UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2003

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1994

                For the transition period from _______ to _______

                         Commission File Number: 0-23532

                          GLOBETEL COMMUNICATIONS CORP.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

                Delaware                                     88-0292161
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(State or other jurisdiction of incorporation) (IRS Employer Identification No.)


9050 Pines Blvd.  Suite 110  Pembroke Pines, Florida          33024
-----------------------------------------------------  -------------------------
 (Address of Principal Executive Offices)                   (Zip Code)


Issuer's telephone number:       (954) 241-0590
                           ---------------------------

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)

         --------------------------------------------------------------
                                (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 [X ] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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. [ ]

Issuer's revenues for its most recent fiscal year ended December 31, 2003:
$11,351,939.

As of April 12, 2004, there were 741,771,766 shares of the issuer's common stock
issued and outstanding. Affiliates of the issuer own 93,731,725 shares of the
issuer's issued and outstanding common stock and the remaining 648,040,051
shares are held by non-affiliates. The aggregate market value of the shares held
by non-affiliates at April 12, 2004, was $68,044,205.

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 ___  No _X_

(*) 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.
<PAGE>
                                TABLE OF CONTENTS
                                                                            Page
                                     PART I

Item 1. Description of Business                                               3
Item 2. Description of Property                                               7
Item 3. Legal Proceedings                                                     7
Item 4. Submission of Matters to a Vote of Security Holders                   7

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters             8
Item 6.  Management's Discussion and Analysis of Financial Conditions and
           Results of Operations                                             10
Item 7.  Financial Statements                                                13
Item 8.  Changes In and Disagreements With Accountants on Accounting and
           Financial Disclosure                                              35
Item 8a. Controls and Procedures                                             35

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons        35
Item 10. Executive Compensation                                              37
Item 11. Security Ownership of Certain Beneficial Owners and Management      38
Item 12. Certain Relationships and Related Transactions                      38
Item 13. Exhibits and Reports on Form 8-K                                    39
Item 14. Principal Accountant Fees and Services                              39



<PAGE>
                                     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," "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, growth plans,
business goals and other matters. 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, 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").

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 or restaurant dining
occasions, including the ongoing ramifications of the September 11, 2001
terrorist attacks and the governmental response to those attacks, 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; depth of management; adverse publicity about us and our networks; our
current dependence on affiliates in our overseas markets; the rate of growth of
general and administrative expenses associated with building a strengthened
corporate infrastructure to support our Company's growing operations; relations
between our Company and its employees; legal claims and litigation against the
Company; 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").

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 Voice over
Internet Protocol ("VoIP") 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
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.

                                       2
<PAGE>

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.

GlobeTel is authorized to issue up to 1,500,000,000 shares of Common Stock, par
value $0.00001 per share, and 10,000,000 shares of Preferred Stock, par value
$0.001. 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.

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 Transmedia 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. Therefore, the
financial statements of ADGI in this report should be regarded as the financial
statements of GlobeTel and any references to ADGI throughout this report shall
be construed to apply to GlobeTel, if applicable.

Business of GlobeTel

Internet Telephony

Our business is the transmission of telephone calls using Internet facilities.
The transmission method is called VoIP, which stands for Voice over Internet
Protocol.

Internet Protocol or IP, is not ideal for voice transmission. The "protocol"
defines the means by which digital transmissions are broken into small pieces,
called "packets," and the packets are sent to, or received from, the desired
location. IP does not require that the packets all take the same path through
the Internet, or that they arrive in the same sequence in which they were sent.
When they do arrive, they are reassembled in correct order and presented to the
user. The users see this when browsing the Internet, as the "thermometer" on the
browser shows the packets arriving until all are present and the Web page is
presented. This process of reassembling out-of-order packets is called
"buffering."

Applying buffering to VoIP calls results in an unacceptable delay between the
time the "sender" speaks and the time the "receiver" hears what's been spoken.
It's been compared to two-way radio transmissions between the earth and the
moon, where radio waves take more than a second to reach their destination. The
earthbound speaker speaks for, say, 3 seconds, and 1.5 seconds after he stops,
his speech begins to be heard on the moon. The listener requires 3 seconds to
hear what was said, and makes his reply. 1.5 seconds later the reply begins to
be heard on earth. The speaker has waited 1.5 plus 3 plus 1.5 seconds, a total
of six seconds, to hear the reply. The delay while VoIP packets are reassembled
in correct order produces exactly the same sort of delay.

The VoIP solution to this problem is simple in theory but hard to put into
practice. The solution is simply to have the transmitted sequence of packets all
follow the same path through the Internet so that they arrive in the same
sequence in which they were transmitted. This eliminates the need for buffering
and allows VoIP telephone conversations to take place just as they do on wired
telephones.

The difficulty is that, without special arrangements, the public Internet cannot
be used in a manner that avoids buffering. IP was designed for data, not voice
transmissions. Data transmissions are not seriously impacted by buffering, as
you notice when you view a Web page. Sometimes it snaps right up, other times
there are waits of a few seconds. How long it takes depends on the volume of
data traffic over the multiple paths that the different IP packets take in their
trip from sender to receiver. If one path is congested, IP quickly routes some
packets via another, less congested path. The resulting buffering time is not a
serious inconvenience for data, but is a real problem for voice transmissions.

                                       3
<PAGE>

Networks

To provide our services without buffering delays, we arrange with licensed
communications carriers in each desired country to place electronic equipment,
called a "hub," on the carrier's premises. The hub is connected to the regular
telephone network in that country. We maintain similar hubs in New York City,
Miami and Los Angeles in the United States. The hubs are connected by one of two
kinds of network, either of which allows VoIP packets to be received in the same
order they were transmitted, avoiding any buffering.

The first method, used when we first establish service to a new country and
traffic volume is relatively low, is to create a "virtual" network connection
between the two hubs. Virtual networks have been described as "tunnels" through
the Internet. These "tunnels" create "reserved" Internet bandwidth that is used
only by the parties at the ends of the "tunnel," so there is no congestion
caused by other Internet users sending and receiving traffic through the
"tunnel."

A virtual network is limited as to the amount of traffic it can handle. When the
limit begins to be approached, we make arrangements with one of several major
Internet service providers who maintain a physical connection between the United
States and the desired country, in the form of a leased high-speed line. Leased
lines have much greater traffic-carrying capacity than virtual networks. We
connect our hubs to the leased line at both ends and are immediately able to
handle a greater volume of calls than the virtual network allows.

At present we have virtual networks serving callers in Venezuela, the United
Kingdom, Australia, China, Philippines and Malaysia and physical networks
serving customers in Hong Kong, Brazil and Mexico. Within each country served,
depending on traffic volume within the country, we may establish subsidiary hubs
in other major cities, fed from the principal hub.

Enhanced Services Platform

Our Enhanced Services Platform, or ESP, is a proprietary software package that
runs on our hubs and provides a group of enhanced messaging features to users of
our networks. These services include:

o    Call waiting, call forwarding, conference calling, voice mail;
o    Voice to e-mail. This feature permits customers to dial a local number and
     have e-mail messages in his or her e-mail inbox read aloud by the ESP, over
     the phone. Customers may also dictate a reply over the phone, which the ESP
     will record and transmit to the e-mail sender as a voice attachment to a
     reply message.
o    "Follow me" service. This feature allows customers to "program" the
     ESP to have calls forwarded to another location. o Fax service. This
     feature allows customers to send and receive faxes from their phones
     over our facilities.
o    Calling card services. These allow customers to use pre-paid calling cards
     purchased from a Web site or from a local vendor
     to place calls over our facilities. After obtaining a calling card and
     getting a personal identification number (PIN), customers dial their local
     access number and enter their PIN to place calls.

A number of the features provided by the ESP mirror services that are available
to persons using regular telephone lines, but that are not generally available
for VoIP calls.

