**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-KSB/A-1**
  x
        ANNUAL REPORT UNDER
        SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal
        year
        ended December 31, 2004
 
 o
        TRANSITION REPORT UNDER SECTION 13 OR
        15(d) EXCHANGE ACT OF 1934 OF THE SECURITIES
 
 Commission
        File Number: 0-23532
 
 **GLOBETEL
        COMMUNICATIONS CORP.**
 _______________________
 
 (Name
        of
        small business issuer in its charter)
 
 **Delaware**
              **88-0292161**(State
                  or other jurisdiction of incorporation)
              (I.R.S.
                  Employer Identification No.)
 
 
 101
                  NE 3rdAve, Suite 1500, Fort Lauderdale, Florida 33301(Address
                  of Principal Executive Offices) 
                  (Zip Code)
 
 Issuer's
        telephone number: (954) 332-3759
 
 Copies
        to:
 Stephen
        M. Fleming, Esq.
 Sichenzia
        Ross Friedman Ference LLP
 61
        Broadway, 32 nd Floor
 New
        York,
        New York 10006
 Phone:
        (212) 930-9700
 Fax:
        (212) 930-9725
 
 Securities
        registered under Section 12 (b) of the Exchange Act:
 
 Title
        of
        each class Name of exchange on which registered
 ______________________________________
 _________________________________________
 
 Securities
        registered under Section 12 (g) of the Exchange Act:
 
 Common
        Stock, Par Value $.00001 Per Share
 ___________________________________________
 
 (Title
        of
        class)
  Check
        whether the issuer: (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Exchange Act during the past 12 months (or for such shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to the filing requirements for the past 90 days. Yes o No x
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B is not contained in this form, and no disclosure will be
        contained, to the best of the registrant's knowledge, in definitive proxy
        or
        information statements incorporated by reference in Part III of this Form
        10-KSB
        or any amendment to this Form 10-KSB. o
  
 
 State
        issuer's revenues for its most recent fiscal year ended December 31, 2004:
        $11,309,376.
 
 As
        of
        October 17, 2007, there were 127,749,688  shares
        of
        the issuer's common stock issued and outstanding subsequent to a 15 for 1
        reverse stock split on May 23, 2005. Affiliates of the issuer own 9,320,000
        shares of the issuer's issued and outstanding common stock and the remaining
        113,159,169 shares are held by non-affiliates. The aggregate market value
        of the
        shares held by non-affiliates at October 17, 2007, was $13,413,717.
 
 DOCUMENTS
        INCORPORATED BY REFERENCE:
 
 There
        are
        documents incorporated by reference in this Annual Report on Form
 10-KSB,
        which are identified in Part III, Item 13.
 
 Transitional
        Small Business Disclosure Format (Check one): Yes x No o
 
 (*)
        Affiliates for the purposes of this Annual Report refer to the officers,
        directors of the issuer and subsidiaries and/or persons or firms owning 5%
        or
        more of issuer's common stock, both of record and beneficially.
  2
 
 **TABLE
        OF CONTENTS**
 **PART
        I**
 
 Item
                  1. Description of Business
              5Item
                  2. Description of Property
              14Item
                  3. Legal Proceedings
              14Item
                  4. Submission of Matters to a Vote of Security Holders
              16
 
 **PART
        II**
 
 Item
                  5. Market for Common Equity and Related Stockholder
                  Matters
              17Item
                  6. Management's Discussion and Analysis or Plan of
                  Operation
              19Item
                  7. Financial Statements
              22Item
                  8. Changes In and Disagreements With Accountants on Accounting
                  andFinancial
                  Disclosure
              74Item
                  8a. Controls and Procedures
              74Item
                  8b. Other Information
              75
  **PART
        III**
 
 Item
                  9. Directors, Executive Officers, Promoters and Control
                  Persons,Compliance
                  with Section 16(a) of the Exchange Act
              76Item
                  10. Executive Compensation
              78Item
                  11. Security Ownership of Certain Beneficial Owners and Management
                  andRelated
                  Stockholder Matters
              80Item
                  12. Certain Relationships and Related Transactions
              81Item
                  13. Exhibits
              85Item
                  14. Principal Accountant Fees and Services
              85
 
 3
 
 **PART
        I**
 
 **Forward-Looking
        Statements and Risk Factors**
 
 Certain
        information included in this Form 10-KSB and other materials filed or to
        be
        filed by GlobeTel Communications Corp. ("GlobeTel," the “Company”, "we", "us" or
        "ours") with the Securities and Exchange Commission (as well as information
        included in oral or written statements made from time to time by us, may
        contain
        forward-looking statements about our current and expected performance trends,
        business plans, goals and objectives, expectations, intentions, assumptions
        and
        statements concerning other matters that are not historical facts. These
        statements may be contained in our filings with the Securities and Exchange
        Commission, in our press releases, in other written communications, and in
        oral
        statements made by or with the approval of one of our authorized officers.
        Words
        or phrases such as "believe", "plan", "will likely result", "expect", "intend",
        "will continue", "is anticipated", "estimate", "project", "may", "could",
        "would", "should" and similar expressions are intended to identify
        forward-looking statements. These statements, and any other statements that
        are
        not historical facts, are forward-looking statements within the meaning of
        the
        Private Securities Litigation Reform Act of 1995, 15 U.S.C.A. Sections 77Z-2
        and
        78U-5 (SUPP. 1996), as codified in Section 27A of the Securities Act of 1933
        and
        Section 21E of the Securities Exchange Act of 1934, as amended from time
        to time
        (the "Act").
 
 Those
        statements include statements regarding our intent, belief or current
        expectations, and those of our officers and directors and the officers and
        directors of our subsidiaries as well as the assumptions on which such
        statements are based. Prospective investors are cautioned that any such
        forward-looking statements are not guarantees of future performance and involve
        risks and uncertainties, and that actual results and the timing of certain
        events may differ materially from those contemplated by such forward-looking
        statements.
 
 In
        connection with the "safe harbor" provisions of the Act, we are filing the
        following summary to identify important factors, risks and uncertainties
        that
        could cause our actual results to differ materially from those projected
        in
        forward-looking statements made by us, or on our behalf. These cautionary
        statements are to be used as a reference in connection with any forward-looking
        statements. The factors, risks and uncertainties identified in these cautionary
        statements are in addition to those contained in any other cautionary
        statements, written or oral, which may be made or otherwise addressed in
        connection with a forward-looking statement or contained in any of our
        subsequent filings with the Securities and Exchange Commission. Because of
        these
        factors, risks and uncertainties, we caution against placing undue reliance
        on
        forward-looking statements. Although we believe that the assumptions underlying
        forward-looking statements are reasonable, any of the assumptions could be
        incorrect, and there can be no assurance that forward-looking statements
        will
        prove to be accurate. Forward-looking statements speak only as of the date
        on
        which they are made. We do not undertake any obligation to modify or revise
        any
        forward-looking statement to take into account or otherwise reflect subsequent
        events, or circumstances arising after the date that the forward-looking
        statement was made.
 
 The
        following risk factors may affect our operating results and the environment
        within which we conduct our business. If our projections and estimates regarding
        these factors differ materially from what actually occurs, our actual results
        could vary significantly from any results expressed or implied by
        forward-looking statements. These risk factors include, but are not limited
        to,
        changes in general economic, demographic, geopolitical or public safety
        conditions which affect consumer behavior and spending, including the armed
        conflict in Iraq or other potential countries; increasing competition in
        the
        VoIP segment of the telecommunications industry; adverse Internet conditions
        which impact customer traffic on our Company's networks in general and which
        cause the temporary underutilization of available bandwidth; various factors
        which increase the cost to develop and/or affect the number and timing of
        the
        openings of new networks, including factors under the influence and control
        of
        government agencies and others; fluctuations in the availability and/or cost
        of
        local minutes or other resources necessary to successfully operate our Company's
        networks; our Company's ability to raise prices sufficiently to offset cost
        increases, including increased costs for local minutes; the feasibility and
        commercial viability of our Stratellite project; related contemplated funding
        from third parties to finance the project, and necessary cooperation with
        various military and non-military agencies of the United States government,
        and
        similar agencies of foreign government and telecommunication companies; depth
        of
        management and technical expertise and source of intellectual and technological
        resources; adverse publicity about us and our networks; our current dependence
        on affiliates in our overseas markets; relations between our Company and
        its
        employees; legal claims and litigation against the Company; including the
        recently commenced SEC investigation; the availability, amount, type, and
        cost
        of capital for the Company and the deployment of such capital, including
        the
        amounts of planned capital expenditures; changes in, or any failure to comply
        with, governmental regulations; the amount of, and any changes to, tax rates
        and
        the success of various initiatives to minimize taxes; and other risks and
        uncertainties referenced in this Annual Report on Form 10-KSB. This statement,
        and any other statements that are not historical facts, are forward-looking
        statements within the meaning of the Private Securities Litigation Reform
        Act of
        1995, as codified in Section 27A of the Securities Act of 1933 and Section
        21E
        and the Securities Exchange Act of 1934, as amended from time to time (the
        "Act").
  4
  This
        annual report also contains certain estimates and plans related to the
        telecommunications industry in which we operate. The estimates and plans
        assume
        that certain events, trends and activities will occur, of which there can
        be no
        assurance. In particular, we do not know what level of growth will exist,
        if
        any, in the telecommunications industry, and particularly in those domestic
        and
        international markets in which we operate. Our growth will be dependent upon
        our
        ability to compete with larger telecommunications companies, and such factors
        as
        our ability to collect on our receivables and to generate profitable revenues
        from operations and/or from the sale of debt or equity securities, of which
        there can be no assurance. If our assumptions are wrong about any events,
        trends
        and activities, then our estimates for the future growth of GlobeTel and
        our
        consolidated business operations may also be wrong. There can be no assurance
        that any of our estimates as to our business growth will be
        achieved.
 
 
 **ITEM
        1. DESCRIPTION OF BUSINESS**
 
 **General**
 
 GlobeTel
        Communications Corp. (“GlobeTel”), a Delaware corporation established in July
        2002, is engaged in the business of providing telecommunication services,
        primarily involving Internet telephony using Voice over Internet Protocol
        ("VoIP") equipment.
 
 **Reverse
        Stock Split**
 
 GlobeTel
        is authorized to issue up to 250,000,000 shares of Common Stock, par value
        $0.00001 per share, (subsequent to a 15-for-1 reverse stock split on May
        23,
        2005) and 10,000,000 shares of Preferred Stock, par value $0.001. The post
        split
        share calculation will be used throughout this document, unless noted, with
        the
        exception of the Financial Statements, which uses the pre-split share figures.
        The preferred stock is a so-called "blank check" preferred, meaning that
        its
        terms such as dividends, liquidation and other preferences, are to be fixed
        by
        our Board of Directors at the time of issuance. The dividends, liquidation
        rights and other preferences for each class of Preferred Stock are explained
        in
        Item 7, Financial Statements, Note 24.
 
 **Recent
        Developments**
 
 On
        October 5, 2007, GlobeTel received a " Wells Notice"
        from the Securities and Exchange Commission (the "SEC") in connection with
        the
        SEC’s ongoing investigation of the Company. The Wells Notice provides
        notification that the staff of the SEC intends to recommend to the Commission
        that it bring a civil action against the Company for possible violations
        of the
        securities laws including violations of Sections 5 and 17(a) of the Securities
        Act of 1933; Sections 10(b), 13(a), and 13(b)(2)(A) & (B) of the Securities
        Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5, 12b-20, 13a-1, 13a-11,
        and 13a-13 thereunder; and seeking as relief a permanent injunction, civil
        penalties, and disgorgement with prejudgment interest.  The staff is also
        considering recommending that the SEC authorize and institute proceedings
        to
        revoke the registration of Company’s securities pursuant to Section 12(j) of the
        Exchange Act.
 
 Under
        the
        process established by the SEC, recipients have the opportunity to respond
        in
        writing to a Wells Notice
        before the SEC staff makes any formal recommendation to the Commission regarding
        what action, if any, should be brought by the SEC. The Company is determining
        if
        it will provide a written submission to the SEC in response to the Wells
        Notice.
  **Restatement
        of Results**
  We
        have
        determined that, in certain cases, we misinterpreted or misapplied Generally
        Accepted Accounting Principles (“GAAP”) in our 2004 consolidated financial
        statements and, accordingly, we have restated our consolidated financial
        statements for the period ended December 31, 2004.
  5
  As
        discussed more fully below, the restatements involve, among other matters,
        revenue recognition issues related to reporting gross revenue versus net
        as per
        EITF Issue 99-19. In making these restatements, we have performed an internal
        analysis of our accounting policies, practices, procedures and disclosures
        for
        the affected periods.
   *Summary
        of restatement items*
   The
        following tables set forth the effects of the restatement adjustments discussed
        below on revenue; cost of sales; net loss; and loss per share as presented
        in
        our consolidated statements of operations for the year ended December 31,
        2004, and intangible assets. The restatement adjustments are discussed in
        the
        paragraphs following the tables.
  **Year
                ended December 31, 2004********Revenue**
              
              **Cost
                  of Sales**
              
              **Net
                  Loss******
              
              **Loss
                  per**
                **Share******
              
              **Intangible
                  Assets******Previously
                  reported
              
              $
              28,996,213
              
              $
              29,187,414
              
              $
              (13,166,869
              )
              $
              (0.02
              )
              $
              2,778,000**Restatement**
                **Adjustments,
                  net:**Net
                  Revenue Adjustment
              
              $
              (17,686,837
              )
              $
              (17,686,837
              )
              
              (0
              )
              
              (0.00
              )Purchase
                  accounting
              
              
              —
              
              
              —
              
              
              (2,778,000
              )
              
              (0.00
              )
              
              (2,778,000
              )Net
                  restatements
              
              $
              (17,686,837
              )
              $
              (17,686,837
              )
              
              (2,778,000
              )
              
              (0.00
              )
              
              (2,778,000
              )As
                  restated
              
              $
              11,309,376
              
              $
              11,500,577
              
              $
              (15,944,869
              )
              $
              (0.02
              )
              $
              (0
              )
  **Net
        Revenue Adjustment**
 
 In
        2004,
        we engaged in transactions where we recorded our wholesale telecommunications
        revenues as Gross Revenue. After thorough review, we concluded that revenues
        equaling $11,190,902 could not be supported and thus were reduced from
        previously reported revenues, Also after applying the indicators, upon
        application of the EITF Issue 99-19 “Reporting Revenue Gross as a Principal
        versus Net as an Agent,” Accounting Principles Board Opinion No. 10 (“APB 10”)
“ Revenue
        Recognition Principle ,“
and
        Financial Accounting Standards Board Interpretation No. 39 (“FIN 39”)
“ Offsetting
        of Amounts Related to Certain Contracts ,” we
        concluded that we should record only the net revenue from certain wholesale
        telecommunications due to the indicators not supporting the criteria for
        gross
        revenue which further reduced revenues $6,495,935 for a total of $17,686,837.
        The adjustments were offset against previously reported cost of sales by
        the
        same amount of $17,686,837.
  In
        our
        previously issued consolidated financial statements, we booked the gross
        consideration for all our wholesale telecommunications revenue without
        additional consideration to its characteristics. As part of our internal
        analysis of our accounting policies, practices and procedures in place in
        2004,
        we did not review the previous accounting model for recording our
        revenues.
  **Purchase
        Accounting**
  As
        described in Item 7, Financial Statements, Note 7 - **** Asset
        Acquisition - Sanswire, we found a discrepancy in the application of purchase
        accounting for the April 15, 2004 transaction and have recorded an adjustment
        to
        correct it in our restated consolidated financial statements.
  6
  *Intangible
        Assets.* We
        recorded restatement adjustments to the amounts allocated to the
        technology-in-place intangible assets acquired in the transaction. The effect
        of
        the adjustments to intangible assets in 2004 was a reduction of $2,778,000
        and
        subsequently an increase to research and development expense in 2004 of
        $2,778,000.
  
 **Background**
 
 We
        were
        previously a wholly-owned subsidiary of American Diversified Group, Inc.
        (“ADGI”). At a special meeting of stockholders of ADGI held on July 24, 2002,
        the stockholders of ADGI approved a plan (the "Plan") for the exchange of
        all
        outstanding shares of ADGI for an equal number of shares of
        GlobeTel.
 
 ADGI
        was
        incorporated under the laws of the State of Nevada as Terra West Homes, Inc.
        on
        January 16, 1979. On March 15, 1995, its name was changed to "American
        Diversified Group, Inc." During the period ended July 24, 2002, ADGI's business
        activities included (i) sale of telecommunication services primarily involving
        Internet telephony using VoIP through its Global Transmedia Communications
        Corporation subsidiary ("Global"), and (ii) wide area network and local area
        network services provided through its NCI Telecom, Inc. subsidiary ("NCI").
 
 Global
        was acquired by ADGI on February 19, 2000, and NCI was acquired on June 29,
        2000. During 2002, Global and NCI were merged with and into ADGI, with ADGI
        as
        the surviving corporation.
 
 When
        ADGI
        exchanged all of its outstanding shares of common stock for GlobeTel common
        stock, ADGI became a wholly-owned subsidiary of GlobeTel and GlobeTel began
        conducting the business formerly conducted by ADGI.
 
 We
        have a
        99% ownership of GTCC de Mexico, S.A. de C.V., a Mexican company established
        to
        represent our interests in Mexico. The remaining 1% is owned by the Company's
        Mexican lawyer who is representing the Company in all matters of the operations
        in Mexico. GTCC de Mexico is utilized in connection with our operations in
        Mexico including No Mas Cables de Mexico S.A. de CV.
 
 In
        2004,
        we formed wholly-owned subsidiaries: Sanswire, LLC (“Sanswire-FL”) for our
        Stratellite project; and Centerline Communications, LLC, (“Centerline” or “CLC”)
        and its wholly-owned subsidiaries, EQ8, LLC, G Link Solutions, LLC, Volta
        Communications, LLC, and Lonestar Communications, LLC for the purpose of
        the
        recording and managing the sale of wholesale minutes and related network
        management functions. We have since closed Centerline and its
        subsidiaries.
 
 In
        2004,
        we acquired a 73.15% interest in Consolidated Global Investments, Ltd. (“CGI”),
        formerly known as Advantage Telecommunications, Ltd. (“ATC”), an Australian
        company. CGI was to be utilized in the carrier sales sector of our business
        and
        was later to be a licensee of the Sanswire Networks, LLC in Australia. However,
        we have since sold our shares in CGI back to the company and no longer have
        any
        interest in CGI. Certain of the shares of GlobeTel acquired by CGI were sold
        by
        CGI. The Securities and Exchange Commission has questioned the validity of
        the
        exemption used for the sale of such shares as more fully discussed below
        in Item
        3 “Legal Proceedings.”
 
 **Business
        of GlobeTel**
 
 We
        are a
        communications company with a range of services, product lines, and projects
        as
        described below. Our core products and services are: wireless broadband
        networks, IP Telephony (“VoIP” or “Voice over Internet Protocol”), and lighter
        than air (“LTA”) unmanned aerial vehicles (“UAVs”) for use in communications and
        other applications.
 
 From
        time
        to time, we embark on certain services, product lines and projects and enter
        into certain contractual and non-contractual relationships, which we may
        subsequently deem unfeasible, impractical, cost prohibitive or otherwise
        incompatible with our overall business plans. In such cases, we disclose
        the
        initial intent and anticipated result of the applicable service, product,
        project or relationship. We further disclose the current status of each project
        and current and/or contemplated changes resulting from the factors mentioned
        above.
 
 **International
        Wholesale Carrier Traffic**
 
 The
        business of International Wholesale Carrier traffic is a business whereby
        we
        bought and sold large blocks of calling minutes with particular origination
        and
        termination points. In some instances, we would enter into agreements with
        established international telephone carriers to deliver international calls
        into
        their domestic telephone networks for termination to the parties being called.
        Additionally we purchased a bulk package of minutes to specific destinations
        and
        resold these minutes in smaller quantities to individual and business customers.
        In most instances, our customers prepaid for these minutes or post letters
        of
        credit with our bank, securing their purchases.
  7
  Beginning
        in July 2004, we began to migrate these operations from GlobeTel, the parent
        company, to our subsidiary, Centerline and its subsidiaries. The migration
        was
        completed in the beginning of September 2004.
 
 In
        2007,
        the Centerline business was wound down and the Company is seeking to liquidate
        the Centerline assets. Additionally, certain revenues reported by Centerline
        are
        being restated and are the subject of an investigation by the Securities
        and
        Exchange Commission. The Commission believes that certain former officers
        and
        employees of the Company improperly recognized revenue from carrier traffic
        that
        ran off 3 rd party
        telecommunications switches.
 
 **Networks**
 
 To
        provide the above described services we interconnect with licensed carriers
        in
        each country we would desire to provide calling services. In some countries,
        we
        placed electronic equipment called a "hub" on the carrier's premises and
        then
        interconnect with their local network. In other countries, we would connect
        directly to the carrier's hub, which is connected to the local telephone
        network
        in that country. Historically, we maintained hubs in Miami, Los Angeles,
        Monterrey Mexico, Sao Paulo, Brazil and Hong Kong.
 
 When
        we
        would establish service to a new country and traffic volume is relatively
        low,
        we create a "virtual" network connection between the two hubs. Virtual networks
        have been described as "tunnels" through the Internet.
 
 In
        line
        with the Company’s strategy to close down the Centerline business, all Virtual
        Networks were also shut down.
 
 **Internet
        Telephony**
 
 Since
        our
        launch of the MagicPhone in May of 2004, we expanded and upgraded our Internet
        Telephony product line. Our original MagicPhone product and program, which
        was
        based on the SIP protocol was being sold primarily in the Mexican market.
        Along
        with the MagicPhone launch, we continued product development and upgraded
        the
        system based on new open source standards that better serve the needs of
        both
        residential and business consumers. It also opened up many markets that the
        older technology could not reach. Our new MagicPhone was "plug and play"
        and
        provides the user with enhanced features such as conference calling, call
        forwarding, emergency services, voice mail and multiple lines.
 
 We
        targeted the Mexican, Latin American and Eastern European markets for the
        continued rollout of this product.
 
 The
        MagicPhone line was replaced by the StrateVoIP system in 2006 which uses
        the SIP
        protocol and industry standard Linksys PAPs. StrateVoIP launched services
        aimed
        at the Brazilian market with its VozBrasil and iLigue products. The StrateVoIP
        system also underlies the Company’s wireless broadband offerings. The Company is
        no longer actively promoting or supporting the VozBrasil and iLigue services,
        though the underlying StrateVoIP platform remains in use.
 
 **Enhanced
        Services - PrePaid Calling Services**
 
 Our
        Enhanced Services use proprietary software that operated on our switch
        interconnected with various customer networks. PrePaid Calling Services are
        the
        most widely used Enhanced Service. Our Prepaid Calling Services allowed carrier
        customers and reseller customers to sell their own branded prepaid calling
        cards
        in their markets and allows their customers to make both domestic and
        international calls.
 
 We
        focused on prepaid calling services and outsourcing the use of our Enhanced
        Services switch. We were a provider and enabler of these services having
        expanded our market from telephone companies and prepaid calling card resellers
        to financial institutions who wish to create new revenue sources from their
        existing bank card customer base by introducing new value added services
        to
        their bank cards.
 
 These
        enhanced services were part of the Stored Value Services, further discussed
        below, which in November 2006 were sold to Gotham Financial Services. GlobeTel
        entered into an agreement to sell substantially all of the assets related
        to its
        stored value card division, also known as the Magic Money program, to Gotham
        Financial LLC. Under terms of the agreement, Gotham acquired substantially
        all
        of the assets, which include the stored value program, financial processing
        switch and contracts, and assumed the liabilities associated with the program
        including certain employees and leased office space.
 
 The
        agreement calls for the payment, over a 3-to-6 year period, of up to $4 million.
        The length of the payment period depends upon Gotham making certain minimum
        payments. Revenues earned by GlobeTel will be based on the successful rollout
        of
        the platform by Gotham and on user fees following a formula that considers
        the
        total number of transactions on a Stored Value card and use of the card at
        any
        ATM, Point-of-Sale (POS) or other transaction, under closed and committed
        contracts GlobeTel had at the time of sale, and the number of transactions
        utilizing the Financial Processing Switch.
  8
  The
        agreement also gives GlobeTel the right to the most favorable pricing if
        it
        decides in the future to utilize the services to be provided by
        Gotham.
 
 **Stored
        Value Services**
 
 In
        late
        2003, we began offering new products and services which we call the MagicMoney
        program. The features of the MagicMoney program allowed telecommunications
        companies and financial institutions worldwide to add true stored value services
        to their existing products and create new products. MagicMoney stored value
        services included: prepaid long distance and international calling services,
        debit card "electronic bank accounts" and funds sharing services.
 
 We
        developed the MagicMoney program as a stored value product to sell into specific
        ethnic communities around the world so that Overseas Foreign Workers remain
        connected with their family members and friends in their country of origin.
        Some
        of the features that made our product unique were the combination of such
        stored
        value services as inexpensive prepaid calling services, funds sharing between
        linked cardholders, electronic banking services and a full complement of
        debit
        card services that were offered anywhere the Maestro and Cirrus logos are
        found,
        which covers between 5 - 8 million merchants and approximately 1 million
        ATMs
        around the world.
 
 Our
        programs were geared towards Latin American, Filipino and Asian markets,
        linking
        their overseas family members to home. One of our key goals was to tap into
        the
        multi-billion dollar money remittance market while providing all of the other
        financial and non-financial services not commonly available to these ethnic
        groups.
 
 By
        having
        developed a comprehensive stored value services platform and system
        infrastructure we were able to support a unique range of innovative solutions
        for telecommunications companies, financial institutions, credit card
        processors, retail outlets, nonprofit organizations and additional businesses
        in
        a range of vertical markets that already have their own existing card
        programs.
 
 We
        were
        widely recognized as "an enabler" of ground-breaking stored value applications
        and technology. Our suite of stored value applications aided firms with existing
        card programs and brought them flexibility to add ancillary services to their
        cards. These ancillary services helped firms create new profit centers from
        products, drive new value added benefits for existing cardholders and create
        new
        marketing vehicles for firms to attract new cardholders and grow their
        businesses. These new stored value technology based solutions further defined
        our paradigm shift.
 
 We
        have
        developed a wireless access application to enable the cardholders in the
        United
        States to access all of the stored value features and functionally via their
        mobile phones using SMS technology.
 
 The
        following Stored Value Service Agreements & Programs were transferred to
        Gotham Financial Services as part of their purchase of the MagicMoney program
        in
        November 2006.
 
 **Banco
        Azteca Letter of Intent**
 
 In
        February 2005, we signed a Letter of Intent (“LOI”) with Banco Azteca, a Mexican
        financial institution. We are no longer pursuing this opportunity.
  9
  **Bankcard
        Agreement**
  In
        June
        2004, we entered into an agreement with Bankcard Inc. (“Bankcard”), a member of
        the RCBC Group, one of the largest private commercial bank and financial
        institutions in the Philippines, to introduce a stored value card program
        for
        domestic and international use. Bankcard will be able to issue a MasterCard
        and/or VISA card that will offer Overseas Filipino Workers and Filipinos
        in
        foreign countries, convenient, risk free and low cost international funds
        transfer and discounted long distance calling services.
 
 We
        and
        Bankcard were working on the deployment of a MasterCard Electronic Signature
        based Stored Value Card to be launched in the Philippines, the Middle East
        and
        additional countries in South East Asia. We have not been able to develop
        this
        opportunity and, as a result, we are no longer pursuing it.
 
 **Globe
        Telecom Memorandum of Agreement**
 
 In
        October 2004, we signed a Memorandum of Agreement with Globe Telecom (“Globe”),
        a Filipino mobile company to jointly develop an integrated payment system
        that
        will combine the Company's stored value card payment processing capabilities
        with Globe's SMS applications technology. The purpose of this program was
        to
        allow the Company's stored value cardholders to send money directly to family
        and friends through their Globe Mobile Phone (“G-Cash”). We are no longer
        pursuing this opportunity.
 
 **Equitable
        Card Letter of Understanding**
 
 In
        August
        2004, we signed a Letter of Understanding with Equitable Card Network, Inc.
        for
        Equitable to enable the Company to issue GlobeTel branded VISA Electron Cards
        in
        the Philippines. We are no longer pursuing this opportunity.
 
 **Pier
        One Filipino Seafarers Union**
 
 In
        July
        2004, we entered into an agreement with Pier One to develop GTEL's Stored
        Value
        Card Program for seafarers. The "Lighthouse Card" allowed Filipino seafarers
        to
        load and remit cash from overseas at special rates. Corresponding Lighthouse
        cardholders in the Philippines could then withdraw money from any ATM in
        the
        Philippines and access their account from most locations throughout the world.
        We are no longer pursuing this opportunity.
 
 **First
        Class Professional Agreement**
 
 In
        August
        2004, we entered into an agreement with First Class Professional Human
        Resources, Inc. (“FC Professional”), a Philippines corporation based in Manila,
        to develop the GTEL Stored Value Program for use by its members in Japan.
        FC
        Professional represented approximately 40,000 Filipino workers in Japan.
        These
        benefits included low cost international calling, funds sharing and loyalty
        discounts.
 
 We
        are no
        longer pursuing this opportunity due to the mandate passed by the Japanese
        government that dramatically reduced the number of Filipino workers who were
        allowed to work in Japan.
 
 **OnQ
        Program**
 
 In
        July
        2004, we announced the launching of the stored value card program in Australia,
        Bill Express, through the Australian distributor, OnQ, with over 8,000 points
        of
        sale throughout Australia. We are no longer pursuing this
        opportunity.
 
 **Timesofmoney.com
        Memorandum of Understanding**
 
 In
        September 2004, we entered into a Memorandum of Understanding with Times
        of
        Money in which Timesofmoney.com would provide direct deposit facilities to
        54
        banks and issue prepaid cards in India for GTEL cardholders. We are no longer
        pursuing this opportunity.
 
 **Englewood
        Agreement**
 
 In
        May of
        2004, we signed a joint venture agreement with Englewood Corporation whereby
        (“Englewood”) would provide all of its current and future business opportunities
        to GlobeTel. This included carrier customers, carrier termination networks,
        stored value products and services and value added ATM, debit and credit
        card
        products for both financial and non financial products and services and the
        processing capabilities for such transactions on ATM/debit card networks
        including but not limited to MasterCard Inc, MasterCard International, VISA
        and
        private banking ATM networks. This was transferred to Gotham as part of the
        sale
        of the Magic Money division
  10
  **Processing
        Switch Agreement**
 
 In
        August
        2004, through Englewood Corporation, we entered into an agreement to join
        with
        Grupo Ingedigit C.A. ("GI"), a certified MasterCard third party transaction
        processor and the leading electronic financial transactions services backbone
        provider for the banking industry in Venezuela, establishing a new venture
        in
        Miami, Florida providing domestic and worldwide financial transaction processing
        services. This domestic venture combined with GI's current international
        processing capabilities will support on its own network all the Magic Money
        and
        other private label GTEL stored value card programs around the world, as
        well as
        other third party cards. Both parties were to contribute equally to the
        operation of the Miami switch. The switch was expected to be certified to
        process MasterCard, Visa, Cirrus, and other independent ATM network
        transactions. Operations were expected to begin by the third quarter of 2005.
        The switch was to be installed and integrated by Englewood Corporation; however
        the Switch was included in the sale of the MagicMoney program to Gotham
        Financial Services in November 2006.
 
 **Sanswire
        Networks LLC**
 
 Sanswire
        is developing a Wireless Broadband Network utilizing high-altitude airships
        called Stratellites that will be used to provide wireless voice, video, and
        data
        services. These Stratellites will form strategic nodes for the Super Hub(TM)
        Network. A Stratellite is similar to a satellite, but is stationed in the
        stratosphere rather than in orbit. At an altitude of only 13 miles, each
        Stratellite will have clear line-of-site to an entire major metropolitan
        area
        and should allow subscribers to easily communicate in "both directions" using
        readily available wireless devices. Each Stratellite will be powered by a
        series
        of solar powered hybrid electric motors and other state-of-the-art energy
        storage technologies.
 
 In
        addition to Sanswire's Wireless Broadband Network, proposed telecommunications
        uses include cellular, 3G/4G mobile, MMDS, paging, fixed wireless telephony,
        HDTV and others.
 
 We
        strongly believe that we will be able to use the Stratellites as the most
        efficient and cost-effective means of interconnecting our Super
        Hubs(TM).
 
 The
        Stratellite is being designed and tested to operate at an altitude of between
        55,000 and 65,000 feet using GPS coordinates to achieve its on-station position.
        Tests of the Stratellite and its systems began in the second quarter of
        2005.
 
 We
        have
        had on-going discussions with several groups within the U.S. government and
        military concerning the rollout and use of the Stratellite. Further, we are
        in
        discussions with the other corporate and private groups, as well as foreign
        governments, all of whom have expressed interest in the development and
        commercial viability of the Stratellite.
 
 Sanswire
        has been contacted by the U.S. Army's Space and Missile Defense Command
        (“SMDC”), which expressed its desire to be involved in the sharing of technology
        and information as well as possible involvement in the development of the
        Stratellite. In addition to the commercial applications being developed by
        GTEL,
        the SMDC sees several military intelligence gathering and operational
        applications for Stratellite-type systems.
 
 On
        January 18, 2005, we signed a Letter of Intent (“NASA LOI”) with the National
        Aeronautics and Space Administration (“NASA”). The agreement with NASA's Dryden
        Flight Research Center at Edwards Air Force Base in California positions
        us for
        future governmental associations and business development ventures.
 
 The
        NASA
        LOI was subsequently terminated.
 
 On
        March
        8, 2005, we announced a global strategy for Sanswire. We signed a Letter
        of
        Intent to immediately establish Sanswire Europe S.A., its first regional
        operating subsidiary. Sanswire Europe was to be a joint venture between
        GlobeTel's wholly-owned operating subsidiary, Sanswire Networks, LLC and
        Strato-Wireless Ltd. (“SWL”), in which GlobeTel will own 55% and Strato-Wireless
        will own 45% of the shares of the European Venture.
  11
  In
        December 2006, Sanswire demonstrated the Sanswire 2A Technology Demonstrator
        that opened a new area of service for the Company: low and mid-altitude
        airships. In 2007, Sanswire designed and continues to develop low and mid
        altitude ships called SkySats. These SkySat airships have been designed to
        address the growing military and defense markets; providing integrated solutions
        for Homeland Security, Border Control and persistent surveillance. These
        airships will supplement the high-altitude airship, Stratellites that will
        be
        used to provide wireless voice, video, and data services.
 
 **Competitive
        Business Conditions - Telecommunications Services**
 
 The
        telecommunications industry is highly competitive, rapidly evolving and subject
        to constant technological change and to intense marketing by different providers
        of functionally similar services. Since there are few, if any, substantial
        barriers to entry, except in those markets that have not been subject to
        governmental deregulation, we expect that new competitors are likely to enter
        our markets. Most, if not all, of our competitors are significantly larger
        and
        have substantially greater market presence and longer operating history as
        well
        as greater financial, technical, operational, marketing, personnel and other
        resources than we do.
 
 Due
        to
        these competitive conditions and the high cost of capital associated with
        running the business, the Company has decided to shut down its carrier
        operations.
 
 **Competitive
        Business Conditions - Sanswire Project**
 
 We
        are
        aware of other companies that are also developing high altitude platforms
        similar in nature to our Stratellite project. Our competitors, though, may
        have
        more resources available to develop their respective products. Furthermore,
        since the Sky Sat and Stratellite project are currently in the development
        stage, there can be no assurance that the project will successfully complete
        the
        development stage and result in a commercially viable product. Even if a
        properly functioning, commercially viable product is established there can
        be no
        assurance that revenues will be achieved from the sales of Stratellites or
        Sky
        Sats or that the costs to produce such revenues will not exceed the revenues
        or
        that the project will otherwise be profitable. There can be no assurance
        that we
        will be able to successfully achieve the results we anticipate with this
        project.
 
 **Sources
        and Availability of Hardware and Software**
 
 GlobeTel
        has developed in-house proprietary software for network applications and
        stored
        value products. We are dependent upon many suppliers of hardware and software.
        However we use equipment from prime manufacturers of equipment including
        Cisco,
        Motorola, SUN, HP and Newbridge Networks, among others. Equipment for the
        Stratellite, SkySat and the prototypes thereof are custom made for those
        products and are dependent upon either single or limited number of suppliers
        for
        certain goods. Failure of a supplier could cause significant delays in delivery
        of the airships if another supplier cannot be promptly found.
 
 **Sources
        and Availability of Technical Knowledge and Component
        Parts**
 
 The
        Sanswire project requires a high level of technological knowledge and adequately
        functioning component parts and sub-assemblies to continue the project and
        achieve commercial viability. We have current and contemplated arrangements
        for
        supply of both internal and external technical knowledge to provide the
        intellectual capital to continue with this project. Specifically, there is
        a
        high level of interest and anticipated cooperation from technical experts
        within
        the government, military, and commercial sectors. Similarly, we have current
        and
        contemplated arrangements for supply required component parts, both internally
        developed, as well as, outsourced from specialty contractors to provide
        component parts to continue with this project in the near term.
 
 **Dependence
        on a Few Customers**
 
 As
        discussed below in Item 6, Management Discussion and Analysis and Plan of
        Operation, we are currently dependent on a limited number of customers. As
        we
        expand our products, services, and markets, we expect to substantially broaden
        our customer base and reduce our dependence upon just a few customers. However,
        there is no guarantee that we will be able to broaden our customer
        base.
  12
  **Trademarks**
 
 We
        have
        filed marks and/or are filing marks for the following:
 
 ·
            International
                trademark application under the Madrid Protocol for
                MagicMoney; ·
            International
                trademark application under the Madrid Protocol for
                GlobeTel; ·
            Trademark
                of GlobeTel in Canada; ·
            Trademark
                of MagicMoney in Canada; ·
            Trademark
                of GlobeTel in Mexico; ·
            Trademark
                of MagicMoney in Mexico; ·
            Trademark
                of GlobeTel in Guatemala; ·
            Trademark
                of MagicMoney in Guatemala; ·
            Trademark
                of MagicMoney in Brazil; ·
            Trademark
                of GlobeTel in Brazil; and ·
            Trademark
                of GlobeTel in Philippines. 
 We
        have
        filed for registration of the names "Stratellite" and "Sanswire" under the
        Madrid Protocol and in many non-Madrid Protocol countries.
 
 We
        intend
        to file for patents covering unique design and intellectual property covering
        the design and engineering of the Stratellite, but will wait until these
        are
        finalized.
 
 **Regulatory
        Matters**
 
 Carriers
        seeking to provide international telecommunication services are required
        by
        Section 214 of the Telecommunications Act to obtain authorization from the
        Federal Communications Commission to provide those services. We applied for
        and
        obtained the required authorization.
 
 Our
        operations in foreign countries must comply with applicable local laws in
        each
        country we serve. The communications carrier with which we associate in each
        country is licensed to handle international call traffic, and takes
        responsibility for all local law compliance. For that reason we do not believe
        that compliance with foreign laws will affect our operations or require us
        to
        incur any significant expense.
 
 The
        export of the Stratellite or SkySat may be subject to United States State
        Department restrictions on the transfer of technology. We are currently
        investigating whether or not the export of the Sanswire products would require
        export licenses.
 
