Company's
      consolidated financial statements was not material. The acquisitions are
      as follows:

      TELECOM ROUTING EXCHANGE DEVELOPERS, INC.

      On May 31, 2000, the Company acquired Telecom Routing Exchange Developers,
      Inc. ("T-Rex"), a corporation holding rights to develop and manage
      facilities catering to the telecommunications industry, in exchange for
      eight million shares of common stock. Since the Company was a non-public
      entity at the time the AmTec merger was announced and the terms were
      conditional on the consummation of the AmTec merger, the purchase price
      was based on the closing price of the Company's common stock of $1.94 per
      common share on the acquisition date.

      POST SHELL TECHNOLOGY CONTRACTORS, INC.

      On June 23, 2000, the Company acquired all of the outstanding stock of
      Post Shell Technology Contractors, Inc. ("Post Shell"), a provider of
      construction services, in exchange for three million shares of common
      stock. The acquisition was accounted for using the purchase method of
      accounting. The purchase price was based on the market capitalization of
      the Company using an average closing price of $2.81 per common share for a
      period immediately before and after the announcement of the acquisition on
      June 26, 2000.

      SPECTRUM TELECOMMUNICATIONS

      On August 9, 2000, the Company acquired an 80% ownership interest in
      Spectrum Telecommunications, Inc. ("Spectrum") through issuing three
      million shares of common stock. Spectrum was a provider of
      telecommunication services in Latin America. On February 16, 2001, the
      Company acquired for $100 the remaining 20% ownership interest.

                                      F-13
<PAGE>   43
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      IXS.NET

      On August 14, 2000, the Company acquired 100% of IXS.Net ("IXS"), a
      private IP fax services provider in Asia, by issuing 412,500 shares of
      common stock and transferring a 7.55% ownership interest in the Company's
      subsidiary, Asia Connect L.L.C.

      ASIA CONNECT L.L.C.

      On September 1, 2000, the Company completed its acquisition of a
      controlling interest in Asia Connect L.L.C. (Asia Connect). Asia Connect
      was developing unified messaging services in Asia. The Company had a
      92.45% interest in Asia Connect.

      Acquisitions during the twelve months ended March 31, 2001 are summarized
      as follows:

<TABLE>
<CAPTION>

                                           AMTEC         T-REX       POST SHELL   SPECTRUM        IXS.NET      ASIA CONNECT
                                        -----------   -----------   -----------   -----------   -----------    -------------
<S>                                     <C>           <C>           <C>           <C>           <C>            <C>
      Assets:
          Cash and cash equivalents     $ 1,508,803   $   248,210   $   307,260   $   247,130   $    26,945    $    29,925
          Restricted cash                        --        30,000            --            --            --             --
          Accounts and contracts
           receivable                            --       238,322     2,325,020       531,712       184,902             --
          Investments and option
           agreements                    12,228,209       172,970            --            --            --             --
          Reclassification of option             --            --            --            --    (2,400,000)    (6,500,000)
          Notes receivable                  344,438            --            --            --            --             --
          Furniture and equipment            48,355        46,038        55,556     5,352,923       161,694         55,866
          Other assets                      279,143        61,275        17,785       900,939        95,710        293,030
          Identifiable intangible
           assets                                --    15,785,558     1,283,000            --            --             --
          Goodwill                       35,519,223            --     7,126,748    18,252,975     4,543,194      6,770,179
                                        -----------   -----------   -----------   -----------   -----------    -----------
            Total assets acquired       $49,928,171   $16,582,373   $11,115,369   $25,285,679   $ 2,612,445    $   649,000
                                        ===========   ===========   ===========   ===========   ===========    ===========
      Liabilities

          Notes payable                 $        --   $        --   $     4,924   $10,531,229   $    29,896    $   150,000
          Trade payable and other
           liabilities                      479,060     1,082,373     2,680,445     1,693,463       320,904             --
                                        -----------   -----------   -----------   -----------   -----------    -----------
            Total liabilities assumed       479,060     1,082,373     2,685,369    12,224,692       350,800        150,000

          Minority interest                      --            --            --       475,306            --             --