International Customers -- Purchase and Resale of Telephony Minutes

Because calls to other countries must terminate at the called residential or
business telephone number, which can be reached only through the facilities of
an authorized local telephone carrier, we enter into an agreement with an
established international telephone carrier as our "partner" in each of the
countries we serve, usually the same carrier that hosts our hub in that country.
Under these agreements, we purchase a bulk "package" of minutes that we are
entitled to use for calls between the United States and the countries in
question. We then resell these minutes at a profit to individual and business
customers. Most of our customers either prepay for these minutes or post letters
of credit with our bank securing their transaction, by means of prepaid calling
cards which are issued by the local carrier, who collects the revenue and
divides it with us. The revenue retained by the carrier pays for our bulk
purchase of minutes.

                                       4
<PAGE>

Stored Value Cards

In late 2003, we began offering a new international telecommunications and
financial services program which we call the Magic Money Card Program
("Program"). The Magic Money Card is a true stored value debit card offering
prepaid long distance and international calling services along with a host of
non-telephony services in each country that it is offered. We developed the
Magic Money Card as a stored value product to sell into specific ethnic
communities in the United States which connects them with their families in
their home countries. We provide them with such stored value services as
inexpensive prepaid calling services, money remittance services, electronic
banking services and a full complement of debit card services that are offered
anywhere the Maestro and Cirrus logos are found, which covers over 20 million
merchants and 1 million ATMs around the world.

At the moment, our programs are geared towards the ethnic communities of Latin
Americans and Asians living in the U.S. and tying them to their home countries.
One of our key goals is 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 and not found in competitors'
programs.

The Magic Money Card services are available to our cardholders in all of the
countries that are registered on our network. We are able to issue Magic Money
Cards to each cardholder in their respective country and cardholders are able to
link services and features with other cardholders. Additionally, with our
telephone networks and international carrier agreements, we are able to offer
them access to our calling network through each local carrier participating in
the Program.

To connect these overseas network "spokes" to the main "hub" of the Program in
the United States, we enter into relationships with local banks to act as a
depository for the cardholder's funds in the U.S. and provide us with a bank
identification number (BIN) with MasterCard to issue domestic Magic Money Cards
to be registered on our network ("BIN Bank Program"). The BIN Bank Program
proposal is fee based whereby the bank will act as a depository for Magic Money
Card cardholder's funds, receiving the benefits of these deposits while
receiving a monthly fee from us for each active Magic Money Card cardholder in
the U.S. and, independently, the bank will receive a portion of the fees
collected by MasterCard for each service rendered to Magic Money Card
cardholders. There are no administrative services required or expenses incurred
by the bank nor are there any financial risks as we and our in-country partners
will be providing all of the MasterCard processing services. We, along with our
in-country partners, will be providing customer service to the Magic Money Card
cardholders.

For example, one of our major market is Mexico. We have a carrier services
agreement and are providing prepaid calling services to one of the licensed
Mexican telephone companies. Our program is able to connect Mexicans working in
the U.S. with their families in Mexico providing an inexpensive way for families
to stay in touch and for Mexican workers in this country to send money home to
their families. We have developed the same business relationships in Venezuela,
Brazil and Colombia. In Asia, we are forming relationships with banks and
carriers in the Philippines, Hong Kong, Australia, and the U.K.

Super Hubs(TM)

Our strategic plan is to install a worldwide VoIP network, which will consist of
regional centers (which we refer to as VoIP International Super Hubs(TM), or
simply Super Hubs(TM)) strategically located around the world. Each Super
Hub(TM) controls network activity regionally, for example in South America or in
East Asia, and is connected directly to a United States point of presence (PoP).

We have consolidated our operations to focus on the Super Hub(TM) and our
enhanced services platform to market to maturing foreign markets, utilizing VoIP
technology. Further, we have limited our activities in some markets to focus on
opportunities with greater margins. VoIP technology continues to be the most
cost effective and efficient alternative to traditional circuit switching
technology.

Each Super Hub(TM) will be interconnected and equipped with our enhanced
services platform to provide one-stop shopping for quality voice communications,
e-mail, voicemail, faxing, etc. The Super Hub(TM), with the enhanced services
platform, makes the network unique in its design. It will not be built on the
conventional, hub-and-spoke connection but will instead follow a high
connectivity, multi-route design only available by using VoIP.

In March 2004, we entered into a binding letter of intent to purchase
substantially all of the assets of Sanswire Technologies, Inc., subject to the
completion of due diligence, the satisfaction of several conditions set forth in
the binding letter of intent and the execution of a definitive Purchase
Agreement by April 30, 2004.

                                       5
<PAGE>

Sanswire 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. 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
regenerative fuel cell technologies.

In addition to Sanswire's National 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).
However, the technology for the Stratellites is new and we do not know if all of
this technology can and will be developed for commercial use.

Competitive Business Conditions

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. Our use of VoIP technology and
proprietary enhanced services platform enables us to provide customers with
competitive pricing for their telecommunications needs. Nevertheless, there can
be no assurance that we will be able to successfully compete with major carriers
including other VoIP telephony providers and traditional phone companies, in
present and prospective markets. These markets include Mexico, Brazil,
Venezuela, Colombia, Australia, the Philippines Hong Kong and Malaysia.
GlobeTel's business strategy is to provide competitive pricing to small to
mid-sized businesses and individuals to increase our customer base and we are
pursuing large multi-national corporations which operate in a number of our
markets. We are dependent upon local independent affiliates or associates
partners in each market for sales and marketing, customer service and technical
support to terminate and originate our IP telephony services. This marketing
strategy should minimize our dependency on any single market and/or group of
customers and lessen our costs and expedite our entry into markets. There can be
no assurance that we will be able to successfully compete in our present and
prospective markets.

Sources and Availability of Hardware and Software

All equipment used by GlobeTel is provided by major suppliers and is readily
available. Software to operate the network is commercially available from
software suppliers and equipment suppliers, and GlobeTel has developed in-house
proprietary software for network applications and new telecommunications
products. We are not dependent upon any supplier of hardware or software. We use
equipment from major telecommunication equipment manufacturers such as Cisco,
Motorola and Newbridge Networks, among others.

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 have
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 "partner" 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.

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.

                                       6
<PAGE>

Number of total employees and number of full-time employees

GlobeTel at present has 15 full-time employees, including our executive officers
and two consultants. We do not believe that we will have difficulty in hiring
and retaining qualified individuals in the field of Internet telephony, although
the market for skilled technical personnel is highly competitive.


ITEM 2.  DESCRIPTION OF PROPERTY

GlobeTel leased facilities at 444 Brickell Avenue, Suite 522, Miami, Florida
33131. The Company is under a five-year lease expiring April 2005 with a present
monthly rent of $3,463. Since the Miami facility does not provide sufficient
space for equipment and personnel for our growing operations, we have leased
additional facilities at 9050 Pines Blvd., Suite 110, Pembroke Pines, Florida
33024, as of April 1, 2004. For this new facility, the lease will expire in June
2009, with an initial monthly rent of $5,462, and increases of 4% per year. The
condition of our leased facility is deemed to be satisfactory for our business
operations for the foreseeable future.

We had another facility leased in Jersey City, New Jersey, which, effective
November 2001, was sub-leased to one of our consultants and customer. Pursuant
to the sublease agreement, the customer/consultant 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.


ITEM 3.  LEGAL PROCEEDINGS

We are a defendant in a lawsuit file 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). This lawsuit relates 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 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 have commenced an
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 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. However, we cannot project an outcome with any
certainty. We have not entered into any settlement negotiations with Mr. Milo
and Mr. Quattrocchi and we do not believe that we would be materially adversely
affected by the outcome of this proceeding.

There is presently an outstanding claim against us related to an equipment lease
which approximates $53,311 and is reflected as part of capital lease
obligations, current portion. As of April 12, 2004, the lessor has not commenced
any legal action against us and we believe that we may be able to enter into
settlement agreement. We do not believe that we will be materially adversely
affected by these liabilities.

Globetel is in the process of taking legal actions against our associate and
customer in Mexico for non-payment of the amount they owe us. This customer has
substantial assets, including telecommunications equipment, existing working
networks and Mexico tax refunds which they have proposed to turn over to us. The
motion filed in the Mexican courts was necessary to formally request that
Globetel become the assigned payee of the tax refund receivable and formally
secure the equipment and to take over the operations of the existing networks.