 **Effect
        of Existing or Probable Governmental Regulations**
 
 In
        February 1997, the United States and approximately seventy (70) other countries
        of the World Trade Organization (“WTO”) signed an agreement committing to open
        their telecommunications markets to competition and foreign ownership beginning
        in January 1998. These countries account for approximately 90% of world
        telecommunications traffic. The WTO agreement provides us and all companies
        in
        our industry with significant opportunities to compete in markets where access
        was previously either denied or extremely limited. However, the right to
        offer
        telecommunications services is subject to governmental regulations and therefore
        our ability to establish ourselves in prospective markets is subject to the
        actions of the telecommunications authorities in each country. In the event
        that
        new regulations are adopted that limit the ability of companies such as
        ourselves to offer VoIP telephony services and other services, we could be
        materially adversely affected.
 
 **Research
        and Development**
 
 Research
        and development costs for 2004 in connection with our Sanswire project were
        $3,038,085. Since our acquisition of the Sanswire assets in April 2004,
        increasing amounts of time and resources are devoted to Sanswire, and time
        and
        resources are expected to continue increasing in the near team as our
        Stratellite project continues and expands.
  13
  **Number
        of Total Employees and Number of Full-Time Employees**
  At
        present we have 7 full-time employees, including our executive officers and
        employees of our subsidiaries. We do not believe that we will have difficulty
        in
        hiring and retaining qualified individuals in the fields of Internet telephony
        and other communications projects although the market for skilled technical
        personnel is highly competitive.
 
 
 **ITEM
        2. DESCRIPTION OF PROPERTY**
 
 We
        previously leased facilities at 9050 Pines Blvd., Suite 110, Pembroke Pines,
        Florida 33024, as of April 1, 2004 with an initial monthly rent of $5,462
        (plus
        6% sales tax), and increases of 4% per year.
 
 In
        November 2004, we leased additional adjacent space under the same terms and
        period as the existing lease, bringing the total monthly office rent to $9,186
        (including sales tax).
 
 We
        have
        subsequently turned over the space we were occupying to Gotham Financial
        and
        have relocated the Company’s corporate offices to 101 NE 3 rd Ave.,
        Suite 1500, Fort Lauderdale, Florida 33301. Rent and services for this space
        is
        approximately $6,500 per month.
 
 In
        January 2005, we satisfied our lease obligation at 444 Brickell Avenue, Suite
        522, Miami, Florida 33131 and have no further obligation in the
        property.
 
 In
        January 2005, we signed a lease agreement with the San Bernardino International
        Airport Authority for hangar space at the airport in San Bernardino, CA for
        the
        purpose of assembling and storing the Stratellite prototype. The term of
        the
        agreement is from January 15, 2005 through March 31, 2005, at a monthly lease
        rate of $9,767. Three months prepaid rent totaling $29,302 was paid in December
        2004.
 
 As
        of
        October 2007, Sanswire no longer occupies a hangar at Palmdale Regional Airport,
        the monthly cost of this space was $20,847. This facility is adjacent to
        the
        United States Air Force’s Plant 42 and Edwards Air Force Base. Sanswire
        constructs and tests Stratellite and Sky Sat prototypes at the facility.
        The
        hangar also includes administrative office space.
 
 Sanswire
        Technologies, Inc., the company from which we purchased our Sanswire, LLC
        assets, had an office space lease in Dekalb County, GA. The lease term was
        from
        April 1, 2004 through March 31, 2005, with monthly rent of $2,628. Although
        not
        directly obligated on this lease, the company paid the monthly rent from
        May
        2004 through March 2005, whereas employees of our subsidiary, Sanswire, LLC,
        utilized the premises. The employees have since vacated the premises and
        the
        company no longer occupies the space and is no longer obligated for any lease
        payments.
 
 **ITEM
        3. LEGAL PROCEEDINGS**
 
 Securities
        and Exchange Commission
 
 In
        March
        2006 the Company received a request from the Securities and Exchange Commission
        (the “SEC”) regarding the purchase of Company shares by an administrative
        assistant around the time of a material corporate announcement. They asked
        for
        information regarding the announcement and the assistant’s knowledge of the
        announcement. The SEC later informed the Company that it did not intend to
        proceed with its investigation into the assistant.
 
 The
        Company received a formal order of investigation from the SEC on September
        28,
        2006. While it only named the company and was no specific to any particular
        allegations, the SEC has requested documentation from certain officers and
        directors of the Company. In subsequent subpoenas the SEC has asked for
        information regarding the way the Company accounted for assets acquired with
        regard to its purchase of assets from HotZone Wireless LLC and Sanswire
        Technologies Inc.; information regarding the recognition of revenue regarding
        the Company’s Centerline subsidiary; and information regarding the sales of
        Company shares by an unconsolidated subsidiary.
 
 On
        October 5, 2007, GlobeTel received a "Wells Notice" from the SEC in connection
        with the SEC’s ongoing investigation of the Company. The Wells Notice provides
        notification that the staff of the SEC intends to recommend to the Commission
        that it bring a civil action against the Company for possible violations
        of the
        securities laws including violations of Sections 5 and 17(a) of the Securities
        Act of 1933; Sections 10(b), 13(a), and 13(b)(2)(A) & (B) of the Securities
        Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5, 12b-20, 13a-1, 13a-11,
        and 13a-13 thereunder; and seeking as relief a permanent injunction, civil
        penalties, and disgorgement with prejudgment interest. The staff is also
        considering recommending that the SEC authorize and institute proceedings
        to
        revoke the registration of Company’s securities pursuant to Section 12(j) of the
        Exchange Act.
  14
  Under
        the
        process established by the SEC, recipients have the opportunity to respond
        in
        writing to a Wells Notice before the SEC staff makes any formal recommendation
        to the Commission regarding what action, if any, should be brought by the
        SEC.
        The Company is determining if it will provide a written submission to the
        SEC in
        response to the Wells Notice.
 
 Richard
        Stevens v. GlobeTel
 
 The
        Company and its directors were sued in the case RICHARD STEVENS vs. GLOBETEL
        COMMUNICATIONS CORP., et al. Case No.: 06-cv 21071. The original allegations
        of
        the complaint were that the company’s proposed transaction to build wireless
        networks in Russia was a sham. The amended complaint alleged that the
        transaction was not a sham,
        but that the company refused to accept payment of $300 million. Recently,
        the
        officers and directors with the exception of Timothy Huff have been dismissed
        from the case.
 
 The
        Company and the Plaintiff have reached a settlement in principle that has
        been
        filed with the Court for approval. Under the terms of the proposed settlement
        agreement in the class action, the Company’s D&O insurance carrier will make
        a cash payment to the class of $2,300,000, less up to $100,000 for potential
        counsel fees and expenses. All claims in the class action will be dismissed
        with
        prejudice.
 
 Alexsam
        v. GlobeTel
 
 In
        August, 2004, GlobeTel was sued in the United States District Court for the
        Eastern District of Texas, Marshall Division, in a civil action entitled Alexsam,
        Inc. v. FSV Payment Systems, Ltd. et al. ,
        Civil
        Action No. 2-03CV-337 (“the Texas Lawsuit”). In this action, Alexsam alleged
        that GlobeTel infringed U.S. Patent No. 6,000,608, issued on December 14,
        1999,
        entitled “Multifunction Card System”, and U.S. Patent No. 6,189,787, issued on
        February 20, 2001, entitled “Multifunctional Card System” (collectively referred
        to as “the Patents”). On October 8, 2004, GlobeTel filed a motion in the Texas
        Lawsuit to dismiss the entitled action. GlobeTel’s motion to dismiss was granted
        on January 14, 2005.
 
 GlobeTel
        then took two actions against Alexsam. GlobeTel filed a motion in the Texas
        Lawsuit seeking to recover the attorneys’ fees and costs it incurred defending
        itself. GlobeTel also filed a Declaratory Judgment lawsuit against Alexsam,
        Inc.
        and Robert Dorf in the United States District Court for the Southern District
        of
        Florida, Ft. Lauderdale Division, in a civil action entitled GlobeTel
        Communications Corp. v. Alexsam, Inc. et al. ,
        Civil
        Action No. 05-60201-CIV (“the Florida Lawsuit”). This lawsuit sought, among
        other things, a declaration that GlobeTel’s product and service offerings would
        not infringe the Patents.
 
 Alexsam
        and GlobeTel subsequently settled their dispute. In exchange for granting
        a
        non-exclusive license to GlobeTel for the Patents, GlobeTel withdrew its
        motion
        for attorneys’ fees in the Texas Lawsuit and dismissed the Florida Lawsuit. The
        License Agreement was made and entered into in September 2005. The license
        taken
        by GlobeTel extends further to GlobeTel’s customers, bank partners, third party
        financial processors and cardholders, and all those in privity with any of
        them,
        but only to the extent those entities’ activities relate to GlobeTel and its
        license.
 
 Derivative
        Action
 
 On
        July
        10, 2006 a derivative action was filed against the officers and directors
        of
        GlobeTel alleging that they have not acted in the best interest of the Company
        or the shareholders and alleged that the transaction to install wireless
        networks in Russia was a “sham.” The lawsuit is pending in the Federal District
        Court for the Southern District of Florida (Civil Case No. 06-60923). The
        Company believes that the suits are without merit and will vigorously defend
        against it. The Company has hired outside counsel to defend it in this action. The
        Company and the Plaintiff have reached an agreement in principle to settle
        this
        action and have submitted such settlement with the Court for its approval. Under
        the
        terms of the proposed settlement, Company’s D&O insurance carrier will pay
        $60,000 in attorneys’ fees to plaintiff’s counsel, the Company will implement or
        maintain certain corporate governance changes, and all claims will be dismissed
        with prejudice.
 
 15
 
 Former
        Consultants
 
 We
        are a
        defendant in two lawsuits filed by Matthew Milo and Joseph Quattrocchi, two
        former consultants, filed in the Supreme Court of the State of New York
        (Richmond County, Case no. 12119/00 and 12118/00). These matters were
        subsequently consolidated as a result of an Order of the court and now bear
        the
        singular index number 12118/00. The original lawsuits were for breach of
        contract. The complaint demands the delivery of 10,000,000 pre split shares
        of
        ADGI stock to Milo and 10,000,000 to Quattrocchi. GlobeTel was entered into
        the
        action as ADGI was the predecessor of the Company. The suit also requests
        an
        accounting for the sales generated by the consultants and attorneys fees
        and
        costs for the action.
 
 The
        lawsuits relate to consulting services that were provided by Mr. Milo and
        Mr.
        Quattrocchi and a $50,000 loan advanced by these individuals, dated May 14,
        1997, of which $35,000 has been repaid.
 
 We
        entered into an agreement with Mr. Milo and Mr. Quattrocchi as consultants
        on
        June 25, 1998. The agreement was amended on August 15, 1998. On November
        30,
        1998, both Mr. Milo and Mr. Quattrocchi resigned from their positions as
        consultants to our company without fulfilling all of their obligations under
        their consulting agreement. We issued 3 million pre split shares each to
        Mr.
        Milo and Mr. Quattrocchi as consideration under the consulting agreement.
        We
        have taken the position that Mr. Milo and Mr. Quattrocchi received compensation
        in excess of the value of the services that they provided and the amounts
        that
        they advanced as loans.
 
 Mr.
        Milo
        and Mr. Quattrocchi disagreed with our position and commenced action against
        us
        that is pending in the Supreme Court of the State of New York. Mr. Milo and
        Mr.
        Quattrocchi claim that they are entitled to an additional 24,526,000 pre
        split
        shares of our common stock as damages under the consulting agreement and
        to the
        repayment of the loan balance. We believe that we have meritorious defenses
        to
        the Milo and Quattrocchi action, and we have counterclaims against Mr. Milo
        and
        Mr. Quattrocchi.
 
 With
        regard to the issues related to original index number 12119/00, as a result
        of a
        summary judgment motion, the plaintiffs were granted a judgment in the sum
        of
        $15,000. The rest of the plaintiff's motion was denied. The court did not
        order
        the delivery of 24,526,000 pre split shares of ADGI common stock as the decision
        on that would be reserved to time of trial.
 
 An
        Answer
        and Counterclaim had been interposed on both of these actions. The Answer
        denies
        many of the allegations in the complaint and is comprised of eleven affirmative
        defenses and five counterclaims alleging damages in the sum of $1,000,000.
        The
        counterclaims in various forms involve breach of contract and breach of
        fiduciary duty by the plaintiffs.
 
 For
        the
        most part, the summary judgment motions that plaintiffs brought clearly stated
        that their theories of recovery and the documents that they will rely on
        in
        prosecuting the action. The case was assigned to a judicial hearing officer
        and
        there was one week of trial. The trial has been since adjourned with no further
        trial dates having been set.
 
 It
        is
        still difficult to evaluate the likelihood of an unfavorable outcome at this
        time in light of the fact that there has been no testimony with regard to
        the
        actions. However, the plaintiffs have prevailed with regard to their claim
        of
        $15,000 as a result of the lawsuit bearing the original index Number
        12119/00.
 
 This
        case
        went before a Judicial Hearing Officer on July 6 and 7, 2006. No resolution
        occurred during the July hearing and the Judicial Hearing Officer has asked
        for
        written statements of facts and law. The outcome cannot be projected with
        any
        certainty.  However, the company does not believe that it will be
        materially adversely affected by the outcome of the proceeding.
 
 
 **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
 
 There
        were no matters submitted to a vote of security holders in 2003.
 
 Our
        Annual Meeting of Shareholders was held on August 27, 2004 in Ft. Lauderdale,
        Florida. With over 91% favorable votes from all shareholders entitled to
        vote,
        the seven (7) nominees for the Board of Directors were elected and the
        appointment of Dohan & Company, CPAs, P.A. of Miami as the independent
        registered auditors for the year ending December 31, 2004 was
        ratified.
  16
  The
        Directors elected for a one-year term ending at the next shareholders meeting
        in
        2005 are Przemyslaw Kostro, Timothy M. Huff, Mitchell A. Siegel, Jerrold
        R.
        Hinton, Leigh A. Coleman, Michael K. Molen and Kyle McMahan.
 
 The
        following table lists the number of votes cast for each matter, including
        a
        separate tabulation with respect to each nominee for office. There were no
        votes
        against and no abstentions. The total number of voting shares was
        51,550,761.
 
 **Proposal
        1 - Board of Directors**
  **Nominee**
                **Votes
                    For**Przemyslaw
                    L. Kostro
                46,769,487Timothy
                    M. Huff
                46,875,889Jerrold
                    R. Hinton
                46,836,515Leigh
                    A. Coleman
                46,883,859Mitchell
                    A. Siegel
                46,873,512Michael
                    K. Molen
                46,863,809Kyle
                    McMahan
                46,748,667
  
 Proposal
        2 -
 
 Ratification
                  of Dohan & Co., CPAs, P.A. as Independent
                Auditors
              46,771,988
 
 There
        were no other matters brought to a vote of security holders in
        2004.
 
 
 **PART
        II**
 
 **ITEM
        5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS.**
 
 **(a)
        Market Price**
 
 Our
        shares of common stock were quoted on the Over-the-Counter Bulletin Board
        (“OTCBB”) quotation system under the symbol GTEL until May 23, 2005 when the
        shares started trading on the American Stock Exchange under the symbol GTE.
        On
        October 11, 2006 the Company began trading on the Pink Sheets under the symbol
        GTEM.
 
 The
        following information sets forth the high and low bid price of our common
        stock
        during fiscal 2004 and 2003 and was obtained from the National Quotation
        Bureau.
        The quotations reflect inter-dealer prices, without retail mark-up, mark-down
        or
        commission and may not represent actual transactions.
 
 CALENDAR
        2003
 
 **High**
              **Low**Quarter
                  Ended March 31,
              $0.660
              $0.300Quarter
                  Ended June 30,
              $0.435
              $0.227Quarter
                  Ended September 30,
              $0.600
              $0.285Quarter
                  Ended December 31,
              $1.965
              $0.375
  17
  CALENDAR
        2004
 
 **High**
              **Low**Quarter
                  Ended March 31,
              $2.940
              $0.750Quarter
                  Ended June 30,
              $1.950
              $1.200Quarter
                  Ended September 30,
              $1.920
              $1.050Quarter
                  Ended December 31,
              $2.100
              $0.150
 
 **(b)
        Holders**
 
 As
        of
        October 25, 2007, there were approximately 28,000 beneficial owners of our
        common stock.
 
 **(c)
        Dividends**
 
 We
        have
        never paid a dividend and do not anticipate that any dividends will be paid
        in
        the near future. We currently have no funds from which to pay dividends and
        as
        of December 31, 2004, our accumulated deficit was $42,439,036. We do not
        expect
        that any dividends will be paid for the foreseeable future.
 
 **(d)
        Securities Authorized for Issuance Under Equity Compensation
        Plans**
 
 In
        September 2003, the board of directors authorized the issuance of stock options
        totaling 3,183,413 shares to the officers of the Company in return for the
        forgiveness of $683,168 in accrued salaries and $33,100 in other accrued
        expenses through December 31, 2002. The stock options were exercisable at
        the
        lower of $.225 per share or 50% of the closing market price.
 
 In
        December 2003, the board of directors authorized the issuance of stock options
        totaling 1,088,889 shares to the officers of the company in return for the
        forgiveness of $245,000 in accrued salaries through December 31, 2003. The
        stock
        options were exercisable at the lower of $.225 per share or 50% of the closing
        market price.
 
 On
        January 8, 2004, the officers exercised their rights to convert the stock
        options into common stock at $.225 and as a result, we issued 4,272,302 shares
        of common stock in January 2004, in accordance with the stock option
        agreements.
 
 In
        May
        2004, the board of directors approved an Officers' Stock Option Grant Plan,
        pursuant to which certain officers are entitled to receive stock options,
        for
        each of three years, beginning in 2004 (Year 1). The annual number of option
        shares to be issued will be equal to amounts that, after the exercise of
        such
        options, would affect ownership of various percentages of the total shares
        then
        issued and outstanding. The following officers received options for shares
        in
        the following percentages: CEO - 3% in each of the three years (total 9%);
        COO -
        2% in each of the three years (total 6%), CFO - 1.5% in Year 1 and 1% in
        each of
        the following years (total 3.5%), Director and former President - 1.0% in
        Year 1
        and .5% in each of the following years (total 2%), current President - 1%
        in
        each of the three years (total 3%), and CTO - 1% in each of the three years
        (total 3%). The recipient's rights to the options will vest after continued
        service at the completion of each year. The total of the 6,654,196 option
        shares
        are to be issued for 2004. The stock options are exercisable at the lower
        of
        $.675 per share or 50% of the closing market price on date of
        exercise.
 
 In
        December 2004, we established our 2004 Stock Option Bonus Plan, wherein the
        board of directors authorized the issuance of stock options totaling 1,765,832
        shares to the officers and employees of the company as payment of accrued
        bonuses through December 31, 2004. The stock options are exercisable at the
        lower of $.675 per share or 50% of the closing market price.
 
 In
        December 2004, the board of directors authorized the issuance of stock options
        totaling 247,885 shares to the directors of the company as payment of accrued
        board members' stipends through December 31, 2004. The stock options are
        exercisable at the lower of $.5865 per share or 50% of the closing market
        price
        on date of exercise.
  In
        January 2005 the option holders exercised their rights to convert a portion
        of
        the stock options pursuant to the Officers Stock Grant Plan, the 2004 Stock
        Option Bonus Plan, and the options for accrued directors' stipends into common
        stock at $.675, and, as a result, we issued 2,000,000 shares of common stock
        in
        January 2005, in accordance with the stock option agreements.
 
 In
        addition, certain employees, vendors, professionals and consultants were
        paid
        with common stock (see Note 22 to financial statements) and with stock options
        (see Note 23 to financial statements) and certain investment banking and
        broker's fees were paid with preferred stock (see Note 24 to financial
        statements) in lieu of cash compensation.
  18
  **ITEM
        6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION**
 
 **General**
 
 Twelve
        months ended December 31, 2004 ("Fiscal 2004" or "2004" or "the current year")
        compared to twelve months ended December 31, 2003 ("Fiscal 2003" or "2003"
        or
        "the prior year").
 
 **Results
        of Operations**
 
 **Revenues.** During
        the fiscal 2004, our gross sales were $11,309,376, representing a decrease
        of
        0.4% over the prior year when our gross sales were $11,351,939. Our revenues
        remained consistent due to the fact that wholesale telecommunications revenues
        were being moved from GlobeTel Communications to the subsidiary, Centerline
        which was better suited for wholesale traffic revenues (telecommunications
        minutes). The revenues continued to be predominantly from telecommunications
        minutes going through our Mexico, Philippines and Brazil networks through
        June
        2004.
 
 Our
        Mexico network generated $4,774,657 (or 42.2% of gross revenues), while our
        Philippines network generated $3,234,279 (or 28.6% of gross revenues) and
        our
        Brazil network generated $2,147,119 (or 19.0% of gross revenues). Other domestic
        and international wholesale traffic revenues were $1,065,656 (or 9.4% of
        gross
        revenues), including revenues $469,821 (or 4.1% of gross revenue) from Mexico
        (unrelated to our Mexico network).
 
 Additional
        revenues generated included $9,515 from our Stored Value Card program, $69,845
        from our Magic Money program and $7,717 from the sale of IP Phones. There
        were
        no sales from these programs in the prior year.
 
 **Cost
        of Sales** .
        Our
        cost of sales consists primarily of the wholesale cost of buying bandwidth
        purchased by us for resale, collocations costs, technical services, wages,
        equipment leases, and the costs of telecommunications equipment. We had cost
        of
        sales of $11,500,577 for fiscal 2004, compared to $8,840,872 for fiscal 2003.
        We
        expect cost of sales to increase in future periods to the extent that our
        sales
        volume increases.
 
 **Gross
        Margin (Loss)** .
        Our
        gross margin (loss) was ($191,201) or (0.66%) for fiscal 2004, compared to
        $2,511,067 or 22.12% of total revenues in fiscal 2003, a decrease of $2,702,268
        or (107.6%). The decrease is primarily due to the fact that there was lower
        margin on resale of wholesale minutes related to the increased cost of the
        minutes to terminate, especially the Mexico network, where our margin was
        less
        than two percent, and initial activities of Centerline, where our gross margin
        was minimal or zero.
 
 **Operating
        Expenses.** Our
        operating expenses consist primarily of payroll and related taxes, professional
        and consulting services, expenses for executive and administrative personnel
        and
        insurance, bad debts, investment banking and financing fees, investor and
        public
        relations, research and development, sales commissions telephone and
        communications, facilities expenses, travel and related expenses, and other
        general corporate expenses. Our operating expenses for fiscal 2004 were
        $15,628,250 compared to fiscal 2003 operating expenses of $3,805,388, an
        increase of $11,822,862 or 311%.
 
 The
        increase is primarily due to an increase in officers' and directors'
        compensation to $6,520,206, including non-cash compensation, from $595,000
        in
        the prior year. During fiscal 2004, total officers' and directors' compensation
        included non-cash equity compensation (stock and stock options) of $5,805,646,
        compared $185,000 in non-cash compensation during fiscal 2003.
 
 In
        addition, employee payroll and related taxes for fiscal 2004 were $1,248,562
        compared to $283,408, an increased by $965,154 or 340.6%. This increase was
        due
        to expansion of our operations, facilities and workforce from 15 total employees
        to 30 during 2004. Included in non-cash equity compensation (stock and stock
        options) for employees was $438,187 in fiscal 2004, compared to $86,000 in
        fiscal 2003. Consulting and professional fees increased by $1,487,250 or
        206.9%,
        to $2,206,237 in 2004 (including $325,000 in non-cash equity compensation),
        compared to $718,987 in 2003 (including $203,607 in non-cash equity
        compensation). These increases are related to additional services required
        to
        develop and expand our geographical and product markets and projects, including
        our Stored Value Program, our Sanswire Project, and international markets,
        primarily in Asia and Australia, as well as increased professional fees in
        maintaining and expanding a public company.
  19
  We
        incurred $3,038,085 of research and development costs for our Sanswire project
        -
        development of the Stratellite during fiscal 2004, compared to none in the
        prior
        year, whereas the Sanswire assets was acquired in April 2004.
 
 We
        incurred $404,747 of sales commissions for our Centerline operations during
        fiscal 2004, compared to none in the prior year, whereas the Centerline
        operations began in 2004.
 
 **Income
        (Loss) from Operations** .
        We had
        an operating loss of ($15,819,451) for fiscal 2004 as compared to an operating
        loss of ($1,294,321) for fiscal 2003, primarily due to the excess of costs
        of
        revenues earned over revenues earned and increased operating expenses as
        described above, including reduced margins and higher operating costs and
        expansion of our various programs. We expect that we will continue to have
        higher operating costs as we increase our staffing and continue expanding
        operations, programs, projects and operating costs related to our newly acquired
        subsidiaries.
 
 **Other
        Income (Expense)** .
        We had
        net other expenses totaling $125,418 during fiscal 2004 compared to $4,908,205
        during fiscal 2003.
 
 Other
        income during fiscal 2004 included $268,397 in net gains on the settlements
        of
        liabilities, compared to $26,274 in 2003. Various liabilities, representing
        disputed obligations, were settled for amounts less than the previously recorded
        values, pursuant to agreements between us and the vendors. We also reported
        a
        net gain of $55,842 in 2003 in connection with the closing of operations
        of our
        St. Louis, Missouri office after accounting adjustments were made. We had
        interest income of $2,067 in fiscal 2004 compared to none in fiscal
        2003.
 
 Other
        expense of $56,804 in fiscal 2004 was a result of losses realized on the
        disposition of fixed assets, compared to a loss of $42,301 in fiscal 2003.
        Other
        expense of $4,834,878 in fiscal 2003 was as a result of the write-off of
        assets
        and liabilities resulting from the transactions in Australia with
        IPW.
 
 Interest
        expense for fiscal 2004 was $189,520 compared to $113,142 during fiscal 2003.
        Interest expense increase was primarily due to the accrual of contractual
        financing charges in connection with the operations of our Centerline
        subsidiary. Other interest charges actually decreased in 2004, as result
        in
        reduction of our total debts.
 
 **Net
        Income (Loss)** .
        We had
        a net loss of ($15,944,869) in fiscal 2004 compared to a net loss of
        ($6,202,526) in fiscal 2003. The net loss is primarily attributable to the
        increase in the operating expenses as discussed above.
 
 **Liquidity
        and Capital Resources**
 
 **Assets** .
        At
        December 31, 2004, we had total assets of $3,417,977 compared to total assets
        of
        $4,144,231 as of December 31, 2003.
 
 The
        current assets at December 31, 2004, were $2,561,197, compared to $3,389,421
        at
        December 31, 2003. As of December 31, 2004, we had $601,559 of cash and cash
        equivalents compared to $224,994 as of December 31, 2003.
 
 Our
        net
        accounts receivable were $1,740,883 as of December 31, 2004, compared to
        $3,039,427 at the same point in 2003. Approximately 92% of the December 31,
        2004
        receivables were attributable to three customers, including 63% or $773,319
        (net
        of allowance) related to the Mexico network and 22% or $266,167 (net of
        allowance) related to the Brazil network. We have increased our allowance
        for
        doubtful accounts by $1,141,534 for the year, the substantial portion of
        which
        relates to two of these three customers.
 
 Other
        current assets included $58,900 in prepaid expense, primarily prepaid minutes
        with carriers, compared to $71,000 in 2003; $63,976 inventory of IP Phones,
        compared to none in the prior year; and deposits on equipment purchases and
        other current assets of $88,994 compared to none in 2003.
 
 We
        had
        other assets totaling $411,024 as of December 31, 2004, compared to $318,435
        as
        of December 31, 2003. The increase was attributable primarily to the additional
        investments of $50,000 in CGI, our unconsolidated foreign subsidiary, totaling
        $352,300 as of December 31, 2004.
  20
  **Liabilities** .
        At
        December 31, 2004, we had total liabilities of $919,400 compared to total
        liabilities of $1,908,686 as of December 31, 2003.
 
 The
        current liabilities at December 31, 2004 were $914,682 compared to $1,908,686
        at
        December 31, 2003, a decrease of $994,004. The decrease is principally due
        to
        payments of notes and loans payable, payment of accounts and loans payable
        to
        related parties with stock, and a reduction in accounts payable. There were
        no
        significant long-term liabilities as of December 31, 2004 and 2003.
 
 **Cash
        Flows** .
        Our
        cash used in operating activities was ($4,467,989) for 2004, compared to
        ($1,389,102) for the prior year. The increase was primarily due to the increased
        level of operations and operating activities and changes in our current assets
        and liabilities.
 
 Our
        cash
        used in investing activities, including acquisitions of property and equipment
        investment in CGI, and loans to employees for a total of ($356,570) compared
        to
        ($607,401) in the prior year.
 
 Net
        cash
        provided by financing activities was $5,201,124, principally from the sale
        of
        preferred stock, for 2004, as compared to $2,019,686, principally from the
        sale
        of preferred and common stock and proceeds from notes and loans payable,
        for the
        prior year.
 
 In
        order
        for us to pay our operating expenses during 2004 and 2003, including certain
        operating expenses of our wholly-owned subsidiaries, Sanswire and Centerline,
        and the overall expansion of our operations, we raised $5,157,500 from sales
        of
        preferred stock in 2004, compared $717,140 and $500,000 from sales of preferred
        stock and common stock, respectively in 2003. We also raised $60,000 and
        $144,194 from proceeds from related party payables in 2004 and 2003,
        respectively. We generated $375,000 and $784,259 from loans and notes payable
        in
        2004 and 2003, respectively.
 
 In
        April
        2004, Caterham Financial Management Ltd., subscribed for 35,000 shares of
        Series
        B Preferred Stock. Originally, the Series B Preferred allowed the purchaser
        to
        convert such shares for up to 35% of the then outstanding shares of common
        stock
        of the Company. However, prior to the Company listing on the American Stock
        Exchange in 2005, the Company and Caterham agreed to fix the number of shares
        to
        which the Series B Preferred could be converted to 12,931,000 shares.
        Caterham subsequently converted all their Series B Preferred
        Shares.
  We
        raised
        an additional approximately $5 million in equity placements in 2005. We do
        not
        have existing capital resources or credit lines available that are sufficient
        to
        fund our operations and contractual obligations as presently planned over
        the
        next twelve months. Throughout 2006 and continuing into 2007, the Company
        has
        been dependent upon monthly funding from its existing debt holders. Funding
        decisions have typically not extended beyond thirty days at any given time,
        and
        the Company does not currently have a defined funding source. Funding delays
        and
        uncertainties have seriously damaged vendor relationships, new product
        development and revenues. In the absence of continued monthly funding by
        its
        current debt holders, the Company would have insufficient funds to continue
        operations. There is no assurance that additional funding from the current
        debt
        holders will be available, or available on terms and conditions acceptable
        to
        the Company.
 
 As
        reflected in the accompanying financial statements, during the year ended
        December 31, 2004, we had a net loss of ($15,944,869) compared to a net loss
        of
        ($6,202,526) during 2003. Consequently, there is an accumulated deficit of
        ($42,439,036) at December 31, 2004, compared to ($26,494,167) at December
        31,
        2003.
  21
  **ITEM
        7. FINANCIAL STATEMENTS**
 
 GLOBETEL
        COMMUNICATIONS CORP. AND SUBSIDIARIES
 CONSOLIDATED
        FINANCIAL STATEMENTS
 DECEMBER
        31, 2004 AND 2003
 TABLE
        OF
        CONTENTS
 
 **Page**REPORT
                  OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
              23CONSOLIDATED
                  FINANCIAL STATEMENTSConsolidated
                  Balance Sheets
              24Consolidated
                  Statements of Operations
              25Consolidated
                  Statements of Cash Flows
              26Consolidated
                  Statements of Stockholders' Equity
              27Notes
                  to Consolidated Financial Statements
              32
 
  22
 Dohan
                    and Company
                7700
                    North Kendall Drive, 200Certified
                    Public Accountants
                Miami,
                    Florida 33156-7564A
                    Professional Association
                Telephone:
                    (305) 274-1366Facsimile:
                    (305) 274-1368E-mail:
                    info@uscpa.comInternet:
                    www.uscpa.com
  **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 To
        the
        Board of Directors and Stockholders
 Globetel
        Communications Corp. and Subsidiaries
 Ft.
        Lauderdale, Florida
  We
        have
        audited the accompanying consolidated balance sheet of Globetel Communications
        Corp. and Subsidiaries (the Company) as of December 31, 2004, and the related
        consolidated statements of income (loss), cash flows and stockholders’ equity
        for the years then ended December 31, 2004 and 2003. These consolidated
        financial statements are the responsibility of the Company’s management. Our
        responsibility is to express an opinion on these consolidated financial
        statements based on our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. The
        Company
        is not required to have, nor were we engaged to perform, an audit of its
        internal control over financial reporting. Our audit included consideration
        of
        internal control over financial reporting as a basis for designing audit
        procedures that are appropriate in the circumstances, but not for the purpose
        of
        expressing an opinion on the effectiveness of the Company’s internal control
        over financial reporting. Accordingly, we express no such opinion. An audit
        also
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the consolidated financial statements. An audit also includes
        assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall financial statement presentation.
        We believe that our audit provides a reasonable basis for our
        opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of Globetel Communications
        Corp. and Subsidiaries as of December 31, 2004 and 2003, and the results of
        their operations and their cash flows for the years then ended in conformity
        with U.S. generally accepted accounting principles.
 
 As
        described in Note 2 to the financial statements, the 2004 financial statements
        have been restated for an error in the method of revenue recognition related
        to
        reporting gross revenue versus net as per EITF 99-19 and in the application
        of
        an accounting principle relating to purchase accounting.
 
 /s/
                      Dohan & Company,
                      CPAs
 Miami,
        Florida
 March
        19,
        2005 except as to Note 2, which is October 17, 2007
  Member:
  Florida
        Institute of Certified Public Accountants
 American
        Institute of Certified Public Accountants Private Companies and SEC Practices
        Sections National and worldwide associations through Accounting Group
        International
  23
 **GLOBETEL
        COMMUNICATIONS CORP. AND SUBSIDIARIES**
 **CONSOLIDATED
        BALANCE SHEET**
 December
        31, 2004 and 2003
 December
                      31,2004
                  
                  2003(restated)ASSETSCURRENT
                      ASSETSCash
                      and cash equivalents
                  
                  $
                  601,559
                  
                  $
                  224,994Accounts
                      receivable, less allowance for doubtful accountsof
                      $1,505,731 and $378,787
                  
                  
                  1,740,883
                  
                  
                  3,093,427Loans
                      to employees
                  
                  
                  6,885
                  
                  
                  --Prepaid
                      expenses
                  
                  
                  58,900
                  
                  
                  71,000Inventory
                  
                  
                  63,976
                  
                  
                  --Deposits
                      on equipment purchase
                  
                  
                  88,994
                  
                  
                  --Deferred
                        tax asset, less valuation allowance of $4,529,043 and
                        $3,104,649
                  
                  
                  --
                  
                  
                  --TOTAL
                      CURRENT ASSETS
                  
                  
                  2,561,197
                  
                  
                  3,389,421PROPERTY
                      AND EQUIPMENT, net
                  
                  
                  445,756
                  
                  
                  436,375OTHER
                      ASSETSInvestment
                      in unconsolidated foreign subsidiary -Consolidated
                      Global Investments, Ltd.
                  