      Equity assumed                     48,649,111            --            --            --            --             --
      Issuance of common stock                   --    15,500,000     8,430,000    12,039,000     1,576,457             --
      Merger and acquisition costs          800,000            --            --       546,681       685,188        499,000
                                        -----------   -----------   -----------   -----------   -----------    -----------
                                        $49,928,171   $16,582,373   $11,115,369   $25,285,679   $ 2,612,445    $   649,000
                                        ===========   ===========   ===========   ===========   ===========    ===========

</TABLE>

                                      F-14
<PAGE>   44
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


5.    DISPOSITIONS

      SALE OF TELECOM FACILITIES MANAGEMENT OPERATIONS

      On February 23, 2001, the Company sold certain of its telecom facilities
      management operations to MP Telecom, LLC ("MP"), an entity owned by
      certain officers and a director of the Company.

      Assets sold include all of the Company's equity ownership interests
      (including any rights to contingent profit) in the T-Rex branded "Telecom
      Hotel" together with assets owned by Telecom Routing Exchange Developers,
      Inc., a wholly owned subsidiary of the Company. As part of the
      transaction, the Company retained its management rights for The Technology
      Center of the Americas ("TECOTA"), in which the NAP of the Americas will
      be located. The purchaser conveyed to the Company its rights to the
      contingent profit and equity interests in TECOTA. As a result of these
      transactions, at March 31, 2001, the Company owns 100% of the contingent
      profit and .84% of the equity interests in TECOTA.

      As part of the transaction, MP conveyed to the Company 1,400,000 shares of
      the Company's common stock, representing a portion of 8,000,000 shares
      issued to MP and its affiliates in conjunction with the T-Rex acquisition.
      MP also conveyed its minority interest in the Company's co-location
      business. The Company paid $900,000 to the purchaser in connection with
      the transaction. The principals of MP and certain Company officers have
      agreed, until December 25, 2001, to limit the aggregate number of Company
      shares sold by them during any trading day.

      During the quarter ended December 31, 2000, the Company recognized an
      impairment of intangible assets of $4,155,178 in contemplation of the
      transaction with MP, which closed during the quarter ended March 31, 2001.

      DISCONTINUED OPERATIONS

       In March 2001, the Company implemented its plan to dispose of certain
      acquired businesses whose operations reflect IP fax, unified messaging and
      telephony services. Since the operations represent a class of customer and
      a major line of business as contemplated in APB 30, the results of these
      activities and estimated loss on disposal are accounted for as
      discontinued operations.

      As of March 31, 2001 $2,245,896 in assets, exclusive of goodwill, had been
      disposed. Remaining assets to be disposed amounted to $6,390,009.
      Subsequent to March 31, 2001, these assets became subject to sales
      contracts with proceeds aggregating $500,000 in cash and assumption of
      approximately $1,740,838 in liabilities. The loss on disposition of
      discontinued operations includes the write-off of $54,381,681 in goodwill.
      For the year ended March 31, 2001, discontinued operations had $1,760,640
      of total revenues and a loss of $11,346,447, net of $10,153,140 in
      goodwill amortization. The net liabilities for discontinued operations
      primarily represents trade payables as of March 31, 2001 which will remain
      an obligation of the Company. In addition, the Company at March 31, 2001
      guaranteed approximately $550,000 in debt related to discontinued
      operations.

                                      F-15
<PAGE>   45
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      OTHER

      In February 2001, the Company sold for $4,750,000 certain rights,
      including the entitlement to a contingent payment and related preferred
      return, under agreements entered into in conjunction with a hotel
      development project in Miami, Florida. These proceeds are included in
      development, commission and construction fees.

6.    CONTRACTS RECEIVABLE

      Contracts receivable consist of the following:

                                                           MARCH 31,
                                                      ---------------------
                                                         2001       2000
                                                      ----------   --------

      Completed contracts                             $  939,312   $     --
      Contracts in progress                            2,543,489         --
      Retainage                                        1,155,115
                                                      ----------   --------
                                                      $4,637,916   $     --
                                                      ==========   =========

7.    REAL ESTATE HELD FOR SALE

      Real estate held for sale is summarized as follows:

                                                            MARCH 31,
                                                    -------------------------
                                                        2001          2000
                                                    -----------   -----------
      Fortune House II land and improvements        $11,668,090   $        --
      Fortune House I completed condominium units     1,192,567            --
      Terremark Centre                                       --    55,781,259
                                                    -----------   -----------
                                                    $12,860,657   $55,781,259
                                                    ===========   ===========