This situation with our customer has caused us to write-off $648,812 as a bad
debt expense. In February 2004, the customer agreed that proceeds from the
network operations will be paid totally to Globetel, including the customer's
portion of the profit-sharing, until the amount they owe us has been fully paid.
Upon full payment, we will begin the sharing profits again in accordance with
the contract.


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

There were no matters submitted to a vote of security holders in 2003.


                                       7
<PAGE>

                                     PART II

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

(a)  Market Price

Our shares of common stock are quoted on the Over-the-Counter Bulletin Board
(OTCBB) quotation system under the symbol GTEL. As of April 12, 2004, there are
approximately 22 market makers in our common shares.

The following information sets forth the high and low bid price of our common
stock during fiscal 2003 and 2002 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.

                                                        High              Low
CALENDAR 2002

Quarter Ended March 31,                                 $.0690            $.0185
Quarter Ended June 30,                                  $.0530            $.0250
Quarter Ended September 30,                             $.0510            $.0250
Quarter Ended December 31,                              $.0500            $.0295


CALENDAR 2003

Quarter Ended March 31,                                 $.0440            $.0200
Quarter Ended June 30,                                  $.0290            $.0151
Quarter Ended September 30,                             $.0400            $.0190
Quarter Ended December 31,                              $.1310            $.0250


CALENDAR 2004

Quarter Ended March 31,                                 $.1960            $.0500


(b) Holders

As of April 12, 2004, there were approximately 24,000 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, 2003 and our accumulated deficit was $26,494,167. 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 47,751,200 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 $.015 per share or 50% of the closing market price.

In December 2003, the board of directors authorized the issuance of stock
options totaling 16,333,333 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 $.015 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 $.015 and as a result, we issued 64,084,533 shares
of common stock in January 2004, in accordance with the stock option agreements.

                                       8
<PAGE>

Recent Sales of Unregistered Securities

The following information is given with regard to unregistered securities issued
and/or sold by us during the twelve months ended December 31, 2003, including
the dates and amounts of securities sold; the persons or class of persons to
whom we sold the securities; the consideration received in connection with such
sales and if the securities were issued or sold other than for cash, the
description of the transaction and the type and amount of consideration
received.
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------
                     Amount of
Date                Securities                                   Cash or Non-Cash
                 Title        Sold     Persons                     Consideration
--------------------------------------------------------------------------------------
<S>                <C>        <C>        <C>                          <C>

02/14/2002    Common Stock  5,500,000  Sigma Online              Services valued at
                                                                         $92,500
--------------------------------------------------------------------------------------
03/25/2002    Common Stock  6,000,000  Paul Taboada              Broker fees valued
                                                                     at $150,000
--------------------------------------------------------------------------------------
03/25/2002    Common Stock  2,000,000  John Rooney               Broker fees valued
                                                                      at $50,000
--------------------------------------------------------------------------------------
03/25/2002    Common Stock  1,000,000  Eric Ellenhorn            Broker fees valued
                                                                      at $25,000
--------------------------------------------------------------------------------------
03/25/2002    Common Stock   500,000   Zoe Ellenhorn (Trustee)   Broker fees valued
                                                                      at $12,500
--------------------------------------------------------------------------------------
03/25/2002    Common Stock   500,000   Zach Ellenhorn (Trustee)  Broker fees valued
                                                                      at $12,500
--------------------------------------------------------------------------------------
06/26/2002    Common Stock 10,000,000  Schrader & Schoenber      Services valued at
                                       (Custodial for            $300,000
                                       Charterhouse Consultancy)
--------------------------------------------------------------------------------------
06/26/2002    Common Stock 10,000,000 Schrader & Schoenber       Services valued at
                                      (Custodial for             $300,000
                                       Charterhouse Consultancy)
--------------------------------------------------------------------------------------
07/09/2002    Common Stock  1,000,000  George LeFevre            Services valued at
                                                                         $30,000
--------------------------------------------------------------------------------------
07/09/2002    Common Stock  1,000,000  Scott Abscher             Services valued at
                                                                         $30,000
--------------------------------------------------------------------------------------
07/09/2002    Common Stock  3,000,000  Charterhouse Investments  Services valued at
                                                                         $90,000
--------------------------------------------------------------------------------------
08/02/2002    Common Stock   250,000   Robinson Markel           Private Placement at
                                                                          $ .028
--------------------------------------------------------------------------------------
08/21/2002    Common Stock  5,837,500  Paul Taboada              Broker fees valued at
                                                                        $116,750
--------------------------------------------------------------------------------------
08/21/2002    Common Stock   412,500   Sperry Younger            Broker fees valued at
                                                                          $8,250
--------------------------------------------------------------------------------------
08/21/2002    Common Stock  6,250,000  Charles Morgan Securities Broker fees valued at
                                                                        $125,000
--------------------------------------------------------------------------------------
08/28/2002    Common Stock  7,500,000  Clay Realty               Loan collateral
--------------------------------------------------------------------------------------
08/28/2002    Common Stock  7,500,000  Brantridge Holdings       Loan collateral
--------------------------------------------------------------------------------------
10/01/2002    Common Stock  2,220,000  Sigma Online              Services valued at
                                                                         $33,300
--------------------------------------------------------------------------------------
11/07/2002    Common Stock  15,000,000 Andrew Roth               Loan collateral
--------------------------------------------------------------------------------------
11/14/2002    Common Stock   500,000   Robinson Markel           Private Placement at
                                                                          $ .035
--------------------------------------------------------------------------------------
12/06/2002    Common Stock  15,000,000 Andrew Roth               Loan collateral
--------------------------------------------------------------------------------------
12/06/2002    Common Stock  30,000,000 TR Enterprises            Loan collateral
--------------------------------------------------------------------------------------
12/06/2002    Common Stock  12,500,000 Paul Taboada              Broker fees valued
                                                                        $250,000
--------------------------------------------------------------------------------------
12/30/2002    Common Stock  1,000,000  James E. Kimble           Services valued at
                                                                         $15,000
--------------------------------------------------------------------------------------
12/31/2002    Common Stock  2,000,000  Marcelino Reyes           Services valued at
                                                                         $40,000
--------------------------------------------------------------------------------------
12/31/2002    Common Stock   500,000   Robert McInerney          Services valued at
                                                                         $10,000
--------------------------------------------------------------------------------------
12/31/2002    Common Stock  2,000,000  Bretton Hill (2)          Balance due for
                                                                 Acquisition of Global
--------------------------------------------------------------------------------------
12/31/2002    Common Stock   673,338   Bretton Hill              Interest valued at
                                                                         $10,000
--------------------------------------------------------------------------------------
03/14/2003    Common Stock  2,200,000  Mandalay Industries, Inc. Services valued at
                                                                         $22,000
--------------------------------------------------------------------------------------
03/14/2003    Common Stock  1,800,000  Fordham Fin. Mgmt. Inc.   Broker fees valued
                                                                         $18,000
--------------------------------------------------------------------------------------
05/07/2003    Common Stock  1,100,000  Mandalay Industries, Inc. Services valued at
                                                                         $11,550
--------------------------------------------------------------------------------------
05/07/2003    Common Stock    900,000  Fordham Fin. Mgmt. Inc.   Broker fees valued
                                                                         $18,000
--------------------------------------------------------------------------------------
05/22/2003    Common Stock  2,500,000  Clay Realty, Inc.         Loan collateral
--------------------------------------------------------------------------------------
05/22/2003    Common Stock  2,500,000  Brantridge Holdings       Loan collateral
--------------------------------------------------------------------------------------
05/22/2003    Common Stock  9,000,000  Infinity Capital Partners Conversion of 60% of
                                                                 $239,206 of debt
--------------------------------------------------------------------------------------
05/22/2003    Common Stock  6,000,000  Timothy M. Huff           Conversion of 40%
                                                                 $239,206 of debt
--------------------------------------------------------------------------------------
05/22/2003    Common Stock  4,000,000  Gerard Harryman           Settlement of
                                                                 $55,000 of debt
--------------------------------------------------------------------------------------
07/18/2003    Common Stock 12,844,000  Michael Terry             Conversion of
                                                                 $256,880 of debt
--------------------------------------------------------------------------------------
09/03/2003    Common Stock    944,444  Charles Morgan Securities  Services valued at
                                                                         $11,806
--------------------------------------------------------------------------------------
09/03/2003    Common Stock    900,000  Fordham Fin. Mgmt. Inc.   Services valued at
                                                                         $11,250
--------------------------------------------------------------------------------------
09/03/2003    Common Stock  1,100,000  Mandalay Industries, Inc. Services valued at
                                                                         $13,750
--------------------------------------------------------------------------------------
09/03/2003    Common Stock  3,847,222  Mandalay Industries, Inc. Services valued at
                                                                         $48,090
--------------------------------------------------------------------------------------
09/29/2003    Common Stock    656,867  Charles Morgan Securities Services valued at
                                                                          $8,211
--------------------------------------------------------------------------------------
10/09/2003    Common Stock  4,281,333  Michael Terry             Additional shares due
                                                                   for conversion of
                                                                   debt
--------------------------------------------------------------------------------------
10/09/2003    Common Stock  3,650,000  Leigh A. Coleman          Consulting services
                                                                   valued at $73,000
--------------------------------------------------------------------------------------