                  
                  352,300
                  
                  
                  302,300Deposits
                  
                  
                  50,712
                  
                  
                  16,135Prepaid
                      expenses
                  
                  
                  8,012
                  
                  
                  --TOTAL
                      OTHER ASSETS
                  
                  
                  411,024
                  
                  
                  318,435TOTAL
                      ASSETS
                  
                  $
                  3,417,977
                  
                  $
                  4,144,231LIABILITIES
                      AND STOCKHOLDERS' EQUITYCOMMITMENTS
                      AND CONTINGENCIES (NOTES 6, 7, 13, AND 17)LIABILITIESCURRENT
                      LIABILITIESAccounts
                      payable
                  
                  $
                  456,248
                  
                  $
                  736,241Current
                      portion of capital lease obligations
                  
                  
                  2,846
                  
                  
                  53,311Notes
                      and loans payable
                  
                  
                  --
                  
                  
                  448,700Accounts
                      payable to related party - Charterhouse Consultancy
                  
                  
                  --
                  
                  
                  135,000Loan
                      Payable to related party - Charterhouse Investments
                  
                  
                  --
                  
                  
                  361,960Accrued
                      officers' salaries
                  
                  
                  198,333
                  
                  
                  --Accrued
                      expenses and other liabilities
                  
                  
                  93,436
                  
                  
                  57,423Deferred
                      revenues
                  
                  
                  46,319
                  
                  
                  31,528Due
                      to former employees
                  
                  
                  --
                  
                  
                  27,023Related
                      party payables
                  
                  
                  117,500
                  
                  
                  57,500TOTAL
                      CURRENT LIABILITIES
                  
                  
                  914,682
                  
                  
                  1,908,686LONG-TERM
                      LIABILITIESCapital
                      lease obligations
                  
                  
                  4,718
                  
                  
                  --TOTAL
                      LONG-TERM LIABILITIES
                  
                  
                  4,718
                  
                  
                  --TOTAL
                      LIABILITIES
                  
                  
                  919,400
                  
                  
                  1,908,686STOCKHOLDERS'
                      EQUITYSeries
                      A Preferred stock, $.001 par value, 10,000,000 sharesauthorized;96,500
                      and 72,000 shares issued and outstanding:
                  
                  
                  97
                  
                  
                  72Additional
                      paid-in capital - Series A Preferred stock
                  
                  
                  697,403
                  
                  
                  1,092,068Series
                      B Preferred stock, $.001 par value, 35,000 sharesauthorized;35,000
                      and 0 shares issued and outstanding:
                  
                  
                  35
                  
                  
                  --Additional
                      paid-in capital - Series B Preferred stock
                  
                  
                  14,849,965
                  
                  
                  --Series
                      C Preferred stock, $.001 par value, 5,000 shares
                      authorized;750
                      and 0 shares issued and outstanding:
                  
                  
                  1
                  
                  
                  --Additional
                      paid-in capital - Series C Preferred stock
                  
                  
                  749,999
                  
                  
                  --Series
                      D Preferred stock, $.001 par value, 5,000 shares
                      authorized;1,000
                      and 0 shares issued and outstanding:
                  
                  
                  1
                  
                  
                  --Additional
                      paid-in capital - Series D Preferred stock
                  
                  
                  999,999
                  
                  
                  --Common
                      stock, $.00001 par value, 1,500,000,000 shares authorized;950,849,646
                      and 653,224,471 shares issued and outstanding
                  
                  
                  9,508
                  
                  
                  6,532Additional
                      paid-in capital
                  
                  
                  39,880,605
                  
                  
                  28,006,040Stock
                      subscriptions receivable:Series
                      A Preferred Stock
                  
                  
                  --
                  
                  
                  (375,000
                  )Series
                      B Preferred Stock
                  
                  
                  (11,500,000
                  )
                  
                  --Series
                      D Preferred Stock
                  
                  
                  (750,000
                  )
                  
                  --Accumulated
                      deficit
                  
                  
                  (42,439,036
                  )
                  
                  (26,494,167
                  )TOTAL
                      STOCKHOLDERS' EQUITY
                  
                  
                  2,498,577
                  
                  
                  2,235,545TOTAL
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                  
                  $
                  3,417,977
                  
                  $
                  4,144,231
  See
          accompanying notes
  24
  **GLOBETEL
        COMMUNICATIONS CORP. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 For
                    the Years Ended December 31,2004
                
                2003(restated)REVENUES
                    EARNED
                
                $
                11,309,376
                
                $
                11,351,939COST
                    OF REVENUES EARNED
                
                
                11,500,577
                
                
                8,840,872GROSS
                    (LOSS) MARGIN
                
                
                (191,201
                )
                
                2,511,067EXPENSESPayroll
                    and related taxes
                
                
                1,248,562
                
                
                283,408Consulting
                    and Professional fees
                
                
                2,206,237
                
                
                718,987Officers'
                    and Directors' compensation
                
                
                6,520,206
                
                
                595,000Bad
                    debts
                
                
                1,141,534
                
                
                1,409,994Investment
                    banking and financing fees
                
                
                172,106
                
                
                223,886Investor
                    and public relations
                
                
                117,856
                
                
                121,656Commissions
                    expense - CSI
                
                
                404,747
                
                
                --Research
                    and development - Sanswire
                
                
                3,038,085
                
                
                --Other
                    operating expenses
                
                
                156,011
                
                
                92,715Telephone
                    and communications
                
                
                75,390
                
                
                69,169Travel
                    and related expenses
                
                
                240,862
                
                
                95,213Rents
                
                
                126,424
                
                
                48,607Insurance
                    and employee benefits
                
                
                126,644
                
                
                102,383Depreciation
                    and amortization
                
                
                53,586
                
                
                44,370TOTAL
                    EXPENSES
                
                
                15,628,250
                
                
                3,805,388LOSS
                    BEFORE OTHER INCOME (EXPENSE) AND INCOME TAXES
                
                
                (15,819,451
                )
                
                (1,294,321
                )OTHER
                    INCOME (EXPENSE)Net
                    gains on settlement of liabilities
                
                
                268,397
                
                
                26,274Loss
                    on disposition of fixed assets
                
                
                (56,804
                )
                
                (42,301
                )Loss
                    on deposits with carriers
                
                
                (149,558
                )
                
                --Gain
                    on discontinued operations
                
                
                --
                
                
                55,842Loss
                    on write-off of receivables and non-readily marketable
                    securities
                
                
                --
                
                
                (4,834,878
                )Interest
                    income
                
                
                2,067
                
                
                --Interest
                    expense
                
                
                (189,520
                )
                
                (113,142
                )NET
                    OTHER INCOME ( EXPENSE )
                
                
                (125,418
                )
                
                (4,908,205
                )LOSS
                    BEFORE INCOME TAXES
                
                
                (15,944,869
                )
                
                (6,202,526
                )INCOME
                    TAXESProvision
                    for income taxes
                
                
                --
                
                
                --Tax
                    benefit from utilization of net operating loss
                    carryforward
                
                
                --
                
                
                --TOTAL
                    INCOME TAXES
                
                
                --
                
                
                --NET
                    LOSS
                
                
                ($
                    15,944,869
                )
                
                ($
                    6,202,526
                )WEIGHTED
                    AVERAGE NUMBER OF COMMON SHARES OUTSTANDINGBASIC
                
                
                748,388,269
                
                
                627,814,875DILUTED
                
                
                750,639,900
                
                
                627,814,875NET
                    LOSS PER SHAREBASIC
                
                
                ($
                    0.02
                )
                
                ($
                    0.01
                )DILUTED
                
                
                ($
                    0.02
                )
                
                ($
                    0.01
                )
 See
          accompanying notes
  25
 
 **GLOBETEL
        COMMUNICATIONS CORP. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
  For
                    the Years Ended December 31,2004
                
                2003(restated)CASH
                    FLOWS FROM OPERATING ACTIVITIESNet
                    income (loss)
                
                
                ($
                    15,944,869
                )
                
                ($
                    6,202,526
                )Adjustments
                    to reconcile net loss to net cashused
                    by operating activities:Depreciation
                    and amortization
                
                
                170,021
                
                
                227,200Gain
                    on settlement of liabilities
                
                
                (85,337
                )
                
                26,274Gain
                    on discontinued operations
                
                
                --
                
                
                55,842Loss
                    on disposition of fixed assets
                
                
                56,804
                
                
                42,301Loss
                    on write-off of receivables and non-readilymarketable
                    securities
                
                
                --
                
                
                4,834,878Bad
                    debt expense
                
                
                1,141,534
                
                
                1,409,994Research
                    and development expense
                
                
                2,778,000
                
                
                --Common
                    stock exchanged for services
                
                
                1,558,707
                
                
                604,510Options
                    exchanged for services
                
                
                5,828,833
                
                
                --(Increase)
                    decrease in assets:Accounts
                    receivable
                
                
                211,010
                
                
                (2,755,602
                )Prepaid
                    expenses
                
                
                (66,912
                )
                
                --Inventory
                
                
                (63,976
                )
                
                --Deposits
                    on equipment purchases
                
                
                (28,092
                )
                
                74,486Deposits
                    and prepaid expenses
                
                
                71,000
                
                
                (71,000
                )Increase
                    (decrease) in liabilities:Accounts
                    payable
                
                
                (309,867
                )
                
                1,111,960Accounts
                    payable, to be satisfied with non-readilymarketable
                    securities
                
                
                (974,951
                )Accrued
                    payroll and related taxes
                
                
                --
                
                
                (12,785
                )Accrued
                    officers' salaries
                
                
                198,333
                
                
                --Accrued
                    expenses and other liabilities
                
                
                29,054
                
                
                439,245Deferred
                    revenues
                
                
                14,791
                
                
                (46,106
                )Deferred
                    revenues - related party
                
                
                (27,023
                )
                
                (152,822
                )NET
                    CASH USED BY OPERATING ACTIVITIES
                
                
                (4,467,989
                )
                
                (1,389,102
                )CASH
                    FLOWS FROM INVESTING ACTIVITIESAcquisition
                    of property and equipment
                
                
                (204,206
                )
                
                (305,101
                )Deposit
                    on equipment
                
                
                (145,479
                )
                
                (302,300
                )Loans
                    to employees
                
                
                (6,885
                )
                
                --NET
                    CASH USED BY INVESTING ACTIVITIES
                
                
                (356,570
                )
                
                (607,401
                )CASH
                    FLOWS FROM FINANCING ACTIVITIESSale
                    of preferred stock - Series A
                
                
                1,057,500
                
                
                717,140Sale
                    of preferred stock - Series B
                
                
                2,850,000
                
                
                --Sale
                    of preferred stock - Series C
                
                
                1,000,000
                
                
                --Sale
                    of preferred stock - Series D
                
                
                250,000
                
                
                --Sale
                    of common stock
                
                
                --
                
                
                500,000Proceeds
                    from capital lease financing
                
                
                9,554
                
                
                --Payments
                    on capital lease financing
                
                
                (2,229
                )
                
                (29,674
                )Proceeds
                    from notes and loans payable
                
                
                375,000
                
                
                784,259Payments
                    on notes and loans payable
                
                
                (398,701
                )
                
                --Proceeds
                    from related party payables
                
                
                60,000
                
                
                144,194Payments
                    on related party payables
                
                
                --
                
                
                (96,053
                )NET
                    CASH PROVIDED BY FINANCING ACTIVITIES
                
                
                5,201,124
                
                
                2,019,866NET
                    INCREASE IN CASH AND EQUIVALENTS
                
                
                376,565
                
                
                23,363CASH
                    AND EQUIVALENTS - BEGINNING
                
                
                224,994
                
                
                201,631CASH
                    AND EQUIVALENTS - ENDING
                
                $
                601,559
                
                $
                224,994SUPPLEMENTAL
                    DISCLOSURES Cash paid during the period for:Interest
                
                $
                11,071
                
                $
                95,736Income
                    taxes
                
                $
                --
                
                $
                --In
                    addition to amounts reflected above, common stock was issued
                    for:Options
                    issued for services
                
                $
                5,828,833
                
                $
                10,000Options
                    issued for settlement of debt
                
                $
                --
                
                $
                1,016,648Shares
                    issued for services
                
                $
                1,546,568
                
                $
                --Shares
                    issued for research and development
                
                $
                2,778,000
                
                $
                --Shares
                    issued for Sanswire assetsShares
                    issued for settlement of debt
                
                $
                --
                
                $
                1,431,084Conversion
                    of Series A preferred stock to common stock
                
                $
                1,452,140
                
                $
                0Conversion
                    of Series C preferred stock to common stock
                
                $
                250,000
                
                $
                0In
                    addition to amounts reflected above, preferred stock was issued
                    for:Series
                    A preferred stock issued for broker's fees(107,500
                    shares, recorded at par)
                
                $
                --
                
                $
                --Series
                    B preferred stock issued for broker's fees
                
                $
                150,000
                
                $
                --Series
                    B preferred stock issued for settlement of debt
                
                $
                500,000
                
                $
                --
  **Non-cash
        Financing Activities:**
  On
        April
        27, 2004, $15,000,000 of Series B preferred stock was issued. A stock
        subscription receivable of $11,500,000 was outstanding as of December 31,
        2004
  On
        April
        27, 2004, $1,000,000 of Series C preferred stock was issued No stock
        subscription receivable was outstanding as of December 31, 2004
  On
        July
        28, 2004, $1,000,000 of Series D preferred stock was issued A stock subscription
        receivable of $750,000 was outstanding as of December 31, 2004
  See
        accompanying notes
  26
 **GLOBETEL
        COMMUNICATIONS CORP. & SUBSIDIARIES CONSOLIDATED STATEMENT OF**
 **STOCKHOLDERS'
        EQUITY (restated)**
 Common
                    StockAdditionalPaid-inDescription
                
                Shares
                
                Amount
                
                CapitalBalance,
                    Dec. 31, 2002
                
                
                605,320,283
                
                
                6,053
                
                
                24,444,457Shares
                    issued for services
                
                
                23,748,533
                
                
                237
                
                
                568,273Options
                    issued for services
                
                
                --
                
                
                --
                
                
                10,000Shares
                    issued forseverance
                    pay
                
                
                1,200,000
                
                
                12
                
                
                35,988Shares
                    issued forextinguishment
                    of debt
                
                
                44,792,000
                
                
                448
                
                
                1,430,636Options
                    issued forextinguishment
                    of debt
                
                
                0
                
                
                0
                
                
                1,016,468Shares
                    issued for cash
                
                
                20,080,321
                
                
                201
                
                
                499,799Shares
                    issued forloan
                    collateral
                
                
                5,000,000
                
                
                50
                
                
                (50
                )Shares
                    returned forloan
                    collateral
                
                
                (46,916,666
                )
                
                (469
                )
                
                469Preferred
                    Series A sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --Net
                    loss
                
                
                --
                
                
                --
                
                
                --Balance,
                    Dec. 31, 2003
                
                
                653,224,471
                
                
                6,532
                
                
                28,006,040Shares
                    issued foroptions
                    exercised
                
                
                59,447,795
                
                
                595
                
                
                (595
                )Shares
                    issued to / forunconsolidatedforeign
                    subsidiary
                
                
                20,000,000
                
                
                200
                
                
                (200
                )Shares
                    issued for services
                
                
                26,264,653
                
                
                262
                
                
                1,546,306Shares
                    issued forSanswire
                    assets
                
                
                320,000
                
                
                3
                
                
                31,997Shares
                    issued forresearch
                    and development
                
                
                27,680,000
                
                
                277
                
                
                2,767,723Shares
                    issued forStratodyne
                    assets
                
                
                2,000,000
                
                
                20
                
                
                (20
                )Preferred
                    Series A sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for broker's fees
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for conversionof
                    Preferred Series A shares
                
                
                159,640,000
                
                
                1,596
                
                
                1,450,544Preferred
                    Series B sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series B sharesissued
                    for extinguishmentof
                    debt
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series B sharesissued
                    for broker's fees
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series C sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for conversionsof
                    Preferred Series C shares
                
                
                2,272,727
                
                
                23
                
                
                249,977Preferred
                    Series D sharesissued
                    for cash
                
                
                --
                
                
                --
                
                
                --Options
                    issued for Boardmember
                    stipends
                
                
                --
                
                
                --
                
                
                145,313Options
                    issued for services,per
                    2004 Stock Option Plan
                
                
                --
                
                
                --
                
                
                1,191,937Options
                    issued for services,per
                    Executives StockOption
                    Grant
                
                
                --
                
                
                --
                
                
                4,491,583Net
                    loss
                
                
                --
                
                
                --
                
                
                --Balance,
                    Dec. 31, 2004(restated)
                
                
                950,849,646
                
                
                9,508
                
                
                39,880,605
  27
  PREFERREDSTOCKSeriesAAdditional
                
                StockPaid-in
                
                SubscriptionsDescription
                
                Shares
                
                Amount
                
                Capital
                
                ReceivableBalance,
                    Dec. 31, 2002
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forseverance
                    pay
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forextinguishment
                    of debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued forextinguishment
                    of debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for cash
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forloan
                    collateral
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    returned forloan
                    collateral
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                72,000
                
                
                72
                
                
                1,092,068
                
                
                (375,000
                )Net
                    loss
                
                
                --
                
                
                --
                
                
                --
                
                
                --Balance,
                    Dec. 31, 2003
                
                
                72,000
                
                
                72
                
                
                1,092,068
                
                
                (375,000
                )Shares
                    issued foroptions
                    exercised
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued to / forunconsolidatedforeign
                    subsidiary
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forSanswire
                    assets
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forresearch
                    and development
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forStratodyne
                    assets
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for cashand
                    stock subscriptionsreceivable
                
                
                70,500
                
                
                71
                
                
                1,057,429
                
                
                375,000Preferred
                    Series A sharesissued
                    for broker's fees
                
                
                107,500
                
                
                107
                
                
                (107
                )
                
                --Shares
                    issued for conversionof
                    Preferred Series A shares
                
                
                (153,500
                )
                
                (153
                )
                
                (1,451,987
                )
                
                --Preferred
                    Series B sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series B sharesissued
                    for extinguishmentof
                    debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series B sharesissued
                    for broker's fees
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series C sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for conversionsof
                    Preferred Series C shares
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series D sharesissued
                    for cash
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for Boardmember
                    stipends
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for services,per
                    2004 Stock Option Plan
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for services,per
                    Executives StockOption
                    Grant
                
                
                --
                
                
                --
                
                
                --
                
                
                --Net
                    loss
                
                
                --
                
                
                --
                
                
                --
                
                
                --Balance,
                    Dec. 31, 2004(restated)
                
                
                96,500
                
                
                97
                
                
                697,403
                
                
                0
  28
  PREFERRED
                    STOCKSeries
                    BAdditional
                
                StockPaid-in
                
                SubscriptionsDescription
                
                Shares
                
                Amount
                
                Capital
                
                ReceivableBalance,
                    Dec. 31, 2002
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forseverance
                    pay
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forextinguishment
                    of debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued forextinguishment
                    of debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for cash
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forloan
                    collateral
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    returned forloan
                    collateral
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --Net
                    loss
                
                
                --
                
                
                --
                
                
                --
                
                
                --Balance,
                    Dec. 31, 2003
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued foroptions
                    exercised
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued to / forunconsolidatedforeign
                    subsidiary
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forSanswire
                    assets
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forresearch
                    and development
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forStratodyne
                    assets
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for broker's fees
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for conversionof
                    Preferred Series A shares
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series B sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                35,000
                
                
                35
                
                
                14,999,965
                
                
                (12,150,000
                )Preferred
                    Series B sharesissued
                    for extinguishmentof
                    debt
                
                
                --
                
                
                --
                
                
                --
                
                
                500,000Preferred
                    Series B sharesissued
                    for broker's fees
                
                
                --
                
                
                --
                
                
                (150,000
                )
                
                150,000Preferred
                    Series C sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for conversionsof
                    Preferred Series C shares
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series D sharesissued
                    for cash
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for Boardmember
                    stipends
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for services,per
                    2004 Stock Option Plan
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for services,per
                    Executives StockOption
                    Grant
                
                
                --
                
                
                --
                
                
                --
                
                
                --Net
                    loss
                
                
                --
                
                
                --
                
                
                --
                
                
                --Balance,
                    Dec. 31, 2004(restated)
                
                
                35,000
                
                
                35
                
                
                14,849,965
                
                
                (11,500,000
                )
  29
 PREFERRED
                    STOCKSeries
                    CAdditional
                
                StockPaid-in
                
                SubscriptionsDescription
                
                Shares
                
                Amount
                
                Capital
                
                ReceivableBalance,
                    Dec. 31, 2002
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forseverance
                    pay
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forextinguishment
                    of debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued forextinguishment
                    of debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for cash
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forloan
                    collateral
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    returned forloan
                    collateral
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --Net
                    loss
                
                
                --
                
                
                --
                
                
                --
                
                
                --Balance,
                    Dec. 31, 2003
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued foroptions
                    exercised
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued to / forunconsolidatedforeign
                    subsidiary
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forSanswire
                    assets
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forresearch
                    and development
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued forStratodyne
                    assets
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for broker's fees
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for conversionof
                    Preferred Series A shares
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series B sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series B sharesissued
                    for extinguishmentof
                    debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series B sharesissued
                    for broker's fees
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series C sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                1,000
                
                
                1
                
                
                999,999
                
                
                --Shares
                    issued for conversionsof
                    Preferred Series C shares
                
                
                (250
                
                
                0
                
                
                (250,000
                )
                
                --Preferred
                    Series D sharesissued
                    for cash
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for Boardmember
                    stipends
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for services,per
                    2004 Stock Option Plan
                
                
                --
                
                
                --
                
                
                --
                
                
                --Options
                    issued for services,per
                    Executives StockOption
                    Grant
                
                
                --
                
                
                --
                
                
                --
                
                
                --Net
                    loss
                
                
                --
                
                
                --
                
                
                --
                
                
                --Balance,
                    Dec. 31, 2004(restated)
                
                
                750
                
                
                1
                
                
                749,999
                
                
                --
  30
  PREFERRED
          STOCK
 Series
          D
 Description
                
                Shares
                
                Amount
                
                Additional
                  Paid-in
                  Capital
                
                Stock
                  Subscriptions
                  Receivable
                
                Accumulated
                  Deficit
                
                Total
                  Shareholders'
                  EquityBalance,
                    Dec. 31, 2002
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (20,291,641
                )
                
                4,158,869Shares
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                568,510Options
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                10,000Shares
                    issued forseverance
                    pay
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                36,000Shares
                    issued forextinguishment
                    of debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                1,431,084Options
                    issued forextinguishment
                    of debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                1,016,468Shares
                    issued for cash
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                500,000Shares
                    issued forloan
                    collateral
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    returned forloan
                    collateral
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                717,140Net
                    loss
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (6,202,526
                )
                
                (6,202,526
                )Balance,
                    Dec. 31, 2003
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (26,494,167
                )
                
                2,235,545Shares
                    issued foroptions
                    exercised
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued to / forunconsolidatedforeign
                    subsidiary
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for services
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                1,546,568Shares
                    issued forSanswire
                    assets
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                32,000Shares
                    issued forresearch
                    and development
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                2,768,000Shares
                    issued forStratodyne
                    assets
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series A sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                1,432,500Preferred
                    Series A sharesissued
                    for broker's fees
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --Shares
                    issued for conversionof
                    Preferred Series A shares
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series B sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                2,850,000Preferred
                    Series B sharesissued
                    for extinguishmentof
                    debt
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                500,000Preferred
                    Series B sharesissued
                    for broker's fees
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series C sharesissued
                    for cash and stocksubscriptions
                    receivable
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                1,000,000Shares
                    issued for conversionsof
                    Preferred Series C shares
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --Preferred
                    Series D sharesissued
                    for cash
                
                
                250
                
                
                1
                
                
                999,999
                
                
                (750,000
                )
                
                --
                
                
                250,000Options
                    issued for Boardmember
                    stipends
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                145,313Options
                    issued for services,per
                    2004 Stock Option Plan
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                1,191,937Options
                    issued for services,per
                    Executives StockOption
                    Grant
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                4,491,583Net
                    loss
                
                
                --
                
                
                --
                
                
                --
                
                
                --
                
                
                (15,944,869
                )
                
                (15,944,869
                )Balance,
                    Dec. 31, 2004(restated)
                
                
                250
                
                
                1
                
                
                999,999
                
                
                (750,000
                )
                
                (42,439,036
                )
                
                2,498,577
  31
  **GLOBETEL
        COMMUNICATIONS CORP. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS, December 31, 2004 (restated) and
        2003**
  **NOTE
        1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES**
  **Nature
        of Operations**
  GlobeTel
        is engaged in the business of providing telecommunication services, primarily
        involving Internet telephony using Voice over Internet Protocol ("VoIP")
        technology and equipment. In addition, our subsidiary, Sanswire, LLC, is
        developing a National Wireless Broadband Network utilizing high-altitude
        airships called Stratellites that will be used to provide wireless voice,
        video,
        and data services.
  **Organization
        and Capitalization**
  GlobeTel
        Communications Corp. ("GlobeTel") was organized in July 2002, under the laws
        of
        the State of Delaware. Upon its incorporation, GlobeTel was a wholly-owned
        subsidiary of American Diversified Group, Inc. (“ADGI”). ADGI was organized
        January 16, 1979, under the laws of the State of Nevada. ADGI had two other
        wholly-owned subsidiaries, Global Transmedia Communications Corporation
        (“Global”), a Delaware corporation, and NCI Telecom, Inc. (“NCI”), a Missouri
        corporation.
  On
        July
        1, 2002, both Global and NCI were merged into ADGI. On July 24, 2002, ADGI
        stockholders approved a plan of reincorporation for the exchange of all
        outstanding shares of ADGI for an equal number of shares of GlobeTel.
        Subsequently, ADGI was merged into GlobeTel, which is now conducting the
        business formerly conducted by ADGI and its subsidiaries, and all references
        to
        ADGI in these financial statements now apply to GlobeTel
        interchangeably.
  In
        July
        2002, pursuant to the reincorporation, the Company authorized the issuance
        of up
        to 1,500,000,000 shares of common stock, par value of $0.00001 per share
        and up
        to 10,000,000 shares of preferred stock, par value of $0.001 per
        share.
  **Basis
        of Presentation**
  The
        financial statements include the accounts of GlobeTel Communication Corp.
        and
        its wholly-owned subsidiaries, Sanswire, LLC and Centerline Communications,
        LLC,
        and its wholly-owned subsidiaries, EQ8, LLC, EnRoute Telecom, LLC, G Link
        Solutions, LLC, Volta Communications, LLC, and Lonestar Communications, LLC,
        as
        well as the accounts GTCC de Mexico, S.A. de C.V, which GlobeTel owns 99%
        of.
  All
        material intercompany balances and transactions were eliminated in the
        consolidation.
  **Restatement**
  During
        2006 and 2007, we performed an internal analysis ("internal analysis") of
        our
        previously issued consolidated financial statements for 2004 and 2005. As
        a
        result of our internal analysis, we discovered certain errors in those
        consolidated financial statements. Our 2004 consolidated financial statements
        and related financial information included herein have been restated. For
        further details on the nature of the errors and the related effects on our
        previously issued consolidated financial statements see Note 2—Restatement
        of Results. Where appropriate, we have identified all balances that have
        been
        restated with the notation "restated." Throughout these notes, the term
        "previously reported" will be used to refer to balances from our previously
        issued 2004 consolidated financial statements.
  **Reclassifications**
  Certain
        amounts in the prior year financial statements have been reclassified for
        comparative purposes to conform to the current year presentation.
  The
        Company's consolidated balance sheets reflect, in other assets, "Investment
        in
        unconsolidated subsidiary - Consolidated Global Investments, Ltd." (“CGI”) at
        $352,300 and $302,300 as of December 31, 2004 and 2003, respectively. The
        financial statements issued for the prior year listed the $302,500 in current
        assets, included in deposits on equipment. This reclassification in 2004
        is a
        result of the Company's acquisition of 73.15% of CGI's stock.
  32
  **Cash
        and Cash Equivalents**
  The
        Company considers all highly liquid debt instruments with an original maturity
        of three months or less at the date of purchase to be cash
        equivalents.
  **Accounts
        Receivable and Allowance for Doubtful Accounts**
  Trade
        and
        other accounts receivable are reported at face value less any provisions
        for
        uncollectible accounts considered necessary. Accounts receivable primarily
        includes trade receivables from customers and, in connections with our Mexico
        network, Mexican tax refunds receivable. The Company estimates doubtful accounts
        on an item-to-item basis and includes over-aged accounts as part of allowance
        for doubtful accounts, which are generally ones that are ninety-days overdue.
        Bad debt expense for the years ended December 31, 2004 and 2003 were $1,141,534
        and $1,409,994, respectively.
  **Inventory**
  Inventory
        is recorded at lower-of-cost-or-market, first-in first-out (“FIFO”) basis.
        Inventory at December 31, 2004 consists of IP (“Internet Protocol”) phones held
        for resale.
  **Property
        and Equipment**
  Property
        and equipment consists of telecommunications equipment, office furniture
        and
        equipment, which are stated at cost. Depreciation is based on the estimated
        useful lives of the assets, ranging from five years for office furniture
        and
        equipment to seven years for telecommunications equipment, using the
        straight-line method. Expenditures for maintenance and repairs are charged
        to
        expense as incurred. Major improvements are capitalized. Gains and losses
        on
        disposition of property and equipment are included in income as
        realized.
  **Revenue
        Recognition**
  Revenues
        for voice, data, and other services to end-users are recognized in the month
        in
        which the service is provided. Amounts invoiced and collected in advance
        of
        services provided are recorded as deferred revenue. Revenues for carrier
        interconnection and access are recognized in the month in which the service
        is
        provided.
  Sales
        of
        telecommunications networks are recognized when the networks are delivered
        and
        accepted by the customer. Sales of computer hardware, equipment, and
        installation are recognized when products are shipped to customers. Provisions
        for estimated returns and allowances are provided for in the same period
        the
        related sales are recorded. Revenues on service contracts are recognized
        ratably
        over applicable contract periods. Amounts billed and collected before services
        are performed are included in deferred revenues.
  **Income
        Taxes**
  Income
        taxes are computed under the provisions of the Financial Accounting Standards
        Board (“FASB”) Statement 109 No. (SFAS 109), Accounting for Income Taxes. SFAS
        109 is an asset and liability approach that requires the recognition of deferred
        tax assets and liabilities for the expected future tax consequences of the
        difference in events that have been recognized in the Company's financial
        statements compared to the tax returns.
  **Advertising
        and Marketing Costs**
  Advertising
        and marketing costs are charged to operations in the period incurred.
        Advertising and marketing expense for the years ended December 31, 2004 and
        2003, were $19,160 and $105,314, respectively, and are included in "Investor
        and
        public relations" in the consolidated statements of income (loss).
  **Fair
        Value of Financial Instruments**
  Financial
        instruments, including cash, receivables, securities, accounts payable, and
        notes payable are carried at amounts which reasonably approximate their fair
        value due to the short-term nature of these amounts or due to variable rates
        of
        interest which are consistent with market rates.
  33
  **Concentrations
        of Credit Risk and Economic Dependence**
  Financial
        instruments, which potentially subject the Company to a concentration of
        credit
        risk, are cash and cash equivalents and accounts receivable. The Company
        currently maintains a substantial portion of its day-to-day operating cash
        balances at a single financial institution. The Company had cash balances
        of
        $601,449 and $224,994 as of December 31, 2004 and 2003, respectively, which
        are
        in excess of federally insured limit. As of December 31, 2004 and 2003, the
        Company had $462,690 and $124,994, respectively, in excess of federally insured
        limits.
  The
        Company operates worldwide. Consequently, the Company's ability to collect
        the
        amounts due from customers may be affected by economic fluctuations in each
        of
        the geographical locations in which the Company provides its services,
        principally Central and South America and Asia. The Company is dependent
        upon
        certain major customers, key suppliers, and contractual agreements, the absence
        of which may affect the Company's ability to operate its telecommunications
        business at current levels.
  **Recently
        Issued Accounting Pronouncements**
  In
        April
        2003, FASB issued Statements of Financial Accounting Standards No. 149
        "Amendment of Statement 133 on Derivative Instruments and Hedging Activities"
        ("SFAS 149"). SFAS 149 amends and clarifies financial accounting and reporting
        for derivative instruments, including certain derivative instruments embedded
        in
        other contracts and for hedging activities under FASB Statement No. 133
        "Accounting for Derivative Instruments and Hedging Activities". SFAS 149
        is
        generally effective for contracts entered into or modified after June 30,
        2003.
  In
        May
        2003, FASB issued Statements of Financial Accounting Standards No. 150
        "Accounting for Certain Financial Instruments with Characteristics of both
        Liabilities and Equity" ("SFAS 150"). SFAS 150 establishes standards for
        how an
        issuer classifies and measures certain financial instruments with
        characteristics of both liabilities and equity. SFAS 150 is effective for
        financial instruments entered into or modified after May 31, 2003.
  In
        December 2003, the Financial Accounting Standards Board (“FASB”) issued a
        revised Interpretation No. 46, "Consolidation of Variable Interest Entities"
        (“FIN 46R”). FIN 46R addresses consolidation by business enterprises of variable
        interest entities and significantly changes the consolidation application
        of
        consolidation policies to variable interest entities and, thus improves
        comparability between enterprises engaged in similar activities when those
        activities are conducted through variable interest entities. The Company
        does
        not hold any variable interest entities.
  In
        November 2004, the FASB issued Statement No. 151, "Inventory Costs", to amend
        the guidance in Chapter 4, "Inventory Pricing", of FASB Accounting Research
        Bulletin ("ARB”) No. 43, "Restatement and Revision of Accounting Research
        Bulletins", which will become effective for the Company in fiscal year 2006.
        Statement 151 clarifies the accounting for abnormal amounts of idle facility
        expense, freight, handling costs, and wasted material (spoilage). The Statement
        requires that those items be recognized as current-period charges. Additionally,
        Statement 151 requires that allocation of fixed production overhead to the
        costs
        of conversion be based on the normal capacity of the production facilities.
        Management believes that the adoption of SFAS 151 will not affect the Company's
        financial position or results of operations.
  In
        December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets,"
        an amendment to Opinion No. 29, "Accounting for Nonmonetary Transactions."
        Statement No. 153 eliminates certain differences in the guidance in Opinion
        No.
        29 as compared to the guidance contained in standards issued by the
        International Accounting Standards Board. The amendment to Opinion No. 29
        eliminates the fair value exception for nonmonetary exchanges of similar
        productive assets and replaces it with a general exception for exchanges
        of
        nonmonetary assets that do not have commercial substance. Such an exchange
        has
        commercial substance if the future cash flows of the entity are expected
        to
        change significantly as a result of the exchange. SFAS No. 153 is effective
        for
        nonmonetary asset exchanges occurring in periods beginning after June 15,
        2005.
        Earlier application is permitted for nonmonetary asset exchanges occurring
        in
        periods beginning after December 16, 2004. Management does not expect adoption
        of SFAS No. 153 to have any impact on the Company's financial
        statements.
  In
        December 2004, the FASB issued SFAS No. 123 (revised 2004) "Share-Based
        Payments", which is a revision of SFAS No. 123, "Accounting for Stock-Based
        Compensation". SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting
        for
        Stock Issued to Employees and amends SFAS No. 95, "Statement of Cash Flows".
        Generally, the approach in SFAS No. 123(R) is similar to the approach described
        in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments
        to
        employees, including grants of employee stock options, to be recognized in
        the
        income statement based on their fair values. Pro forma disclosure is no longer
        an alternative. The new standard will be effective for the Company in the
        first
        interim or annual reporting period beginning after December 15, 2005. The
        Company expects the adoption of this standard will have a material impact
        on its
        financial statements assuming employee stock options are granted in the
        future.
  34
  The
        adoptions of these new pronouncements have not and, other than as noted above,
        are not expected to have a material effect on the Company's consolidated
        financial position or results of operations.
  **Use
        of Estimates**
  The
        process of preparing financial statements in conformity with generally accepted
        accounting principles in the United States requires the use of estimates
        and
        assumptions regarding certain types of assets, liabilities, revenues, and
        expenses. Such estimates primarily relate to unsettled transactions and events
        as of the date of the financial statements. Accordingly, upon settlement,
        actual
        results may differ from estimated amounts.
  **Net
        Loss Per Common Share**
  Basic
        net
        loss per common share has been computed based upon the weighted average number
        of shares of common stock outstanding during each period. The basic net loss
        is
        computed by dividing the net loss by the weighted average number of common
        shares outstanding during each period. Following is a reconciliation of the
        numerators and denominators of the basic and diluted earnings per share
        computations for the year ended December 31, 2004 (restated):
  Income
                
                Shares
                
                Per-Share(Numerator)
                
                (Denominator)
                
                AmountBasic
                    Net Loss per Share:Income
                    (loss) available tocommon
                    stockholders
                
                $
                (15,944,869
                )
                
                748,388,269
                
                $
                (.02
                )Effect
                    of Dilutive ConvertiblePreferred
                    Stock and Options
                
                
                --
                
                
                2,251,631Diluted
                    Net Income (loss) per Share:Income
                    (loss) available to commonstockholders
                    plus, assumedConversions
                    and exercises
                
                $
                (15,944,869
                )
                
                750,639,900
                
                $
                (.02
                )
  Available
        stock options at December 31, 2003, were anti-dilutive and therefore were
        excluded from the net income (loss) per common share calculation.
  **Impairment
        of Long-Lived Assets**
  The
        Company follows FASB Statement No. 144 (“SFAS 144”), "Accounting for the
        Impairment of Long-Lived Assets." SFAS 144 requires that long-lived assets
        to be
        held and used are reviewed for impairment whenever events or changes in
        circumstances indicate that the related carrying amount may not be recoverable.
        When required, impairment losses on assets to be held and used are recognized
        based on the fair value of the asset. Long-lived assets to be disposed of,
        if
        any, are reported at the lower of carrying amount or fair value less cost
        to
        sell.
  **Stock-Based
        Compensation**
  The
        Company accounts for its stock-based compensation arrangements with employees
        in
        accordance with Accounting Principles Board Opinion No. 25, "Accounting for
        Stock Issued to Employees" ("APB 25") and related interpretations. As such,
        compensation expense under fixed term option plans is recorded at the date
        of
        grant only to the extent that the market value of the underlying stock at
        the
        date of grant exceeds the exercise price. In accordance with SFAS No. 123
        "Accounting for Stock-Based Compensation" ("SFAS 123"), since the Company
        has
        continued to apply the principles of APB 25 to employee stock compensation,
        pro
        forma loss and pro forma loss per share information has been presented as
        if the
        options had been valued at their fair values. The Company recognizes
        compensation expense for stock options, common stock and other equity
        instruments issued to non-employees for services received based upon the
        fair
        value of the services or equity instruments issued, whichever is more reliably
        determined. Stock compensation expense is recognized as the stock option
        is
        earned, which is generally over the vesting period of the underlying
        option.
  35
  In
        December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based
        Compensation". This statement amends SFAS 123. SFAS 148 provides alternative
        methods of transition for companies that voluntarily change to the fair
        value-based method of accounting for stock-based employee compensation. In
        addition, this statement amends the disclosure requirements of SFAS 123 to
        require prominent disclosures in both annual and interim financial statements
        about the method of accounting for stock-based compensation and the effect
        of
        the method used on reported results.
  In
        March
        2000, the FASB issued FASB Interpretation No. 44, "Accounting for Certain
        Transactions Involving Stock Compensation." ("FIN 44") The Company adopted
        FIN
        44, effective July 1, 2000, with respect to certain provisions applicable
        to new
        awards, option repricings, and changes in grantee status. FIN 44 addresses
        practice issues related to the application of APB 25. The Company accounts
        for
        stock-based compensation issued to non-employees and consultants in accordance
        with the provisions of SFAS 123 and SFAS 148 and EITF No. 96-18, "Accounting
        for
        Equity Instruments that are issued to Other Than Employees for Acquiring
        or in
        Conjunction with Selling, Goods or Services". The measurement date used is
        the
        earlier of either the performance commitment date or the date at which the
        equity instrument holder's performance is complete.
  Had
        compensation cost for the Company's stock option plans been determined based
        on
        the fair value at the grant date for awards under those plans, consistent
        with
        the measurement provisions of SFAS 123 and SFAS 148, the Company's net loss
        and
        basic loss per share would have been adjusted as follows:
 2004(restated)
                
                2003Net
                    loss for the year - as reported
                
                $
                (15,944,869
                )
                $
                (6,202,526
                )Add:
                    Total stock-based
                
                
                5,828,833
                
                $
                310,000compensation
                    expense included innet
                    loss, as reported determinedunder
                    APB 25, net of related taxeffectsDeduct:
                    Total stock-based
                
                
                (5,323,319
                )
                $
                (210,800
                )compensation
                    expense determinedunder
                    fair value based method forall
                    awards, net of related taxeffectsNet
                    loss for the year - pro forma
                
                $
                (15,439,355
                )
                $
                (6,103,326
                )Basic
                    net loss per share - asreported
                
                $
                (0.02
                )
                $
                (0.01
                )Basic
                    net loss per share - pro forma
                
                $
                (0.02
                )
                $
                (0.01
                )Weighted
                    average fair value ofoptions
                    granted during the year
                
                $
                0.04
                
                $
                0.01
  The
        fair
        value of each option grant has been estimated on the date of the grant using
        the
        Black-Scholes option-pricing model with the following assumptions:
 2004
                
                2003(restated)Expected
                    dividend yield
                
                
                --
                
                
                --Expected
                    stock price volatility
                
                
                300
                %
                
                150
                %Risk-free
                    interest rate
                
                
                2.0
                %
                
                2.0
                %Expected
                    life of options
                
                
                2
                    years
                
                
                3
                    yearsBlock
                    discount applied
                
                
                --
                
                
                --
  In
        December 2004, the FASB issued SFAS No. 123 (revised 2004). Share-Based Payment,
        which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation.
        SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued
        to
        Employees and amends SFAS No. 95, Statement of Cash Flows. Effective for
        the
        years on or after December 15, 2005, the Company will recognize all share-based
        payments to employees, including grants of employee stock options, in the
        statement of operations based on their fair values.
  36
  **NOTE
        2. RESTATEMENT OF RESULTS**
  We
        have
        determined that, in certain cases, we misinterpreted or misapplied Generally
        Accepted Accounting Principles (“GAAP”) in our 2004 consolidated financial
        statements and, accordingly, we have restated our consolidated financial
        statements for the period ended December 31, 2004.
  As
        discussed more fully below, the restatements involve, among other matters,
        revenue recognition issues related to reporting gross revenue versus net
        as per
        EITF Issue 99-19. In making these restatements, we have performed an internal
        analysis of our accounting policies, practices, procedures and disclosures
        for
        the affected periods.
  *Summary
        of restatement items*
  The
        following tables set forth the effects of the restatement adjustments discussed
        below on revenue; cost of sales; net loss; and loss per share as presented
        in
        our consolidated statements of operations for the year ended December 31,
        2004, and intangible assets. The restatement adjustments are discussed in
        the
        paragraphs following the tables.
  **Year
                    ended December 31, 2004****Revenue**
                
                **Cost
                    of Sales**
                
                **Net
                    Loss**
                
                **Loss
                    per**
                  **Share**
                
                **Intangible
                    Assets**Previously
                    reported
                
                $
                28,996,213
                
                $
                29,187,414
                
                $
                (13,166,869
                )
                $
                (0.02
                )
                $
                2,778,000**Restatement**
                  **Adjustments,
                    net:**Net
                    Revenue Adjustment
                
                $
                (17,686,837
                )
                $
                (17,686,837
                )
                
                (0
                )
                
                (0.00
                )Purchase
                    accounting
                
                
                —
                
                
                —
                
                
                (2,778,000
                )
                
                (0.00
                )
                
                (2,778,000
                )Net
                    restatements
                
                $
                (17,686,837
                )
                $
                (17,686,837
                )
                
                (2,778,000
                )
                
                (0.00
                )
                