      On December 22, 1999, the Company acquired for approximately $56.0 million
      all partnership interests of Terremark Centre, Ltd. ("TCL"). TCL is a
      single purpose entity and fee simple owner of a 294,000 square foot 21
      story Class A office building and 16 townhouses, located in Coconut Grove,
      Florida. The acquisition was financed through assumption of a first
      mortgage of approximately $28.3 million and issuance of approximately
      $27.1 million in purchase money notes to the sellers. In April 2000, the
      Company sold its interests for approximately $58.8 million. No gain or
      loss was recognized on this sale. The cash proceeds were used to repay
      approximately $55.8 million in related debt.

                                      F-16
<PAGE>   46
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


8.    REAL ESTATE INVENTORIES

      Real estate inventories are summarized as follows:

                                                 MARCH 31,
                                          ----------------------
                                            2001          2000
                                          --------   -----------

      Work in progress                    $     --   $ 8,566,697
      Completed inventories                     --     3,230,609
                                          --------   -----------
                                          $     --   $11,797,306
                                          ========   ===========


9.    PROPERTY AND EQUIPMENT, NET

      Property and equipment, net consist of the following:

                                                MARCH 31,
                                      ----------------------------
                                          2001            2000
                                      ------------    ------------

      Leasehold improvements          $  1,217,608    $    426,085
      Furniture and equipment            3,433,806         718,593
                                      ------------    ------------
                                         4,651,414       1,144,678
      Less accumulated depreciation       (542,217)       (133,943)
                                      ------------    ------------
                                         4,109,197       1,010,735
      Construction in process           20,956,792              --
                                      ------------    ------------
                                      $ 25,065,989    $  1,010,735
                                      ============    ============


      Construction in process primarily includes costs related to construction
      of NAP of the Americas and a colocation facility in Santa Clara,
      California.



                                      F-17
<PAGE>   47
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


10.   OTHER ASSETS

      Other assets consist of the following:
<TABLE>
<CAPTION>

                                                                  MARCH 31,
                                                           -----------------------
                                                               2001         2000
                                                           ----------   ----------
<S>                                                        <C>          <C>
      Prepaid expenses and other                           $2,091,073   $1,057,340
      Loan costs, net of accumulated
        amortization of $1,228,076 and $1,095,595,
        respectively                                          130,785      368,946
      Prepaid investment costs                                     --      410,591
      Reimbursable construction costs and other expenses           --      140,496
                                                           ----------   ----------
                                                           $2,221,858   $1,977,373
                                                           ==========   ==========
</TABLE>


      Loan costs, principally loan origination and related fees, are deferred
      and amortized as interest expense over the life of the respective loan
      using the straight-line method, which approximates the effective interest
      method.



                                      F-18
<PAGE>   48
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


11.   NOTES RECEIVABLE

      Notes receivable consist of the following:
<TABLE>
<CAPTION>

                                                                                           MARCH 31,
                                                                                   -------------------------
                                                                                       2001            2000
                                                                                   ----------   -------------
<S>                                                                                <C>          <C>
      Note receivable from a corporation, $200,000 principal, interest accrues
      annually at 8% interest and principal due
      upon demand                                                                  $  200,000   $     220,647

      Note receivable from a corporation, $360,000 principal, collateralized by
      second lien on condominium units, interest accrues annually at 9% interest
      and principal due August 27, 2002                                               401,721         369,321

      $3,000,000 line of credit to Spectrum Telecommunications
      Corp., $0 and $1,000,000 principal outstanding,
      respectively, interest accrues annually at 10%                                       --       1,002,740

      Notes receivable from AmTec, Inc., $0 and $1,125,000
      principal outstanding, respectively, interest accrues
      annually at 10%.  Interest and principal due July 1, 2000                            --       1,162,705
                                                                                   ----------   -------------
                                                                                   $  601,721   $   2,755,413
                                                                                   ==========   =============
</TABLE>