10/09/2003    Common Stock  2,000,000  Thomas Y. Jimenez         Officer's salary
                                                                  valued at $40,000
--------------------------------------------------------------------------------------
12/31/2003    Common Stock  7,500,000  Timothy M. Huff           Officer's salary
                                                                   valued at
                                                                   $112,500
--------------------------------------------------------------------------------------
12/31/2003    Common Stock  1,166,667  Thomas Y. Jimenez         Officer's salary
                                                                  valued at $17,500
--------------------------------------------------------------------------------------
</TABLE>

                                       9
<PAGE>

As further discussed in Note 4 in the Notes to the Financial Statements, we
entered into an agreement with Fordham Financial Management Inc. to raise
$2,500,000 to finance our purchase of the assets of Advantage
Telecommunications, Ltd. 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.

We had $1,200,000 subscribed as of December 31, 2003, and had received $717,140,
which represents the subscriptions less fees totaling $107,860 and $375,000 that
were not received until after December 31, 2003. The full amount of $2,500,000
had been subscribed as of January 31, 2004 and funds fully received as of
February 2004.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
         OPERATIONS

General

This discussion and analysis should be read in conjunction with our Company's
Consolidated Financial Statements and related notes found elsewhere in this
Annual Report on Form 10-KSB.

Twelve months ended December 31, 2003 ("Fiscal 2003") compared to twelve months
ended December 31, 2002 ("Fiscal 2002")

Results of Operations

Revenues. During the fiscal 2003, our gross sales were $11,351,939, representing
a decrease of 2.9% over the same period in the prior year when our gross sales
were $11,689,573. This decrease is primarily because there were no related party
transactions in fiscal 2003 as compared to fiscal 2002, when related party
transactions totaling $5,717,150 were reported.

Our gross sales, compared to the prior year when excluding related party
transactions, actually increased by $5,379,516 or 90.07%.

Our two main customers were the source of over 93% of all revenues. Our customer
utilizing the Mexico network generated $7,569,007 or 67% of gross sales and our
customer utilizing the Brazil network generated $3,043,348, or 26% of gross
sales.

We did not have income from international sales during fiscal 2003, compared to
2002 when we had international sales totaling 49% of total sales, representing
revenues related to the network sales and services to related parties
(Charterhouse) domiciled outside of the United States.

Cost of Sales. Our cost of sales consists primarily of the wholesale cost of
buying bandwidth purchased by us for resale, technical services, rents and the
costs of depreciation of telecommunications equipment. We had cost of sales of
$8,840,872 for fiscal 2003, compared to $6,566,944 for fiscal 2002. We expect
cost of sales to increase in future periods to the extent that our sales volume
increases.

Gross Margin. Our gross margin was $2,511,067 or 22.12% for fiscal 2003,
compared to $5,122,629 or 43.5% of total revenues in fiscal 2002, a decrease of
$2,611,562 or 51%. The decrease is primarily due to the fact that there was a
higher margin resulting from the related party transactions in fiscal 2002. The
gross margin for non-related party transaction is 22% for 2003 and 16% for 2002.

Operating Expenses. Our operating expenses consist primarily of payroll and
related taxes, expenses for executive and administrative personnel, facilities
expenses, professional and consulting service expenses, travel and other general
corporate expenses. Our operating expenses for fiscal 2003 were $3,805,388
compared to fiscal 2002 operating expenses of $3,492,894, an increase of
$292,494 or 8%. The increase is primarily due to an increase in bad debts
resulting from our networks in Mexico and Brazil, totaling $1,409,994. When
excluding bad debt expense, our actual operating expenses decreased by 22% from
the previous year, primarily because of substantially reduced consulting and
brokers' fees paid in fiscal 2003. (See Note 11 and Note 12 to the Notes to
Financial Statements with respect to consulting agreements executed in January
2002, and August 2002, respectively, for investment banking services).

                                       10
<PAGE>

Our operating expenses are expected to further decrease as a percentage of
revenues in future periods because our existing operating infrastructure will
allow increases in revenues without having to incrementally add operating
expenses. However, our expenses may increase in absolute dollars as we continue
to expand our network termination locations worldwide and incur additional costs
related to the growth of our business and being a public company.

Income(Loss) from Operations. We had an operating loss of $1,294,321 for fiscal
2003 as compared to operating income of $1,629,735 in fiscal 2002. The results
of operations of the company were directly impacted by the bad debt recognized
in fiscal 2003 as discussed above and in the prior year, we had higher margins
resulting from the related party transactions, also as previously discussed
above. (See Note 3 to the Notes to Financial Statements).

Other Income (Expense).

We had net other expenses totaling $4,908,205 during fiscal 2003 compared to
$308,441 during fiscal 2002.

Other income during fiscal 2003 resulted from a gain of $26,274 by paying a
vendor a lesser amount than what was recorded in the books as settlement for
providing equipment that did not function as purported. We also reported a net
gain of $55,842 in connection with the closing of operations of our St. Louis,
Missouri office after accounting adjustments were made.

We did not have interest income in fiscal 2003 compared to $6,528 in fiscal
2002. This amount was substantially all the other income in fiscal 2002.

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 and a loss
of $42,301 resulting from the disposal of defective equipment. For fiscal 2002,
other expenses included $247,379 associated with the reincorporation of the
company and loss of $43,488 on forgiveness of accrued interest receivable from
officers. Interest expense for fiscal 2003 was $113,142 compared to $24,102
during fiscal 2002. Interest expense increases were due to substantially more
notes and loans payable in fiscal 2003.

Net Income (Loss). We had a net loss of $6,202,526 in fiscal 2003 compared to
net income of $1,321,294 during fiscal 2002. The net loss is primarily
attributable to the writing-off of our assets, specifically, the IPW stock which
we are rendering without value as it is presently in liquidation and not listed
in the Australian Exchange and the recording of bad debts or write-offs of
accounts receivable.

In order for us to pay our operating expenses during 2003 and 2002, including
certain operating expenses of our then wholly-owned subsidiaries, we raised
$500,000 and $24,500 from the sale of common stock in 2003 and 2002 respectively
and raised $144,194 and $8,593 from proceeds from related party payables in 2003
and 2002, respectively. We generated $784,259 from loans and notes payable in
2003 and $1,922,488 in 2002. During 2003, we also raised a net amount of
$717,140 from the sales of preferred stock.

Liquidity and Capital Resources

At December 31, 2003, we had total assets of $4,144,231 compared to total assets
of $8,344,884 as of December 31, 2002. The current assets at December 31, 2003,
were $3,691,721 compared to $3,549,450 at December 31, 2002.

The decrease in total assets was primarily due to the write-off of receivables
related to the related party transactions totaling $4,301,500 as discussed in
Note 3 of the Notes to the Financial Statements. The increase in current assets
is primarily attributable to an increase in accounts receivable to $3,093,427
(net of an allowance for doubtful accounts of $378,787) at year end 2003,
compared to $1,747,819 (net of an allowance for doubtful accounts of $1,094,420)
at year end 2002. Further, we had made deposits totaling $302,300 for purchase
of equipment and $71,000 as prepayment to our carriers in fiscal 2003. Finally,
we recorded a write-off of $1,600,000 in non-readily marketable securities,
available-for-sale as also discussed in Note 3 of the Notes to the Financial
Statements.