                (2,778,000
                )As
                    restated
                
                $
                11,309,376
                
                $
                11,500,577
                
                $
                (15,944,869
                )
                $
                (0.02
                )
                $
                (0
                )
  **Net
        Revenue Adjustment**
  In
        2004,
        we engaged in transactions where we recorded our wholesale telecommunications
        revenues as Gross Revenue.  After thorough review, we concluded that we
        could not rely on certain records of the subsidiary and thus the revenues
        equaling $11,190,902 were reduced from previously reported revenues,  Also
        after applying the indicators, upon application of the EITF Issue 99-19
“Reporting Revenue Gross as a Principal versus Net as an Agent,” Accounting
        Principles Board Opinion No. 10 (“APB 10”)  “ Revenue
        Recognition Principle ,“
and
        Financial Accounting Standards Board Interpretation No. 39 (“FIN 39”)
“ Offsetting
        of Amounts Related to Certain Contracts ,” we
        concluded that we should record only the net revenue from certain wholesale
        telecommunications due to the indicators not supporting the criteria for
        gross
        revenue which further reduced revenues $6,495,935 for a total of
        $17,686,837.  The adjustments were offset against previously reported cost
        of sales by the same amount of $17,686,837.
  In
        our
        previously issued consolidated financial statements, we booked the gross
        consideration for all our wholesale telecommunications revenue without
        additional consideration to its characteristics. As part of our internal
        analysis of our accounting policies, practices and procedures in place in
        2004,
        we did not review the previous accounting model for recording our
        revenues.
  37
  **Purchase
        Accounting**
  As
        described in Note 7— **** Asset
        Acquisition - Sanswire we found a discrepancy in the application of purchase
        accounting for the April 15, 2004, transaction and have recorded an adjustment
        to correct it in our restated consolidated financial statements.
  *Intangible
        assets.* We
        recorded restatement adjustments to the amounts allocated to the
        technology-in-place intangible assets acquired in the transaction. The effect
        of
        the adjustments to intangible assets in 2004 was a reduction of $2,778,000
        and
        subsequently an increase to research and development expense in 2004 of
        $2,778,000.
  **NOTE
        3. ACCOUNTS RECEIVABLE AND SALES - SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
        AND
        ECONOMIC DEPENDENCE**
  Three
        customers, Gatesway Online, Ltd., GTCC Qualnet Communications, Ltd., and
        Transglobal Ventures, Inc., accounted for 88% of the Company's sales for
        2004
        and two customers accounted for 97% of the Company's sales for 2003, including
        19% attributable to the Brazil network, 46% to the Mexico (including 42%
        related
        to our Mexico network and 4% unrelated to our network), and 29% to the
        Philippine network. Four of the customers for the international networks
        account
        for 92% of accounts receivable as of December 31, 2004.
  Sales
        attributable to foreign operations for the year ended December 31, 2004,
        were
        $11,096,261 or 98% of total sales and $11,256,907 or 99% of total sales for
        the
        year ended December 31, 2003. The amounts include $2,147,119 or 19% for 2004
        and
        $2,923,981 or 26% for 2003 from Brazil and $5,244,478 or 46% for 2004 and
        $8,052,143 or 71% from Mexico. Revenue is attributable to these countries
        since
        calls either originate or terminate in these countries. All transactions
        were
        accounted for in U.S. currency, and no gain or loss was recorded on fluctuations
        in foreign currency.
  In
        connection with the Brazil network, $1,903,264 and $1,955,818 during years
        ended
        December 31, 2004 and 2003, respectively, was paid by our Brazilian network
        customer directly to a local provider of network termination services, and,
        accordingly, the accounts receivable due from the customer was reduced by
        the
        same amounts.
  In
        connection with the Mexico network, $4,485,030 and $5,609,939 during the
        years
        ended December 31, 2004 and 2003, respectively, was paid by our Mexico network
        customer directly to a local provider of network termination services, and,
        accordingly, the accounts receivable due from the customer was reduced by
        the
        same amounts.
  During
        the year ended December 31, 2004, the Company increased its allowance for
        doubtful accounts by $1,126,944, predominantly for the receivables from the
        Mexico and Brazil networks, representing a percentage of amounts receivable,
        which have not been received as of the date of this report.
  **NOTE
        4. NON-READILY MARKETABLE AVAILABLE-FOR-SALE EQUITY
        SECURITIES**
  **Network
        Sales - Charterhouse Investment Holdings, Ltd.**
  In
        May
        2002, the Company entered into a Network Purchase Agreement with IP World
        Ltd.,
        (“IPW”) an Australian corporation to build as many as five (5) networks to be
        located in different countries throughout the world. As payment for each
        network
        the Company agreed to accept 64 million shares of IPW stock, at an agreed-upon
        value of $0.10 (US) per share, in full payment of the promissory note for
        the
        Brazil and Philippines networks. The IPW shares were not listed for sale
        on the
        Australian Stock Exchange (“ASX”) or any other domestic or international
        securities exchange. At the time, the Company was informed that such listing
        was
        imminent, and the Company would be able to sell all or a portion of the IPW
        shares.
  The
        above
        agreements and transactions were facilitated by and through Charterhouse
        Consultancy Service, Ltd, a Nevis corporation, and it's successor corporation,
        Charterhouse Investment Holdings Ltd., a Malaysian corporation (collectively
        known as "Charterhouse"), and Global VoIP (“GVoIP”), a Delaware Corporation, of
        which Timothy Huff, the Company's previous CEO was a 99% owner and officer.
        Although Mr. Huff, by and through GVoIP, originally functioned as consultant
        to
        Charterhouse, neither Mr. Huff nor GVoIP were directly compensated for
        participating in the agreements and transactions described above and below.
        Instead, Mr. Huff became an officer and a Director of the Company and assigned
        any and all interest GVoIP had to the Company without compensation. GVoIP
        was
        dissolved immediately thereafter.
  38
  In
        connection with agreements between Charterhouse and the Company, Charterhouse
        paid for the two networks sold to date by the transfer of shares in IPW to
        the
        Company. In that connection, Charterhouse maintained 70 million IPW shares
        in
        escrow for the Company, and, accordingly, the Company was deemed the beneficial
        owner of the shares.
  As
        of
        June 30, 2003, the Company had included in its current assets, $1,600,000
        in
        non-readily marketable, available-for-sale equity securities, which represent
        16
        million shares of IP World (“IPW”) unrestricted stock, valued at $.10 per share,
        held in the Company's name and $4,301,500 in non-readily marketable, available
        for sale equity securities, due from a related party, Charterhouse, which
        represent 70 million shares of IPW restricted stock valued at $.06145 per
        share,
        held by Charterhouse on the Company's behalf.
  As
        of
        September 30, 2003, IP World Ltd. was in liquidation and was no longer listed
        in
        the Australian Exchange. The Company is no longer transacting with IPW to
        move
        out of liquidation and be relisted in the Australian Exchange. Therefore,
        the
        Company charged off $4,301,500 in stock receivable as well as the $1,600,000
        in
        stock it had in its name during the three months ended September 30, 2003.
        As of
        December 31, 2004, the Company believes that the likelihood of recovering
        any
        such amounts is remote.
  **Service
        and Installation Agreements**
  In
        June
        2002, the Company entered into a one-year service agreement with IP World
        Ltd.
        for $240,000, related to servicing the Brazil network, the revenues from
        which
        are recognized ratably over the term of the agreement, beginning in July
        2002.
        Revenue of $120,000 was initially recognized in connection with this
        agreement.
  In
        July
        2002, the Company also entered into an installation and one-year service
        agreement with IP World Ltd. for $300,000 ($60,000 for installation and $240,000
        for maintenance), related to the Philippines network. The revenues from
        installation were recorded during 2002. The revenues from maintenance services
        were recognized ratably over the term of the agreement, beginning in October
        2002. Revenue of $60,000 for maintenance services was initially recognized
        during 2002.
  In
        2003,
        the Company continued to report revenues for the agreement for the first
        and
        second quarter of the year. Upon writing off the receivable as discussed
        above,
        no further revenue was recognized by the Company.
  **NOTE
        5. PROPERTY AND EQUIPMENT**
  Property
        and equipment consisted of the following:
 2004
                
                2003Telecommunications
                    equipment
                
                $
                549,779
                
                $
                706,892Office
                    furniture and equipment
                
                
                165,979
                
                
                154,169715,758
                
                
                861,061Accumulated
                    depreciation
                
                
                (270,002
                )
                
                (424,686
                )Property
                    and equipment,net
                    book value
                
                $
                445,756
                
                $
                436,375
  Total
        depreciation expense for the years ended December 31, 2004 and 2003, amounted
        to
        $170,021 and $227,200, respectively. Included in cost of sales is $116,435
        in
        2004 and $182,774 in 2003.
  **NOTE
        6 - INVESTMENT IN UNCONSOLIDATED FOREIGN SUBSIDIARY**
  In
        September 2003, the Company entered into an agreement with Advantage
        Telecommunications Ltd. (“ATC”), n/k/a Consolidated Global Investments, Ltd.
        (“CGI”) an Australian telecommunications corporation where, for a strategic
        investment of $1.2 million, the Company would own up to 50% of the stock
        of ATC,
        and would have control of the board of directors of ATC. ATC had operations
        in
        England and Hong Kong and had points of presence in over 15 countries. The
        agreement was subsequently modified to where our investment of $1.2 million
        would be for purchase of the ATC's telecommunication equipment and network
        operations in Hong Kong and England. Subsequently, ATC deconsolidated its
        subsidiaries and suspended operations.
  39
  As
        of
        December 31, 2003, the Company had remitted $302,300 to ATC and ATC's assignee.
        The Company remitted an additional $25,000 in February and $25,000 in March
        2004
        for a total of $352,300 and as of December 31, 2004 as partial payment towards
        the completion of the transaction.
  Pursuant
        to additional modifications of the agreement, the Company issued 16,500,000
        restricted shares of the Company's common stock to ATC to complete the
        transaction as follows: (a) 10,000,000 shares, valued at $847,700, were issued
        to bring the investment balance to $1.2 million, and (b) an additional 6,500,000
        shares, valued at $520,000 were issued to bring the investment balance to
        $1,720,000. These amounts were agreed to by the Company and ATC.
  The
        investment was structured by the parties and recorded by ATC as a secured
        convertible note payable to the Company, bearing interest at a rate of 12%,
        convertible, at the option of the Company, at a conversion rate of AUD$ 0.005
        per share. However, as agreed by the parties, neither the Company nor ATC
        received or paid, respectively, nor accrued such interest.
  In
        May
        2004, Advantage Telecommunications Ltd. changed its name to Consolidated
        Global
        Investments, Ltd. (“CGI”) and all reports and filings are now under the name of
        Consolidated Global Investments, Ltd.
  On
        June
        30, 2004, the Company exercised its option to convert the note and was issued
        467,327,745 shares of CGI stock. In addition, the Company took an assignment
        from CGI of a note payable to a CGI bank creditor in the amount of approximately
        AUD$ 750,000 (US $518,000) for a purchase price of 3,500,000 restricted shares
        of the Company's stock, in full payment of the balance due. Pursuant to an
        agreement between the Company and CGI, the Company converted the balance
        to CGI
        shares, at a conversion rate of AUD$.005 and on June 30, 2004, the Company
        was
        issued 147,968,635 shares of CGI stock.
  As
        a
        result of the conversions, the Company held a total of 615,296,380 shares
        representing an ownership interest in CGI of 73.15%. In addition, as a result
        of
        and pursuant to the terms of conversion, the Company received options to
        acquire
        an additional 467,327,809 shares by June 30, 2007, at AUD$ 0.005 per
        share.
  Notwithstanding
        the Company's 73.15% ownership interest and control of CGI's Board of Directors,
        the Company has not consolidated CGI into its accounts, whereas CGI is a
        foreign
        subsidiary of the Company, with no current operations. Furthermore, the primary
        asset of CGI as of December 31, 2004, consists of the 16.5 million shares
        of the
        Company's stock. Such consolidation is not required by generally accepted
        accounting principles in the United States.
  The
        Company's stock issuances described above were recorded at par value, and
        the
        carrying value of the Company's investment in the unconsolidated foreign
        subsidiary is $352,000, representing the sum of cash advanced by the Company
        to
        CGI through December 31, 2004.
  As
        of
        December 31, 2004, CGI's shares were not trading on the Australian Stock
        Exchange, or any other exchange. However, CGI expects the shares to be relisted
        in the near-term. The Company intends to make CGI into an operating company,
        with operations in Telecommunications and Sanswire projects, expanding the
        Company's presence in the Asian market, and resulting in the marketability
        of
        CGI's stock and potential income from the subsidiary. Upon the occurrence
        of
        such events, the Company may adjust the carrying value of and/or consolidate
        the
        subsidiary in accordance with generally accepted accounting principles used
        in
        the United States.
  In
        addition, the Company has agreed with the Liquidator of CGI's former UK
        subsidiary to acquire telecommunication equipment owned by that former
        subsidiary valued by the Company at $128,210.
  **NOTE
        7 - ASSET ACQUISITION - SANSWIRE**
  **Asset
        Purchase Agreement -Sanswire Technologies, Inc.**
  In
        March
        2004, the Company entered into a binding letter of intent to purchase certain
        assets of Sanswire Technologies, Inc. and its subsidiary, Sanswire, Inc.
        (collectively, "Sanswire"), a company that is developing a National Wireless
        Broadband Network utilizing high-altitude airships called Stratellites that
        will
        be used to provide wireless voice, video, and data services. The definitive
        purchase agreement was signed and effective on April 15, 2004.
  40
  **Asset
        Purchase Agreement - Stratodyne, Inc. (restated)**
  The
        Company entered into a purchase agreement, effective August 23, 2004, with
        Sanswire, Stratodyne, Inc. and its principal shareholder, Vern Koenig, for
        certain assets of Stratodyne and under substantially the same terms, conditions
        and consideration as the original Sanswire purchase agreement. The "Stratodyne"
        agreement supplements the original "Sanswire" agreement. Stratodyne was the
        primary contractor for Sanswire.
  The
        assets acquired under the Sanswire and Stratodyne agreements consist primarily
        of intellectual property and proprietary rights in intellectual property.
        The
        Stratellite is similar to a satellite, but it is stationed in the stratosphere
        rather than in orbit. As of September 30, 2004, the Company had placed all
        of
        Sanswire's and Stratodyne's assets into Sanswire Networks, LLC, its
        Florida-based, wholly-owned subsidiary ("Sanswire-FL").
  As
        consideration for the purchase, the Company issued 28 million shares of its
        common stock to Sanswire. In November 2004 all the final documents were
        delivered and the relationship was consummated. In September 2004, pursuant
        to
        the Stratodyne agreement, 2 million shares of the Company's common stock
        were
        issued directly to Stratodyne's principal shareholder. These shares are included
        in the 28 million shares originally issued to Sanswire, and, accordingly,
        the
        Sanswire shareholders will retain only 26 million shares issued and return
        2
        million of the previously issued shares to the Company. On February 5, 2005
        GlobeTel filed a registration statement to register shares associated with
        these
        agreements.
  **Contingent
        Consideration**
  In
        accordance with the Sanswire agreement, an additional 200 million shares
        were to
        be issued pursuant to the terms and conditions of the "successful commercial
        launch" of a commercial communications platform aboard an airship developed
        by
        Sanswire and Stratodyne by the December 31, 2005 closing date. The Stratodyne
        agreement provides that 50 million of the 200 million additional shares will
        be
        issued to Stratodyne or its assignee(s) and the remaining 150 million shares
        to
        Sanswire Technologies, Inc.
  For
        purposes of the Sanswire purchase agreement, a "successful commercial launch"
        was to be deemed to have occurred if all the conditions in the agreement
        have
        been satisfied and all other conditions deemed material by GlobeTel are
        satisfied, as determined by GlobeTel in its sole discretion. A "successful
        commercial launch" will occur if (i) an airship (dirigible) is flown for
        a
        period of 90 consecutive days at an approximate altitude of 70,000 feet,
        without
        technical difficulty, (ii) a customer is able to receive both voice and Internet
        services at the same time when it uses the "Stratellite service", at a
        customer-premises equipment (“CPE”) cost of approximately $100, and (iii) at
        least 250,000 paying customers must be able to use the Stratellite service
        based
        on agreed upon engineering specifications. For these purposes, it is also
        assumed that the cost of each airship used in the Stratellite service will
        not
        exceed $3 million, the cost of each tracking earth station will not exceed
        $7
        million and that each earth station (if more than one) will have the ability
        to
        cover several deployed airships at one time. If the cost of any airship or
        earth
        station exceeds $3 million or $7 million, respectively, at the time that
        the
        "commercial launch" is being implemented, the project will not be deemed
        to be
        commercially viable and a "successful commercial launch" will not have
        occurred.
  The
        Stratodyne agreement modified the definition of a "successful" commercial
        launch
        by eliminating the CPE cost provisions described in (ii) above, and eliminated
        all of the provisions of (iii) above, except that it is assumed that the
        cost of
        each airship used in the Stratellite service will not exceed $3 million.
        The
        other provisions above remain the same in the Stratodyne agreement.
  **Accounting
        for Purchase Price (restated)**
  The
        purchase price for the assets acquired was $2,800,000, based on a value of
        $ .10
        per share for the 28 million Company shares issued in the transaction. The
        Company allocated the purchase price based on the estimated fair market value
        of
        the asset acquired as follows: (a) Sanswire equipment - $32,000; and (b)
        Sanswire and Stratodyne research and development expense - $2,768,000. In
        addition, the Company recorded an additional $10,000 to the purchase price
        to
        account for estimated cost of issuing and registering the shares for public
        sale
        in connection with this transaction. Sanswire-FL's assets, liabilities, results
        of operations and cash flows are consolidated in these financial
        statements.
  Since
        it
        is presently unknown whether or not Sanswire and Stratodyne will achieve
        the
        above referenced results required to be entitled to the contingent
        consideration, no amount for such contingent consideration was recorded as
        a
        liability or included in the allocation of the purchase price. The Company
        will
        record the 200 million contingent shares at fair value upon issuance of the
        shares or at such time that the Company may determine that the issuance of
        the
        shares is probable and the value ascribable to the shares is
        estimable.
  41
  Previously
        the Company reported the transaction with intangible assets that included
        technology-based, marketing-related, and contract-related assets. The Company
        determined that the intangible assets have an indefinite life, and, accordingly,
        was not subject to amortization. Instead, the Company would test the asset
        for
        impairment at each reporting period, and upon the occurrence of any significant
        event that may affect the carrying value of the assets. The Company tested
        the
        assets for impairment and determined that no impairment existed and no
        adjustment to the carrying value was required as of December 31, 2004. As
        noted
        in Note 2 - Restatements, the Company has adjusted the transaction to not
        include any intangible assets and instead chose to charge the $2,778,000
        as a
        research and development expense in 2004.
  The
        results of operations Sanswire-FL for the year ended December 31, 2004, which
        are consolidated in the Company's results of operations, included expenses
        of
        $746,826 with no sales or costs of sales.
  **Stratellite
        Build-Out Memorandum of Agreement (“MOA”) and Advances to
        Sanswire**
  An
        MOA
        between the Company and Mr. Koenig dated August 23, 2004, stated the following:
        Mr. Koenig agreed to resume and expedite the build-out of the prototype of
        the
        Stratellite; the Stratellite is a proprietary technology acquired by the
        Company
        as part of the asset purchase agreement with Sanswire; when completed, the
        prototype will be used for demonstration and testing for commercial use;
        the
        original expected completion of the build-out agreement was January 15, 2005;
        the Company agreed to provide funding to complete the build-out process of
        the
        Stratellite prototype; and the Company provided a total of
        $200,000.
  The
        Company has provided amounts to or on behalf of Sanswire-FL in excess of
        the
        above amounts, including approximately $600,000 through December 31, 2004,
        and
        at total of approximately $1,000,000 through the date of this
        report.
  **Employment
        Agreements**
  In
        connection with the Sanswire asset purchase agreement, the Company also entered
        into three-year employment agreements with five former Sanswire Technology,
        Inc.
        executives. Michael Molen, Jairo Rivera, Brian Keith, Keith Sistrunk and
        Jane
        Molen were to serve as the Chief Executive Officer, Chief Financial Officer;
        Chief Operating Officer, Chief Technology Officer and Comptroller of
        Sanswire-FL, respectively. Mr. Molen was to receive an earn-out based on
        value
        of Sanswire-FL compared to the Company (exclusive of Sanswire-FL). If the
        value
        of Sanswire-FL was less than 24% of the value of the Company, Mr. Molen would
        be
        entitled to receive stock equal to 10% of GlobeTel common stock outstanding
        on
        the date of valuation. Mr. Molen had the right to select the valuation date
        and
        a mutually agreeable third party will evaluate the value of Sanswire-FL compared
        to GlobeTel.
  As
        of
        September 30, 2004, the Company decided to restructure the operations of
        Sanswire, LLC and eliminate redundant positions. As a result, Mr. Molen has
        accepted the appointment as Chairman of Sanswire, LLC and a member of GlobeTel's
        Board of Directors and stepped down as CEO of Sanswire, LLC. The Company
        closed
        the Sanswire, Inc. offices in Atlanta and Mr. Sistrunk and Ms. Molen have
        separated from the Company.
  In
        connection with the Stratodyne agreement, the Company entered into a three-year
        key employment agreement with Vernon Koenig, Stratodyne's principal shareholder,
        to perform services including, but not limited to, telecommunications services
        and other services that Mr. Koenig serves as Sanswire-FL's Chief Design
        Engineer, and is responsible for development of the Stratellite. Mr. Koenig
        will
        receive a salary of no less than $75,000 per year, plus grants of stock options
        based on performance evaluations given annually by the Company.
  **Independent
        Contractor Agreement**
  In
        September 2004, the Company entered into an agreement with Hotzone Wireless,
        LLC, a service provider for consulting/engineering services related to the
        Sanswire Stratellite project. The non-exclusive service provider will provide
        engineering / consulting services, transmission equipment, and installation
        and
        testing of equipment.
  42
  The
        term
        of the agreement is for six (6) months and shall automatically renew for
        additional one (1) year terms after the initial term unless terminated by
        either
        party. As initial compensation, Company will pay the service provider $10,000
        per month.
  **NOTE
        8 - CENTERLINE COMMUNICATIONS, LLC.**
  **Centerline
        Communications, LLC.**
  On
        June
        30, 2004, the Company entered into an operating agreement with Carrier Services,
        Inc. ("CSI") a Nevada corporation, also a telecommunications company to operate
        Centerline Communications, LLC, a wholly-owned subsidiary of the
        Company.
  The
        purposes of Centerline and its subsidiaries are to build telecommunications
        revenue and client base, utilizing each party's network and financial resources
        and to engage in any other business or activity that is necessary and proper
        to
        accomplish the above purposes.
  Pursuant
        to the agreement, the Company is responsible for all costs associated with
        the
        operation and maintenance of the Prepaid Calling Card Platform, all expenses
        related to funding, staffing, technical support, customer service, equipment,
        and credit facilities. CSI is responsible for all costs and responsibilities
        associated with operation of the termination network, providing network
        facilities for the termination of carrier traffic, administer and operate
        the
        termination network, including subscriber accounts and tracking of minutes,
        all
        training and salary expenses of its sales personnel, all marketing expenses
        connected with the sale of the calling services and all other organizations
        related expense in any foreign base operation in which the LLC is
        operating.
  The
        agreement provided for minimum selling requirements of $50 million per year
        for
        the LLC. This revenue must be profitable. If the LLC brought in $50 million
        at
        the end of the first year of operation, CSI will receive $1 million of the
        company's publicly traded stock. If CSI repeats the $50 million in profitable
        revenue in year two, CSI would receive another $1 million of the company's
        publicly traded stock. The initial term of the agreement was for two years
        and
        automatically renewable for another two years.
  The
        parties subsequently modified the agreement to provide for minimum selling
        requirements of $25 million for the LLC. This revenue must be profitable.
        Upon
        the LLC achieving in $25 million in profitable revenues, CSI will receive
        5
        million shares of the company's publicly traded stock.
  **Due
        To / From CSI**
  The
        required revenues were achieved in January 2005 and CSI became entitled to
        the 5
        million shares. As of December 31, 2004, the Company recorded $404,707 due
        to
        CSI, computed by applying a ratio, based on the revenues achieved through
        December 2004 (approximately $18.4 million) compared to the required $25
        million, to the number of shares to be issued recorded at a price $ .11 per
        share, the closing market value of the Company's stock as of December 31,
        2004.
  CSI
        owed
        the Company a total of $401,723 as of December 31, 2004, consisting of the
        amounts due for accounts receivable collected by CSI on behalf of the LLC
        and
        for accounts receivable, pre-paid expenses and accounts payable assumed by
        CSI,
        and payments made by the Company on behalf of CSI, net of any payments made
        by
        CSI on behalf of the Company.
  The
        Company offset the $404,707 due to CSI against the $401,723 due from CSI,
        to
        result in a net amount due to CSI of $3,024 as of December 31, 2004, which
        is
        included in accounts payable.
  In
        February 2005 the Company issued approximately 1.32 million shares to CSI,
        which
        the Company sold on CSI's behalf, resulting in net proceeds of approximately
        $517,000, of which $100,000 was paid to CSI and the remaining $417,000 is
        currently held by the Company to collateralize the amounts due to the Company
        from CSI.
  The
        Company and CSI mutually decided to conclude and restructure their joint
        business operations as of February 6, 2005. Upon completion of the parties
        reconciling and agreeing upon the final amount due from CSI, CSI and the
        Company
        agreed that the remaining amount due to CSI will be paid by the Company with
        remaining 133,334 (2 million pre-split) shares due to CSI, and the parties
        entered into new agreements.
  43
  In
        addition, the Company agreed to issue a total 66,667 (1 million pre-split)
        additional shares to CSI for additional revenues of approximately $10 million
        generated during the three months ended March 31, 2005. Commissions in the
        amount of $162,335 were recorded, based on the value of the Company’s
        free-trading stock on the dates of issuance of the shares.
  The
        Company entered into two asset purchase agreements with CSI to acquire
        telecommunication equipment totaling $837,836. The parties agreed that the
        purchase price for this equipment would be paid with (1) 233,333 (3,500,000
        pre-split) shares of GlobeTel’s common stock; and (2) $286,136 in cash. In
        addition, the purchase agreement also required GlobeTel to provide $150,000
        for
        the reconstruction and establishment of a new telecom switch site in Los
        Angeles, CA. GlobeTel has complied with this provision.
  The
        Company also acquired from CSI additional telecommunications equipment valued
        at
        $58,206 and paid with 38,730 (580,950 pre-split) shares of GlobeTel’s common
        stock.
  As
        partial payment for the above shares, in December 2005, the Company received
        $111,325 from proceeds of the sales of 30,000 (450,000 pre-split) shares
        of the
        Company’s common stock which was sold by CGI and advanced to GlobeTel (see Note
        6 above), which was in turn paid to CSI.
  Based
        on
        the above transactions, as of December 31, 2005 the balance owed to CSI includes
        (1) 336,667 (5,050,000 pre-split) shares of GlobeTel common stock; and (2)
        $106,231, related to the asset purchase agreements.
  Subsequent
        to December 31, 2005, and as of the date of this report, the $106,231 cash
        balance was paid in full, and 226,666 (3,400,000 pre-split) shares of GlobeTel
        stock were transferred to CSI (from the GlobeTel shares due to be returned
        by
        CGI) GlobeTel and CSI subsequently settled all amounts due by entering into
        a
        debt conversion agreement in February 2007 whereby GlobeTel issued to CSI
        1,846,542 shares of GlobeTel common stock.
  "Partner
        Incentive and Financing Agreements"
  The
        Company uses the term "partner" in a sense different than the strict legal
        definition. Herein, the term "partner" is equivalent to "business associate."
        The Company, Centerline and its subsidiaries entered in "Partner Incentive
        and
        Financing Agreements" with various parties ("Partners") in the business of
        providing the transmission of wholesale voice and/or data communications
        services to domestic and international destinations utilizing a proprietary
        call
        processing platform, technologies, software and other equipment ("Calling
        Services") to produce profitable revenues utilizing the Calling Services
        of the
        partners for an initial term of two (2) years.
  The
        "Partners" shall be compensated on a semi-annual basis with a grant of equity
        and cash commissions. These grant and commissions will be paid out by
        Centerline, utilizing cash generated by the operations and stock given by
        the
        Company as part of the original agreement between CSI and the
        Company.
  Six
        (6)
        months after the date of the agreement, "Partner" will be granted an option
        to
        purchase shares of publicly traded common stock of the Company ("Shares").
        The
        grant shall be calculated pursuant to the terms of the "Partner's" stock
        option
        agreement, which is based on a predetermined stock strike price for the first
        six months of operation, and the formula used for the remaining three periods
        shall be 75% of the stock price at the grant date. Vested shares would be
        exercisable by "Partner" every six (6) months during the term of the agreement
        and for a period of thirty (30) days following the termination of this
        agreement.
  The
        amount of the stock grant is calculated as follows:
  For
        each
        $1,000,000 of revenue generated in a 12-month period, "Partner" shall be
        entitled to an option for a grant of 25,000 shares of common stock of GTEL.
        For
        each additional $1,000,000 revenues generated after the first $5,000,000,
        "Partner" shall be entitled to an option for a grant of 50,000 shares of
        common
        stock of GTEL. In the event that revenues exceed $10,000,000 in the 12-month
        period, "Partner" shall receive additional options for a grant of 20,000
        shares
        of common stock of GTEL for each additional $1,000,000 of revenue generated
        in
        excess of $10,000,000.
  The
        agreement provides for cash incentive bonuses based on revenues generated
        pursuant to the parties' agreements. This grant is in addition to the stock
        option grant described above. So long as the "Partner" continues to produce
        profitable Calling Services revenues during the term of the agreement, and
        the
        "Partner" is not in breach of the parties' agreements, the cash bonus earned
        shall be paid as follows:
  44
  For
        each
        $1,000,000 of revenue generated in a 12-month period, "Partner" shall be
        entitled to receive a cash bonus of $15,000. For each additional $1,000,000
        revenues generated above the first $5,000,000 revenue, the "Partner" shall
        be
        entitled to receive a cash bonus of $35,000. In the event that revenues exceed
        $10,000,000 in the 12-month period, "Partner" shall receive an additional
        cash
        bonus of $20,000 for each additional $1,000,000 of revenue generated above
        $10,000,000.
  As
        further inducement for the "Partners" to generate profitable revenues utilizing
        their Calling Services, the Company, through Centerline and its subsidiaries,
        shall provide accounts receivable financing for customers and advance payments
        for vendors while "Partner" retains 100% of its profit margin. The "Partner"
        shall provide credit terms to qualified customers of the "Partner" and the
        determination of qualified customers shall remain within the sole discretion
        of
        Centerline. Centerline or its subsidiaries shall provide necessary prepayments
        to its vendors where required. Prepayment shall preferably take the form
        of a
        letter of credit, or through an established escrow account and/or cash
        prepayment. The determination of the nature and amount of vendor prepayment
        shall remain within the sole discretion of Centerline. The "Partner" agrees
        to
        repay Centerline for all funds advanced by it for the benefit of "Partner's"
        Calling Services customers and/or vendors within the agreed terms.
  Centerline
        shall acquire equipment necessary to facilitate Calling Services from
        "Partner's" customer or to "Partner's" vendors. Equipment purchase shall
        be
        subject to approval of Centerline's management. Centerline will continue
        to
        expand the network to grow its family of vendors during the term of the
        agreement and make all Centerline vendors' excess capacity available to
        "Partner." "Partner" will be granted the use of Centerline's TDM and/or VoIP
        switching facilities. Network use is included in the .00025 per minute fee.
        "Partners" agree to sell network directly to Centerline at their best wholesale
        price where vendors are not financed/secured by "Partner" pursuant to the
        agreement. In addition, Centerline will retain the right to purchase excess
        termination provided by "Partners" at "Partner's" cost and Centerline will
        share
        with "Partner" margin generated by Centerline sales utilizing "Partner's"
        vendors on a 50/50 basis.
  Profit
        margin on all traffic terminated through "Partner's" network from "Partner's"
        customers, less an operating fee of .00025 per minute, shall be paid to
        "Partner" on a monthly basis following receipt of payment from "Partner's"
        customers. In the event "Partner" customer purchases network from Centerline,
        the parties agree that Centerline will share with "Partner" the margin, on
        a
        50/50 basis.
  The
        wholly-owned subsidiaries of Centerline that are subject to the "Partner"
        Incentive and Financing Agreements as of the date of this filing are EQ8,
        LLC, G
        Link Solutions, LLC, Volta Communications, LLC, and Lonestar Communications,
        LLC. During 2004, only Volta Communications, LLC and Lonestar Communications,
        LLC had operations, which are consolidated in the operations of Centerline
        above. In conjunction with each "Partner Incentive and Financing Agreement,
        Management Agreements" were executed, wherein the "Partners" will provide
        general management for the respective subsidiaries of Centerline in connection
        with the development, marketing and implementation of the business operations
        of
        Centerline's respective subsidiaries.
  The
        parties agreed any equity compensation "Partners'" are entitled to, if any,
        shall be paid from the Company's shares issueable to CSI as described above,
        and, furthermore, the cash bonuses, if any, shall also be the obligation
        of CSI.
        However, whereas the anticipated profit margin was not achieved, and the
        management fees not paid, the Company believes that no additional compensation
        is payable to the "Partners" by CSI or the Company. Furthermore the revenue
        generated by the partners was not profitable, as required by the agreements.
        Accordingly, no additional amounts were recorded as owing to the "Partners"
        by
        the Company as of December 31, 2004.
  During
        a
        period of this contract, Mr. Joseph Monterosso was a principal of CSI and
        was an
        officer of GlobeTel Communications.
  **NOTE
        9. MISCELLANEOUS RECEIVABLE**
  In
        September 1999, the Company was awarded a judgment against Imaging Systems
        Synergies, Inc. (“ISS”) in the amount of $125,000. However, the Company is
        uncertain if it will be successful in recovering any damages against ISS.
        There
        has been an allowance for uncollectibility for the entire $125,000. During
        2003,
        the Company determined that this amount is unrecoverable and therefore wrote-off
        the balance.
  45
  **NOTE
        10 - LOANS AND ACCOUNTS PAYABLE TO RELATED PARTY -
        CHARTERHOUSE**
  In
        January 2003, the Company received a $50,000 loan from Charterhouse. This
        loan
        payable, as well a previous loan of $311,960 was unsecured, non-interest
        bearing
        and have no formal repayment terms. In addition, the Company had an outstanding
        account payable to Charterhouse for $135,000 in connection with consulting
        services provided in 2002. During 2004, all of the amounts owing to Charterhouse
        were paid in full with the issuance of $500,000 of Series B preferred stock.
        The
        $3,040 difference between the total amounts payable and amount representing
        the
        preferred stock issued was expensed in 2004.
  **NOTE
        11. ACCRUED EXPENSES AND OTHER LIABILITIES**
  Accrued
        expenses and other liabilities consisted of the following:
 2004
                
                2003Professional
                    fees
                
                $
                90,000
                
                $
                35,000Interest
                
                
                --
                
                
                22,423Other
                
                
                3,436
                
                
                --$
                93,436
                
                $
                57,423
  **NOTE
        12. CAPITAL LEASE OBLIGATIONS**
  Capital
        lease obligations as of December 31, 2003, consisted of an amount payable
        for
        telecommunications equipment, which was abandoned prior to 2003, and the
        liability was subsequently written off in 2004. See Note 18 below regarding
        disposition of this obligation.
  In
        March
        2004, the Company entered into a lease agreement for office equipment, under
        which the Company must pay $279 per month, plus sales tax, for a period of
        39
        months. The Company expects to have use of the equipment for the substantial
        portion of its useful life and the lease provides for a bargain purchase
        option,
        wherein the Company may acquire ownership of the asset at the end of the
        lease
        for 10% of its fair market value. Accordingly, the lease transaction was
        recorded as a capital lease obligation and ascribed an initial value to the
        asset and principal amount due on the lease of $9,554, based on the present
        value of the monthly payments with an imputed interest rate of 8%. This was
        the
        only capital lease obligation as of December 31, 2004.
 2004
                
                2003Total
                    capital lease obligations,as
                    described above
                
                $
                7,564
                
                $
                53,311Current
                    obligations undercapital
                    leases
                
                
                (
                    2,846
                )
                
                (53,311
                )Long-term
                    obligations undercapital
                    leases
                
                $
                4,718
                
                $
                --
  Future
        minimum lease payments under capital leases for years subsequent to December
        31,
        2004 are as follows:
 2005
                
                $
                3,3482006
                
                
                3,3482007
                
                
                1,674Amount
                    representing interest
                
                
                (3,652
                )Present
                    value of future minimum lease payments
                