                                      F-19
<PAGE>   49
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


12.   NOTES PAYABLE

      Notes payable consist of the following:
<TABLE>
<CAPTION>

                                                                                   MARCH 31,
                                                                           -------------------------
                                                                               2001          2000
                                                                           -----------   -----------
<S>                                                                        <C>           <C>
      Note payable to an individual, collateralized by a
      first mortgage on land, interest accrues at 12% and is
      payable monthly.  Principal due November 10, 2001                    $ 7,500,000   $        --

      $5 million line of credit facility with a financial institution,
      collateralized by (1) certain assets of the Company and (2) a
      corporate guaranty. Interest accrues at 1% over prime, payable
      monthly, with principal balance due upon demand                        3,500,000            --

      Note payable to a financial institution, collateralized by certain
      assets and personal guarantees of a stockholder and certain
      executives of the Company. Interest accrues at 1% over prime,
      payable monthly, with principal balance due December 2001              1,750,000            --

      Note payable to a commercial lender, collateralized by a first
      mortgage on real estate. Principal payable in installments as
      condominium units are sold. Interest accrues at prime, payable
      through an interest reserve. Principal and unpaid interest due
      November 2001, with an option for a six month extension
      Guaranteed by a stockholder                                              534,378     2,681,998

      Note payable to a corporation in seventy-five monthly
      installments of principal and interest beginning
      January 1, 1999.  Interest accrues at 9.5%                               249,326       272,397

      Notes payable to individuals, interest accrues at 8%,
      with principal and interest due monthly through
      March 2001                                                               147,139            --

      Notes payable to a financial institution, collateralized
      by a first mortgage on Terremark Centre and all future
      rents of the property.  Principal and interest payable
      monthly based on a 20-year amortization at 7.74%                              --    28,100,084

</TABLE>

                                      F-20
<PAGE>   50
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                                                    MARCH 31,
                                                                          --------------------------
                                                                               2001          2000
                                                                          ------------   -----------
<S>                                                                        <C>            <C>
      Notes payable to a corporation, collateralized by the partnership
      interests of Terremark Centre, Ltd. Principal, together with the
      greater of (a) all accrued and unpaid interest at a rate of 7%,
      beginning December 22, 1999 or (b) a minimum interest payment of
      $1,000,000, due upon sale of Terremark Centre                                 --    27,097,900

      $15 million line of credit facility with a financial
      institution, collateralized by a first mortgage on real
      estate.  Interest accrues at 1% over prime, payable
      monthly.  Line of credit reduced to $7.5 million
      in 2000 and cancelled in July 2000                                            --    14,631,700
                                                                          ------------   -----------
                                                                          $ 13,680,843   $72,784,079
                                                                          ============   ===========

</TABLE>


      The Company's $5 million line of credit with a financial institution
      allows for the issuance of letters of credit. At March 31, 2001, the
      Company had two stand-by letters of credit totaling $1,500,000 related to
      deposits for leased space. Therefore, the line of credit was fully
      utilized.

      Interest expense of $1,097,683, $804,785 and $1,493,539, net of amounts
      capitalized to real estate inventories totaling $605,332 and $41,038 and
      $1,657,948 was recognized in fiscal years 2001, 2000 and 1999.

      The future maturities through March 31 for each of the following five
      years and thereafter of the Company's borrowings as of March 31, 2001 are
      as follows:

      2002                              $13,317,662
      2003                                  907,148
      2004                                   30,699
      2005                                   33,746
      2006                                   37,095
      Thereafter                             94,455
                                        ------------
            Total                       $14,420,805
                                        ============



                                      F-21
<PAGE>   51
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


13.   CONVERTIBLE DEBT

      During the year ended March 31, 2001, the Company issued $15,855,382 of
      subordinated convertible debt. Interest accrues at 13% and is payable
      quarterly beginning March 31, 2001. The debt matures on December 31, 2005.
      The debt is convertible into the Company's stock at 120% of the 20-day
      average trading price prior to the closing. Prepayment by the Company is
      permitted, but will entitle holders to warrants or a premium over their
      outstanding principal and interest based upon the following schedule:

                YEAR                                  REDEMPTION PRICE
                ----                                  ----------------
                2001                                         105%
                2002                                         104%
                2003                                         103%
                2004                                         102%
                2005                                         100%

      Subsequent to March 31, 2001 the Company sold an additional $9,792,318 of
      convertible debt. Approximately 28.0% of the amount sold is payable to
      management and directors.