Our total current liabilities were $1,908,686 at December 31, 2003, compared to
$4,131,015 at December 31, 2002. The decrease in current liabilities was
primarily a result of writing-off accounts payable, to be satisfied with
non-readily marketable securities as discussed in Note 3 of the Notes to the
Financial Statements, paying off notes payable and paying off accrued officers'
salaries by issuances of stock options.

Accounts payable increased from $639,323 to $871,241 primarily due to costs
associated with operations of the network.

                                       11
<PAGE>

As of December 31, 2002, we had long-term notes payable to our former chairman,
totaling $55,000 which we satisfied in 2003 by issuing common stock totaling
4,000,000 shares. We do not have any other long-term liabilities as of December
31, 2003.

We had a negative cash flow from operations of $1,389,102 in 2003 compared to
$1,038,461 in 2002. The significant change was primarily due to the increased
level of operations and operating activities.

We used $607,401 for investing activities in 2003 compared to $74,290 in 2002.
The increase is due to deposits and purchase of equipment.

Net cash provided by financing activities increased substantially in 2003 to
$2,019,866 from $1,282,149 in 2002. The increase was principally due to proceeds
from sales of common and preferred stock and financing and notes payable. As
reflected in the accompanying financial statements, during the year ended
December 31, 2003, we had a net loss of $6,202,526 compared to a net income of
$1,321,294 during 2002. Consequently, there is an accumulated deficit of
$26,494,164 at December 31, 2003, compared to $20,291,641 at December 31, 2002.






                                       12
<PAGE>


ITEM 7. FINANCIAL STATEMENTS


                  GLOBETEL COMMUNICATIONS CORP. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002


                                TABLE OF CONTENTS

                                                                          Page
                                                                          ----
INDEPENDENT AUDITORS' REPORT                                               21
CONSOLIDATED FINANCIAL STATEMENTS

  Consolidated Balance Sheets                                              22
  Consolidated Statements of Income (Loss)                                 24
  Consolidated Statements of Cash Flows                                    26
  Consolidated Statements of Stockholders' Equity                          28
  Notes to Consolidated Financial Statements                               29




                                       13
<PAGE>


Dohan and Company                                 7700 North Kendall Drive, #200
Certified Public Accountants                      Miami, Florida 33156-7564
A Professional Association                        Telephone: (305) 274-1366
                                                  Facsimile: (305) 274-1368
                                                  e-Mail:    info@uscpa.com
                                                  Web site:  www.uscpa.com


                          INDEPENDENT AUDITORS' REPORT


Board of Directors
GlobeTel Communications Corp. and Subsidiary
Pembroke Pines, Florida

We have audited the accompanying consolidated balance sheets of GlobeTel
Communications Corp. and Subsidiary, as of December 31, 2003 and 2002,and the
related consolidated statements of income (loss), cash flows, and stockholders'
equity for the years then ended. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. 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 audits provide 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 Subsidiary, as of December 31, 2003 and 2002, and the
results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.

                                               /s/ Dohan and Company, CPAs, P.A.

March 30, 2004,
Miami, Florida



Member:
Florida Institute of Certified Public Accountants
American Institute of Certified Public Accountants
  Private Companies and SEC Practice Sections
Accounting Group International
  Offices in Principal Cities World-Wide




                                       14
<PAGE>
                  GLOBETEL COMMUNICATIONS CORP. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                                          December 31,
                                                      2003             2002
                                               ---------------   --------------

                                     ASSETS
CURRENT ASSETS

  Cash and cash equivalents                    $       224,994   $      201,631
  Accounts receivable, less allowance for doubtful
    accounts of $378,787 and $1,094,420              3,093,427        1,747,819
  Deposits to carriers                                  71,000             -
  Deposits on equipment                                302,300             -
  Non-readily marketable, available-for-sale
    equity securities                                     -           1,600,000
  Deferred taxes (less valuation allowance
    of $3,104,649 and $2,303,276)                         -                -
                                               ---------------   --------------
    TOTAL CURRENT ASSETS                             3,691,721        3,549,450
                                               ---------------   --------------

PROPERTY AND EQUIPMENT, NET                            436,375          403,030

OTHER ASSETS
  Non-readily marketable, available-for-sale
    equity securities due from related party -
    Charterhouse Investment                               -           4,301,500
  Organization costs, net                                 -                 283
  Deposits                                              16,135           90,621
                                               ---------------   --------------
     TOTAL OTHER ASSETS                                 16,135        4,392,404
                                               ---------------   --------------
TOTAL ASSETS                                   $     4,144,231   $    8,344,884
                                               ===============   ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES

   Accounts payable                            $       871,241   $      639,323
   Accounts payable, to be satisfied with
     non-readily marketable, available-for-sale
     equity securities                                    -             974,951
   Current portion of capital lease obligations         53,311           82,984
   Notes payable                                       438,700          960,528
   Loans payable to related party - Charterhouse
     Investment                                        361,960          311,960
   Loans payable                                        10,000             -
   Accrued payroll and related taxes                      -              12,785
   Accrued expenses and other liabilities               57,423           48,700
   Deferred revenues                                    31,528           51,353
   Deferred revenues - related party                      -             184,350
   Accrued officers' salaries and bonuses                 -             730,000
   Due to former employees                              27,023             -
   Related party payables                               57,500          134,081
                                               ---------------   --------------
     TOTAL CURRENT LIABILITIES                       1,908,686        4,131,015
                                               ---------------    --------------
LONG-TERM LIABILITIES
   Notes payable-shareholder                              -              55,000
                                               ---------------   --------------
     TOTAL LONG-TERM LIABILITIES                          -              55,000
                                               ---------------   --------------
       TOTAL LIABILITIES                             1,908,686        4,186,015
                                               ---------------   --------------

COMMITMENTS AND CONTINGENCIES (NOTES 3 and 14)            -                -

STOCKHOLDERS' EQUITY
   Preferred stock, $.001 par value,
     10,000,000 shares authorized; 72,000 issued            72             -
   Additional paid-in capital - Preferred stock      1,092,068
   Common stock, $.00001 par value,
     1,500,000,000 shares authorized;
     653,224,471 and 605,320,283 shares issued
     and outstanding                                     6,532           6,053
   Additional paid-in capital                       28,006,040       24,444,457
   Stock subscription receivable
      - Preferred stock                            (   375,000)            -
   Accumulated deficit                             (26,494,167)     (20,291,641)
                                                ---------------  --------------
TOTAL STOCKHOLDERS' EQUITY                           2,235,545        4,158,869
                                                ---------------  --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $     4,144,231   $    8,344,884
                                               ===============   =============
See accompanying notes.

                                       15
<PAGE>
                  GLOBETEL COMMUNICATIONS CORP. AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)