                $
                4,718
  Interest
        expense recorded on all capital lease obligations of the Company amounted
        to
        $2,561 and $15,924 for the years ended December 31, 2004 and 2003,
        respectively.
  46
  **NOTE
        13 - OPERATING EQUIPMENT LEASE OBLIGATIONS**
  **Telecommunications
        equipment lease**
  In
        July
        2004, the Company entered into a lease agreement for telecommunications
        collocation equipment, under which they made a down payment and other fees
        totaling $37,635 and must pay $3,778 for 24 months. Since the transaction
        does
        not qualify as a capital lease, the company charges the monthly payments
        to cost
        of sales and amortizes the prepayment to cost of sales over the period of
        the
        lease.
  **NOTE
        14. ACCRUED OFFICERS' SALARIES AND BONUSES**
  Effective
        January 1, 2002, GlobeTel entered into three-year employment agreements with
        its
        key management. For the year 2002, the agreements provide for annual
        compensation of $150,000 for its Chief Executive Officer (“CEO”), $125,000 each
        for its Chief Financial Officer (“CFO”) and Chief Operating Officer (“COO”) and
        $75,000 each for its Chief Administrative Officer (“CAO”) and VP of Network
        Operations. Further, there remained an employment contract with its President,
        as described below, which calls for annual salaries of $100,000 per annum.
        In
        addition to the base compensation, the employment agreements provide for
        payment
        of bonuses that at a minimum equal the executives' base compensation. As
        of
        December 31, 2002, the executives all agreed not to receive bonuses to which
        they were entitled pursuant to the employment agreement.
  In
        2003,
        the base compensation increased to $175,000 for its CEO, $150,000 each for
        its
        CFO and COO, $90,000 each for its CAO and VP of Network Operations. In 2004,
        the
        base compensation increases to $200,000 for its CEO, $175,000 each for its
        CFO
        and COO, $120,000 for its CAO and $110,000 for its VP of Network Operations.
        Bonuses for each year will also be equal to the base salaries as a minimum,
        unless otherwise agreed to by the executives.
  From
        October 1, 1996, through December 31, 2003, the Company had an employment
        agreement with its President wherein the Company agreed to pay compensation
        of
        $100,000 annually. In September 2003, the Company's president resigned effective
        December 31, 2003, but remained as a member of the board of directors of
        the
        Company throughout 2004.
  In
        September 2003, the officers agreed to forego their accrued salaries in exchange
        for stock options at $.015 per share or 50% of the market price as of the
        exercise date. The officers subsequently exercised their stock options in
        January 2004.
  As
        of
        December 31, 2003, the Company recorded accrued officers' salaries totaling
        $245,000. The officers again agreed to forego their accrued salaries in exchange
        for stock options at $.015 per share or 50% of the market price as of the
        exercise date. The officers subsequently exercised their stock options in
        January 2004.
  As
        of
        December 31, 2004, the Company recorded accrued officers' salaries totaling
        $198,333, which were subsequently paid in January 2005.
  **NOTE
        15. NOTES AND LOANS PAYABLE**
  **Loan
        Payable to Related Party - Charterhouse**
  In
        October 2002, the holders of two promissory notes agreed that in lieu of
        payment
        of principal and interest under the loans, each to accept six (6) million
        shares
        of common stock of GlobeTel as payment, which were paid to the note holders
        directly by the Company's primary customer during 2002, who was also a
        consultant (“Charterhouse”). Accordingly, the Company recorded the $300,000,
        plus interest of $11,960, as a loan payable to Charterhouse. In January 2003
        Charterhouse loaned an additional $50,000, for total loans payable of $361,960.
        As of December 31, 2004, these amounts, as well as $135,000 payable for
        consultancy services rendered in 2002, were settled for Series B preferred
        stock. See Note 9 above and Note 23 below.
  **Convertible
        Subordinated Notes**
  On
        August
        21, 2002, the Company executed a $125,000 convertible subordinated promissory
        note payable to an unrelated third party, due August 21, 2003, with interest
        payable monthly at a rate of 12% per annum. The note is collateralized with
        7.5
        million shares of the Company's common stock, which were issued by the Company
        and held in escrow under the agreement. The Company recorded the issuance
        of
        these shares at par value. The note is convertible into shares of the Company's
        common stock at the option of the holder in whole or in part, in accordance
        with
        the terms of the note. The conversion price for this note in effect on any
        conversion date shall be the lesser of $.25 or 75% of the per share market
        value
        price as of the close of business on the conversion date. Any conversion
        pursuant to this agreement shall be for a minimum principal of $10,000 and
        until
        the first day of the month preceding the maturity date of this note, the
        holder
        may not, during any 30-day period, convert more than the greater of $100,000
        of
        the principal amount of this note, or 10% of the preceding month's trading
        value
        of the common stock as reported by the principal market in which the common
        stock is traded.
  47
  In
        July
        2003, the holder exercised his right to convert the debt into shares of the
        Company's common stock in accordance with the terms of the note. The conversion
        rate was determined to be $.04 and accordingly, the holder retained 3,055,556
        shares and returned 4,444,444 to the Company.
  On
        August
        27, 2002, the Company executed a $125,000 convertible subordinated promissory
        note payable to an unrelated third party, due August 27, 2003, with interest
        payable monthly at a rate of 12% per annum. The note is collateralized with
        7.5
        million shares of the Company's common stock, which were issued by the Company
        and held in escrow under the agreement. The Company recorded the issuance
        of
        these shares at par value. The note is convertible into shares of the company's
        common stock at the option of the holder in whole or in part, in accordance
        with
        the terms of the note. The conversion price for this note in effect on any
        conversion date shall be the lesser of $.25 or 75% of the per share market
        value
        price as of the close of business on the conversion date. Any conversion
        pursuant to this agreement shall be for a minimum principal of $10,000 and
        until
        the first day of the month preceding the maturity date of this note, the
        holder
        may not, during any 30-day period, convert more than the greater of $100,000
        of
        the principal amount of this note, or 10% of the preceding month's trading
        value
        of the common stock as reported by the principal market in which the common
        stock is traded.
  In
        December 2003, the holder exercised his right to convert the debt into shares
        of
        the Company's common stock in accordance with the terms of the note. The
        conversion rate was determined to be $.035 and accordingly, the holder retained
        3,500,000 shares and returned 4,000,000 to the Company.
  On
        October 22, 2002, the Company executed a $125,000 convertible subordinated
        promissory note payable to an unrelated third party, due October 22, 2003,
        with
        interest payable monthly at a rate of 12% per annum. The note is collateralized
        with 15 million shares of the Company's common stock, which were issued by
        the
        Company and held in escrow under the agreement. The Company recorded the
        issuance of these shares at par value. The note is convertible into shares
        of
        the Company's common stock at the option of the holder in whole or in part,
        in
        accordance with the terms of the note. The conversion price for this note
        in
        effect on any conversion date shall be the lesser of $.20 or 75% of the per
        share market value price as of the close of business on the conversion date.
        Any
        conversion pursuant to this agreement shall be for a minimum principal of
        $10,000 and until the first day of the month preceding the maturity date
        of this
        note, the holder may not, during any 30-day period, convert more than the
        greater of $100,000 of the principal amount of this note, or 10% of the
        preceding month's trading value of the common stock as reported by the principal
        market in which the common stock is traded.
  On
        November 18, 2002, the Company executed a $125,000 convertible subordinated
        promissory note payable to an unrelated third party, due November 18, 2003,
        with
        interest payable monthly at a rate of 12% per annum. The note is collateralized
        with 15 million shares of the Company's common stock, which were issued by
        the
        Company and held in escrow under the agreement. The Company recorded the
        issuance of these shares at par value. The note is convertible into shares
        of
        the Company's common stock at the option of the holder in whole or in part,
        in
        accordance with the terms of the note. The conversion price for this note
        in
        effect on any conversion date shall be the lesser of $.20 or 75% of the per
        share market value price as of the close of business on the conversion date.
        Any
        conversion pursuant to this agreement shall be for a minimum principal of
        $10,000 and until the first day of the month preceding the maturity date
        of this
        note, the holder may not, during any 30-day period, convert more than the
        greater of $100,000 of the principal amount of this note, or 10% of the
        preceding month's trading value of the common stock as reported by the principal
        market in which the common stock is traded.
  The
        October 22 and November 18 notes were from the same investor, and in July
        2003,
        the holder exercised the right to convert the debt into shares of the Company's
        common stock in accordance with the terms of the note. The conversion rate
        was
        determined to be $.024 and accordingly, the holder retained 10,416,666 shares
        and returned 19,583,334 to the Company.
  48
  On
        November 25, 2002, the Company executed a $125,000 convertible subordinated
        promissory note payable to an unrelated third party, due November 25, 2003,
        with
        interest payable monthly at a rate of 12% per annum. The note is collateralized
        with 15 million shares of the Company's common stock, which were issued by
        the
        Company and held in escrow under the agreement. The Company recorded the
        issuance of these shares at par value. The note is convertible into shares
        of
        the Company's common stock at the option of the holder in whole or in part,
        in
        accordance with the terms of the note. The conversion price for this note
        in
        effect on any conversion date shall be the lesser of $.20 or 75% of the per
        share market value price as of the close of business on the conversion date.
        Any
        conversion pursuant to this agreement shall be for a minimum principal of
        $10,000 and until the first day of the month preceding the maturity date
        of this
        note, the holder may not, during any 30-day period, convert more than the
        greater of $100,000 of the principal amount of this note, or 10% of the
        preceding month's trading value of the common stock as reported by the principal
        market in which the common stock is traded.
  Also
        on
        November 25, 2002, the Company executed a second $125,000 convertible
        subordinated promissory note payable to an unrelated third party, due November
        25, 2003, with interest payable monthly at a rate of 12% per annum. The note
        is
        collateralized with 15 million shares of the company's common stock, which
        were
        issued by the Company and held in escrow under the agreement. The company
        recorded the issuance of these shares at par value. The note is convertible
        into
        shares of the company's common stock at the option of the holder in whole
        or in
        part, in accordance with the terms of the note. The conversion price for
        this
        note in effect on any conversion date shall be the lesser of $.20 or 75%
        of the
        per share market value price as of the close of business on the conversion
        date.
        Any conversion pursuant to this agreement shall be for a minimum principal
        of
        $10,000 and until the first day of the month preceding the maturity date
        of this
        note, the holder may not, during any 30-day period, convert more than the
        greater of $100,000 of the principal amount of this note, or 10% of the
        preceding month's trading value of the common stock as reported by the principal
        market in which the common stock is traded.
  Both
        notes dated November 25, 2002 were from the same investor, and in July 2003,
        the
        holder exercised the right to convert the debt into shares of the Company's
        common stock in accordance with the terms of the note. The conversion rate
        was
        determined to be $.022 and accordingly, the holder retained 11,111,112 shares
        and returned 18,888,888 to the Company.
  On
        November 5, 2002, the Company executed a second $125,000 convertible
        subordinated promissory note payable to an unrelated third party, due November
        5, 2003, with interest payable monthly at a rate of 12% per annum. The note
        is
        collateralized with 15 million shares of the Company's common stock, which
        were
        issued by the Company and held in escrow under the agreement. The Company
        recorded the issuance of these shares at par value. The note is convertible
        into
        shares of the Company's common stock at the option of the holder in whole
        or in
        part, in accordance with the terms of the note. The conversion price for
        this
        note is of $.025 per share. The note holder also received a common stock
        purchase warrant giving them the right to purchase 5 million shares of the
        Company's common stock at the price of $.03 per share. Subsequent to the
        execution of this note, additional amounts of $85,528 were received from
        the
        note holder, bringing the total balance to $210,528.
  In
        May
        2003, the holder and the Company agreed that the balance of $210,528 be
        converted into shares of the Company's common stock and as a result the
        collateralized shares were then issued to the holder. In addition, it was
        agreed
        upon that the holder's 15 million shares are non-dilutable for 18 months
        from
        April 1, 2003. Further, the holder of the note is comprised of three (3)
        owners,
        one of whom is Timothy M. Huff who owns 40% of the entity. Timothy Huff is
        the
        CEO of the Company.
  49
  **Unsecured
        Loans and Notes Payable**
  In
        February 2003, the Company executed two unsecured promissory notes payable,
        each
        for $100,000 (to fund operations and pay operating expenses), to an unrelated
        third party, which is also a secured promissory note holder. Each note was
        originally due in May 2003, and included interest payable monthly at a rate
        of
        25% per annum. The Company and the note holder subsequently agreed to extend
        due
        dates of the loans on a month-to-month basis under the same interest rate.
        In
        February 2004, the Company paid both notes.
  In
        February 2003, the Company executed a $40,000 promissory note payable to
        another
        party, due on demand with interest payable at 2.5% per annum.
  In
        June
        2003, the Company executed a $200,000 promissory note payable to Commercebank,
        N.A., due in June 2004, with interest payable at a rate of one percent over
        the
        prime rate, currently 4%. In August 2004, the Company repaid its $200,000
        loan
        with Commercebank, N.A. in full.
  **Letter
        of Credit and Bank Loan Payable**
  As
        of
        December 31, 2002, the Company had a $500,000 letter of credit with
        Commercebank, N.A., guaranteed by Florida Export Finance Corporation (“FEFC”) a
        $200,000 letter of credit was issued to the Mexican telecom provider that
        provides local connectivity. In March 2003, the Company issued another $100,000
        to the same Mexican telecom provider. The remaining $200,000 was used by
        the
        Company as collateral for its $200,000 loan with Commercebank, N.A., the
        funds
        of which were used to purchase the telecom equipment used in the Brazil
        operations.
  The
        letters of credit issued to the Mexican telecom provider have been cancelled
        by
        the provider and have been returned. The Company is in the process of
        negotiating with their bank to renew the letters of credit for use in future
        transactions
  The
        Company presently does not have any existing letters of credit but has the
        option of reopening the letter of credit with Commercebank, N.A. should the
        needs for it arise.
  **NOTE
        16. RELATED PARTY TRANSACTIONS**
  **Related
        Party Payables**
  As
        of
        December 31, 2004 and 2003, related party payables were $117,500 and $57,500,
        respectively. The balances represent short-term, non-interest bearing loans
        by
        officers of the Company, due on demand.
  **Notes
        Payable - Stockholder**
  As
        of
        December 31, 2002, the Company was obligated under a convertible promissory
        note
        payable to a stockholder and former director for $55,000, principally
        representing advances to the Company. In fiscal 2003, the Company issued
        4
        million shares in complete settlement of the balance due.
  **NOTE
        17 - AGREEMENTS**
  **Consulting,
        Investment Advisory and Investment Banking Agreements**
  On
        August
        15, 2002, the Company entered into an agreement with Charles Morgan Securities,
        Inc. ("Charles Morgan") to provide consulting services for a period of 12
        months, including arranging for funding, assisting with corporate and business
        planning, advice regarding potential mergers and acquisitions, private
        placements of the Company's stock, and other related services.
  The
        agreement provided that the Company pay Charles Morgan a monthly fee of $5,000
        from August to January 2003, and $10,000 thereafter for the next six months.
        The
        Company also paid an engagement fee of $30,000 upon initial
        funding.
  50
  In
        accordance with the agreement, the Company also paid Charles Morgan a total
        of
        2.7 million shares of common stock of the Company for services provided in
        fiscal 2002 and 1.3 million shares in fiscal 2003, for a total of 4 million
        shares.
  In
        addition to the shares described above, in August 2002, Charles Morgan received
        12.5 million restricted shares (Rule 144) in connection with arranging for
        the
        convertible subordinated notes payable above. The Company valued the shares
        at
        $250,000, based on one-half of the closing bid price of the Company's shares
        on
        the date of issuance and charged this amount to consulting expense. Pursuant
        to
        the agreement, Charles Morgan received an additional 12.5 million restricted
        shares (Rule 144) for arranging additional financing of $500,000 during the
        quarter ending December 31, 2002.
  During
        the third quarter 2002, Global VoIP, a principal customer and related party
        to
        the Company, paid Charles Morgan $35,000 for the initial monthly fee of $5,000
        and the engagement fee of $30,000. This amount was offset against the remaining
        accounts receivable balance owed by Global VoIP to the Company.
  In
        January 2003, Fordham Financial Management, Inc. (“Fordham Financial”), an
        investment banking firm, based in New York City, assumed all functions and
        responsibilities of Charles Morgan Securities to provide consulting services.
        Under the agreement, the Company was obliged to pay a monthly fee of $10,000.
        In
        June 2003, the firm and the Company agreed to suspend the monthly fee until
        both
        parties agree it should resume. The Company paid total fees of $40,000 during
        the six months ended June 30, 2003. Pursuant to agreement, the Company issued
        4.9 million restricted shares of the Company's common stock as payment for
        services rendered. The Company charged $51,250 to expense during the three
        months ended September 30, 2003, based on an amount equal to one-half of
        the
        average bid and asked price of the Company's shares on the date of issuance.
        No
        further payments were made in the fourth quarter of 2003 as it relates to
        this
        investment banking agreement.
  In
        October 2003, the Company entered into an agreement with Fordham Financial
        to
        raise $2,500,000 resulting in issuance of circular offering dated October
        17,
        2003 (“Preferred Stock, Series A”). Fordham Financial agreed to receive 10%
        commission for the raising of the investments. In addition to the commissions
        totaling $250,000, Fordham Financial also received 57,500 Preferred Stock,
        Series A as additional compensation. Fordham Financial had subscriptions
        of
        $1,092,140 as of December 31, 2003 and had raised the full $2,500,000 as
        of
        January 31, 2004.
  On
        August
        16, 2004, the Company entered into an investment advisory agreement with
        Charles
        Morgan Securities, Inc. (“CMS”) for term ending on December 31, 2005. CMS will
        render consulting services related to business development, corporate planning,
        investment and securities matters, including the Company's applying for trading
        on a higher listed exchange. As compensation for services, the Company will
        pay
        a one-time fee of 500 shares of Preferred Class C stock, convertible into
        1% of
        the common shares of the Company after a one year holding period. Pursuant
        to
        the agreement, the compensation is not considered earned until when and if
        the
        advisor accomplishes the moving of the Company's stock from trading on the
        OTCBB
        to another trading board of higher standing by December 31, 2005.
  **Sanswire,
        LLC - Australian Project**
  On
        April
        14, 2004, the Company entered into an agreement with Australian based
        individuals, Michael Terry, E. John Hardy and Robert Johnson to form a new
        company to be domiciled in Australia. The new company will have the following
        distribution: GlobeTel - 45%, Mr. Terry - 30%, Mr. Hardy - 12.5% and Mr.
        Johnson
        - 12.5%.
  The
        purpose of the new corporation is to deploy the StratelliteTM technology
        and
        other GlobeTel international services in the Australian and New Zealand markets.
        Messrs. Terry, Hardy & Johnson will undertake initial capital raising to
        fund the launch of the StratelliteTM technology in Australia while GlobeTel
        will
        enter into a license agreement with the new company to provide its StratelliteTM
        technology and GlobeTel services under terms and conditions agreed
        upon.
  No
        operations or activities were conducted during 2004 and through the date
        of this
        report.
  **Stored
        Value Card and Other Telecommunications Programs
        Agreements**
  In
        June
        2004, the Company entered into an agreement with Bankcard Inc., a member
        of the
        RCBC Group, one of the largest private commercial bank and financial
        institutions in the Philippines to introduce a stored value card program
        for
        domestic and international use. Bankcard will be able to issue a Visa and
        MasterCard card program that will offer Overseas Filipino Workers and Filipinos
        in foreign countries, convenient, risk free and low cost international funds
        transfer and discounted long distance calling services. This agreement was
        facilitated by Four Star Consulting, a Manila, Philippine-based consulting
        group
        who was paid a fee of $10,000.
  51
  Several
        other agreements, letters of intent, and memorandums of understanding regarding
        stored value cards and other telecommunications programs, as well as the
        for the
        Sanswire project, were entered into during 2004 and through the date of this
        report, none of which required the recording of any assets, liabilities,
        revenues or expenses.
  **NOTE
        18. COMMITMENTS AND CONTINGENCIES**
  **Mexico
        Associate and Customer Litigation**
  The
        Company has a legal action against our associate and customer in Mexico for
        non-payment of the amount they owe the Company. This customer has substantial
        assets, including telecommunications equipment, existing working networks
        and
        Mexican tax refunds which they have proposed to turn over to the Company.
        The
        Company filed a motion in the Mexican courts which was necessary to formally
        request that the Company become the assigned payee of the tax refund receivable
        and formally secure the equipment and to take over the operations of the
        existing networks.
  In
        February 2005, the customer agreed that proceeds from the network operations
        were to be paid totally to GlobeTel, including the customer's portion of
        the
        profit sharing, until the amount owed has been fully paid. Upon full payment,
        the Company will begin the sharing profits again in accordance with the
        contract.
  The
        Company received a judgment on February 14, 2005 in the amount of $330,000.
        It
        is not certain of the amounts that, ultimately, will be realized from the
        Mexico
        associate.
  This
        situation with our customer has caused us to record an allowance for bad
        debt
        expense for the fiscal year ending 2004 in the amount of $938,782 and record
        an
        allowance for bad debt expense for the fiscal year ending 2005 in the amount
        of
        $625,855 and an allowance for bad debt expense for the fiscal year ending
        2005
        for a Mexican Tax Refund in the amount of $382,160.
  **Former
        Consultants Litigation**
  The
        Company is a defendant in two lawsuits filed by Matthew Milo and Joseph
        Quattrocchi, two former consultants, filed in the Supreme Court of the State
        of
        New York (Richmond County, Case no. 12119/00 and 12118/00). These matters
        were
        subsequently consolidated as a result of an Order of the court and now bear
        the
        singular index number 12118/00. The original lawsuits were for breach of
        contract. The complaint demands the delivery of 10,000,000 pre-split shares
        of
        ADGI stock to Milo and 10,000,000 to Quattrocchi. GlobeTel was entered into
        the
        action, as ADGI was the predecessor of the Company. The suit also requests
        an
        accounting for the sales generated by the consultants and attorneys fees
        and
        costs for the action.
  The
        lawsuits relate to consulting services that were provided by Mr. Milo and
        Mr.
        Quattrocchi and a $50,000 loan advanced by these individuals, dated May 14,
        1997, of which $35,000 had been repaid.
  With
        regard to the issues related to original index number 12119/00, as a result
        of a
        summary judgment motion, the plaintiffs were granted a judgment in the sum
        of
        $15,000, which has since been paid. The rest of the plaintiff's motion was
        denied. The court did not order the delivery of 24,526,000 pre-split shares
        of
        ADGI common stock as the decision on that would be reserved to time of
        trial.
  An
        Answer
        and Counterclaim had been interposed on both of these actions. The Answer
        denies
        many of the allegations in the complaint and is comprised of eleven affirmative
        defenses and five counterclaims alleging damages in the sum of $1,000,000.
        The
        counterclaims in various forms involve breach of contract and breach of
        fiduciary duty by the plaintiffs.
  However,
        an outcome cannot be projected with any certainty. The Company has not entered
        into any settlement negotiations with Mr. Milo and Mr. Quattrocchi and does
        not
        believe that we will be materially adversely affected by the outcome of this
        proceeding.
  Presently,
        the Company is continuing its defense and counterclaims in this matter. A
        jury
        was selected on March 3, 2006 in anticipation for a trial; however, the parties
        entered into an agreement to proceed before a Judicial Hearing Officer for
        a
        non-jury trial. This case was assigned to a Judicial Hearing Officer and
        one
        week of trial has taken place. The trial has adjourned and no new date for
        the
        continuation of the trial has been set.
  52
  **Patent
        Infringement Litigation**
  A
        case
        was filed against the Company for patent infringement. On or about September
        1,
        2004, Alexsam, Inc. (“Alexsam”) filed an action for patent infringement against
        us alleging the stored value card and service the Company is planning to
        offer
        infringes one or more of U.S. Patent No. 6,000,608 (“the 608 patent”) and U.S.
        Patent No. 6,189,787 (“the 787 patent”), allegedly owned by Alexsam. The actions
        were filed in the United States District Court, Eastern District of Texas,
        styled Alexsam, Inc. vs. Datastream Card Svc., et al. Case Number 2:03-cv-337.
        On January 14, 2005, the court dismissed the lawsuit against the
        Company.
  On
        February 8, 2005, we filed suit against Alexsam and Robert Dorf (collectively
        the “defendants”) in the United States District Court for the Southern District
        of Florida, Civil Action No. 05-60201, seeking a declaratory judgment from
        the
        court that the 608 and 787 patents are invalid, not enforceable and will
        not be
        infringed by our stored value card offering. We are also seeking recovery
        for
        damages brought on us by Alexsam, the owners of Alexsam and Dorf, for breach
        of
        confidential disclosure and trust, intentional interference with business
        advantage, and for unfair competition under Sec. 501.204 of the Florida
        Statutes.
  We
        and
        Alexsam have subsequently settled our dispute. In exchange for granting a
        non-exclusive license to GlobeTel for the Patents, GlobeTel withdrew its
        motion
        for attorneys' fees in the Texas Lawsuit and dismissed the Florida Lawsuit.
        The
        License Agreement was made and entered into in September 2005. The license
        taken
        by us extends further to our customers, bank partners, third party financial
        processors and cardholders, and all those in privity with any of them, but
        only
        to the extent those entities' activities relate to us and its
        license.
  **Service
        Provider Agreement - Brazil Network**
  On
        March
        23, 2002, GlobeTel signed a memorandum of understanding with a company called
        Trans Global Ventures, Inc. (“TGV”), a company based in Miami, to form a joint
        venture to be registered as a limited liability company ("LLC”) in the State of
        Florida to build out a VoIP network in Brazil offering call origination
        including but not limited to prepaid calling and 800 number calling as well
        as
        access to GlobeTel's Enhanced Services Platform technology.
  TGV
        has
        been operating in Brazil and had networks with a capacity of 3 million minutes
        per month in Rio de Janeiro, Sao Paulo and Belo Horizonte. Initially, the
        venture was to be based on a 50/50 ownership between the two companies.
        Subsequently, the memorandum of understanding was modified to give GlobeTel
        80%
        ownership, a percentage determined based on the investments to be made by
        the
        Company in the venture. Ultimately, however, both companies determined that
        TGV
        acting as a service provider would best serve the needs of each company,
        and
        therefore both companies agreed to terminate the memorandum of understanding
        and
        accordingly, the LLC was never formed.
  Under
        the
        service provider agreement, for service provided, TGV shall be entitled to
        receive 20% of the project income, defined as: the revenues from the Brazil
        network, less direct costs of sales for operating this network, less other
        costs
        allocated to this project (based on multiplying total operating expenses
        by the
        percentage of Brazil network sales to total Company revenues for the
        year).
  The
        Brazilian network operated at a ramp-up rate during the first six months
        of
        2002, and upon delivery of equipment during this period, the network began
        operating at capacity of approximately 4 million minutes per month starting
        in
        July 2002. The network continued to operate at or near capacity throughout
        the
        year and still continues to operate as of the date of this filing.
  The
        Company recognized revenues of $2,147,119 and $2,923,981 for December 31,
        2004
        and 2003, respectively. The cost of sales, substantially all of which was
        paid
        directly to third-party suppliers, was $1,996,635 in 2004 and of $1,993,737
        in
        2003.
  In
        June
        2005, the Company and TGV discontinued the network operations and do not
        intend
        to recommence such operations in the near term.
  53
  **Service
        Provider Agreement - Mexico Network**
  On
        June
        26, 2002, GlobeTel signed a memorandum of understanding with Qualnet Telecom,
        LLC for a joint venture to be known as GlobeTel Qualnet LLC, to be registered
        as
        an LLC in the State of Florida. The purpose of the venture was to build out
        a
        VoIP network in Mexico for call termination throughout the country that will
        have initial capacity to transport 8 million minutes per month. Qualnet had
        been
        operating in Mexico for several years and had contracts with various Mexican
        telecom companies. GlobeTel's role in the agreement was to provide financing
        and
        equipment to build the network. The agreement was for GlobeTel to have 80%
        ownership of the venture and Qualnet 20%, and accordingly GlobeTel committed
        80%
        of the funding of the venture in the form of working capital, equipment and
        guarantees for the issuance of letters of credit as required by the Mexican
        telecom companies. Since Qualnet already had points of presence in several
        cities in Mexico had an established customer base, installation of the equipment
        and ramping up of the traffic required substantially less time than if the
        network was to be built from the ground up. As a result, the venture was
        able to
        operate within several weeks and was able to fill the network near
        capacity.
  The
        network continued to operate at capacity throughout the year and it was
        subsequently determined that each party would be better served by continuing
        to
        do business with Qualnet as a service provider. Both parties agreed not to
        proceed with the joint venture, and accordingly, the LLC was never formed
        and
        the parties signed an agreement not to pursue the joint venture agreement
        as
        contemplate in the memorandum of agreement dated June 26 2002. Under the
        service
        provider agreement, for services provided, Qualnet shall be entitled to receive
        20% of the project income, defined as: the revenues from the Mexico network,
        less direct costs of sales for operating this network, less other costs
        allocated to this project (based on multiplying total operating expenses
        by the
        percentage of Mexico network sales to total Company revenues for the
        year).
  The
        Company recognized revenues of $4,774,657 and $8,052,143, respectively, for
        the
        years ended December 31, 2004 and 2003. The cost of sales substantially all
        of
        which was paid directly to third-party suppliers were $4,556,912 in 2004
        and
        $6,159,401 in 2003. There were no activities in connection with the Mexico
        network in 2005 and through the date of this report.
  **Joint
        Venture Agreement - TrueSpeed Wireless**
  On
        September 19, 2002, the Company entered into a joint venture agreement with
        TrueSpeed Wireless, Inc., a Nevada corporation based in Aliso Viejo, California.
        The venture is incorporated in Nevada as TrueSpeed Wireless International,
        Inc.
        and the structure of the joint venture is based on 50% ownership by GlobeTel
        and
        50% ownership by TrueSpeed Wireless, Inc. The purpose of the joint venture
        shall
        be for the deployment of the wireless technology services currently being
        deployed by TrueSpeed Wireless, Inc. and to market and distribute high-speed
        wireless data communications.
  The
        venture had not been able to secure contracts in targeted countries and as
        of
        December 2003, both companies agreed to dissolve the joint venture. No revenues
        or expenses were ever generated from the joint venture, nor were there any
        asset, liability, or equity transactions requiring recording in the financial
        statements during the existence of the joint venture.
  **Joint
        Venture Agreement - Englewood Corporation**
  On
        May 3,
        2004, the Company entered into a Joint Venture Agreement and Stock Option
        Plan
        with Englewood Corporation and respectively with Joseph Seroussi an individual
        (“Agreement”). This Agreement replaces in its entirety a Memorandum of
        Understanding signed among the parties on October 21, 2002. Under the Agreement
        Englewood gives to the Company all of its current and new products and services
        in the telephony, financial and non financial services fields all market
        contacts and relationships and existing and future telecommunications, non
        financial and financial contracts and to develop the processing capabilities
        for
        transactions on networks in conjunction with ATM, debit and credit cards
        including but not limited to the financial networks of MasterCard, MasterCard
        International, VISA and private banking ATM networks along with the ability
        to
        market such products and services through strategic partners in various
        countries around the world. Subject to the terms and conditions of the Agreement
        the Company will earn 100% of all revenues and profits. During the three-year
        term of this Agreement Englewood at its sole discretion may elect to have
        a
        third party independent appraiser, mutually agreed to by both parties, determine
        the fair market value of the Joint Venture. The Englewood portion of the
        value
        of the Joint Venture will be equal to 20% of the fair market value of the
        Joint
        Venture.
  54
  At
        Englewood's sole discretion Englewood may elect in whole or in part to exchange
        in whole or a portion of its interest in the Joint Venture for cashless options
        granted by the Company. The options granted by the company shall be at .02
        cents
        per share of the Company's common stock, as established on the date that
        the
        original Memorandum of Understanding was signed in October of 2002. Once
        exercised, the options shall be distributed to Englewood over a three-year
        period in 12 equal parts. Englewood will have piggy back registration rights
        for
        a period of two years following the grant of each block of options.
  Additionally,
        at the time of the Agreement, Seroussi would continue to serve as a consultant
        to the Company for a minimum period of three years. Subsequently Seroussi
        and
        the Company have entered in an Agreement whereby Seroussi has given up his
        consulting contract and on October 1, 2004, joined the Company as its Chief
        Technical Officer. All of the terms and conditions of the Agreement with
        Englewood remain the same.
  Through
        the date of this report their were no transactions requiring recording in
        the
        financial statements related to this joint venture, other than 3 million
        restricted shares of the Company's common stock issued for consulting services,
        valued at $135,000, based on one-half of the closing price of the stock on
        date
        of issuance. See Note 22.
  **Use
        of Proceeds from Preferred Stock Subscriptions Receivable**
  During
        2005, the Company anticipates receiving Series B Preferred Stock subscriptions
        of $11.75 million, of which approximately $10 million is committed to capital
        expenditures for equipment for our stored value program.
  **Leases
        and Rents**
  The
        Company leases office facilities at 9050 Pines Blvd., Suite 110, Pembroke
        Pines,
        Florida 33024, as of April 1, 2004. This lease will expire in June 2009,
        and has
        an initial monthly rent of $5,462 with increases of 4% per year.
  In
        November 2004, the Company leased additional adjacent space at the Pembroke
        Pines, Florida location under the same terms and period as the existing lease,
        bring the total monthly rent to $9,186.
  In
        June
        2005, we negotiated with the landlord to lease an additional 5,000 square
        feet
        office on the second floor of our present facility, 9050 Pines Blvd., Pembroke
        Pines, Florida 33024. The Company will begin occupancy of this office in
        April
        2006 and the lease expires in June 2009 with a monthly rent of $9,186 (including
        sales tax). GlobeTel vacated the premises in March 2006, having turned over
        the
        space to Gotham Financial as part of the sale of the Magic Money division
        to
        Gotham.
  GlobeTel’s
        corporate offices are not located at 101 NE 3 rd Ave.,
        Suite 1500, Fort Lauderdale, FL 33301. Base rent is $13,000 per month plus
        the
        cost of services used by GlobeTel. The lease is for a period of 6 months.
  GlobeTel
        formerly leased facilities at 444 Brickell Avenue, Suite 522, Miami, Florida
        33131. The Company was under a five-year lease expiring April 2005, with
        a
        monthly rent of $3,463. In January of 2005 the Company satisfied its lease
        obligation related to this office.
  In
        January 2005, GlobeTel signed a lease agreement with the San Bernardino
        International Airport Authority for hangar space at the airport in San
        Bernardino, California for the purpose of assembling and storing the Stratellite
        prototype. The term of the agreement is from January 15, 2005 through March
        31,
        2005, at a monthly lease rate of $9,767. Three months prepaid rent totaling
        $29,302 was paid in December 2004. The agreement provides that with the consent
        of the lessor we may remain on a month-to-month basis, and we do intend to
        remain in the space for the near term.
  Sanswire
        Technologies, Inc., the company from which we purchased Sanswire, LLC, had
        an
        office space lease in Dekalb County, Georgia. The lease term was from April
        1,
        2004 through March 31, 2005, with monthly rent of $2,628. Although not directly
        obligated on this lease, the Company paid the monthly rent from May 2004
        through
        March 2005, whereas employees of our subsidiary, Sanswire, LLC, utilized
        the
        premises. The employees have since vacated the premises.
  Effective
        November 2001, the Company signed a sub-lease agreement for the Jersey City
        facility with a customer/consultant of the Company. Pursuant to the sublease
        agreement, the customer/consultant has maintained the obligation of the monthly
        rent of $1,600, and at January 31, 2003, the lease expired and the Company
        has
        no further obligation to the lessee.
  55
  Future
        minimum rental payments required under the above operating leases subsequent
        to
        the year ended December 31, 2004 are as follows:
 2005
                
                $
                154,4722006
                
                $
                115,7712007
                
                $
                120,4012008
                
                $
                125,2172009
                    and thereafter
                
                $
                88,617$
                604,478
  Rent
        expense for 2004 and 2003 was $126,624 and $48,607, respectively.
  **NOTE
        19 - NET GAINS ON SETTLEMENT OF LIABILITIES AND DISCONTINUED
        OPERATIONS**
  During
        the year ended December 31, 2004 and 2003 the Company recorded net gains
        on
        settlement of debts totaling $268,397and $26,274, respectively, as discussed
        below.
  **Equipment
        Vendor**
  At
        December 2003, the Company settled with one its vendors to pay a lesser amount
        for the purchase of equipment that ultimately did not function as purported.
        Likewise, the Company wrote off other long-term outstanding liabilities for
        purchase of equipment that also did not function properly. The settlement
        and
        write-off resulted in a gain of $26,274 in 2003.
  **Accounts
        Payable**
  The
        Company had included in accounts payable certain disputed amounts payable
        to
        creditors totaling $14,823. The Company does not believe it has obligations
        to
        pay the recorded balances, and the vendors have not sought collection from
        the
        Company for over one year, and, accordingly, recognized a gain in
        2004.
  **Professional
        Services Provider and Note Holder**
  In
        addition, the Company has recorded accounts payables to a former provider
        of
        professional services totaling $333,060 and a note payable of $50,000 to
        an
        individual, a principal of the professional services firm. The Company entered
        into an arrangement with the parties, which states that upon payment of a
        total
        of $200,000, all of which was paid prior to December 31, 2004, the remaining
        balance of the above obligations referred to above will be considered fully
        satisfied without the necessity of further payments. The balance of $183,060
        was
        written off and a gain recorded in 2004 whereas the amounts due under the
        settlement are paid in full and all conditions fulfilled.
  **Capital
        Lease Obligations**
  As
        of
        December 31, 2003, the Company had a balance due of $53,311 of principal
        on
        capital lease obligation and $15,924 in accrued interest. The equipment securing
        the obligation was abandoned prior to the 2003, after the lessee's refusal
        to
        accept return of the equipment in settlement of the obligation. The Company
        does
        not believe it has an obligation to repay the recorded balance, and neither
        the
        original lessee nor assigns have sought collection from the Company for over
        one
        year, and, accordingly the Company has recorded a gain of $69,235 in
        2004.
  **Former
        Employees of Discontinued Operating Division**
  In
        June
        2003, the Company ceased operations of its St. Louis, Missouri office. As
        part
        of the termination agreement with the employees of the St. Louis office,
        the
        employees were authorized to maintain and service the existing clients and
        keep
        the property and equipment of that office. The Company agreed to return the
        customer deposits made by the St. Louis clients. The Company recorded a gain
        of
        $55,842 in 2003 in connection with these transactions, based on the excess
        of
        the liabilities extinguished over the assets given up by the
        Company.
  Three
        terminated employees were issued a total of 1.2 million free-trading shares
        of
        the Company's stock as severance pay. The Company charged $36,000 to expense
        in
        2003 based on an amount equal to the average bid and asked price of the
        Company's shares on the date of issuance. The Company had a recorded balance
        due
        of $16,279 to terminated employees. However, during the three months ended
        September 30, 2004, the Company determined, and the former employees agreed,
        that any and all amounts due to or payable on behalf of the employees had
        been
        satisfied and no additional amounts were owed.
  56
  **Former
        Consultants**
  Certain
        former consultants of the Company were granted a judgment in the sum of $15,000,
        as described in Note 17 above. All disputed amounts allegedly payable to
        the
        consultants were written off and a gain was reported in prior periods. A
        loss on
        settlement of liabilities was recorded during 2004, for the $15,000 subsequently
        determined payable.
  **NOTE
        20 - LOSS ON PROPERTY AND EQUIPMENT DISPOSITIONS**
  As
        of
        December 31, 2004, the Company evaluated its property and equipment, including
        telecommunications equipment, located both within and outside of the United
        States, and office furniture and equipment ascribed to our various domestic
        office locations maintained from 2000 through December 31, 2004. Certain
        assets
        were abandoned, based on management's determination that such assets have
        no
        economic value, due to such factors as technological obsolescence,
        non-functioning of assets, lack of salvage in excess of costs to dispose,
        and
        non-recoverability of assets located in geographical markets and areas in
        which
        we are no longer active. During 2004 we recorded a loss on disposition of
        property and equipment of $56,804.
  Similarly,
        in 2003, a loss of $42,301 was recorded in connection with abandoned obsolete
        equipment.
  **NOTE
        21. INCOME TAXES (restated)**
  Deferred
        income taxes and benefits for 2004 and 2003 are provided for certain income
        and
        expenses, which are recognized in different periods for tax and financial
        reporting purposes. The tax effects (computed at 15%) of these temporary
        differences and carryforwards that give rise to significant portions of deferred
        tax assets and liabilities consist of the following:
 CurrentPeriod2003
                
                Changes
                
                2004Deferred
                    tax assets:Accrued
                    officers' compensation
                
                $
                137,005
                
                $
                (107,255
                )
                $
                29,750Allowance
                    for doubtful accounts
                
                
                56,818
                
                
                169,042
                
                
                225,860Consulting
                    services electedas
                    start-up costs underIRC
                    Sec. 195 (b)
                
                
                851,257
                
                
                (425,628
                )
                
                425,629Reincorporation
                    expenses amortizedunder
                    IRC Sec. 248
                
                
                25,975
                
                
                --
                
                
                25,975Accumulated
                    depreciation
                
                
                (376,829
                )
                
                136,806
                
                
                (240,023
                )Net
                    operating loss carryforwards
                
                
                2,410,423
                
                
                2,068,129
                
                
                4,478,5523,104,649
                
                
                1,841,094
                
                
                4,945,743Valuation
                    allowance
                
                
                (3,104,649
                )
                
                (1,841,094
                )
                
                (4,945,743
                )Net
                    deferred tax asset
                
                $
                --
                
                $
                --
                
                $
                --
  57
  A
        reconciliation of income benefit provided at the federal statutory rate of
        15%
        to income tax benefit is as follows:
 2003
                
                2004Income
                    tax benefit computed at federalstatutory
                    rate
                
                $
                (930,379
                )
                $
                (1,975,030
                )Accrued
                    officers' salaries
                
                
                27,505
                
                
                29,750Allowance
                    for doubtful accounts
                
                
                (107,345
                )
                
                169,042Depreciation
                
                
                (7,179
                )
                
                (4,497
                )Losses
                    not benefited
                
                
                1,017,398
                
                
                1,780,735$
                --
                
                $
                --
    
  The
        Company has accumulated net operating losses, which can be used to offset
        future
        earnings. Accordingly, no provision for income taxes is recorded in the
        financial statements. A deferred tax asset for the future benefits of net
        operating losses and other differences is offset by a 100% valuation allowance
        due to the uncertainty of the Company's ability to utilize the losses. These
        net
        operating losses begin to expire in the year 2021.
  At
        the
        end of 2004, the Company had net operating loss carryforwards (of its successor
        due to accounting for the reincorporation as an "F" reorganization under
        the
        Internal Revenue Code) of approximately $27,079,011, which expire at various
        dates through 2021.
  **NOTE
        22. COMMON STOCK TRANSACTIONS**
  During
        the year ended December 31, 2003, the Company issued the following shares
        of
        Common stock:
   Date
                    Issued
                