14.   CHANGES TO STOCKHOLDERS' EQUITY

      In addition to acquisitions effectuated through common stock transactions,
      the Company entered into the following equity transactions:

      COMMON STOCK

      In conjunction with the AmTec merger, the Company sold 68,722,349 shares
      of common stock to a third party for approximately $28.1 million. The
      third party was the previous owner of Terremark Centre.

      CONVERTIBLE PREFERRED STOCK

      At March 31, 2000, the Company had 4,176,693 shares of convertible
      preferred stock outstanding. The $1 par value preferred stock had a 10%
      cumulative preferred dividend, payable annually commencing March 31, 2000.
      During April 2000, the preferred stock was acquired by certain members of
      the Company's management. Upon consummation of the AmTec merger, the
      preferred shares were converted into 7,853,985 shares of the Company's
      common stock.



                                      F-22
<PAGE>   52
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      SERIES G CONVERTIBLE PREFERRED STOCK

      The Company assumed AmTec's 20 outstanding shares of Series G convertible
      preferred stock ("Series G Preferred") in the AmTec merger, which do not
      bear dividends. Conversion of the Series G Preferred into common stock is
      based on the issue price plus an 8% per annum non-compounding premium,
      divided by the lesser of: (a) $1.50 per Series G Preferred share or (b)
      the closing price of the Company's common stock, as reported on the
      American Stock Exchange, on the business day immediately preceding the
      conversion. The Series G Preferred also has a stated liquidation
      preference value of $100,000 per share plus 8% in-kind dividends since
      March 1999, the date of issuance. The holders have no voting rights except
      with respect to matters that affect rights related to the Series G
      Preferred.

      STOCK WARRANTS

      In conjunction with the AmTec merger, the Company assumed 3,036,981
      warrants to acquire common stock at prices ranging from $1.25 to $3.31 per
      share. The Company has assigned a value of $1,687,038 to the warrants
      which expire in June 2001 through March 2004.

      In November 2000, the Company issued 250,000 warrants to acquire common
      stock at $2.76 per share in payment for services provided. The Company has
      assigned a value of $394,000 to the warrants which expire in 2008.

      STOCK OPTIONS

      In conjunction with the AmTec merger, the Company adopted two stock option
      plans, which were the 1995 and 1996 stock option plans, and assumed all
      outstanding stock options. On June 23, 2000, the Board of Directors of the
      Company adopted the 2000 stock option plan. Prior to the AmTec merger, the
      Company did not have a plan. Incentive and nonqualified options and stock
      appreciation rights may be granted to employees, officers, directors, and
      consultants of the Company. There are 12,500,000 shares of common stock
      reserved for issuance under the 1995 and 1996 plans and 5,000,000 under
      the 2000 plan. The exercise price of the options are determined by the
      board of directors, but in the case of an incentive stock option, the
      exercise price may not be less than 100% of the fair market value at the
      time of grant. Options vest over periods not to exceed ten years.



                                      F-23
<PAGE>   53
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      A summary of the status of all of the Company's stock options issued as of
      March 31, 2001 and changes during the year is presented below:

                                                                  WEIGHTED
                                                                  AVERAGE
                                                                  EXERCISE
                                                NUMBER              PRICE
                                             -----------          ---------

      Outstanding beginning of year                   --            $  --
      Assumed in merger                        5,077,000             1.24
      Granted                                  6,468,326             1.48
      Expired/Terminated                        (157,500)            3.19
      Exercised                                 (489,000)            1.06
                                             -----------            -----
      Outstanding at end of period            10,898,826            $2.31
                                             ===========            =====
      Options exercisable at end of period     4,588,000            $1.26
                                             ===========            =====
      Weighted average fair value of
       options granted during period         $      2.63
                                             ===========

      The Company has followed the guidelines under SFAS No. 123 to determine
      the fair value of options at the date of grant. The fair value of the
      options at the date of grant was determined using an adjusted
      Black-Scholes option pricing model, which is generally accepted as
      appropriate primarily for short-term, exchange-traded options. For the
      purpose of valuing the Company's options, the following assumptions were
      used:

           Risk-free rate                                4.64% - 6.41%
           Volatility                                    80%-139%
           Expected life                                 5 years
           Expected dividends                            0%




                                      F-24
<PAGE>   54
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------




      The following table summarizes information about options outstanding at
March 31, 2001:
<TABLE>
<CAPTION>

                                                      AVERAGE                               NUMBER
      RANGE OF                                       REMAINING         AVERAGE           EXERCISABLE
      EXERCISE               OUTSTANDING AT         CONTRACTUAL        EXERCISE           OPTIONS AT
      PRICES                 MARCH 31, 2001         LIFE (YEARS)        PRICE           MARCH 31, 2001
      ------------------  ---------------------   -----------------  -------------  -----------------------
<S>                                  <C>                       <C>        <C>                    <C>
      $0.35 - 0.50                   2,390,000                 4.1        $  0.35                2,390,000
      $0.51-1.00                       223,500                 7.7           0.87                  217,500
      $1.01-1.50                     1,235,500                 7.5           1.37                  704,500
      $1.51-2.00                       808,374                 9.7           1.82                   17,500
      $2.01-3.00                     1,167,000                 5.2           2.90                1,146,000
      $3.01-5.00                     5,074,452                 9.2           3.94                  112,500
                          ---------------------                                     -----------------------
                                    10,898,826                                                   4,588,000
                          =====================                                     =======================
</TABLE>


      The Company applies Accounting Principles Board Opinion No. 25 and related
      Interpretations in accounting for its employee options. Accordingly, no
      compensation cost has been recognized with respect to such awards. Had
      compensation cost for the Company's stock option plans been determined
      consistent with Statement of Financial Accounting Standards No. 123
      "Accounting for Stock-Based Compensation," the Company's net earnings and
      earnings per share for the year ended March 31, 2001, would have
      approximated the pro forma amounts indicated below:

Net loss applicable to common shares - as reported             $ (103,999,662)
                                                               ==============
    Net loss applicable to common shares - proforma            $ (106,477,216)
                                                               ==============
    Loss per common share - as reported                            $    (0.55)
                                                               ==============
    Loss per common share - proforma                               $    (0.56)
                                                               ==============




                                      F-25
<PAGE>   55
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


15.   INCOME TAXES

      The deferred tax provision consists of income taxes relating to
      differences between the tax bases of assets and liabilities and their
      financial reporting amounts.
<TABLE>
<CAPTION>

                                                                  MARCH 31,
                                                        -----------------------------
                                                              2001            2000
                                                         ------------    ------------
<S>                                                      <C>             <C>
      Deferred tax assets:
        Charitable contributions                         $    231,393    $    199,704
        Deferred revenue (percentage of completion vs.
           completed contract)                                322,191         315,292
        Capitalized start-up costs                          3,073,793              --
        Equity basis in foreign investment                         --              --
        Allowances and other                                  166,938         166,938
        Net operating loss carryforwards                    6,619,344       2,745,673
        Net operating loss carryforwards retained
           from discontinued operations                    17,280,709              --
        Tax credits                                           245,780         245,780
                                                         ------------    ------------
      Total deferred tax assets                            27,940,148       3,673,387
                                                         ------------    ------------
      Valuation allowance                                 (27,687,376)     (3,553,499)
                                                         ------------    ------------
      Deferred tax liability:
        Excess of book basis over tax basis on real
           estate investment                                 (252,166)       (109,758)
        Other                                                    (606)        (10,130)
                                                         ------------    ------------
      Total deferred tax liability                           (252,772)       (119,888)
                                                         ------------    ------------
      Net deferred tax asset                             $         --    $         --
                                                         ============    ============

</TABLE>

      The Company provides a valuation allowance against deferred tax assets if,
      based on the weight of available evidence, it is more likely than not that
      some or all of the deferred tax assets will not be realized. The Company
      has established a valuation allowance against deferred tax assets of
      $27,687,376 and $3,553,499 as of March 31, 2001 and 2000, respectively,
      since the Company has a history of operating losses and in the near term
      does not expect taxable income. Accordingly, the deferred tax asset will
      likely not be realized. The Company's federal and state net operating loss
      carryforwards begin to expire in 2011. Utilization of the net operating
      losses generated prior to the AmTec merger may be limited by the Internal
      Revenue Code.