                                               For the Years Ended December 31,
                                                  2003                  2002
                                               ---------------   --------------
REVENUES
   Sales                                       $    11,351,939   $    5,972,423
   Sales - related parties                                -           5,717,150
                                               ---------------   --------------
     Total sales                                    11,351,939       11,689,573
                                               ---------------   --------------
   Cost of sales                                     8,840,872        6,407,944
   Cost of sales - related parties                        -             159,000
                                               ---------------   --------------
     Total cost of sales                             8,840,872        6,566,944
                                               ---------------   --------------
     GROSS MARGIN                                    2,511,067        5,122,629
                                               ---------------   --------------
EXPENSES
   Payroll and related taxes                           283,408          138,485
   Professional fees                                   694,530          539,713
   Officers' salaries and bonuses                      595,000          730,000
   Consulting and brokers' fees                        199,167        1,230,800
   Bad debts                                         1,409,994          445,147
   Other operating expenses                            160,609           95,353
   Telephone and communications                         69,169           56,408
   Advertising and marketing                           105,314           15,987
   Travel and related expenses                          95,213           73,433
   Rents                                                46,231           40,971
   Insurance and employee benefits                     102,383           82,568
   Depreciation and amortization                        44,370           44,029
                                               ---------------   --------------
     TOTAL EXPENSES                                  3,805,388        3,492,894
                                               ---------------   --------------
INCOME (LOSS) BEFORE OTHER INCOME (EXPENSE)
  AND INCOME TAXES                                  (1,294,321)       1,629,735
                                               ---------------   --------------
OTHER INCOME (EXPENSE)
   Gain on discontinued operations                      55,842             -
   Gain on forgiveness of debt                          26,274             -
   Interest income                                        -               6,528
   Interest expense                                   (113,142)         (24,102)
   Reincorporation expenses                               -            (247,379)
   Loss on forgiveness of accrued interest
     receivable from officers                             -             (43,488)
   Loss on disposal of equipment                      ( 42,301)            -
   Write-off of non-readily marketable,
     available-for-sale equity securities           (4,834,878)            -
                                               ---------------   --------------
NET OTHER INCOME (EXPENSE)                          (4,908,205)        (308,441)
                                               ---------------   --------------
NET INCOME (LOSS) BEFORE INCOME TAXES               (6,202,526)       1,321,294
                                               ---------------   --------------
INCOME TAXES
  Provision for income taxes                              -            (528,518)
  Tax benefit from utilization of net
    operating loss carryforwards                          -             528,518
                                               ---------------   --------------
TOTAL INCOME TAXES                                        -                -
                                               ---------------   --------------
NET INCOME (LOSS)                              $    (6,202,526)  $    1,321,294
                                               ===============   ==============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
    BASIC                                          627,814,875      501,679,301
    DILUTED                                        627,814,875      505,617,703
                                               ===============   ==============
NET INCOME (LOSS) PER SHARE
    BASIC                                      $         (0.01)  $         0.00
    DILUTED                                    $         (0.01)  $         0.00
                                               ===============   ==============
See accompanying notes.



                                       16
<PAGE>
                  GLOBETEL COMMUNICATIONS CORP. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                               For the Years Ended December 31,
                                                  2003                 2002
                                               ---------------   --------------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                           $    (6,202,526)  $    1,321,294
   Adjustments to reconcile net income
     (loss) to net cash used by operating activities:
     Depreciation and amortization                     227,200          134,262
     Bad debt expenses                               1,409,994             -
     Gain on discontinuance of operation                55,842             -
     Gain on debt forgiveness                           26,274             -
     Loss on write-off of asset                      4,834,878             -
     Loss on sale of equipment                          42,301             -
     Common stock exchanged for severance pay           36,000             -
     Common stock exchanged for services               568,510        1,690,800
     Property and equipment used in cost of sales         -             233,191
     Non-readily marketable, available-for-sale
       equity securities due from related
       party - Charterhouse Investment                    -          (4,051,500)
     Non-readily marketable, available-for-
       sale equity securities                             -          (1,600,000)
   (Increase) decrease in assets:
     Accounts receivable                            (2,755,602)      (1,446,047)
     Accounts receivable, related party                   -             872,248
     Prepaid expenses                                  (71,000)            -
     Deposits                                           74,486           37,301
   Increase (decrease) in liabilities:
     Accounts payable                                1,111,960          299,202
     Accounts payable, to be satisfied with
       non-readily marketable, available-for-
       for sale equity securities                     (974,951)         632,451
     Accrued payroll and related taxes                 (12,785)        (133,075)
     Accrued officers' payroll and bonuses                -             541,569
     Accrued expenses and other liabilities            439,245          250,330
     Deferred revenues                                ( 46,106)          (4,837)
     Deferred revenues - related party                (152,822)         184,350
                                               ---------------   --------------
     NET CASH USED BY OPERATING ACTIVITIES          (1,389,102)      (1,038,461)
                                               ---------------   --------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of property and equipment              (305,101)         (77,512)
   Deposit on equipment                               (302,300)            -
   Payments for related party
     receivables (net)                                    -               3,222
                                               ---------------   --------------
     NET CASH USED BY INVESTING ACTIVITIES            (607,401)         (74,290)
                                               ---------------   --------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Sale of common stock                                500,000           24,500
   Sale of preferred stock                             717,140             -
   Payments on capital lease financing                 (29,674)          (6,029)
   Proceeds from notes and loans payable               784,259        1,922,488
   Payments on notes and loans payable                    -            (650,000)
   Proceeds from related party payables                144,194            8,593
   Payments on related party payables                 ( 96,053)         (17,403)
                                               ---------------   --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES            2,019,866        1,282,149
                                               ---------------   --------------
NET INCREASE IN CASH AND EQUIVALENTS                    23,363          169,398

CASH AND EQUIVALENTS - BEGINNING                       201,631           32,233
                                               ---------------   --------------
CASH AND EQUIVALENTS - ENDING                  $      224,994    $      201,631
                                               ===============   ==============

SUPPLEMENTAL DISCLOSURES Cash paid during the period for:
     Interest                                  $       113,142   $       24,102
     Income taxes                              $          -      $         -

In addition to amounts reflected above, common stock was issued for:
     Options issued for services               $        10,000   $         -
     Options issued for settlement
         of debt                               $     1,016,648   $         -
     Settlement of debt                        $     1,431,084   $       10,000
     Non-readily marketable,available-
      for-sale equity securities
      due from related party in payment
      of notes and accounts receivable         $          -      $    4,301,500
     Non-readily marketable, available-
      for-sale equity securities - due
      from related party, received in
      payment of notes and accounts
      receivable                               $         -       $   1,600,000
                                               ===============   ==============
See accompanying notes.


                                       17
<PAGE>

<TABLE>

                  GLOBETEL COMMUNICATIONS CORP. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
                                    Common Stock                         Preferred Stock
                        --------------------------------   -------------------------------------------
                                              Additional                      Additional      Stock                       Total
                                               Paid-in                         Paid-in    Subscription   Accumulated   Stockholders'
Description                Shares    Amount     Capital     Shares    Amount   Capital     Receivable       Deficit      Equity
                        -----------  ------  -----------   --------  -------  ----------  ------------   ------------  -------------

<S>                          <C>       <C>         <C>        <C>     <C>         <C>          <C>            <C>          <C>

Balance, Dec. 31, 2001  467,276,945  $4,673  $22,720,537       -     $   -    $     -     $      -       $(21,612,935) $  1,112,275

Shares issued
 for services            71,220,000     712    1,690,088       -         -          -            -               -        1,690,800

Shares issued for
 extinguishment of debt     673,338       7        9,993       -         -          -            -               -           10,000

Shares issued for cash      750,000       7       24,493       -         -          -            -               -           24,500

Shares issued for loan
 collateral              75,000,000     750         (750)      -         -          -            -               -             -

Adjustment for actual
 number of shares
 issued for Global
 acquisition            (9,600,000)     (96)          96       -         -           -            -               -            -

Net income                    -          -          -          -         -           -            -         1,321,294     1,321,294
                        -----------  ------  -----------   --------  -------  ----------  ------------   ------------  -------------

Balance, Dec. 31, 2002  605,320,283   6,053   24,444,457       -         -           -            -       (20,291,641)    4,158,869
                        -----------  ------  -----------   --------  -------  ----------  ------------   ------------  -------------

Shares issued
 for services            23,748,533     237      568,273       -         -           -            -               -         568,510

Options issued
 for services                  -         -        10,000       -         -           -            -               -          10,000

Shares issued
 for severance pay        1,200,000      12       35,988       -         -           -            -               -          36,000

Shares issued for
 extinguishment of debt  44,792,000     448    1,430,636       -         -           -            -               -       1,431,084

Options issued for
 extinguishment of debt        -         -     1,016,468       -         -           -            -               -       1,016,468

Shares issued for cash   20,080,321     201      499,799       -         -           -            -               -         500,000

Shares issued for loan
 collateral               5,000,000      50         ( 50)      -         -           -            -               -            -

Shares returned for loan
 collateral             (46,916,666)   (469)         469       -         -           -            -               -            -

Preferred shares issued
 for cash                      -         -           -       72,000       72   1,092,068    ( 375,000)            -         717,140

Net loss                       -         -           -         -          -          -            -        (6,202,526)   (6,202,526)
                        -----------  ------  -----------   --------  -------  ----------- ------------   ------------  -------------

Balance, Dec. 31, 2003  653,224,471  $6,532  $28,006,040     72,000  $    72  $1,092,068  $ ( 375,000)   $(26,494,167) $  2,235,545
                        ===========  ======  ===========   ========  =======  ==========  ============   ============  =============


<FN>
See accompanying notes.
</FN>
</TABLE>




                                       18
<PAGE>
GLOBETEL COMMUNICATIONS CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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 Company has a 99% ownership of GTCC de Mexico, S.A. de C.V., a Mexican
company established to represent its 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.