                Shares
                
                Consideration
                
                Valuation
                
                RelationshipMarch
                    14, 2003
                
                
                2,200,000
                
                
                Consulting
                    services
                
                $
                22,000
                
                
                ConsultantMarch
                    14, 2003
                
                
                1,800,000
                
                
                Investment
                    banking
                
                
                18,000
                
                
                ConsultantMay
                    7, 2003
                
                
                1,100,000
                
                
                Consulting
                    services
                
                
                11,550
                
                
                ConsultantMay
                    7, 2003
                
                
                900,000
                
                
                Investment
                    banking
                
                
                9,450
                
                
                ConsultantMay
                    22, 2003
                
                
                2,500,000
                
                
                Loan
                    Collateral
                
                
                --
                
                
                Note
                    HolderMay
                    22, 2003
                
                
                2,500,000
                
                
                Loan
                    Collateral
                
                
                --
                
                
                Note
                    HolderMay
                    22, 2003
                
                
                15,000,000
                
                
                Conversion
                    of debt
                
                
                239,206
                
                
                InvestorMay
                    29, 2003
                
                
                4,000,000
                
                
                Satisfaction
                    of debt
                
                
                55,000
                
                
                Shareholder/Former
                    directorJuly
                    18, 2003
                
                
                200,000
                
                
                Severance
                    pay
                
                
                6,000
                
                
                EmployeeJuly
                    18, 2003
                
                
                500,000
                
                
                Severance
                    pay
                
                
                15,000
                
                
                EmployeeJuly
                    18, 2003
                
                
                500,000
                
                
                Severance
                    pay
                
                
                15,000
                
                
                EmployeeJuly
                    18, 2003
                
                
                450,000
                
                
                Legal
                    services
                
                
                13,500
                
                
                Legal
                    counsel/former corporate
                  secretaryJuly
                    18, 2003
                
                
                800,000
                
                
                Consulting
                    services
                
                
                24,000
                
                
                Consultant/employeeJuly
                    18, 2003
                
                
                12,844,000
                
                
                Conversion
                    of debt
                
                
                256,880
                
                
                InvestorAugust
                    5, 2003
                
                
                20,080,321
                
                
                Sale
                    of stock
                
                
                500,000
                
                
                Investor/consultantAugust
                    5, 2003
                
                
                --
                
                
                Marketing
                    services
                
                
                100,402
                
                
                Investor/consultantAugust
                    8, 2003
                
                
                3,400,000
                
                
                Consulting
                    services
                
                
                102,000
                
                
                Consultant/employeeAugust
                    28, 2003
                
                
                (42,916,666
                )
                
                Return
                    of shares issued
                
                
                --
                
                
                Note
                    Holdersfor
                    loan collateralAugust
                    28, 2003
                
                
                --
                
                
                Conversion
                    of debt
                
                
                125,000
                
                
                InvestorAugust
                    28, 2003
                
                
                --
                
                
                Conversion
                    of debt
                
                
                250,000
                
                
                Investor/consultantAugust
                    28, 2003
                
                
                --
                
                
                Conversion
                    of debt
                
                
                125,000
                
                
                InvestorAugust
                    28, 2003
                
                
                --
                
                
                Conversion
                    of debt
                
                
                250,000
                
                
                InvestorSeptember
                    3, 2003
                
                
                944,444
                
                
                Consulting
                    services
                
                
                11,806
                
                
                ConsultantSeptember
                    3, 2003
                
                
                900,000
                
                
                Consulting
                    services
                
                
                11,250
                
                
                ConsultantSeptember
                    3, 2003
                
                
                1,100,000
                
                
                Consulting
                    services
                
                
                13,750
                
                
                ConsultantSeptember
                    3, 2003
                
                
                3,847,222
                
                
                Consulting
                    services
                
                
                49,090
                
                
                ConsultantSeptember
                    29, 2003
                
                
                656,687
                
                
                Consulting
                    services
                
                
                8,211
                
                
                ConsultantOctober
                    9, 2003
                
                
                4,281,333
                
                
                Additional
                    shares due
                
                
                --
                
                
                Investorfor
                    Conversion of debtOctober
                    9, 2003
                
                
                3,650,000
                
                
                Consulting
                    services
                
                
                73,000
                
                
                Consultant/employeeOctober
                    9, 2003
                
                
                2,000,000
                
                
                Officer's
                    salary
                
                
                40,000
                
                
                Chief
                    Financial OfficerDecember
                    31, 2003
                
                
                7,500,000
                
                
                Officer's
                    salary
                
                
                112,500
                
                
                Chief
                    Executive OfficerDecember
                    31, 2003
                
                
                1,166,667
                
                
                Officer's
                    salary
                
                
                17,500
                
                
                Chief
                    Financial OfficerDecember
                    31, 2003
                
                
                (4,000,000
                )
                
                Return
                    of shares issued
                
                
                --
                
                
                Note
                    Holderfor
                    loan collateral
   58
  During
        the year ended December 31, 2004, the Company issued the following shares
        of
        Common stock:
 Date
                    Issued
                
                Shares
                
                Consideration
                
                Valuation
                
                RelationshipJanuary
                    15, 2004
                
                
                4,500,000
                
                
                Exercised
                    Stock Options
                
                $
                --
                
                
                Chief
                    Executive Officer/DirectorJanuary
                    15, 2004
                
                
                5,166,666
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                Chief
                    Financial OfficerJanuary
                    15, 2004
                
                
                2,000,000
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                Director/Former
                    PresidentJanuary
                    15, 2004
                
                
                9,000,000
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                Chief
                    Operating Officer/DirectorJanuary
                    15, 2004
                
                
                1,000,000
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                President/Director/Former
                  ConsultantJanuary
                    15, 2004
                
                
                2,666,667
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                VendorFebruary
                    3, 2004
                
                
                3,202,180
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                Chief
                    Executive Officer/DirectorFebruary
                    3, 2004
                
                
                1,243,847
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                Chief
                    Financial OfficerFebruary
                    3, 2004
                
                
                2,003,106
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                Chief
                    Operating Officer/DirectorFebruary
                    3, 2004
                
                
                6,410,513
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                EmployeeFebruary
                    3, 2004
                
                
                1,458,333
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                AccountantFebruary
                    4, 2004
                
                
                20,796,483
                
                
                Exercised
                    Stock Options
                
                
                --
                
                
                Director/Former
                    PresidentFebruary
                    4, 2004
                
                
                16,500,000
                
                
                Investment
                    in Unconsolidated
                    Foreign
                      Subsidiary
                
                
                --
                
                
                InvesteeFebruary
                    5, 2004
                
                
                3,500,000
                
                
                Investment
                    in Unconsolidated
                    Foreign
                      Subsidiary
                
                
                --
                
                
                Creditor
                    of InvesteeFebruary
                    17, 2004
                
                
                9,100,000
                
                
                Consulting
                    Services
                
                
                425,000
                
                
                Director
                    (COB)/Former ConsultantMay
                    11, 2004
                
                
                108,333
                
                
                Marketing
                    Services
                
                
                6,500
                
                
                ConsultantMay
                    12, 2004
                
                
                28,000,000
                
                
                Sanswire
                    Assets Acquisition
                
                
                2,800,000
                
                
                Shareholders
                    of Selling CorporationMay
                    25, 2004
                
                
                1,352,528
                
                
                Investment
                    Banking Fees
                
                
                67,626
                
                
                Investment
                    BankerMay
                    25, 2004
                
                
                676,264
                
                
                Investment
                    Banking Fees
                
                
                33,813
                
                
                Investment
                    BankerMay
                    25, 2004
                
                
                1,352,528
                
                
                Investment
                    Banking Fees
                
                
                67,626
                
                
                Investment
                    BankerJuly
                    29, 2004
                
                
                1,500,000
                
                
                Compensation
                
                
                144,000
                
                
                EmployeeJuly
                    29, 2004
                
                
                500,000
                
                
                Compensation
                
                
                48,000
                
                
                EmployeeJuly
                    29, 2004
                
                
                500,000
                
                
                Compensation
                
                
                48,000
                
                
                EmployeeAugust
                    12, 2004
                
                
                2,000,000
                
                
                Consulting
                    Services
                
                
                192,000
                
                
                President/Former
                    Consultant (as Nominee)August
                    12, 2004
                
                
                2,000,000
                
                
                Consulting
                    Services
                
                
                192,000
                
                
                Chief
                    Technology Officer/Former
                  Consultant(as
                    Nominee)August
                    12, 2004
                
                
                175,000
                
                
                Compensation
                
                
                7,000
                
                
                EmployeeSept.
                    28, 2004
                
                
                2,000,000
                
                
                Stratodyne
                    Assets Acquisition
                
                
                --
                
                
                Shareholder
                    of Selling CorporationNovember
                    4, 2004
                
                
                7,800,000
                
                
                Convert
                    Pfd. Ser. A
                  (received
                    as broker fee).
                
                
                --
                
                
                Preferred
                    Series-A Shareholder/
                  Investment
                    BankerNovember
                    4, 2004
                
                
                5,200,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                --
                
                
                Preferred
                    Series-A ShareholdersNovember
                    17, 2004
                
                
                26,000,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                --
                
                
                Preferred
                    Series-A Shareholder/
                  Investment
                    BankerNovember
                    17, 2004
                
                
                20,800,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                --
                
                
                Preferred
                    Series-A ShareholdersNovember
                    17, 2004
                
                
                10,920,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                157,500
                
                
                Preferred
                    Series-A ShareholdersNovember
                    18, 2004
                
                
                1,560,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                22,500
                
                
                Preferred
                    Series-A ShareholdersNovember
                    19, 2004
                
                
                9,360,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                135,000
                
                
                Preferred
                    Series-A ShareholdersNovember
                    23, 2004
                
                
                7,800,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                112,500
                
                
                Preferred
                    Series-A ShareholdersNovember
                    24, 2004
                
                
                1,560,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                22,500
                
                
                Preferred
                    Series-A ShareholdersNovember
                    30, 2004
                
                
                9,360,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                135,000
                
                
                Preferred
                    Series-A ShareholdersDecember
                    1, 2004
                
                
                31,200,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                450,000
                
                
                Preferred
                    Series-A ShareholdersDecember
                    3, 2004
                
                
                1,560,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                22,500
                
                
                Preferred
                    Series-A ShareholdersDecember
                    8, 2004
                
                
                6,240,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                90,000
                
                
                Preferred
                    Series-A ShareholdersDecember
                    10, 2004
                
                
                12,480,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                180,000
                
                
                Preferred
                    Series-A ShareholdersDecember
                    28, 2004
                
                
                6,240,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                90,000
                
                
                Preferred
                    Series-A ShareholdersDecember
                    30, 2004
                
                
                1,560,000
                
                
                Convert
                    Pfd. Ser. A
                
                
                22,500
                
                
                Preferred
                    Series-A ShareholdersDecember
                    31, 2004
                
                
                (28,000,000)
                
                
                Return
                      of shares originally
                      issued for
                    Sanswire
                      andStratodyne
                      Assets
                
                
                (2,800,000)
                
                
                Shareholders
                    of SellingCorporationDecember
                    31, 2004
                
                
                26,000,000
                
                
                Reissuance
                    of shares for
                  Sanswire
                    Assets
                
                
                2,600,000
                
                
                Shareholders
                    of Selling CorporationDecember
                    31, 2004
                
                
                2,000,000
                
                
                Reissuance
                    of shares for Stratodyne
                  Assets
                
                
                200,000
                
                
                Shareholder
                    of Selling CorporationDecember
                    31, 2004
                
                
                3,000,000
                
                
                Consulting
                    Services
                
                
                135,000
                
                
                ConsultantDecember
                    31, 2004
                
                
                3,000,000
                
                
                Consulting
                    Services
                
                
                135,000
                
                
                ConsultantDecember
                    31, 2004
                
                
                500,000
                
                
                Consulting
                    Services
                
                
                22,500
                
                
                ConsultantDecember
                    31, 2004
                
                
                500,000
                
                
                Consulting
                    Services
                
                
                22,500
                
                
                Consultant
 59
  In
        connection with the above, for certain issuances of shares, Forms S-8 have
        been
        filed with the Securities and Exchange Commission relative to such issuances
        of
        stock. The shares issued were valued by the Company based upon the average
        bid
        and asked price of the shares on the date of issuance. The value of these
        shares
        was charged to expense unless they were in consideration for future services,
        in
        which case they were recorded as deferred consulting fees.
  For
        other
        issuances of shares during the periods described above, the Company issued
        restricted shares (Rule 144) of its common stock to consultants and officers
        for
        services to the Company. Issuance of restricted shares (Rule 144) are valued,
        due to limitations in current marketability, by the Company based upon half
        of
        the average bid and asked price of the Company's shares on the date of issuance,
        unless the services provided were valued at another amount as agreed upon
        between the parties.
  Shares
        issued (retired) for loan collateral were recorded at par value.
  **NOTE
        23. STOCK OPTIONS**
  During
        the year ended December 31, 2003, the Company issued the following options
        to
        acquire Common stock:
 Date
                    Issued
                
                Shares
                
                Consideration
                
                Valuation
                
                RelationshipSeptember
                    26, 2003
                
                
                2,206,667
                
                
                Satisfaction
                    of debt
                
                
                33,100
                
                
                Former
                    PresidentSeptember
                    26, 2003
                
                
                17,600,000
                
                
                Accrued
                    salary
                
                
                264,200
                
                
                Former
                    PresidentSeptember
                    26, 2003
                
                
                8,944,467
                
                
                Accrued
                    salary
                
                
                134,167
                
                
                Chief
                    Executive OfficerSeptember
                    26, 2003
                
                
                7,444,467
                
                
                Accrued
                    salary
                
                
                111,667
                
                
                Chief
                    Operating OfficerSeptember
                    26, 2003
                
                
                7,444,467
                
                
                Accrued
                    salary
                
                
                111,667
                
                
                Chief
                    Financial OfficerSeptember
                    26, 2003
                
                
                4,111,133
                
                
                Accrued
                    salary
                
                
                61,667
                
                
                ControllerDecember
                    18, 2003
                
                
                6,666,667
                
                
                Officer
                    salary
                
                
                100,000
                
                
                Former
                    PresidentDecember
                    18, 2003
                
                
                5,333,333
                
                
                Officer
                    salary
                
                
                80,000
                
                
                Chief
                    Operating OfficerDecember
                    18, 2003
                
                
                3,333,333
                
                
                Salary
                
                
                50,000
                
                
                Former
                    ControllerDecember
                    18, 2003
                
                
                1,000,000
                
                
                Officer
                    salary
                
                
                15,000
                
                
                PresidentDecember
                    18, 2003
                
                
                1,666,667
                
                
                Accounting
                    services
                
                
                25,000
                
                
                AccountantsDecember
                    18, 2003
                
                
                2,666,667
                
                
                Network
                    services
                
                
                40,000
                
                
                Vendor
  The
        above
        options were issued at $0.015 per share.
  The
        above
        option shares were issued in "cashless exercises". Accordingly, the option
        shares actually issued were reduced by the number of shares required to pay
        for
        the options as $0 .015 per share.
  All
        of
        the above stock options were subsequently exercised in January
        2004.
  60
  During
        the year ended December 31, 2004, the Company issued the following options to
        acquire Common stock:
 Issued
                
                Shares
                
                Consideration
                
                Valuation
                
                RelationshipDecember
                    31, 2004
                
                
                479,778
                
                
                Accrued
                    Board Member Stipends
                
                
                18,750
                
                
                Chief
                    Executive Officer/DirectorDecember
                    31, 2004
                
                
                479,778
                
                
                Accrued
                    Board Member Stipends
                
                
                18,750
                
                
                Director
                    (COB)/Former ConsultantDecember
                    31, 2004
                
                
                479,778
                
                
                Accrued
                    Board Member Stipends
                
                
                18,750
                
                
                Chief
                    Operating Officer/DirectorDecember
                    31, 2004
                
                
                479,778
                
                
                Accrued
                    Board Member Stipends
                
                
                18,750
                
                
                Director/Former
                    PresidentDecember
                    31, 2004
                
                
                479,778
                
                
                Accrued
                    Board Member Stipends
                
                
                18,750
                
                
                President/Director/Former
                    ConsultantDecember
                    31, 2004
                
                
                479,778
                
                
                Accrued
                    Board Member Stipends
                
                
                18,750
                
                
                Director/Former
                    President of SubsidiaryDecember
                    31, 2004
                
                
                479,778
                
                
                Accrued
                    Board Member Stipends
                
                
                18,750
                
                
                DirectorDecember
                    31, 2004
                
                
                359,833
                
                
                Accrued
                    Board Member Stipends
                
                
                14,065
                
                
                Chief
                    Financial OfficerDecember
                    31, 2004
                
                
                4,444,444
                
                
                Bonus
                
                
                200,000
                
                
                Chief
                    Executive Officer/DirectorDecember
                    31, 2004
                
                
                3,888,889
                
                
                Bonus
                
                
                175,000
                
                
                Chief
                    Financial OfficerDecember
                    31, 2004
                
                
                3,888,889
                
                
                Bonus
                
                
                175,000
                
                
                Chief
                    Operating Officer/DirectorDecember
                    31, 2004
                
                
                694,444
                
                
                Bonus
                
                
                31,250
                
                
                Chief
                    Technology Officer/Former ConsultantDecember
                    31, 2004
                
                
                833,333
                
                
                Bonus
                
                
                37,500
                
                
                Senior
                    Vice-PresidentDecember
                    31, 2004
                
                
                2,777,778
                
                
                Bonus
                
                
                125,000
                
                
                President/Director/Former
                    ConsultantDecember
                    31, 2004
                
                
                1,444,444
                
                
                Bonus
                
                
                65,000
                
                
                EmployeeDecember
                    31, 2004
                
                
                2,444,444
                
                
                Bonus
                
                
                110,000
                
                
                EmployeeDecember
                    31, 2004
                
                
                670,556
                
                
                Bonus
                
                
                30,175
                
                
                EmployeeDecember
                    31, 2004
                
                
                530,556
                
                
                Bonus
                
                
                23,875
                
                
                EmployeeDecember
                    31, 2004
                
                
                500,000
                
                
                Bonus
                
                
                22,500
                
                
                EmployeeDecember
                    31, 2004
                
                
                412,720
                
                
                Bonus
                
                
                18,572
                
                
                EmployeeDecember
                    31, 2004
                
                
                523,144
                
                
                Bonus
                
                
                23,541
                
                
                EmployeeDecember
                    31, 2004
                
                
                88,040
                
                
                Bonus
                
                
                3,962
                
                
                EmployeeDecember
                    31, 2004
                
                
                281,250
                
                
                Bonus
                
                
                12,656
                
                
                EmployeeDecember
                    31, 2004
                
                
                61,040
                
                
                Bonus
                
                
                2,747
                
                
                EmployeeDecember
                    31, 2004
                
                
                68,000
                
                
                Bonus
                
                
                3,060
                
                
                EmployeeDecember
                    31, 2004
                
                
                20,000
                
                
                Bonus
                
                
                900
                
                
                EmployeeDecember
                    31, 2004
                
                
                550,922
                
                
                Bonus
                
                
                24,791
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                83,333
                
                
                Bonus
                
                
                3,750
                
                
                Former
                    Employee of SubsidiaryDecember
                    31, 2004
                
                
                374,078
                
                
                Bonus
                
                
                16,834
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                574,533
                
                
                Bonus
                
                
                25,854
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                397,456
                
                
                Bonus
                
                
                17,886
                
                
                Former
                    Employee of SubsidiaryDecember
                    31, 2004
                
                
                277,778
                
                
                Bonus
                
                
                12,500
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                133,333
                
                
                Bonus
                
                
                6,000
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                116,667
                
                
                Bonus
                
                
                5,250
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                185,189
                
                
                Bonus
                
                
                8,334
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                222,222
                
                
                Amount
                    owed for services
                
                
                10,000
                
                
                AccountantDecember
                    31, 2004
                
                
                31,519,878
                
                
                Officer
                    Stock Option Grant
                
                
                1,418,394
                
                
                Chief
                    Executive Officer / DirectorDecember
                    31, 2004
                
                
                21,013,252
                
                
                Officer
                    Stock Option Grant
                
                
                945,596
                
                
                Chief
                    Operating Officer / DirectorDecember
                    31, 2004
                
                
                15,759,939
                
                
                Officer
                    Stock Option Grant
                
                
                709,197
                
                
                Chief
                    Financial OfficerDecember
                    31, 2004
                
                
                10,506,626
                
                
                Officer
                    Stock Option Grant
                
                
                472,798
                
                
                Director/Former
                    PresidentDecember
                    31, 2004
                
                
                10,506,626
                
                
                Officer
                    Stock Option Grant
                
                
                472,798
                
                
                President
                    / Director / Former ConsultantDecember
                    31, 2004
                
                
                10,506,626
                
                
                Officer
                    Stock Option Grant
                
                
                472,798
                
                
                Chief
                    Technology Officer / Former Consultant
 
 61
  **2004
        Stock Options Issued**
  In
        May
        2004, the board of directors approved an Officers' Stock Option Grant Plan,
        pursuant to which certain officers are entitled to receive stock options,
        for
        each of three years, beginning in 2004 (Year 1). The annual number of option
        shares to be issued will be equal to amounts that, after the exercise of
        such
        options, would affect ownership of various percentages of the total shares
        then
        issued and outstanding. The following officers received options for restricted
        shares in the following percentages: CEO - 3% in each of the three years
        (total
        9%); COO - 2% in each of the three years (total 6%), CFO - 1.5% in Year 1
        and 1%
        in each of the following years (total 3.5%), Director and former President
        -
        1.0% in Year 1 and .5% in each of the following years (total 2%), current
        President - 1% in each of the three years (total 3%), and CTO - 1% in each
        of
        the three years (total 3%). The recipient's rights to the options will vest
        after continued service at the completion of each year. The total number
        of
        option shares to be issued for 2004 is 99,812,946. The stock options are
        exercisable at $.045 per share, based on one-half of the average closing
        market
        price for the shares during the ten day period prior to the vesting date
        of
        December 31, 2004.
  In
        December 2004, we established our 2004 Stock Option Bonus Plan, wherein the
        board of directors authorized the issuance of stock options for restricted
        shares totaling 26,487,483 shares to the officers and employees of the company
        as payment of accrued bonuses through December 31, 2004. The stock options
        are
        exercisable $.045 per share, based on one-half of the average closing market
        price for the shares during the ten-day period prior to the vesting date
        of
        December 31, 2004.
  In
        December 2004, the board of directors authorized the issuance of stock options
        for restricted shares totaling 3,718,279 shares to the directors of the company
        as payment of accrued board members' stipends through December 31, 2004.
        The
        stock options are exercisable at $.0391 per share.
  **2004
        Stock Options Exercised in 2005**
  During
        2005, a total of 1,785,490 (26,782,350 post-split) of the above options shares
        were exercised and issued (net of shares used to pay for “cashless” options”),
        with payment in cash and common stock subscriptions receivable totaling $92,906,
        pursuant to the 2004 Stock Option Bonus Plan, the Officers' Stock Option
        Grant
        Plan, and for accrued board members' stipends, and, furthermore, these shares
        were registered by the Company's filing a Form S-8 registration statement.
        The
        number of shares registered were allocated to the individuals exercising
        the
        options based a ratio of the number of options held by each individual to
        the
        total number of options held by all individuals.
  As
        of the
        date of this report an aggregate of 30,000,000 shares were exercised and
        issued
        pursuant to the 2004 Stock Option Bonus Plan, the Officers' Stock Option
        Grant
        Plan, and for accrued board members' stipends, and, furthermore, these shares
        were registered by the Company's filing a Form S-8 registration statement.
        The
        number of shares registered were allocated to the individuals exercising
        the
        options based a ratio of the number of options held by each individual to
        the
        total number of options held by all individuals.
  62
  **Options
        Pursuant to Convertible Promissory Notes**
  On
        December 16, 2002, the Company filed an SB-2 registration statement to register
        shares pursuant to the convertible promissory notes as described in Note
        14.
        During 2003, the Company and its lenders decided to wait until the waiting
        period is over, thereby eliminating the need to file the SB-2 registration
        statement.
  **NOTE
        24 - PREFERRED STOCK**
  **Series
        A**
  In
        October 2003, the Company entered into an agreement with Fordham Financial
        Management Inc. to raise funds. In accordance with the agreement, the investors
        will receive preferred shares convertible into common stock upon investment.
        An
        Offering Circular was made available to investors on October 17,
        2003.
  The
        offering was for maximum of 150,000 shares ("Shares") of Series A Convertible
        Redeemable Preferred Stock, par value $.001 per share ("Series A Preferred").
        The shares have a liquidation preference of $16.67 per share and each share
        is
        convertible into a number of shares of Common Stock determined by dividing
        the
        number of shares of Common Stock outstanding as of the date of conversion
        by
        three, and dividing the result of that calculation by 250,000. The Company
        may
        redeem the Shares at $.001 per share at any time after the second anniversary
        of
        the date of issuance. Such redemption would effectively require the investor
        to
        convert his shares at that time or lose the entire amount of his
        investment.
  As
        part
        of the offering, the Company agreed to pay its investment banking consultant,
        Fordham Financial Management, Inc. a 10% commission, plus 100,000
        Shares.
  The
        Company had $1,200,000 subscribed as of December 31, 2003, and had received
        $717,140 ($1,200,000 less related expenses of $107,860 and $375,000 of
        subscriptions receivable). The full amount of $2,500,000 had been subscribed
        as
        of January 31, 2005, and the $2,250,000 ($2,500,000 total less 10% commission)
        had been received as of February 6, 2005.
  During
        2004, preferred shareholders converted a total 153,500 shares into 10,642,666
        (159,640,000 pre-split) of the Company's common stock, based on conversation
        ratio of 1,040 common shares for each preferred share owned, in accordance
        with
        the formula described above. The Company had remaining 96,500 Series A Preferred
        Shares issued and outstanding, representing $697,500 subscribed, as of December
        31, 2004. During 2005, the preferred shareholders converted a total all of
        the
        remaining 96,500 Series A Preferred shares into 8,911,651 (pre-split) shares
        of
        the Company's common stock.
  **Series
        B**
  On
        April
        27, 2004, the Company agreed to sell 1,000 shares of Series B Preferred Stock
        of
        GlobeTel Communications Corp. (“GTEL”) to Caterham Financial Management, Ltd., a
        Malaysian company (“Caterham”), for a total investment of $15 million. The
        Company intends to use $5 million of this investment for working capital
        and $10
        million to purchase two Stored Value Card Data switches.
  The
        agreement was later modified so that the total number of shares is 35,000
        for
        the same investment convertible into the same amount of common stock as agreed
        upon on April 27, 2004.
  With
        respect to the $5 million in working capital, Caterham has agreed to advance
        $1
        million to GTEL on May 7, July 1, September 1, November 1 and December 31
        of
        2004. The Agreement provides that Caterham has a 10 day grace period, in
        which
        to make any scheduled payments. With respect to the Master Card Data switches,
        Caterham has agreed to advance an aggregate of $5 million to GTEL to purchase
        a
        Stored Value Card Data Switch, which will be located in Miami, Florida and
        subsequently a second switch will be installed in the Company's Hong Kong
        operations.
  The
        Certificate of Designation for the Series B Preferred Stock was filed with
        the
        State of Delaware on July 30, 2004.
  63
  Except
        for voting rights and conversion rights, each share of Series B Preferred
        Stock
        shall have rights that are identical to shares of the Company's common stock.
        The Series B Preferred Stock issued to Caterham and its nominees will have
        voting rights equal to 50% plus one share of the Company's authorized shares
        of
        common stock for a period of three years beginning on the first closing date
        an
        ending three years thereafter, provided that Caterham and/or its nominee
        have
        not converted more than 15% of their Series B Preferred Stock into the Company's
        common stock during this time period. In March 2005 the Company and Caterham
        amended the agreement to revise voting rights to specify that provided at
        least
        85% of the Series B Preferred Stock remains outstanding, the holders of the
        Series B Preferred Stock, voting as a group, will have voting rights equal
        to
        50% plus one shares of the Company's authorized shares of common stock for
        a
        period up to and including April 30, 2005. Thereafter the holders shall have
        one
        vote for each share of common stock for which the Series B Preferred Stock
        may
        be converted, regardless of the percentage of Series B Preferred Stock
        outstanding.
  Beginning
        on the first anniversary after the first closing date and expiring two years
        thereafter, Caterham and its nominees may convert (in whole or in part) its
        Series B Preferred Stock into GlobeTel common stock. Each 1,000 share increment
        of Series B Preferred Stock, as a class, issued to Caterham and its nominees
        shall be convertible into that number of shares of the Company's common stock
        equal to 1% of GlobeTel then issued and outstanding shares (the "Aggregate
        Conversion Shares") as determined on the date in which Caterham, or one of
        its
        nominees, first converts its Series B Preferred Stock into the Company's
        common
        stock (the "First Conversion Date"). In March 2005 the Company and Caterham
        amended the agreement to revise conversion rights to provide issuance of
        5,542,000 shares of GlobeTel common stock. Each holder of the Series B Preferred
        Stock will receive shares of GlobeTel aggregate conversion shares based on
        his
        pro-rata ownership of the Series B Preferred Stock. Three years after the
        first
        closing date, all of the shares of GlobeTel's Series B Preferred Stock which
        have not converted into GTEL common stock will be automatically converted
        into
        shares of GlobeTel's common stock.
  The
        Company had subscribed and received $3,350,000 as of December 31, 2004 (net
        of
        $11.5 million of subscriptions receivable). A total of $2,850,000 was received
        from Caterham; an amount representing $500,000 was issued to Charterhouse
        in
        settlement of outstanding obligations (see Note 14 above). In addition, an
        amount representing $150,000, was issued as a broker's fee.
  In
        January 2005 an additional $250,000 was received from Caterham. The remaining
        amount of the subscription receivable was subsequently received during 2005
        in
        the form of $4,835,200 of telecommunication equipment - the data switch in
        connection with the Stored Value Card program.
  In
        December 2005, the Company entered into an agreement with Caterham wherein
        all
        35,000 Series B Preferred shares were converted into 12,931,334 post-split
        shares of GlobeTel common stock in full settlement of all obligations of
        the
        parties.
  **Series
        C**
  On
        April
        27, 2004, the Company agreed to sell 1,000 shares of Series C Preferred Stock
        of
        GlobeTel Communications Corp. ("GTE") to Tim Ingram, a Hong Kong based
        investment banker, for a total investment of $1 million. The Company intended
        to
        use this $1 million investment for working capital and purchase of equipment
        necessary to expand the Company's Stored Value Card Programs.
  On
        July
        30, 2004, the Company filed a Certificate of Designation for Series C Preferred
        Stock with the State of Delaware.
  Provided
        that the preferred shares have not been converted, the holders of the Series
        C
        Preferred Stock, voting as a group, will have voting rights equal to the
        current
        conversion share amount at the time of the vote of GTE's authorized shares
        of
        common stock for a period of three years from the first closing
        date.
  For
        a
        period of one year after the first closing date, the Series C Preferred Stock
        shall not be convertible into shares of GlobeTel Communications common stock.
        Beginning on the first anniversary of the first closing date and for a period
        of
        two years thereafter, Tim Ingram may convert (in whole or part) its Series
        C
        Preferred Stock into GlobeTel Communications common stock. Each 1,000 shares
        of
        Series C Preferred Stock will represent 2% of the GlobeTel Communications
        common
        in their converted state. The Series C Preferred Stock shall be convertible
        in
        at least 100 share increments, each increment, at the time of conversion,
        will
        represent one tenth of 2% of the issued and outstanding shares of GlobeTel
        Communications common stock. On the third anniversary of the First Closing
        Date,
        all shares of Series C Preferred Stock owned by Tim Ingram will automatically
        be
        converted into GlobeTel Communications common stock (to the extent such shares
        have not been converted into common stock prior to this date). Except for
        the
        aforementioned voting rights and conversion rights, each share of Series
        C
        Preferred Stock shall have rights that are identical to that of GlobeTel
        Communications' common stock.
  64
  Ingram
        agreed to advance $1 million to GlobeTel Communications on or before June
        25,
        August 25, October 25 and December 25, 2004. Mr. Ingram advanced $250,000
        to the
        Company on June 25, 2004 as agreed, and 250 shares of Series C Preferred
        Stock
        were issued. Subsequently, Mr. Ingram notified the Company that he will not
        be
        funding the remaining $750,000 and instead agreed to assign the remaining
        amount
        to other groups wanting to invest in the Company. In December 2004, Mr. Ingram
        converted his preferred shares into 151,515 (2,272,727 pre-split) common
        shares,
        recorded at the then current market price of $1.65 ($0.11 pre-split) per
        common
        share, for a total of $250,000.
  On
        August
        20, 2004, the Company agreed to sell 500 shares of Series C Preferred Stock
        of
        GlobeTel Communications Corp. ("GTE") to Paul E. Taboada for a total investment
        of $500,000. Mr. Taboada, an individual investor, has also been providing
        consulting services for the Company for over four years. The Company is using
        this $500,000 investment for working capital and purchase of equipment for
        Sanswire Networks, LLC, necessary to launch the prototype of the
        Stratellite.
  The
        purchase price was payable in five (5) installments of $100,000, payable
        no
        later than August 30, 2004, September 30, 2004, October 30, 2004, November
        30,
        2004, and December 30, 2004. The Purchaser has a three-day cure period to
        remit
        the monthly payments. As of December 31, 2004, the Company has received the
        full
        $500,000 as agreed upon.
  In
        September 2005, Mr. Taboada converted all 500 shares of Series C Preferred
        Stock
        into 820,000 (12,300,000 pre-split) shares of the Company's common stock
        based
        on 1% of the then outstanding total of the Company's common stock, as agreed
        upon by the parties.
  On
        October 22, 2004, the Company agreed to sell 250 shares of Series C Preferred
        Stock of GlobeTel Communications Corp. ("GTE") to Lawrence Lynch for a total
        investment of $250,000. Mr. Lynch, an individual investor, is also the current
        Chief Operating Officer of the Company. The Company used this $250,000
        investment for working capital and purchase of equipment necessary to expand
        the
        Company's stored value card programs.
  In
        November 2005, Mr. Lynch converted all 250 shares of Series C Preferred Stock
        into 500,000 (7,500,000 pre-split) shares of the Company's common
        stock.
  As
        of
        December 31, 2005, the there were no subscriptions receivable for Series
        C
        preferred stock, all shares were converted into Company common stock, and
        the
        Company does not anticipate issuing any additional shares in connection with
        this preferred stock series.
  **Series
        D**
  On
        July
        28, 2004, the Company agreed to sell 1,000 shares of Series D Preferred Stock
        of
        GlobeTel Communications Corp. ("GTE") to Mitchell A. Siegel, former Chief
        Operating Officer and current Vice President and Director of the Company.
        The
        Company intends to use $1 million of this investment for working capital
        and
        purchase of equipment necessary to expand the Company's stored value card
        programs.
  Mitchell
        A. Siegel agreed to advance $1 million to GTEL in four (4) quarterly
        installments beginning August 2004. The agreement was subsequently modified
        for
        the installment period to be semi-annual and to begin in October 2004. Mr.
        Siegel has remitted the initial $250,000, and in June 2005, remitted the
        second
        $250,000.
  The
        Certificate of Designation for the Series D Preferred Stock was filed with
        the
        State of Delaware on July 30, 2004.
  Provided
        that the preferred shares have not been converted, the Holders of the Series
        D
        Preferred Stock, voting as a group, will have voting rights equal to the
        current
        conversion share amount at the time of the vote of GTE's authorized shares
        of
        common stock for a period of three years from the first closing
        date.
  65
  For
        a
        period of two years after the first closing date, the Series D Preferred
        Stock
        shall not be convertible into shares of GTE common stock. Beginning on the
        second anniversary of the first closing date and for a period of one year
        thereafter, Mitchell A. Siegel may convert (in whole or part) its Series
        D
        Preferred Stock into GTE common stock. The 1000 shares of Series D Preferred
        Stock will represent 2% of the GTE common in their converted state. The Series
        D
        Preferred Stock shall be convertible in at least 100 share increments, each
        increment, at the time of conversion, will represent one tenth of 2% of the
        issued and outstanding shares of GTE common stock. On the third anniversary
        of
        the first closing date, all shares of Series D Preferred Stock owned by Mitchell
        A. Siegel will automatically be converted into GTE common stock (to the extent
        such shares have not been converted into common stock prior to this date).
        Except for the aforementioned voting rights and conversion rights, each share
        of
        Series D Preferred Stock shall have rights that are identical to that of
        GTE's
        common stock.
  The
        Series D Preferred Stock was subsequently amended so that it was convertible
        in
        at least 250 share increments, each increment, at the time of conversion,
        representing 8,750,000 shares of GlobeTel common stock.
  The
        Company expects to receive the remaining $500,000 in stock subscriptions
        receivable from Mr. Siegel in the near term.
  **NOTE
        25 - SUBSEQUENT EVENTS (restated)**
 **SEC
        Investigation**
 
 In
        September 2006 the SEC issued a formal order of investigation regarding certain
        issues with respect to the Company.
  On
        October 5, 2007, GlobeTel Communications Corp., received a "Wells Notice"
        from
        the Securities and Exchange Commission ("SEC") in connection with the SEC’s
        ongoing investigation of the Company. The Wells Notice provides notification
        that the staff of the SEC intends to recommend to the Commission that it
        bring a
        civil action against the Company for possible violations of the securities
        laws
        including violations of Sections 5 and 17(a) of the Securities Act of 1933;
        Sections 10(b), 13(a), and 13(b)(2)(A) & (B) of the Securities Exchange Act
        of 1934 (“Exchange Act”) and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13
        thereunder; and seeking as relief a permanent injunction, civil penalties,
        and
        disgorgement with prejudgment interest. The staff is also considering
        recommending that the SEC authorize and institute proceedings to revoke the
        registration of Company’s securities pursuant to Section 12(j) of the Exchange
        Act. Under the process established by the SEC, recipients have the opportunity
        to respond in writing to a Wells Notice before the SEC staff makes any formal
        recommendation to the Commission regarding what action, if any, should be
        brought by the SEC. The Company is determining if it will provide a written
        submission to the SEC in response to the Wells Notice.
  Redwood
        Grove Financing
  During
        the first quarter of 2006, the Company received additional investments totaling
        over $4 million. Convertible promissory notes with face values totaling $1.8
        million were issued, and, after commissions, fees and costs, a net of $1,579,487
        was received in January 2005. In February 2005 the notes were converted into
        a
        total of 23,574,615 shares of the Company's common stock. In March 2005 the
        investors exercised warrants to purchase a total of 35,366,285 additional
        shares
        of common stock for an additional $2,625,025, including amount due under
        a
        redemption buyout of the warrant shares.
  On
        February 5, 2005 GlobeTel filed a registration statement with the Securities
        and
        Exchange Commission on Form SB-2 to register shares offered by shareholders
        who
        may convert, and eventually did as discussed above, their convertible notes,
        and
        additional shares to ensure sufficient number of shares are available for
        conversion. Further, additional shares totaling 75% of the underlying
        convertible notes and warrants to ensure that shares are available for
        conversion under all contingencies.
  Sanswire
        Subsidiaries
  On
        March
        8, 2005, we announced a global strategy for its Sanswire Networks Corporation
        subsidiary. We signed a Letter of Intent to immediately establish Sanswire
        Europe S.A., its first regional operating subsidiary. Sanswire Europe will
        be a
        joint venture between GlobeTel's wholly-owned operating subsidiary, Sanswire
        Networks, LLC and Strato-Wireless Ltd. (“SWL”), in which GlobeTel will own 55%
        and Strato-Wireless will own 45% of the shares of the European Venture. The
        new
        operation will be managed jointly by J. Randolph Dumas and John A. Jensen,
        Jr.,
        both former senior managing directors at global investment banking firms.
        Both
        principals have decades of business experience throughout Europe and the
        Middle
        East.
  66
  Longview
        Financing
 
 On
        January 25, 2005, the company entered into a subscription agreement with
        Longview Equity Fund LP, Longview International Equity Fund, LP, Longview
        Fund
        LP, and Alpha Capital Aktiengesellshcaft whereby these investors are purchasing
        $1,800,000 in convertible notes, with Class A Warrants to purchase up to
        an
        additional $1,609,989 in common stock of the Registrant.
 