                                      F-26
<PAGE>   56
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      The reconciliation between the statutory income tax rate and the effective
      income tax rate on pre-tax (loss) income is as follows:

                                                             FOR THE YEAR ENDED
                                                                  MARCH 31,
                                                              -----------------
                                                               2001     2000
                                                              ------   ------

      Rate reconciliation

      Statutory rate                                           (34.0)%  (34.0)%
      State income taxes, net of federal income tax benefit     (3.4)%   (3.3)%
      Other permanent differences                                4.7 %    2.7 %
      Increase (decrease) in valuation allowance                32.7 %   36.4 %
                                                                ------   ------
      Effective tax rate                                           0 %    1.8 %
                                                                ======   ======


16.   COMMITMENTS AND CONTINGENCIES

      LEASING ACTIVITIES

      The Company leases space for its property management operations, office
      equipment and furniture under operating leases. Certain equipment is also
      leased under a capital lease, which are included in leasehold
      improvements, furniture and equipment.

      Operating lease expense amounted to $1,284,604, $72,833 and $37,565 for
      the years ended March 31, 2001, 2000 and 1999, respectively.



                                      F-27
<PAGE>   57
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------




      At March 31, 2001, future minimum lease payments for each of the following
      five years and thereafter under non-cancellable operating and capital
      leases having a remaining term in excess of one year are as follows:
<TABLE>
<CAPTION>

                                                               CAPITAL            OPERATING
                                                               LEASES               LEASES
                                                             ---------------  -------------------
<S>                                                              <C>                <C>
      2002                                                       $  942,533         $  3,918,822
      2003                                                          259,317            2,711,780
      2004                                                           49,146            2,678,673
      2005                                                               --            2,719,467
      2006                                                               --            2,344,612
      Thereafter                                                         --           31,197,015
                                                             ---------------  -------------------

        Total minimum lease payments                              1,250,996         $ 45,570,369
                                                                              ===================
        Amount representing interest                                167,107
                                                             ---------------

           Present value of net minimum lease payments         $  1,083,889
                                                             ===============
</TABLE>


      LITIGATION

      The Company is a defendant in various lawsuits arising in the ordinary
      course of business. Management, after consultation with its legal counsel,
      believes its positions to be meritorious. However, in the event that
      decisions are adverse, management does not believe the outcome of these
      matters would have a material effect on the consolidated financial
      statements.

      OTHER

      In September 2000, the Company signed a 20-year lease for a 45,000 square
      foot facility in Santa Clara, California. This facility is currently being
      renovated to provide space for multiple parties' telecommunications
      equipment.

      In October 2000, the Company signed a 20 year lease in TECOTA to house and
      operate the NAP of the Americas, a tier one Network Access Point. This
      facility is currently under construction and will provide a carrier
      neutral facility with Internet backbone interconnectivity.

      In October 2000, the Company, entered into a short-term lease in Miami,
      Florida, for a temporary facility to house and operate the interim NAP of
      the Americas until the permanent NAP is completed.



                                      F-28
<PAGE>   58
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      In November 2000, Technology Center of the Americas LLC, an entity in wich
      the Company has a .84% member interest, entered in to a $60.6 million
      construction note payable with a financial institution, which is secured
      by a first lien on TECOTA. Interest is payable monthly at the Citibank
      N.A. prime rate plus 1.5%, initially from the interest reserve and then
      from operations. The Company has unconditionally guaranteed the completion
      of TECOTA and the repayment of the loan. The Company has entered into an
      agreement to provide construction and management services to TECOTA for
      fees. For the year ended March 31, 2001, the Company earned approximately
      $1,369,000 in related fees.

17.   RELATED PARTY TRANSACTIONS

      Due to the nature of the following relationships, the terms of the
      respective agreements might not be the same as those that would result
      from transactions among wholly unrelated parties. All significant related
      party transactions require approval by the Company's board of directors.

      The Company provides management and construction services to partnerships
      where certain officers own an interest. Management and construction fees
      earned totaled $102,348, $119,416 and $243,000 for the years ended March
      31, 2001, 2000 and 1999, respectively.