The financial statements for periods prior to the merger and reincorporation
include the consolidated accounts of ADGI and its two then wholly-owned
subsidiaries, Global and NCI, all of which together and individually are
referred to as the Company.

All material intercompany balances and transactions were eliminated in the
consolidation.

Reclassifications

Certain amounts in the prior year financial statements have been reclassified
for comparative purposes to conform to the current year presentation.

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.

Property and Equipment

Property and equipment consists of telecommunications equipment, office
furniture and equipment, and vehicles 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 and vehicles 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.

                                       19
<PAGE>

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,
2003 and 2002, were $105,314 was $15,987, respectively.

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.

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, accounts receivable, and
non-readily marketable securities equity securities. The Company currently
maintains its day-to-day operating cash balances at a single financial
institution. The Company had cash balances of $224,994 and $201,631 as of
December 31, 2003 and 2002, respectively, which are in excess of federally
insured limit. As of December 31, 2003 and 2002, the Company had $137,705 and
$111,565, 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 2002, FASB issued Statements of Financial Accounting Standards No. 145,
"Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No.
13, and Technical Corrections" ("SFAS 145"). SFAS 145 eliminates the requirement
that gains and losses from the extinguishment of debt be aggregated and, if
material, classified as an extraordinary item, net of the related income tax
effect and eliminates an inconsistency between the accounting for sale-leaseback
transactions and certain lease modifications that have economic effects that are
similar to sale-leaseback transactions. Generally, SFAS 145 is effective for
transactions occurring after May 15, 2002.

In June 2002, FASB issued Statements of Financial Accounting Standards No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146")
that nullifies Emerging Issues Task Force No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(Including Certain Costs Incurred in a Restructuring)" ("EITF 94-3"). SFAS 146
requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred, whereby EITF 94-3 had
recognized the liability at the commitment date to an exit plan. The provisions
of this statement are effective for exit or disposal activities that are
initiated after December 31, 2002 with earlier application encouraged.

In December 2002, FASB issued Statements of Financial Accounting Standards No.
148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an
amendment of FASB Statement No. 123" ("SFAS 148"). SFAS 148 amends FASB
Statement No. 123 to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS 148 amends the disclosure requirements of FASB
Statement No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. SFAS 148 is
effective for fiscal years ending after December 15, 2002.

                                       20
<PAGE>

In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees and Indebtedness of Others", an interpretation of FIN No. 5,
57 and 107, and rescission of FIN No. 34, "Disclosure of Indirect Guarantees of
Indebtedness of Others". FIN 45 elaborates on the disclosures to be made by the
guarantor in its interim and annual financial statements about its obligations
under certain guarantees that it has issued. It also requires that a guarantor
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The initial recognition and
measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002; while, the
provisions of the disclosure requirements are effective for financial statements
of interim or annual periods ending after December 15, 2002.

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.

The adoption of these new pronouncements did not or 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 Income (Loss) Per Common Share

Basic net income (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 income (loss) is computed by dividing the net income
(loss) by the weighted average number of common shares outstanding during each
period. Available stock options at December 31, 2003, were anti-dilutive and
therefore were excluded from the net income (loss) per common share calculation.

Following is a reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations for the year ended December 31,
2002:

                                     Income           Shares        Per-Share
                                   (Numerator)    (Denominator)      Amount
                                  -------------   -------------     ---------
Basic Net Income per Share:
Income available to
  common stockholders              $ 1,321,294     501,679,301         $  .00
                                                                       ======
Effect of Dilutive Convertible
  Notes                                   -          3,938,402
                                  -------------   -------------
Diluted Net Income per Share:
Income available to common
  stockholders plus assumed
  conversions                     $  1,321,294     505,617,703         $  .00
                                  =============   =============        ======

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.

                                       21
<PAGE>

NOTE 2.  ACCOUNTS RECEIVABLE AND SALES - SIGNIFICANT CONCENTRATIONS OF CREDIT
         RISK AND ECONOMIC DEPENDENCE

Two customers accounted for 97% of the Company's sales for 2003 and three
customers accounted for 92.58% of the Company's sales for 2002. One of the
Company's customers, Global VOIP, deemed an affiliate based on common control,
accounted for $2,100,000 or 17.85% of the Company's sales for 2002.

Charterhouse Investment Holdings, Ltd., a shareholder and related party,
accounted for $5,717,150 or 48.60% of the Company's sales for 2002.

Sales attributable to foreign operations for the year ended December 31, 2003,
were $11,256,907 or 99% of total sales and $5,204,778 or 44.24% of total sales
for December 31, 2002. The amounts include $2,979,286 or 26% for 2003 and
$1,978,910 or 16.82% for 2002 from Brazil and $8,089,013 or 71% for 2003 and
$3,225,878 or 27.42% 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, $1,955,818 and $916,629 during years
ended December 31, 2003 and 2002, 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, $5,609,939 and $2,674,552 during the
years ended December 31, 2003 and 2002, 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.

NOTE 3. 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. Pursuant to the
agreement, the Company built and provided to IPW a network capable of
terminating up to a minimum of four million minutes of monthly international
voice traffic to and from the country of Brazil (Brazil Network) and a network
capable of terminating up to a minimum of four million minutes of monthly
international voice traffic to and from the country of the Philippines
("Philippines Network"). The terms of this agreement are substantially the same
as the terms of the Brazil Network agreement.

As payment for each network the Company agreed to accept 64 million shares of
IPW stock, at an agreed-upon value of $ .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, a Delaware Corporation,
of which Timothy Huff, the Company's current 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.

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 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 still transacting with IPW to
move out of liquidation and be relisted in the Australian Exchange. However, the
outcome of the transaction can not be determined, therefore, the company has
written-off $4,301,500 in stock receivable as well as the $1,600,000 in stock it
had in its name.

                                       22
<PAGE>

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 4 - Deposit on Equipment

In September 2003, the Company entered into an agreement with Advantage
Telecommunications Ltd. (ATC), 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.

As of December 31, 2003, the Company had remitted $302,300 to ATC and ATC's
assignee as partial payment towards the purchase of the assets. The asset
purchase was consummated in February 2004 upon the payment of the balance of the
amount agreed upon in restricted shares of the Company's restricted common stock
totaling 16,500,000 shares, valued at a total of $897,700. The issuance of the
shares, based on an average of $.0544 per share, completes the Company's
purchase of ATC's assets totaling $1.2 million.

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

                                             2003                 2002
                                        -----------          -----------
Telecommunications equipment            $   706,892          $   476,808
Office furniture and equipment              154,169              185,682
Vehicles                                       -                  12,440
                                        -----------          -----------
                                            861,061              674,930
Accumulated depreciation                   (424,686)            (271,900)
                                        -----------          -----------
Property and equipment,
  net book value                        $   436,375          $   403,030
                                        ===========          ===========

Total depreciation expense for the years ended December 31, 2003 and 2002
amounted to $227,200 and $134,262, respectively. Included in cost of sales
is $182,830 in 2003 and $90,233 in 2002.

Certain telecommunications equipment acquired by the Company, capitalized in
property and equipment, and placed into service in 2001 was recorded as cost of
sales during 2002. This equipment was ultimately utilized in constructing the
network built for IPW, and the net book value of the equipment, $233,191 (cost
of $353,500, less $110,309 accumulated depreciation) was included in cost of
sales during 2002. The Company initially depreciated this equipment because at
the time the equipment was purchased, the Company did not anticipate using this
equipment in the construction of the IPW networks, or any networks to be
produced and sold to any customers.