 Under
        the
        funding arrangement, the promissory notes are convertible into common stock
        of
        the Company at $.08 per share. Prior to any notice of conversion the Company
        has
        the right to redeem the note at a premium, subject to a 3-day right to convert
        by the investor.
 
 There
        are
        two types of warrants. There are 12,500,000 Class A Warrants exercisable
        at $.12
        per share and Redemption Warrants. Redemption Warrants will be provided in
        the
        event that the Company has sought to redeem more than 50% of the principal
        amount of the Note. They are given on the basis of 1,111 warrants for each
        $1,000 in principal the Company seeks to redeem over $900,000. The Warrants
        are
        identical to the Class A warrants except that they have an exercise price
        of
        $.11 per share.
 
 Resignation
        of Jerrold Hinton
 
 On
        February 8, 2005 Dr. Jerrold R. Hinton has resigned as a member of the Board
        of
        Directors of GlobeTel Communications Corp. There were no disputes between
        the
        Company and Dr. Hinton.
 
 Appointment
        and Resignation of Laina
        Raveendran Greene as
        Director
 
 In
        February 2005, Laina Raveendran Greene joined the Board of Directors of the
        Company. Ms. Greene subsequently resigned from the Board of Directors on
        December 26, 2005.
 
 May
        2005 Financing
 
 On
        May 9,
        2005, the company entered into a private placement with a number of accredited
        investors whereby these investors have purchased $2,357,959.96 in GlobeTel's
        Common Shares at a price of $0.1924 per share, with Warrants to purchase
        up to
        an additional 8,578,856 shares of common stock of the Registrant at an exercise
        price of $.3395 per share.
 
 On
        May
        23, 2005, the Company accepted an additional subscription from one of the
        initial investors increasing their investment by $200,000 on the same terms
        and
        conditions as all the other investors.
 
 The
        Company has entered into a Registration Rights Agreement with the investors
        and
        is obligated to register the shares purchased by Investors and the shares
        underlying the Investor's warrants.
 
 HotZone
 
 In
        September 2004, the Company entered into an independent contractor agreement
        with Hotzone Wireless, LLC (“HotZone”), a service provider for
        consulting/engineering services related to the Sanswire Stratellite project.
        The
        non-exclusive service provider provided engineering / consulting services,
        transmission equipment, and installation and testing of equipment. The term
        of
        the agreement was for six (6) months and was automatically renewable for
        additional one (1) year terms after the initial term unless terminated by
        either
        party. As initial compensation, Company paid the service provider $10,000
        per
        month. This agreement was terminated during fiscal year 2005.
 
 On
        June
        2, 2005, the Company entered into an agreement to acquire assets of HotZone,
        an
        advanced developer of WIMAX and extended range WIFI Systems with operations
        in
        the United States and Europe. The acquisition transaction, which closed during
        the three months ended September 30, 2005, was paid with $27,000 cash and
        provides for a total of 2 million (post split) shares of the Company's common
        stock to be issued in increments of 666,667 shares on each of the first,
        second,
        and third anniversary dates of the agreement, assuming that certain milestones
        are achieved. The first milestone was achieved for 2005, and accordingly,
        shares
        are to be issued during fiscal year 2006. Additionally, the HotZone staff
        is
        entering into employment agreements with the Company.
 
 67
 
 Resignation
        of Leigh Coleman as Director
 
 On
        August
        18, 2005 Leigh Coleman resigned as a director of the Company. Mr. Coleman
        had no
        disputes with the Company.
 
 Appointment
        of Jonathan Leinwand as Director
 
 The
        Board
        of Directors appointed Jonathan Leinwand to the Board of Directors effective
        August 18, 2005. Mr. Leinwand was and continued to be the Company’s General
        Counsel, until September 10, 2007 when he was named Chief Executive
        Officer.
 
 August
        2005 Convertible Note Financing
 
 On
        August
        30, 2005, the company entered into a subscription agreement with Steelhead
        Investments LTD, Nite Capital LP, and SRG Capital LLC whereby these investors
        are purchasing a total $4,500,000 in 5% convertible notes, with 3 year Class
        A
        Warrants to purchase up to an additional $6,818,181 in common stock of the
        Registrant.
 
 Under
        the
        funding arrangement, the promissory notes are convertible into common stock
        of
        the Company at $1.65 per share. Prior to any notice of conversion the Company
        has the right to redeem the note at a premium for cash, subject to a 5-day
        right
        to convert by the investor. The notes amortize at 12.5% per quarter payable
        each
        quarter in cash or common shares.
 
 The
        Investors will receive one Class A Warrant to purchase one share of common
        stock
        for each that the notes would be convertible into had they been converted
        on the
        closing date (August 30, 2005) (a total of 2,727,273 shares). The per share
        exercise price of the Warrants is $2.50.
 
 Appointment
        and Resignation of Sir Christopher Meyer as Director
 
 The
        Board
        of Directors appointed Sir Christopher Meyer as a Director effective September
        13, 2005. Sir Christopher has served as the head of the UK Press Complaints
        Commission since 2003 and from 1997 until 2003 he was the UK ambassador to
        the
        United States. Sir Christopher has also been elected by the Board to be its
        Chairman and to serve on the Audit Committee. Sir Christopher subsequently
        resigned on March 21, 2006. He had no disputes with the Company.
 
 Resignation
        of Przemyslaw
        Kostro as
        Director
 
 Przemyslaw
        Kostro a director of the Company, resigned effective October 7, 2005. Mr.
        Kostro
        had no disputes with the Company.
 
 American
        Stock Exchange Deficiency Letter
 
 On
        December 19, 2005 the Company received a letter from the American Stock
        Exchange, pursuant to Rule 1009(a)(i) of the American Stock Exchange Company
        Guide that it had not timely filed with the Exchange an Additional Listing
        Application to list shares that had been issued by the Company since its
        initial
        listing in May 2005. The Company has subsequently filed such an application
        with
        the Exchange.
 
 According
        to the letter, the Exchange determined not to apply, at that time, continued
        listing evaluation and follow-up procedures.
 
 Agreement
        with Internafta
 
 On
        December 29, 2005, GlobeTel Wireless Corp. a wholly-owned subsidiary of GlobeTel
        Communications Corp. has entered into an agreement with LLC Internafta, a
        Russian corporation, whereby Internafta will pay GlobeTel $600 million to
        construct and install a communications network in the 30 largest Russian
        cities.
        This communications network will utilize GlobeTel’s HotZone 4010 WiMax (802.16e)
        capable radio. It is intended that this network will provide wireless broadband
        access, Voice over IP capabilities, DECT functionality, and IPTV capabilities.
  68
  The
        networks will be installed in the cities over a 27-month period. Payments
        to
        GlobeTel are pursuant to a schedule that includes certain milestones. Payments
        will be made via a Letter of Credit confirmed by a US money center bank.
        GlobeTel will not commence construction until the first payment has been
        made by
        Internafta. Additionally, GlobeTel will help operate the Russian networks
        once
        constructed and will be a 50/50 joint venture partner with Internafta in
        the
        networks’ operations.
 
 In
        May
        2006, GlobeTel announced that it was terminating the Joint Venture
        Agreement
 
 Warrant
        Agreement
 
 On
        January 9, 2006, GlobeTel entered into agreements with the investors in its
        August 2005 Convertible Note placement for them to exercise their warrants
        that
        had an exercise price of $2.50 per share. The investors will exercise their
        warrants and the Company will issue to the investors a total of 1,935,606
        new
        warrants with an exercise price of $4.00 per share.
 
 The
        investors were given “piggy-back” registration rights for the warrants. If the
        warrants have not been registered after one year, then the investors have
        a
        demand registration rights.
 
 The
        warrants expire on August 31, 2008.
 
 Appointment
        and Resignation of Michael Castellano and Dorian Klein as
        Directors
 
 The
        Board
        of Directors appointed Dorian Klein and Michael P. Castellano to serve as
        directors on GlobeTel’s Board of Directors.
 
 Mr.
        Castellano subsequently resigned as a director on March 14, 2007.
 
 Mr.
        Klein
        subsequently resigned as a director on October 7, 2006.
 
 Appointment
        and Resignation of J. Randolph Dumas as Director
 
 The
        Board
        of Directors appointed J. Randolph Dumas as a Director and Executive Vice
        Chairman on November 30, 2005. Mr. Dumas was a partner of Salomon Brothers
        International Limited responsible for the firm's European corporate finance,
        mortgage securities and real estate investment banking businesses, and a
        managing Partner of two private equity firms focusing on telecommunications
        and
        European leveraged buyouts. Upon the resignation of Sir Christopher Meyer
        in
        March 2006, Mr. Dumas was elected Chairman. Mr. Dumas resigned on October
        7,
        2006 in conjunction with a management restructuring. He had no disputes with
        the
        Company.
 
 Retirement
        of Thomas Jimenez
 
 On
        April
        7, 2006, Thomas Jimenez retired as Chief Financial Officer of GlobeTel
        Communications Corp. Mr. Jimenez had no disputes with the Company.
 
 Appointment
        and Termination of Lawrence Lynch
 
 On
        April
        10, 2006 Chief Operating Officer Lawrence Lynch was named acting Chief Financial
        Officer, following Mr. Jimenez’s retirement. Subsequently, Mr. Lynch had been
        promoted to the Company’s Chief Operating Officer. He joined the Company as Vice
        President in July 2004. On October 25, 2006, Mr. Lynch was dismissed from
        the
        Company.
 
 Appointment
        and Resignation of Ambassador Ferdinando Salleo as Director
 
 On
        May
        16, 2006, the Board of Directors appointed Ambassador Ferdinando Salleo,
        former
        Italian ambassador to the United States, as Director. Ambassador Salleo resigned
        as Director on October 7, 2006 in conjunction with a management restructuring.
        He had no disputes with the Company.
  69
  American
        Stock Exchange
 
 On
        July
        18, 2006 certain regulatory officials at the American Stock Exchange called
        the
        Company and stated that they intended to send a notice to the Company that
        the
        Company’s common shares currently traded on the Exchange would be de-listed. On
        July 19, 2006 the Company received a letter from the American Stock Exchange
        stating that the Exchange intended to de-list the Company’s shares because the
        Company’s press releases were “overly promotional” and that the Company had not
        provided all requested documentation to the Exchange pursuant to a request
        for
        information.
 
 GlobeTel
        disputes that its press releases violated Exchange standards and has attempted
        to work diligently with the Exchange to assure its compliance in this area.
        Additionally, the Company did respond to the request for information and
        did not
        receive any indication that the documentation was incomplete.
 
 The
        Company appealed this determination by the AMEX staff.
 
 On
        August
        18, 2006 the Company received notice from the Amex Staff updating and
        supplementing its letter dated July 17, 2006 concerning its allegations that
        the
        Company no longer complies with Exchange's continued listing standards. In
        addition to the alleged violations set forth in its July 18, 2006 letter
        the
        Staff alleges violations of the following sections of the Amex Company Guide:
        120 (Review of Related Party Transactions), 127 (Discretionary Authority
        of the
        Amex), 134 (Filing Requirements with a reference to Section 1101), 402
        (Explanation of Exchange Disclosure Policies), 403 (Content and Preparation
        of
        Public Announcements), 404 (Exchange Surveillance Procedures), 921 (Notification
        of the Exchange Upon Change in Officers and Directors), 1002(d) and (e) (Failure
        to Comply with Listing Agreement, Any Other Event That Would Warrant Delisting
        [referencing Sec 127 listed above]), 1003(d) (Failure to Comply with Listing
        Agreement and/or SEC Requirements) and 1101 (General Filing Requirements).
 
 The
        Company was notified by letter dated August 18, 2006 that its appeal was
        to be
        heard by the Listing Qualifications Panel on September 28, 2006. On October
        3,
        2006 the Company received notice from the American Stock Exchange notifying
        the
        Company that the Amex Committee on Securities upheld the recommendation of
        the
        Amex Staff that the Company no longer complies with Exchange's continued
        listing
        standards including the following sections of the Amex Company Guide: 120
        (Review of Related Party Transactions), 127 (Discretionary Authority of the
        Amex), 134 (Filing Requirements with a reference to Section 1101), 401 ((Outline
        of Exchange Disclosure Policies), 402 (Explanation of Exchange Disclosure
        Policies), 403 (Content and Preparation of Public Announcements), 1001 (General
        Suspension and Delisting Policies), 1002(d) and (e) (Failure to Comply with
        Listing Agreement, Any Other Event That Would Warrant Delisting), 1003(d)
        (Failure to Comply with Listing Agreement and/or SEC Requirements) and 1101
        (General Filing Requirements).
  The
        Company decided not to further appeal this determination and the Company’s
        common shares began trading on the Pink Sheets under the symbol GTEM The
        Company
        disclosed to the SEC in a Form 25-NSE, on November 17, 2006, that it had
        received from the Amex a document dated November 17 entitled “ Determination and
        Notification of Removal from Listing And/or Registration under Section 12(b)
        of
        the Securities Exchange Act of 1934.
 
 The
        2006 Westor Financing
 
 Creation
        Of A Direct Financial Obligation Or An Obligation Under An Off-Balance Sheet
        Arrangement Of A Registrant; Unregistered Sales Of Equity
        Securities
 
 On
        September 6, 2006, the Company entered into subscription agreements with
        Hudson
        Bay Overseas Fund Ltd, Hudson Bay Fund LP, Nite Capital LP, Castle Creek
        Technology, Double U Master Funder, The Nutmeg Group and Brio Capital LP
        whereby
        these investors bought a total $1,075,000 in 7% convertible notes, and were
        issued Class A and Class B Warrants (described below). The common shares
        underlying the notes and the warrants carry with them registration rights
        that
        obligated the Company to register such shares within 30 days.
 
 The
        Notes
        were convertible into common stock at $0.36939 per share. Prior to any notice
        of
        conversion the Company had the right, under certain circumstances, to redeem
        the
        notes at a premium for cash, subject to a right to convert by the investor.
        The
        investors received one Class A Warrant to purchase one share of common stock
        for
        every two shares that the notes were convertible into on the closing date
        as
        well as one Class B Warrant to purchase the identical number of
        shares.
  70
  The
        Class
        A Warrants are exercisable for a purchase price equal to 150% of the market
        price on the day prior to closing and the Class B Warrants are exercisable
        for a
        purchase price equal to 200% of the market price on the day prior to closing.
        The Warrants have a 5 year term The Placement Agent for the transaction,
        Westor
        Capital Group, has the right to raise up to $3 million for the
        Company.
 
 Appointment
        and Resignation of Patrick Heyn as Director
 
 On
        September 27, 2006 the Board of Directors appointed Patrick Heyn to serve
        as an
        independent director on GlobeTel’s Board of Directors and to serve on the Audit
        Committee.
 
 Mr.
        Heyn
        subsequently resigned as a Director on March 14, 2007.
 
 Management
        Restructuring
 
 On
        October 7, 2006 Amb.
        Ferdinando Salleo ,
        Dorian
        Klein, J. Randolph Dumas and Timothy Huff resigned as directors. Timothy
        Huff
        also resigned as Chief Executive Officer but remained as Chief Technology
        Officer until April 13, 2007, when he resigned.
 
 The
        Board
        of Directors appointed Peter Khoury as the Company’s Interim Chief Executive
        Officer and appointed him to the Board of Directors. The Board also appointed
        Przemyslaw L. Kostro as a director and Interim Chairman of the Board of
        Directors.
  Mr.
        Khoury subsequently resigned in September 2007 and was replaced as Chief
        Executive Officer by GlobeTel’s General Counsel, Jonathan Leinwand.
 
 Lt.
        Colonel (USA/Ret.) Douglas B. Murch tendered his resignation as President
        of
        Sanswire Networks LLC on October 16, 2007.
 
 Sale
        of Magic Money Division
 
 On
        November 3, 2006, GlobeTel Communications Corp. entered into an agreement
        to
        sell substantially all of the assets related to its stored value card division
        that was also known as the Magic Money program, to Gotham Financial LLC.
        Under
        terms of the agreement, Gotham acquired substantially all of the assets,
        which
        include the stored value program, financial processing switch and contracts,
        and
        assumed the liabilities of associated with the program including certain
        employees and leased office space.
 
 The
        agreement calls for the payment, over a 3 to 6 year period, of up to $4 million.
        The length of the payment period depends upon Gotham making certain minimum
        payments. Revenues earned by GlobeTel will be based on the successful rollout
        of
        the platform by Gotham and on user fees following a formula that considers
        the
        total number of transactions on a Stored Value card and use of the card at
        any
        ATM, POS or other transaction, under closed and committed contracts GlobeTel
        had
        at the time of sale, and the number of transactions utilizing the Financial
        Processing Switch.
 
 The
        agreement also gives GlobeTel the right to the most favorable pricing if
        it
        decides in the future to utilize the services to be provided by
        Gotham.
 
 Appointment
        and Subsequent Resignation of Michael DeCarlo as Interim CFO
 
 On
        November 7, 2006, Michael A. DeCarlo Jr., was appointed as interim Chief
        Financial Officer. On March 21, 2007, Mr. DeCarlo resigned as Interim
        CFO.
  71
  Appointment
        and Termination of Joseph Monterosso Chief Operating Officer
  On
        November 17, 2006, the Company announced the appointment of Joseph Monterosso
        as
        Chief Operating Officer, succeeding Mr. Lynch, who was dismissed from the
        Company. On April 27, 2007, Mr. Monterosso was terminated as COO.
 
 Appointment
        and Resignation of Alice Muntz as Director
 
 On
        November 20, 2006 the Company announced the appointment of Dr. Alice Muntz
        to
        the Company’s Board of Directors. Dr. Muntz resigned as a director on March 13,
        2007.
 
 Change
        in Registrant's Certifying Accountant
 
 On
        January 4, 2007, the Company’s Audit Committee dismissed Dohan and Co., CPAs PA
        as the Company's certifying accountant, and stated on that date that during
        the
        two years ended December 31, 2005 and December 31, 2004 and the subsequent
        interim periods through August 14, 2006, there were no disagreements with
        Dohan
& Co. on any matter of accounting principles or practices, financial
        statement disclosure, or auditing scope or procedure. The Audit Committee
        went
        on to say that the report of independent registered public accounting firm
        of
        Dohan and Company as of and for the two years ended December 31, 2005 and
        December 31, 2004, did not contain any adverse opinion or disclaimer of opinion,
        nor was it qualified or modified as to audit scope or accounting principle.
        The
        Company also engaged McKean Paul Chrycy Fletcher & Co. as the Company's
        certifying accountants.
 
 Change
        in Registrant's Certifying Accountant
 
 On
        March
        21, 2007, the Company was notified that McKean Paul Chrycy Fletcher & Co.
        declined to accept the engagement as the Company’s certifying public
        accountants. McKean Paul Chrycy Fletcher & Co. performed no services for the
        Company and did not have any disputes with the Company.
 
 Completion
        of Agreement To Form “No Mas Cables” Joint Venture with VPN de Mexico S.A. de
        C.V
 
 On April 3, 2007,
        the Company and VPN de Mexico S.A. de C.V., subsidiary of Grupo IUSA S.A.
        de
        C.V., Mexico, finalized an agreement that called for the creation of a joint
        venture company called “No Mas Cables de Mexico S.A. de C.V.” to be owned 51% by
        VPN and 49% by GlobeTel. The purpose of the joint venture is to install and
        operate wireless broadband networks utilizing GlobeTel's HotZone 4010 wireless
        base station. The parties had originally entered into a Test Network
        Installation Agreement in June 2006, pursuant to which GlobeTel installed
        a
        network in the Mexican city of Pachuca. As of the date of this filing, the
        Company retains its 49% ownership in No Mas Cables and recently re-affirmed
        its
        commitment to working with the Peralta family, owners of VPN de
        Mexico.
 
 Entry
        Into A Material Definitive Agreement to Reprice Exercise Price of
        Warrants
 
 On
        April
        13, 2007, the Company agreed to reprice the exercise price of warrants
        previously packaged with aforementioned Convertible Note financing in September
        2006 to $.20 per share, and increased the number of shares issuable upon
        exercise of such warrants 1.5 times the original amount of warrants issued.
        In
        consideration of the aforementioned the investors exercised their warrants
        which
        will result in the issuance of up to 4,839,014 shares of common being issued
        for
        a total consideration of up to $967,802.80. As of that date, warrants have
        been
        exercised for a total of 3,750,000 shares for total consideration of $750,000.
        The Company relied on the exemption from registration provided by Section
        4(2)
        of the Securities Act of 1933, as amended (the "Securities Act"). The Company
        believes that the investors are 'accredited investors', as such term is defined
        in Rule 501(a) promulgated under the Securities Act.
 
 Change
        in Registrant's Certifying Accountant
 
 On
        April
        13, 2007, the Company appointed Weinberg & Company, P.A. of Boca Raton,
        Florida as the Company's new independent registered public accounting firm
        to
        audit and certify our financial statements for fiscal year ended December
        31,
        2006. The Company had, on September 11, 2007, re-appointed previous independent
        auditor Dohan & Co. P.A. to audit and certify financial statements for
        fiscal year ended December 31, 2004 and 2005. The Company maintains and
        intends to maintain its relationship with Weinberg & Co. moving
        forward.
  72
  Entry
        Into a Material Definitive Agreement, Winding Down of Centerline, Refocus
        of
        Wireless Unit
  On
        May 1,
        2007, the Company entered into a one-year consulting agreement with Ulrich
        Altvater, the former president of the GlobeTel Wireless subsidiary, providing
        for.Mr. Altvater to provide certain assembly and support services to the
        Company
        for its line of HotZone products, the intellectual property for which the
        Company purchased from Mr. Altvater's previous company in June 2005. In
        consideration for providing such services, the Company will pay Mr. Altvater
        a
        consulting fee of $45,000 per month. Additionally, Mr. Altvater would receive
        50% of the net proceeds resulting from any sales of HotZone products he
        generated.
 
 Additionally,
        the Company decided to wind down the operations of its Centerline Communications
        LLC subsidiary. In conjunction therewith the Company is investigating whether
        to
        sell its related equipment, redeploy such equipment or a combination
        thereof.
 
 The
        Company also reorganized its GlobeTel Wireless Corp. subsidiary to focus
        on the
        sale and implementation of wireless broadband networks. In conjunction with
        the
        restructuring, the Company entered into the above referenced consulting
        agreement with Mr. Altvater.
 
 On
        July
        12, 2007, the Company announced that it terminated its agreement with Mr.
        Altvater and his company, Trimax Wireless, Inc., and filed a lawsuit against
        Trimax and Mr. Altvater to recover assets and money, totaling approximately
        $475,000, that belong to the Company’s shareholders.
 
 Refinancing
        of Debt
 
 On
        May 1,
        2007, GlobeTel Communications Corp. executed several Certificates of Adjustments
        for previously issued Warrants. The Warrants previously had Exercise Prices
        ranging from $0.75 to $1.00 and with the execution of the adjustments, the
        Exercise Price is now set at $0.196.
  Non-Reliance
        on Previously Issued Financial Statements or a Related Audit Report or Completed
        Interim Review.
 
 On
        May 4,
        2007, the Board of Directors of GlobeTel Communications Corp. (the "Company"),
        in consultation with its outside accounting consultant, determined that the
        Company will restate its financial statements for the years ended 2004 and
        2005,
        as reported on Form 10-K and for the interim periods in fiscal 2005 and the
        first two fiscal quarters of 2006 for which the Company filed reports on
        Form
        10-Q.
 
 Change
        in Registrant's Certifying Accountant
 
 On
        September 11, 2007, the Company appointed Dohan & Co., P.A. (“Dohan”) CPAs
        of Miami, Florida as the Company’s independent registered public accounting
        firm to audit and certify our financial statements for fiscal year
        ended December 31, 2004 and 2005.
 
 Letter
        of Intent with TAO Technologies GmbH
 
 On
        September 26, 2007 the Company entered into a Letter of Intent with TAO
        Technologies GmbH for the Company to acquire 50% of TAO and its airship design
        patents. The LOI contemplates the acquisition of the interest for payment
        in
        both cash and stock. The LOI also modified the Company’s previous cooperation
        agreement with TAO signed in October 2005. Subsequent to the execution of
        the
        LOI, Sanswire, the Company’s wholly-owned subsidiary, shipped the Sanswire 2A
        Technology Demonstrator airship to TAO in Stuttgart, Germany for evaluation
        and
        overhaul.
  **NOTE
        26. SEGMENTS AND RELATED INFORMATION (restated)**
  During
        the prior year 2001, the Company adopted FASB Statement No. 131 (“SFAS No.
        131”), "Disclosures about Segments of an Enterprise and Related Information,"
        which changes the way the Company reports information about its operating
        segments.
  The
        accounting policies of the segments are the same as those described in the
        summary of significant accounting policies. All inter-segment sales prices
        are
        market based. The Company evaluates performance based on operating earnings
        of
        the respective business units, segregated into telecommunications services
        (international wholesale carrier traffic, networks, prepaid calling services,
        internet telephony, stored value services and Super Hubs (TM)) and the Sanswire
        Stratellite project. The "Unallocated" column includes expenses incurred
        by and
        net other income realized by the parent corporation, GlobeTel, including
        corporate operating expenses, not specifically allocated to either operating
        segment.
  Telecom
                
                Sanswire
                
                Unallocated
                
                Totals(restated)
                
                
                
                (restated)
                
                (restated)Revenues
                    Earned
                
                $
                11,309,376
                
                $
                --
                
                $
                --
                
                $
                11,309,376Costs
                    of Revenues Earned
                
                
                11,500,577
                
                
                --
                
                
                --
                
                
                11,500,577Gross
                    Margin (Loss)
                
                
                (191,201
                )
                
                --
                
                
                --
                
                
                (191,201
                )Expenses
                
                
                901,076
                
                
                746,827
                
                
                13,980,347
                
                
                15,628,250Loss
                    Before Other Income (Expense) and Income
                
                
                (1,092,277
                )
                
                (746,827
                )
                
                (13,980,347
                )
                
                (15,819,451
                )Taxes
                
                
                --
                
                
                --
                
                
                --
                
                
                --Other
                    Income (Expense)
                
                
                (379,511
                )
                
                --
                
                
                254,093
                
                
                (125,418
                )Loss
                    Before Income Taxes
                
                
                (1,471,788
                )
                
                (746,827
                )
                
                (13,726,254
                )
                
                (15,944,869
                )Income
                    Taxes
                
                
                --
                
                
                --
                
                
                --
                
                
                --Net
                    Loss
                
                $
                (1,471,788
                )
                $
                (746,827
                )
                $
                (13,726,254
                )
                $
                (15,944,869
                )
  73
  **ITEM
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE.**
 
 None.
 
 **ITEM
        8a. CONTROLS AND PROCEDURES**
 
 **Evaluation
        of Disclosure Controls and Procedures**
 
 As
        required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended
        (the "Exchange Act"), the Company carried out an evaluation under the
        supervision and with the participation of Jonathan Leinward, the Company’s Chief
        Executive Officer and Principal Financial Officer (the “Reviewing Officer”), of
        the effectiveness of the Company's disclosure controls and procedures as
        of
        December 31, 2004. In designing and evaluating the Company's disclosure controls
        and procedures, the Company and its management recognize that there are inherent
        limitations to the effectiveness of any system of disclosure controls and
        procedures, including the possibility of human error and the circumvention
        or
        overriding of the controls and procedures. Accordingly, even effective
        disclosure controls and procedures can only provide reasonable assurance
        of
        achieving their desired control objectives. Additionally, in evaluating and
        implementing possible controls and procedures, the Company's management was
        required to apply its reasonable judgment. Furthermore, in the course of
        this
        evaluation, management considered certain internal control areas, including
        those discussed below, in which we have made and are continuing to make changes
        to improve and enhance controls. Based upon the required evaluation, the
        Reviewing Officer concluded that as of December 31, 2004, the Company's
        disclosure controls and procedures were not effective to ensure that information
        required to be disclosed by the Company in the reports it files or submits
        under
        the Exchange Act is recorded, processed, summarized and reported within the
        time
        periods specified in the Securities and Exchange Commission's rules and
        forms.
 
 For
        the
        year ended December 31, 2003, the Company's independent auditors, Dohan and
        Company, CPA's, P.A. ("Dohan") advised management and the Board of Directors
        by
        a letter dated March 30, 2004, that in connection with its audit of the
        Company's consolidated financial statements for the year ended December 31,
        2003, it noted certain matters involving internal control and its operation
        that
        it considered to be a material weakness under standards established by the
        American Institute of Certified Public Accountants. Reportable conditions
        are
        matters coming to an independent auditors' attention that, in their judgment,
        relate to significant deficiencies in the design or operation of internal
        control and could adversely affect the organization's ability to record,
        process, summarize, and report financial data consistent with the assertions
        of
        management in the financial statements. Further, a material weakness is a
        reportable condition in which the design or operation of one or more internal
        control components does not reduce to a relatively low level the risk that
        errors or fraud in amounts that would be material in relation to the financial
        statements being audited may occur and not be detected within a timely period
        by
        employees in the normal course of performing their assigned functions. Dohan
        advised management and the Board of Directors that it considered the following
        to constitute material weaknesses in internal control and operations: (i)
        the
        Company's failure to adequately staff its finance group to effectively control
        the increased level of transaction activity, address the complex accounting
        matters and manage the increased financial reporting complexities and (ii)
        the
        Company's current monthly close process does not mitigate the risk that material
        errors could occur in the books, records and financial statements, and does
        not
        ensure that those errors would be detected in a timely manner by the Company's
        employees in the normal course of performing their assigned functions. Dohan
        noted that these matters were considered by them during its audit and did
        not
        modify the opinion expressed in its independent auditor's report dated March
        30,
        2004.
 
 In
        light
        of the letter from Dohan, we identified deficiencies in our internal controls
        and disclosure controls related to our accounting and audit procedures.
        Specifically, the identified deficiencies involved the ineffective controls
        over
        (i) revenue reporting, (ii) audit preparation procedures and (iii) financial
        reporting procedures.
 
 Remediation
        of Material Weaknesses
 
 We
        have
        formulated a program to remedy the material weaknesses identified above.
        In the
        first phase of the program, already completed as of September 30, 2007, we
        have
        hired outside accountants and consultants to review our financial statements
        and
        prepare the restatement of our financial statements. We have also hired outside
        counsel to advise on the amendment of our previously filed annual and quarterly
        reports filed with the SEC.
  74
  Additionally
        we determined that the Company had ineffective controls over revenue
        recognition. Our remediation measures relating to revenue recognition include
        a
        review by management of revenue items other than normal sales and also the
        discontinuation of the operations of our Centerline Communications LLC
        subsidiary for which we have restated revenue.
 
 In
        the
        second phase of the program, commencing with the filing of our restated
        financial statements, we will be implementing certain new policies and
        procedures such as:
 
 a.  Seeking
        to recruit board members independent of management;
 b.  Granting
        Board committees standing authority to retain counsel and special or expert
        advisors of their own choice;
 c.  Seeking
        outside review of acquisition transactions
 
 **Changes
        in Internal Control Over Financial Reporting**
 
 Except
        as
        set forth above, there have been no changes in our internal control over
        financial reporting that occurred during the year ended December 31, 2004
        that
        have materially affected or are reasonably likely to materially affect our
        internal control over financial reporting.
 
 **ITEM
        8b. OTHER INFORMATION**
 
 NONE
 
 
 
 75
 
 **PART
        III**
 
 **ITEM
        9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH
        SECTION 16(a) OF THE EXCHANGE ACT.**
 
 The
        following table sets forth certain information regarding the executive officers
        and directors of the Company as of September 30, 2007:
 
 **Name**
              
              **Age**
              
              **Position
                  with Company**Jonathan
                  Leinwand
              
              37
              
              Chief
                  Executive Officer, DirectorPrzemyslaw
                  Kostro
              
              45
              
              Chairman
                  of the Board
 
 The
        following table sets forth certain information regarding the executive officers
        and directors of the Company as of 2004:
 
 **(During
                  2004)****Name**
              
              **Age**
              
              **Position
                  with Company**Timothy
                  Huff (a)
              
              40
              
              Chief
                  Executive Officer and DirectorPrzemyslaw
                  Kostro
              
              42
              
              ChairmanJerrold
                  Hinton (b)
              
              63
              
              DirectorLeigh
                  Coleman (c)
              
              56
              
              Director,
                  PresidentMitchell
                  Siegel (d)
              
              58
              
              DirectorThomas
                  Y. Jimenez (e)
              
              46
              
              Chief
                  Financial OfficerMichael
                  Molen (f)
              
              48
              
              DirectorKyle
                  McMahan(g)
              
              47
              
              Director
  (a)
              Resigned
                  as Director and CEO October 7, 2006.(b)
              Resigned
                  as Director February 8, 2005.(c)
              Resigned
                  as an officer and Director August 18, 2005.(d)
              Retired
                  as a Director June 21, 2006.(e)
              Retired
                  as Chief Financial Officer on April 17, 2006.(f)
              Declined
                  to stand for re-election and term ended August 11,
                  2005.(g)
              Declined
                  to stand for re-election as director and term ended on June 21,
                  2006.
 
 Set
        forth
        below is a biographical description of directors and senior executive officers
        of the Company based on information supplied by each of them.
 
 **Jonathan
        Leinwand**
 
 Jonathan
        Leinwand, Chief Executive Officer and Director, joined GlobeTel as General
        Counsel in June 2005 and became a director in August 2005. He was appointed
        CEO
        in September 2007. Prior to joining GlobeTel, he was in private practice
        since
        1996 concentrating in the areas of corporate and securities law, representing
        a
        number of public companies. As part of his practice, Mr. Leinwand also served
        as
        a deal-maker for several US and foreign corporations arranging strategic
        alliances and funding both in the US and abroad. Mr. Leinwand graduated from
        the
        University of Miami with honors degrees in Political Science and Communications
        and graduated cum laude from the University of Miami School Of Law.
 
 **Przemyslaw
        L. Kostro**
 
 Przemyslaw
        L. Kostro, Chairman, was first elected to the Board of Directors in November
        2001. From November 2001 to April 2002, Mr. Kostro also served as the CEO
        of
        GlobeTel before relinquishing the position to Timothy Huff. Over the past
        five
        years, Mr. Kostro has been an attorney engaged in international law, and
        has
        been providing professional and consulting services to several large and
        mid-sized entities in Europe.  Mr. Kostro resigned as a Director in October
        2005 and was reappointed as Director and Chairman of the Board in October
        2006.
  76
  **Timothy
        M. Huff**
 
 Timothy
        M. Huff, Director, Chief Executive Officer, joined GlobeTel in October 1999,
        and
        has served as CEO and as a member of the Board of Directors since April 2002.
        Prior to joining GlobeTel, Mr. Huff spent over five years owning and operating
        several successful private telecom companies. Mr. Huff has over eighteen
        years
        experience in international telecom business that included working with Sprint
        and MCI International, where he was involved in the construction of MCI's
        first
        international gateways. Mr. Huff resigned as Director and CEO on October
        7,
        2006.
 
 **Jerrold
        R. Hinton**
 
 Jerrold
        R. Hinton, Director, has served on the Board of Directors since March 1995.
        He
        had previously served as Chief Executive Officer, President and Chairman
        of the
        Board from March 1995 to November 2001. Dr. Hinton, a graduate of Florida
        State
        University, holds bachelors, masters and doctorate degrees in management,
        engineering and real estate. From 1992 to early 1995, prior to joining the
        company, Dr. Hinton served as an officer of United Biomedical, Inc., a private
        company. Mr. Hinton resigned as a Director on February 8, 2005.
 
 **Leigh
        Coleman**
 
 Leigh
        Coleman, President, joined the Company in September 2003. Mr. Coleman was
        CEO of
        a major division for an internationally recognized Dutch public company based
        in
        the United States. In 2001, Mr. Coleman was CEO of an Australian public company
        specializing in IP PBX applications and CP equipment before joining GlobeTel.
        Mr. Coleman has a Masters in Business Administration, and has lectured in
        Strategic Management at Curtin University in Australia. He has focused on
        growing companies and international business development since 1986. Mr.
        Coleman resigned
        as an officer and Director on August 18, 2005.
 
 **Mitchell
        A. Siegel**
 
 Mitchell
        A. Siegel, Director, Chief Operating Officer, has served in this capacity
        and as
        a member of the Board of Directors since May 2002. Since 1996, he was a
        consultant to Global Transmedia Communications Corporation and was instrumental
        in defining our role as a licensed telecommunications company. Mr. Siegel
        graduated from American University, holding a Bachelors Degree in Business
        Administration and has completed Masters Degree courses in finance at City
        College of New York - Bernard Baruch School of Finance. Mr.
        Siegel retired as a Director on June 21, 2006.
 
 **Thomas
        Y. Jimenez**
 
 Thomas
        Y.
        Jimenez, CPA, Chief Financial Officer, has served as our CFO since joining
        the
        Company in October 1999. For the three years prior to joining the Company,
        Mr.
        Jimenez was a consultant to various telecommunications companies, running
        their
        financial department and assisted in building networks in different countries.
        Previously, Mr. Jimenez was a partner in certified public accounting firm
        in the
        New York City area. Mr. Jimenez graduated from Cleveland State University
        with a
        degree in Business Administration. Mr. Jimenez r etired
        as
        Chief Financial Officer on April 17, 2006.
 
 **Michael
        Molen**
 
 Michael
        Molen has served on our Board of Directors since May 2004. Since 1995, he
        has
        served in various capacities for Sanswire Technologies, Inc., including
        Chairman, Chief Executive Officer and Director. He currently serves as Chief
        Executive Officer of Sanswire Technologies, Inc. He was nominated to serve
        on
        the Company's Board of Directors in accordance with the terms of the Company's
        asset purchase agreement with Sanswire Technologies, Inc. Mr. Molen
        d eclined
        to stand for re-election and his term ended on August 11, 2005. Mr. Molen
        declined to stand for re-election and his term ended August 11,
        2005.
 
 77
 
 **Kyle
        McMahan**
 
 Kyle
        McMahan has served on our Board of Directors since May 2004. From 1989 to
        2003,
        Mr. McMahan served as Chief Executive Officer of Southern Mortgage Reporting,
        Inc., a credit-reporting agency. From April 2001 through September 2003,
        he
        served as chairman of INFO 1 Co., Inc., a company that organized, planned
        and
        financed the startup of new businesses in the credit reporting industry.
        Mr.
        McMahan has served as a board member of The Mortgage Bankers Association
        of
        Georgia and The National Credit Reporting Association. He has been nominated
        to
        serve on the Company's Board of Directors in accordance with the terms of
        the
        Company's asset purchase agreement with Sanswire Technologies, Inc. Mr. McMahan declined
        to stand for re-election as director and term ended on June 21,
        2006.
 