18.   INFORMATION ABOUT THE COMPANY'S OPERATING SEGMENTS

      As of March 31, 2001, the Company had three reportable business segments,
      data center operations, telecom facilities management and real estate
      services. The data center operations segment provides Tier 1 NAP, Internet
      and telecommunications infrastructure and managed services in a data
      center environment. The telecom facilities management segment develops,
      manages and leases facilities catering primarily to the telecommunications
      industry. The real estate services segment constructs, develops, finances
      and manages real estate projects. The Company's reportable segments are
      strategic business operations that offer different products and services.
      They are managed separately because each business requires different
      expertise and marketing strategies.



                                      F-29
<PAGE>   59
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      The accounting policies of the segments are the same as those described in
      significant accounting policies. Revenues generated among segments are
      recorded at rates similar to those recorded in third-party transactions.
      Transfers of assets and liabilities between segments are recorded at cost.
      The Company evaluates performance based on the segment's net operating
      results. The following presents information about reportable segments.

<TABLE>
<CAPTION>

                                                                                   DISCONTINUED
                                                     TELECOM                       OPERATIONS -
      FOR THE YEAR ENDED          DATA CENTER       FACILITIES     REAL ESTATE       TELECOM
      MARCH 31,                    OPERATIONS       MANAGEMENT       SERVICES        SERVICES           TOTAL
      -------------------------  ---------------  --------------- --------------- ---------------  ----------------
<S>                                  <C>             <C>             <C>                <C>           <C>
      2001
      -------------------------
      Revenue                        $  252,906      $ 2,863,443     $37,031,059        $     --      $ 40,147,408
      Loss from operations           (9,158,888)      (4,178,548)     (3,258,293)             --       (16,595,729)
      Net loss                       (9,219,416)      (8,383,329)     (3,770,506)    (82,626,411)     (103,999,662)

      2000
      -------------------------
      Revenue                                --               --     $15,390,417        $     --      $ 15,390,417
      Loss from operations                   --               --      (4,964,016)             --        (4,964,016)
      Net loss                               --               --      (6,033,232)             --        (6,033,232)

      1999
      -------------------------
      Revenue                                --               --     $44,456,112        $     --      $ 44,456,112
      Loss from operations                   --               --       1,687,490              --         1,687,490
      Net loss                               --               --         624,186              --           624,186

      ASSETS, AS OF MARCH 31,
      -------------------------
      2001                         $ 19,310,184      $24,910,377     $33,848,017        $     --      $ 78,068,578
      2000                                   --               --      77,998,146              --        77,998,146

</TABLE>

19.   SUBSEQUENT EVENTS

      In April 2001, the Company entered into certain capital lease agreements
      with a third party for equipment related to the NAP of the Americas. The
      lease terms are for 48 months, and the aggregate gross related assets
      total $2,710,737. The Company paid a 20% down payment at lease signing and
      future minimum fixed lease obligations, excluding taxes, insurance and
      other costs payable directly by the Company total $2,175,309.

      In May 2001, the Company issued 294 shares of Series H Convertible
      Preferred Stock to a vendor for $500,000 under an agreement to issue up to
      5,882 Series H shares. The preferred stock issued allows for a
      preferential annual dividend of $102 per share and is initially
      convertible into 294,000 shares of common stock. The preferred stock is
      redeemable at $1,700 per share plus any unpaid dividends at the request of
      the holder on the earlier of June 1, 2005 or termination of a certain
      services agreement between the Company the holder.

                                      F-30
<PAGE>   60
TERREMARK WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
--------------------------------------------------------------------------------


      In June 2001, the Company borrowed $4,600,000 from a financial
      institution. The loan is secured by a second mortgage on the land and
      improvements known as Fortune House II, a proposed condominium/hotel
      project in Fort Lauderdale, Florida, and is due on November 10, 2001.
      Interest accrues at prime plus 2% and is due monthly. The Company has
      entered into a contract to sell Fortune House II for $17.2 million and
      anticipates closing in July 2001.

      In June 2001, the Company borrowed $10,000,000 from a shareholder and
      officer. The loan is unsecured and is due on September 30, 2001. Interest
      accrues at 12% and is due September 30, 2001 and at maturity.

      In July 2001, the Company borrowed $1.5 million from certain members of
      the executive management team.

                                    * * * * *


                                      F-31