 **COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT**
 
 Section
        16(a) of the Securities Exchange Act of 1934 requires that our officers and
        directors, and persons who own more that ten percent of a registered class
        of
        our equity securities, to file reports of ownership and changes in ownership
        with the Securities and Exchange Commission and with any exchange on which
        the
        Company's securities are traded. Officers, directors and persons owning more
        than ten percent of such securities are required by Commission regulation
        to
        file with the Commission and furnish the Company with copies of all reports
        required under Section 16(a) of the Exchange Act. Based solely upon our review,
        we did not disclose any failures to file reports under Section 16(a) of the
        Exchange Act.
 
 During
        2004 we had one audit committee financial expert, Kyle McMahan, who was
        independent of management. We have a separately designated audit committee.
        In
        addition to Mr. McMahan, Jerrold R. Hinton was a member of the audit committee
        through date of his resignation in February 2005. Since March 2007, the Company
        has not had an independent Audit Committee and the Board of Directors as
        a whole
        sat as the Audit Committee.
 
 **ITEM
        10. EXECUTIVE COMPENSATION.**
 
 **SUMMARY
        COMPENSATION TABLE**
 Name
&
Principal
                  Position
                
                Year
                
                Salary
                    ($)
                
                Bonus
                    ($)
                
                Stock
                    Awards($)
                
                Option
                    Awards ($)
                
                Non-Equity
                    Incentive Plan Compensation ($)
                
                Change
                    in Pension Value and Non-Qualified Deferred Compensation Earnings
                    ($)
                
                All
                    Other Compensation ($)
                
                Total
                    ($)Timothy
                    M. Huff, CEO
                
                
                2004
                
                
                200,000
                    (a
                )
                
                0
                
                
                0
                
                
                1,618,394
                    (b,e
                )
                
                0
                
                
                0
                
                
                18,750
                    (d
                )
                
                1,837,144Timothy
                    M. Huff, CEO
                
                
                2003
                
                
                175,000
                    (a
                )
                
                0
                
                
                112,500
                
                
                0
                
                
                0
                
                
                0
                
                
                134,167
                    (f
                )
                
                421,667Mitchell
                    A. Siegel, COO
                
                
                2004
                
                
                175,000
                    (a
                )
                
                0
                
                
                0
                
                
                1,120,596
                    (b,e
                )
                
                0
                
                
                0
                
                
                18,750
                    (d
                )
                
                1,314,346Mitchell
                    A. Siegel, COO
                
                
                2003
                
                
                150,000
                    (a
                )
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                191,667
                    (f
                )
                
                341,167Thomas
                    Y. Jimenez, CFO
                
                
                2004
                
                
                175,000
                    (a
                )
                
                0
                
                
                0
                
                
                884,197
                    (b,e
                )
                
                0
                
                
                0
                
                
                14,063
                    (d
                )
                
                1,073,260Thomas
                    Y. Jimenez, CFO
                
                
                2003
                
                
                150,000
                    (a
                )
                
                0
                
                
                57,500
                
                
                0
                
                
                0
                
                
                0
                
                
                111,667
                    (f
                )
                
                318,667Lawrence
                    E. Lynch, Sr. VP
                  Since
                    August 2004
                
                
                2004
                
                
                37,500
                    (a
                )
                
                0
                
                
                0
                
                
                37,500
                    (b
                )
                
                0
                
                
                0
                
                
                0
                
                
                75,000Joseph
                    Seroussi, CTO
                  Since
                    Novemeber 2004
                
                
                2004
                
                
                25,000
                    (a
                )
                
                0
                
                
                192,000
                
                
                504,048
                    (b,e
                )
                
                0
                
                
                0
                
                
                0
                
                
                721,048Jerrold
                    R. Hinton,
                  Director/Former
                    President
                
                
                2004
                
                
                0
                
                
                0
                
                
                192,000
                
                
                472,798
                    (e
                )
                
                0
                
                
                0
                
                
                18,750
                    (d
                )
                
                683,548Jerrold
                    R. Hinton
                  Director/Former
                    President
                
                
                2003
                
                
                100,000
                    (a
                )
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                100,000Leigh
                    A. Coleman
                  President
                    Since June 2004
                
                
                2004
                
                
                70,780
                    (a
                )
                
                0
                
                
                0
                
                
                597,798
                    (b,e
                )
                
                0
                
                
                0
                
                
                50,031
                    (d
                )
                
                718,609Vivian
                    Manevich, CAO
                  Through
                    Dec. 2002
                
                
                2004
                
                
                0
                    (c
                )
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0Vivian
                    Manevich, CAO
                  Through
                    Dec. 2002
                
                
                2003
                
                
                0
                    (c
                )
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
                
                
                0
 
 78
 
 (a)
        Effective January 1, 2002, GlobeTel entered into a three-year employment
        agreements with its key management. Effective 2005, the agreements were renewed
        automatically on a year-to-year basis. For the year 2002, the agreements
        provided for annual compensation of $150,000 for its Chief Executive Officer
        (CEO), $125,000 each for its Chief Financial Officer (CFO) and Chief Operating
        Officer (COO) and $75,000 each for its Chief Administrative Officer (CAO)
        and VP
        of Network Operations. Further, there remained an employment contract with
        its
        former President, as described below, which called for a salary of $100,000
        per
        annum through 2003.
 
 In
        2003,
        the base compensation increased to $175,000 for its CEO, $150,000 each for
        its
        CFO and COO, $90,000 each for its CAO and VP of Network Operations.
 
 In
        2004,
        the base compensation increased to $200,000 for its CEO, $175,000 each for
        its
        CFO and COO, $120,000 for the Controller (formerly the CAO) and $110,000
        for its
        VP of Network Operations.
 
 Accrued
        but unpaid base compensation of $82,500 for the CEO, $57,500 for the CFO
        and
        $58,333 for the COO (a total of $198,333) were owed as of December 31, 2004.
        These amounts were paid in January 2005.
 
 (b)
        In
        addition to the base compensation, the employment agreements provide for
        payment
        of bonuses that at a minimum equal the executives’ base compensation, unless
        otherwise agreed to by the executives. As of December 31, 2003 and 2002,
        the
        executives all agreed not to receive bonuses they are entitled to pursuant
        to
        the employment agreements. For 2004, the executives received bonuses as entitled
        to under the agreements. The bonuses received were equal to the amount of
        gross
        compensation received during 2004. All executive bonuses for 2004 were included
        in the Employee Stock Option Plan (see Note 23 to financial statements) and
        paid
        with stock options.
 
 (c)
        Vivian Manevich served as the CAO through 2002. Thereafter, Ms. Manevich
        accepted a non-executive position in the Company, and, accordingly, any and
        all
        compensation for 2003, 2004 and 2005 was included in employee payroll and
        none
        of her compensation was included in executive compensation.
 
 (d)
        The
        Company's Directors received stipends of $6,250 per quarter, beginning the
        second quarter of 2004, for a total of $18,750 per director for 2004. The
        CFO,
        who functioned as treasurer reporting to the Board, received stipends equal
        to
        75% of the directors' stipends, or $4,688 per quarter, beginning the second
        quarter of 2004, for a total of $14,063. All Directors' stipends were paid
        with
        stock options (see Note 23 to financial statements).
 
 In
        2004,
        the then Chairman received additional stock compensation of $425,000, for
        services rendered providing assistance in expanding our business and services
        world-wide and in obtaining funding for us.
 
 (e)
        Pursuant to an Officers' Stock Option Grant plan approved by the Board (see
        Note
        23 to financial statements), certain officers are entitled to receive stock
        options in amounts which, after the exercise of such options, would effect
        ownership of various percentages of the total shares then issued and
        outstanding. The following officers received options for restricted shares
        in
        the following percentages for 2005: CEO - 3%, former COO and current SVP
        - 2%,
        CFO - 1.5%, current COO - 1%, CTO - 1%, SVP of Finance - 2% and General Counsel
        - .75%.
 
 All
        of
        the stock options issued to executives in 2003 were subsequently exercised
        in
        January and February 2004. The schedule below indicates the date issued,
        number
        of shares received upon exercise and the aggregate dollar value realized
        upon
        exercise.
 
 (f)
        In
        2003, the Company approved the issuance of Stock Options as reimbursement
        for
        previously accrued and unpaid salary for the Company Officers (see Note 23
        to
        financial statements).
 
 **OUTSTANDING
        EQUITY AWARDS**
 **Option
                      Awards**
                  **Stock
                      Awards**Name
                  Number
                    of
                    Securities
                    Underlying
                    Unexercised
                    Options
                      (#)
                    Exercisable
                  Number
                    of
                    Securities
                    Underlying
                    Unexercised
                    Options
                      (#)
                    Unexercisable
                  Equity
                      Incentive
                    Plan
                      Awards:
                    Number
                      of
                    Securities
                      Underlying
                    Unexercised
                    Unearned
                    Options
                      (#)
                  Option
                    Exercise
                    Price
                    ($)
                  Option
                    Expiration
                      Date
                  Number
                    of
                      Shares
                    or
                      Units
                    of
                      Stock
                    That
                      Have Not
                    Vested
                      (#)
                  Market
                    Value
                      of
                    Shares
                      or
                    Units
                      of
                    Stock
                      That Have Not Vested ($)
                  Equity
                      Incentive
                    Plan
                      Awards:
                    Number
                      of
                    Unearned
                      Shares, Units or Other Rights That Have Not Vested (#)
                  Equity
                      Incentive
                    Plan
                      Awards:
                    Market
                      or Payout
                    Value
                      of Unearned
                    Shares,
                      Units or
                    Other
                      Rights
                    That
                      Have Not Vested ($)Timothy
                      Huff
                  513,479
                  
                  
                  658,918
                  December
                      31, 2006Thomas
                      Jimenez
                  427,368
                  
                  
                  625,168
                  December
                      31, 2006Jerrold
                      Hinton
                  1,519,766
                  
                  
                  1,339,010
                  December
                      31, 2006Mitchell
                      Siegel
                  733,540
                  
                  
                  1,080,168
                  December
                      31, 2006Leigh
                      Coleman
                  66,667
                  
                  
                  108,000
                  December
                      31, 2006
 79
 
 **COMPENSATION
        OF DIRECTORS**
 
 **DIRECTOR
                  COMPENSATION**Name
                (a)
              Fees
                  Earned or Paid in Cash
                ($)
                (b)
              Stock
                  Awards ($)
                (c)
              Option
                  Awards ($)
                (d)
              Non-Equity
                  Incentive
                Plan
                  Compensation
                ($)
                (e)
              Non-Qualified
                  Deferred Compensation Earnings
                ($)
                (f)
              All
                Other
                  Compensation ($)
                (g)
              Total
                  ($)
                (j)Przemyslaw
                  L. Kostro, Chairman (2004)
              
              
              443,750
              
              
              
              443,750Przemyslaw
                  L. Kostro, Chairman (2003)
              
              
              
              
              
              
              0Michael
                  Molen (2004)
              --
              --
              18,750
              --
              --
              
              18,750Kyle
                  McMahan(2004)
              --
              --
              18,750
              --
              --
              
              18,750
  Compensation
        paid to Directors who are also officers of the Company is reflected in Item
        10.
        Executive Compensation.
 
 We
        maintain a policy of compensating our directors using cash and stock options.
        Currently, the Company determines Board compensation on an individual basis.
        Employee members of the Board do not receive additional compensation for
        their
        service on the Board.
 
 **ITEM
        11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
        STOCKHOLDER MATTERS.**
 
 **Common
        Stock**
 
 At
        October 17, 2007, we had 127,749,688  common
        shares issued and outstanding (taking into account the 1 for 15 reverse split
        on
        May 23, 2005). The table below sets forth the share ownership of our executive
        officers and directors, individually and as a group. No other person is the
        beneficial owner of more than 5% of our issued and outstanding common
        shares
 
 Title
                  of Class
              Name
                  & Address of
                Beneficial
                  Ownership
              Amount
                  and
                Beneficial
              Nature
                  of
                Ownership
              Percentage
                  of Class (1)Common
                  Stock
              Przemyslaw
                  L. Kostro Chairman
                101
                  NE 3rdAve, Suite 1500, Fort Lauderdale, Florida 33301
              9,211,385
              Shares
              7.25%Common
                  Stock
              Jonathan
                  Leinwand, CEO Since October 2007 and Director Since August
                  2005
                101
                  NE 3rdAve, Suite 1500, Fort Lauderdale, Florida 33301
              1,420,000
              Shares
              1.1%Total
                  of all Officers and Directors as a Group
              10,631,385
              
              9.35%
  (1)
        Based
        on 127,749,688  shares
        issued and outstanding on October 17, 2007.
  80
  **ITEM
        12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS** .
 
 **COMMON
        STOCK TRANSACTIONS**
  During
        the year ended December 31, 2003, the Company issued the following shares
        of
        Common stock:
 Date
                    Issued
                
                Shares
                
                Consideration
                
                Valuation
                
                RelationshipMarch
                    14, 2003
                
                
                146,667
                
                
                Consulting
                    services
                
                $
                22,000
                
                
                ConsultantMarch
                    14, 2003
                
                
                120,000
                
                
                Investment
                    banking
                
                
                18,000
                
                
                ConsultantMay
                    7, 2003
                
                
                73,333
                
                
                Consulting
                    services
                
                
                11,550
                
                
                ConsultantMay
                    7, 2003
                
                
                60,000
                
                
                Investment
                    banking
                
                
                9,450
                
                
                ConsultantMay
                    22, 2003
                
                
                166,667
                
                
                Loan
                    Collateral
                
                
                --
                
                
                Note
                    HolderMay
                    22, 2003
                
                
                166,667
                
                
                Loan
                    Collateral
                
                
                --
                
                
                Note
                    HolderMay
                    22, 2003
                
                
                1,000,000
                
                
                Conversion
                    of debt
                
                
                239,206
                
                
                InvestorMay
                    29, 2003
                
                
                266,667
                
                
                Satisfaction
                    of debt
                
                
                55,000
                
                
                Shareholder/Former
                    directorJuly
                    18, 2003
                
                
                13,333
                
                
                Severance
                    pay
                
                
                6,000
                
                
                EmployeeJuly
                    18, 2003
                
                
                33,333
                
                
                Severance
                    pay
                
                
                15,000
                
                
                EmployeeJuly
                    18, 2003
                
                
                33,333
                
                
                Severance
                    pay
                
                
                15,000
                
                
                EmployeeJuly
                    18, 2003
                
                
                30,000
                
                
                Legal
                    services
                
                
                13,500
                
                
                Legal
                    counsel/fmr corp secretaryJuly
                    18, 2003
                
                
                800,000
                
                
                Consulting
                    services
                
                
                24,000
                
                
                Consultant/employeeJuly
                    18, 2003
                
                
                856,267
                
                
                Conversion
                    of debt
                
                
                256,880
                
                
                InvestorAugust
                    5, 2003
                
                
                1,338,688
                
                
                Sale
                    of stock
                
                
                500,000
                
                
                Investor/consultantAugust
                    5, 2003
                
                
                --
                
                
                Marketing
                    services
                
                
                100,402
                
                
                Investor/consultantAugust
                    8, 2003
                
                
                226,667
                
                
                Consulting
                    services
                
                
                102,000
                
                
                Consultant/employeeAugust
                    28, 2003
                
                
                (2,861,111
                )
                
                Return
                    of shares issued
                    for
                      loan collateral
                
                
                --
                
                
                Note
                    HoldersAugust
                    28, 2003
                
                
                --
                
                
                Conversion
                    of debt
                
                
                125,000
                
                
                InvestorAugust
                    28, 2003
                
                
                --
                
                
                Conversion
                    of debt
                
                
                250,000
                
                
                Investor/consultantAugust
                    28, 2003
                
                
                --
                
                
                Conversion
                    of debt
                
                
                125,000
                
                
                InvestorAugust
                    28, 2003
                
                
                --
                
                
                Conversion
                    of debt
                
                
                250,000
                
                
                InvestorSeptember
                    3, 2003
                
                
                62,963
                
                
                Consulting
                    services
                
                
                11,806
                
                
                ConsultantSeptember
                    3, 2003
                
                
                60,000
                
                
                Consulting
                    services
                
                
                11,250
                
                
                ConsultantSeptember
                    3, 2003
                
                
                73,333
                
                
                Consulting
                    services
                
                
                13,750
                
                
                ConsultantSeptember
                    3, 2003
                
                
                256,481
                
                
                Consulting
                    services
                
                
                49,090
                
                
                ConsultantSeptember
                    29, 2003
                
                
                43,779
                
                
                Consulting
                    services
                
                
                8,211
                
                
                ConsultantOctober
                    9, 2003
                
                
                285,422
                
                
                Additional
                    shares due
                    for
                      Conversion of debt
                
                
                --
                
                
                InvestorOctober
                    9, 2003
                
                
                243,333
                
                
                Consulting
                    services
                
                
                73,000
                
                
                Consultant/employeeOctober
                    9, 2003
                
                
                133,333
                
                
                Officer's
                    salary
                
                
                40,000
                
                
                Chief
                    Financial OfficerDecember
                    31, 2003
                
                
                500,000
                
                
                Officer's
                    salary
                
                
                112,500
                
                
                Chief
                    Executive OfficerDecember
                    31, 2003
                
                
                77,778
                
                
                Officer's
                    salary
                
                
                17,500
                
                
                Chief
                    Financial OfficerDecember
                    31, 2003
                
                
                (266,667
                )
                
                Return
                    of shares issued
                    for
                      loan collateral
                
                
                --
                
                
                Note
                    Holder
  81
  During
        the year ended December 31, 2004, the Company issued the following shares
        of
        Common stock:
 
 Date
                  Issued
              
              Shares
              
              Consideration
              
              Valuation
              
              RelationshipJanuary
                  15, 2004
              
              
              300,000
              
              
              Exercised
                  Stock Options
              
              $
              --
              
              
              Chief
                  Executive Officer/DirectorJanuary
                  15, 2004
              
              
              344,444
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              Chief
                  Financial OfficerJanuary
                  15, 2004
              
              
              133,333
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              Director/Former
                  PresidentJanuary
                  15, 2004
              
              
              600,000
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              Chief
                  Operating Officer/DirectorJanuary
                  15, 2004
              
              
              66,667
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              President/Director/Former
                  ConsultantJanuary
                  15, 2004
              
              
              177,778
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              VendorFebruary
                  3, 2004
              
              
              213,479
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              Chief
                  Executive Officer/DirectorFebruary
                  3, 2004
              
              
              82,923
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              Chief
                  Financial OfficerFebruary
                  3, 2004
              
              
              133,540
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              Chief
                  Operating Officer/DirectorFebruary
                  3, 2004
              
              
              427,368
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              EmployeeFebruary
                  3, 2004
              
              
              97,222
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              AccountantFebruary
                  4, 2004
              
              
              1,386,432
              
              
              Exercised
                  Stock Options
              
              
              --
              
              
              Director/Former
                  PresidentFebruary
                  4, 2004
              
              
              1,100,000
              
              
              Investment
                  in Unconsolidated
              
              
              --
              
              
              InvesteeForeign
                  SubsidiaryFebruary
                  5, 2004
              
              
              233,333
              
              
              Investment
                  in Unconsolidated
              
              
              --
              
              
              Creditor
                  of InvesteeForeign
                  SubsidiaryFebruary
                  17, 2004
              
              
              606,667
              
              
              Consulting
                  Services
              
              
              425,000
              
              
              Director
                  (COB)/Former ConsultantMay
                  11, 2004
              
              
              7,222
              
              
              Marketing
                  Services
              
              
              6,500
              
              
              ConsultantMay
                  12, 2004
              
              
              1,866,667
              
              
              Sanswire
                  Assets
              
              
              2,800,000
              
              
              Shareholders
                  of SellingAcquisition
              
              
              
              
              
              CorporationMay
                  25, 2004
              
              
              90,169
              
              
              Investment
                  Banking Fees
              
              
              67,626
              
              
              Investment
                  BankerMay
                  25, 2004
              
              
              45,084
              
              
              Investment
                  Banking Fees
              
              
              33,813
              
              
              Investment
                  BankerMay
                  25, 2004
              
              
              90,169
              
              
              Investment
                  Banking Fees
              
              
              67,626
              
              
              Investment
                  BankerJuly
                  29, 2004
              
              
              100,000
              
              
              Compensation
              
              
              144,000
              
              
              EmployeeJuly
                  29, 2004
              
              
              33,333
              
              
              Compensation
              
              
              48,000
              
              
              EmployeeJuly
                  29, 2004
              
              
              33,333
              
              
              Compensation
              
              
              48,000
              
              
              EmployeeAugust
                  12, 2004
              
              
              133,333
              
              
              Consulting
                  Services
              
              
              192,000
              
              
              President/Former
                  Consultant
                (as
                  Nominee)August
                  12, 2004
              
              
              133,333
              
              
              Consulting
                  Services
              
              
              192,000
              
              
              Chief
                  Technology Officer/Former
                Consultant
                  (as
                  Nominee)August
                  12, 2004
              
              
              11,667
              
              
              Compensation
              
              
              7,000
              
              
              EmployeeSept.
                  28, 2004
              
              
              133,333
              
              
              Stratodyne
                  Assets Acquisition
              
              
              --
              
              
              Shareholder
                  of Selling CorporationNovember
                  4, 2004
              
              
              520,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              --
              
              
              Preferred
                  Series-A Shareholder/(received
                  as broker fee).
              
              
              
              
              
              Investment
                  BankerNovember
                  4, 2004
              
              
              346,667
              
              
              Convert
                  Pfd. Ser. A
              
              
              --
              
              
              Preferred
                  Series-A ShareholdersNovember
                  17, 2004
              
              
              1,733,333
              
              
              Convert
                  Pfd. Ser. A
              
              
              --
              
              
              Preferred
                  Series-A Shareholder/
                Investment
                  BankerNovember
                  17, 2004
              
              
              1,386,667
              
              
              Convert
                  Pfd. Ser. A
              
              
              --
              
              
              Preferred
                  Series-A ShareholdersNovember
                  17, 2004
              
              
              728,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              157,500
              
              
              Preferred
                  Series-A ShareholdersNovember
                  18, 2004
              
              
              104,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              22,500
              
              
              Preferred
                  Series-A ShareholdersNovember
                  19, 2004
              
              
              624,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              135,000
              
              
              Preferred
                  Series-A ShareholdersNovember
                  23, 2004
              
              
              520,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              112,500
              
              
              Preferred
                  Series-A ShareholdersNovember
                  24, 2004
              
              
              104,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              22,500
              
              
              Preferred
                  Series-A ShareholdersNovember
                  30, 2004
              
              
              624,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              135,000
              
              
              Preferred
                  Series-A ShareholdersDecember
                  1, 2004
              
              
              2,080,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              450,000
              
              
              Preferred
                  Series-A ShareholdersDecember
                  3, 2004
              
              
              104,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              22,500
              
              
              Preferred
                  Series-A ShareholdersDecember
                  8, 2004
              
              
              416,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              90,000
              
              
              Preferred
                  Series-A ShareholdersDecember
                  10, 2004
              
              
              832,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              180,000
              
              
              Preferred
                  Series-A ShareholdersDecember
                  28, 2004
              
              
              416,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              90,000
              
              
              Preferred
                  Series-A ShareholdersDecember
                  30, 2004
              
              
              104,000
              
              
              Convert
                  Pfd. Ser. A
              
              
              22,500
              
              
              Preferred
                  Series-AShareholdersDecember
                  31, 2004
              
              
              (1,866,667
              )
              
              Return
                  of shares originally
                issued
                  for Sanswire
                  and
                Stratodyne
                  Assets
              
              
              (2,800,000
              )
              
              Shareholders
                  of Selling CorporationsDecember
                  31, 2004
              
              
              1,733,333
              
              
              Reissuance
                  of shares for
              
              
              2,600,000
              
              
              Shareholders
                  of Selling CorporationSanswire
                  AssetsDecember
                  31, 2004
              
              
              133,333
              
              
              Reissuance
                  of shares for
              
              
              200,000
              
              
              Shareholder
                  of Selling CorporationStratodyne
                  AssetsDecember
                  31, 2004
              
              
              200,000
              
              
              Consulting
                  Services
              
              
              135,000
              
              
              ConsultantDecember
                  31, 2004
              
              
              200,000
              
              
              Consulting
                  Services
              
              
              135,000
              
              
              ConsultantDecember
                  31, 2004
              
              
              33,333
              
              
              Consulting
                  Services
              
              
              22,500
              
              
              ConsultantDecember
                  31, 2004
              
              
              33,333
              
              
              Consulting
                  Services
              
              
              22,500
              
              
              Consultant




82


In
        connection with the above, for certain issuances of shares, Forms S-8 have
        been
        filed with the Securities and Exchange Commission relative to such issuances
        of
        stock. The shares issued were valued by the Company based upon the average
        bid
        and asked price of the shares on the date of issuance. The value of these
        shares
        was charged to expense unless they were in consideration for future services,
        in
        which case they were recorded as deferred consulting fees.
  For
        other
        issuances of shares during the periods described above, the Company issued
        restricted shares (Rule 144) of its common stock to consultants and officers
        for
        services to the Company. Issuance of restricted shares (Rule 144) are valued,
        due to limitations in current marketability, by the Company based upon half
        of
        the average bid and asked price of the Company's shares on the date of issuance,
        unless the services provided were valued at another amount as agreed upon
        between the parties.
  Shares
        issued (retired) for loan collateral were recorded at par value.
  **STOCK
        OPTIONS**
  During
        the year ended December 31, 2003, the Company issued the following options
        to
        acquire Common stock:
 Date
                    Issued
                
                Shares
                
                Consideration
                
                Valuation
                
                RelationshipSeptember
                    26, 2003
                
                
                147,111
                
                
                Satisfaction
                    of debt
                
                
                33,100
                
                
                Former
                    PresidentSeptember
                    26, 2003
                
                
                1,173,333
                
                
                Accrued
                    salary
                
                
                264,200
                
                
                Former
                    PresidentSeptember
                    26, 2003
                
                
                596,298
                
                
                Accrued
                    salary
                
                
                134,167
                
                
                Chief
                    Executive OfficerSeptember
                    26, 2003
                
                
                496,298
                
                
                Accrued
                    salary
                
                
                111,667
                
                
                Chief
                    Operating OfficerSeptember
                    26, 2003
                
                
                496,298
                
                
                Accrued
                    salary
                
                
                111,667
                
                
                Chief
                    Financial OfficerSeptember
                    26, 2003
                
                
                274,076
                
                
                Accrued
                    salary
                
                
                61,667
                
                
                ControllerDecember
                    18, 2003
                
                
                444,444
                
                
                Officer
                    salary
                
                
                100,000
                
                
                Former
                    PresidentDecember
                    18, 2003
                
                
                355,556
                
                
                Officer
                    salary
                
                
                80,000
                
                
                Chief
                    Operating OfficerDecember
                    18, 2003
                
                
                222,222
                
                
                Salary
                
                
                50,000
                
                
                Former
                    ControllerDecember
                    18, 2003
                
                
                66,667
                
                
                Officer
                    salary
                
                
                15,000
                
                
                PresidentDecember
                    18, 2003
                
                
                111,111
                
                
                Accounting
                    services
                
                
                25,000
                
                
                AccountantsDecember
                    18, 2003
                
                
                177,778
                
                
                Network
                    services
                
                
                40,000
                
                
                Vendor
  The
        above
        options were issued at $0.225 per share.
  The
        above
        option shares were issued in "cashless exercises". Accordingly, the option
        shares actually issued were reduced by the number of shares required to pay
        for
        the options as $0.225 per share.
  All
        of
        the above stock options were subsequently exercised in January
        2004.
  During
        the year ended December 31, 2004, the Company issued the following options
        to
        acquire Common stock:
 Date
                    Issued
                
                Shares
                
                Consideration
                
                Valuation
                
                RelationshipDecember
                    31, 2004
                
                
                31,985
                
                
                Accrued
                    Board Member
                  Stipends
                
                
                18,750
                
                
                Chief
                    Executive Officer/DirectorDecember
                    31, 2004
                
                
                31,985
                
                
                Accrued
                    Board Member
                  Stipends
                
                
                18,750
                
                
                Director
                    (COB)/Former ConsultantDecember
                    31, 2004
                
                
                31,985
                
                
                Accrued
                    Board Member
                  Stipends
                
                
                18,750
                
                
                Chief
                    Operating Officer/DirectorDecember
                    31, 2004
                
                
                31,985
                
                
                Accrued
                    Board Member
                  Stipends
                
                
                18,750
                
                
                Director/Former
                    PresidentDecember
                    31, 2004
                
                
                31,985
                
                
                Accrued
                    Board Member
                  Stipends
                
                
                18,750
                
                
                President/Director/Former
                    ConsultantDecember
                    31, 2004
                
                
                31,985
                
                
                Accrued
                    Board Member
                  Stipends
                
                
                18,750
                
                
                Director/Former
                    President of
                  SubsidiaryDecember
                    31, 2004
                
                
                31,985
                
                
                Accrued
                    Board Member
                  Stipends
                
                
                18,750
                
                
                DirectorDecember
                    31, 2004
                
                
                23,989
                
                
                Accrued
                    Board Member
                  Stipends
                
                
                14,065
                
                
                Chief
                    Financial OfficerDecember
                    31, 2004
                
                
                296,296
                
                
                Bonus
                
                
                200,000
                
                
                Chief
                    Executive Officer/DirectorDecember
                    31, 2004
                
                
                259,259
                
                
                Bonus
                
                
                175,000
                
                
                Chief
                    Financial OfficerDecember
                    31, 2004
                
                
                259,259
                
                
                Bonus
                
                
                175,000
                
                
                Chief
                    Operating Officer/DirectorDecember
                    31, 2004
                
                
                46,296
                
                
                Bonus
                
                
                31,250
                
                
                Chief
                    Technology Officer/Former
                  ConsultantDecember
                    31, 2004
                
                
                55,556
                
                
                Bonus
                
                
                37,500
                
                
                Senior
                    Vice-PresidentDecember
                    31, 2004
                
                
                185,185
                
                
                Bonus
                
                
                125,000
                
                
                President/Director/Former
                    ConsultantDecember
                    31, 2004
                
                
                96,296
                
                
                Bonus
                
                
                65,000
                
                
                EmployeeDecember
                    31, 2004
                
                
                162,963
                
                
                Bonus
                
                
                110,000
                
                
                EmployeeDecember
                    31, 2004
                
                
                44,704
                
                
                Bonus
                
                
                30,175
                
                
                EmployeeDecember
                    31, 2004
                
                
                35,370
                
                
                Bonus
                
                
                23,875
                
                
                EmployeeDecember
                    31, 2004
                
                
                33,333
                
                
                Bonus
                
                
                22,500
                
                
                EmployeeDecember
                    31, 2004
                
                
                27,515
                
                
                Bonus
                
                
                18,572
                
                
                EmployeeDecember
                    31, 2004
                
                
                34,876
                
                
                Bonus
                
                
                23,541
                
                
                EmployeeDecember
                    31, 2004
                
                
                5,869
                
                
                Bonus
                
                
                3,962
                
                
                EmployeeDecember
                    31, 2004
                
                
                18,750
                
                
                Bonus
                
                
                12,656
                
                
                EmployeeDecember
                    31, 2004
                
                
                4,069
                
                
                Bonus
                
                
                2,747
                
                
                EmployeeDecember
                    31, 2004
                
                
                4,533
                
                
                Bonus
                
                
                3,060
                
                
                EmployeeDecember
                    31, 2004
                
                
                1,333
                
                
                Bonus
                
                
                900
                
                
                EmployeeDecember
                    31, 2004
                
                
                36,728
                
                
                Bonus
                
                
                24,791
                
                
                Employee
                    of  SubsidiaryDecember
                    31, 2004
                
                
                5,556
                
                
                Bonus
                
                
                3,750
                
                
                Former
                    Employee of SubsidiaryDecember
                    31, 2004
                
                
                24,936
                
                
                Bonus
                
                
                16,834
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                38,302
                
                
                Bonus
                
                
                25,854
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                26,497
                
                
                Bonus
                
                
                17,886
                
                
                Former
                    Employee of SubsidiaryDecember
                    31, 2004
                
                
                18,519
                
                
                Bonus
                
                
                12,500
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                8,889
                
                
                Bonus
                
                
                6,000
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                11,111
                
                
                Bonus
                
                
                5,250
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                12,346
                
                
                Bonus
                
                
                8,334
                
                
                Employee
                    of SubsidiaryDecember
                    31, 2004
                
                
                14,815
                
                
                Amount
                    owed for services
                
                
                10,000
                
                
                AccountantDecember
                    31, 2004
                
                
                2,101,325
                
                
                Officer
                    Stock Option Grant
                
                
                1,418,394
                
                
                Chief
                    Executive Officer/DirectorDecember
                    31, 2004
                
                
                1,400,883
                
                
                Officer
                    Stock Option Grant
                
                
                945,596
                
                
                Chief
                    Operating Officer/DirectorDecember
                    31, 2004
                
                
                1,050,663
                
                
                Officer
                    Stock Option Grant
                
                
                709,197
                
                
                Chief
                    Financial OfficerDecember
                    31, 2004
                
                
                700,442
                
                
                Officer
                    Stock Option Grant
                
                
                472,798
                
                
                Director/Former
                    PresidentDecember
                    31, 2004
                
                
                700,442
                
                
                Officer
                    Stock Option Grant
                
                
                472,798
                
                
                President
                    / Director / Former
                  ConsultantDecember
                    31, 2004
                
                
                700,442
                
                
                Officer
                    Stock Option Grant
                
                
                472,798
                
                
                Chief
                    Technology Officer / Former
                  Consultant
  83
  **2004
        Stock Options Issued**
  In
        May
        2004, the board of directors approved an Officers' Stock Option Grant Plan,
        pursuant to which certain officers are entitled to receive stock options,
        for
        each of three years, beginning in 2004 (Year 1). The annual number of option
        shares to be issued will be equal to amounts that, after the exercise of
        such
        options, would affect ownership of various percentages of the total shares
        then
        issued and outstanding. The following officers received options for restricted
        shares in the following percentages: CEO - 3% in each of the three years
        (total
        9%); COO - 2% in each of the three years (total 6%), CFO - 1.5% in Year 1
        and 1%
        in each of the following years (total 3.5%), Director and former President
        -
        1.0% in Year 1 and .5% in each of the following years (total 2%), current
        President - 1% in each of the three years (total 3%), and CTO - 1% in each
        of
        the three years (total 3%). The recipient's rights to the options will vest
        after continued service at the completion of each year. The total number
        of
        option shares to be issued for 2004 is 99,812,946. The stock options are
        exercisable at $.045 per share, based on one-half of the average closing
        market
        price for the shares during the ten day period prior to the vesting date
        of
        December 31, 2004.
  In
        December 2004, we established our 2004 Stock Option Bonus Plan, wherein the
        board of directors authorized the issuance of stock options for restricted
        shares totaling 26,487,483 shares to the officers and employees of the company
        as payment of accrued bonuses through December 31, 2004. The stock options
        are
        exercisable $.045 per share, based on one-half of the average closing market
        price for the shares during the ten-day period prior to the vesting date
        of
        December 31, 2004.
  In
        December 2004, the board of directors authorized the issuance of stock options
        for restricted shares totaling 3,718,279 shares to the directors of the company
        as payment of accrued board members' stipends through December 31, 2004.
        The
        stock options are exercisable at $.0391 per share.
  **2004
        Stock Options Exercised in 2005**
  During
        2005, a total of 1,785,490 (26,782,350 post-split) of the above options shares
        were exercised and issued (net of shares used to pay for “cashless” options”),
        with payment in cash and common stock subscriptions receivable totaling $92,906,
        pursuant to the 2004 Stock Option Bonus Plan, the Officers' Stock Option
        Grant
        Plan, and for accrued board members' stipends, and, furthermore, these shares
        were registered by the Company's filing a Form S-8 registration statement.
        The
        number of shares registered were allocated to the individuals exercising
        the
        options based a ratio of the number of options held by each individual to
        the
        total number of options held by all individuals.
  As
        of the
        date of this report an aggregate of 30,000,000 shares were exercised and
        issued
        pursuant to the 2004 Stock Option Bonus Plan, the Officers' Stock Option
        Grant
        Plan, and for accrued board members' stipends, and, furthermore, these shares
        were registered by the Company's filing a Form S-8 registration statement.
        The
        number of shares registered were allocated to the individuals exercising
        the
        options based a ratio of the number of options held by each individual to
        the
        total number of options held by all individuals.
  **Options
        Pursuant to Convertible Promissory Notes**
  On
        December 16, 2002, the Company filed an SB-2 registration statement to register
        shares pursuant to the convertible promissory notes as described in Note
        14.
        During 2003, the Company and its lenders decided to wait until the waiting
        period is over, thereby eliminating the need to file the SB-2 registration
        statement.
 
 84
 
 **ITEM
        13. EXHIBITS**
 
 (A)
        EXHIBITS
 
 EXHIBIT
                  NO.
              DESCRIPTION3.1
              Articles
                  of Incorporation (filed as Exhibits 3.1, 3.2 and 3.3 to the Company's
                  Registration Statement on Form 10-SB and incorporated herein by
                  reference)3.2
              Bylaws
                  (filed as Exhibit 3.4 to the Company's Registration Statement on
                  Form
                  10-SB and incorporated herein by reference) Material Contracts-Consulting
                  Agreements and Employment Agreements (filed as Exhibits to Registration
                  10.1 Statements on Form S-8 and post-effective amendments thereto
                  and
                  incorporated herein by reference)10.1
              Asset
                  Purchase Agreement between the Company and Sanswire, Inc.(incorporated
                  by
                  reference)10.2
              Asset
                  Purchase Agreement between the Company and Stratodyne,Inc. (incorporated
                  by reference)10.3
              Subscriptions
                  Agreements between the Company and Preferred Series A,B,C, and
                  D
                  shareholders (incorporated by reference)31.1
              Certification
                  of Chief Executive Officer required by Rule
                  13a-14(a)/15d-14(a)32.1
              Certification
                  of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
                  As Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.99.1
              Safe
                  Harbor Compliance Statement for Forward-Looking Statements filed
                  herewith
 
 **ITEM
        14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
 
 **Audit
        Fees**
 
 Dohan
        and
        Company CPA's billed approximately $74,024 for professional services rendered
        for the audit of our annual financial statements for fiscal year 2003, the
        reviews of the financial statements included in our Forms 10-QSB for that
        fiscal
        year and assistance in filing various proxy statements. For fiscal year 2004,
        we
        estimate the amount billed and/or accrued for the same services to be $74,341.
        Dohan & Company has estimated the fees associated with their review of the
        restated financial statements will be $10,000.
 
 The
        above
        fees were pre-approved by the audit committee based on estimated budgets
        presented to the audit committee.
  85
  **SIGNATURES**
 
 In
        accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
        this report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
 
 **GLOBETEL
                COMMUNICATIONS CORP.**By:
              /s/ Jonathan
                LeinwandName:Jonathan
                Leinwand,Title:
                Chief
                Executive Officer (Principal Executive Officer)Dated:November
                  1, 2007
 In
        accordance with the requirements of the Exchange Act, the registrant has
        caused
        this report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
   SIGNATURE
              
              TITLE
              
              DATE/s/
                  Jonathan LeinwandJonathan
                Leinwand
              
              Chief Executive Officer, Principal Financial
                Officer and Director
              
              November
                1,
                2007/s/
Przemyslaw
                KostroPrzemyslaw
                  Kostro
              
              Chairman
                  of the Board
              
              November
                  1, 2007
 
 
 86