NOTE 6. BUSINESS MERGERS

Prior to GlobeTel taking over the operations of ADGI, ADGI had two operating,
wholly-owned subsidiaries, Global and NCI. The two companies were merged into
ADGI as of July 1, 2002 and 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 Communications Corp. ("GlobeTel").

NOTE 7. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consisted of the following:

                                            2003                2002
                                        -----------          -----------
Professional fees                       $    35,000          $    28,600
Interest                                     22,423               20,100
                                        -----------          -----------
                                        $    57,423          $    48,700
                                        ===========          ===========

                                       23
<PAGE>

NOTE 8.  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.

NOTE 9. CAPITAL LEASE OBLIGATIONS

Capital lease obligations consisted of the following:

                                             2003                2002
                                        ------------        -------------
Lease payments, payable in monthly installments totaling $5,109, inclusive of
  imputed interest at rates from 10% through 20% annually, maturing at various
  dates through
  September 2003.                       $    53,311          $    82,984
Current obligations under
  capital leases                            (53,311)             (82,984)
                                        -----------          -----------
Long-term obligations under
 capital leases                         $      -             $      -
                                        ===========          ===========


Future minimum lease payments under capital leases for years subsequent to
December 31, 2003 are as follows:

2004                                                         $   104,026
Amount representing interest                                     (50,715)
                                                             -----------
Present value of future minimum lease payments               $    53,311
                                                             ===========

Interest expense recorded on all capital lease obligations of the Company
amounted to $15,924 and $11,704 for the years ended December 31, 2003 and 2002,
respectively. The assets subject to the above capital lease obligations consist
primarily of telecommunications equipment.

NOTE 10.  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 they were entitled to 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.

Pursuant to the above employment agreements, the Company recorded accrued
officers' salaries totaling $519,168 as of December 31, 2002.

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, which 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.

                                       24
<PAGE>

NOTE 11.  NOTES PAYABLE AND LOAN DUE TO CONSULTANT/CUSTOMER

Secured Promissory Notes Payable

On April 9, 2002, the Company executed a $250,000 secured promissory note
payable to an unrelated third party, due April 9, 2003, with interest payable
monthly at a rate of 12.5% per annum. The note was collateralized with 8 million
unrestricted shares of the Company's common stock, plus additional shares to be
issued should the loan-to-value ratio drop below 65%. The note also provided for
an accommodation fee of 1 million shares of ADGI shares payable to the lender
which was paid by GVoIP. Pursuant to the note's prepayment option, in May 2002,
the principal balance was paid by Global VoIP and $250,000 was offset against
the accounts receivable balance due to the Company from Global VoIP.

On April 9, 2002, the Company executed a $100,000 secured promissory note
payable to another unrelated third party, due April 9, 2003, with interest
payable monthly at a rate of 12.5% per annum. The note was collateralized with
3.2 million unrestricted shares of the Company's common stock, plus additional
shares to be issued should the loan-to-value ratio drop below 65%. The note also
provided for an accommodation fee of 400,000 shares of ADGI shares payable to
the lender which was paid by GVoIP. Pursuant to the note's prepayment option, in
May 2002, the principal balance was paid by Global VoIP and $100,000 was offset
against the accounts receivable balance due to the Company from Global VoIP.

On June 24, 2002, the Company executed a $150,000 secured promissory note
payable to an unrelated third party, due December 24, 2002, with interest
payable upon the due date of the principal of the loan at a rate of 15% per
annum. The note is collateralized with 10 million unrestricted shares of the
Company's common stock, which was provided by Charterhouse. The note also
provided for an accommodation fee of $3,750, which was paid to the lender during
2002 by the Company.

On June 24, 2002, the Company executed another $150,000 secured promissory note
payable to an unrelated third party, due December 24, 2002, with interest
payable upon the due date of the principal of the loan at a rate of 15% per
annum. The note is collateralized with 10 million unrestricted shares of the
Company's common stock, which was provided by Charterhouse. The note also
provided for an accommodation fee of $3,750, which was paid to lender by the
Company during 2002.

In October 2002, the holders of the above two promissory notes agreed that in
lieu of payment of principal and interest under the loans, each agreed 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 who was also a
consultant. Accordingly, the Company recorded the $300,000, plus interest of
$11,960, as a loan payable to that consultant/customer.

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.

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.

                                       25
<PAGE>

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.

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 the November 25 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 $.022 and accordingly, the holder retained 11,111,112 shares
and returned 18,888,888 to the Company.

                                       26
<PAGE>

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) owner,
one of whom is Timothy M. Huff who owns 40% of the entity. Timothy Huff is the
CEO of the Company.

NOTE 12 - NOTES AND LOANS PAYABLE, UNSECURED

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.
The notes remain outstanding as of the date of this report. However, 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 and payable at a rate of 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%.

LOAN PAYABLE TO RELATED PARTY - CHARTERHOUSE

In January 2003, the Company received a $50,000 loan from Charterhouse. This
loan payable, as well as the previous balance of $311,960, is unsecured,
non-interest bearing and provided for no formal repayment terms.

NOTE 13. RELATED PARTY TRANSACTIONS

Related party payables

As of December 31, 2003 and 2002, related party payables are as follows:

                                            2003                 2002
                                        -----------          -----------
Corporation owned by consultant         $      -             $   24,990
Officers                                       -                 33,100
Consultant and officer                       57,500              57,500
IPW                                            -                 18,491
                                        -----------          -----------
Related party payables                  $    57,500          $  134,081
                                        ===========          ===========

The 2003 balance represents a short-term loan by an officer 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 14. COMMITMENTS AND CONTINGENCIES

Litigation

Globetel is in the process of taking legal actions against its associate and
customer in Mexico, GTCC Qualnet Mexico, for non-payment of amounts owed and
non-payment to carrier in Mexico. The customer, however, has been cooperating
and continues to work with the Company. The customer has Mexican tax refunds
receivable and the Company has filed a motion to be the first assigned payee
to receive the tax refunds which the customer expects to receive in the second
quarter of 2004. The customer also has telecommunications equipment and
existing working networks and customers, which the Company is taking over
its operations. The Company and the customer, through the court system,
are working towards continuing the operations together reaping the full
benefits of the working network until the loan has been paid in full.

As a result of the non-payment and because the outcome of the motion cannot be
determined, the Company wrote off $648,812 of accounts receivables as bad debts.

The Company is presently in a dispute with two former consultants who resigned
as consultants to the Company prior to December 31, 1998. The remaining balance
of a loan payable of $15,000 originally advanced by the consultants was
written-off based on the belief that such loans had been satisfied based in part
on the consideration given in the consulting agreement. The Company has taken
the position that it owes no further compensation to the consultants, and
further that the loans from these two individuals have been satisfied, as a
result of the consideration given to the consultants, the consultants'
resignation and their failure to provide services required under the consulting
agreement. The agreement provided for the arbitration in the event of any
dispute. As of the date of this report, the Company cannot predict the outcome
of any legal proceeding or arbitration, or whether, as a result of any such
proceeding or arbitration, the Company will be required to issue additional
common stock as consideration or repay any loans.

                                       27
<PAGE>

Letters of Credit

The Company has available up to $500,000 for letters of credit with
Commercebank, N.A., which is guaranteed by Florida Export Finance Corporation
(FEFC). As of December 31, 2002, 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.

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 an LLC (Limited Liability Company) 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 $3,043,348 and $1,976,135 for December 31,
2003 and 2002, respectively. The cost of sales, substantially all of which was
paid directly to third-party suppliers, were $1,955,818 in 2003 and of $916,628
in 2002.

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 (Limited Liability Company) 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 has been operating in Mexico for several years and has 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 and
since they 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 26th 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 $7,596,007 for the year ended December 31,
2003 and $3,198,502 for 2002. The cost of sales which substantially was paid
directly to third-party suppliers were $6,029,939 in 2003 and $2,674,552 in
2002.

The network is currently still operating at or near capacity and the
relationship continues as that of a service provider. However, as described
above, the Company is in the process of taking over the operations of the
network and if successful, will control all income and expenses of the
operations.

                                       28
<PAGE>

Joint Venture Agreement

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 were generated from the joint venture during 2003 and 2002.

Leases and Rents

GlobeTel currently leases facilities at 444 Brickell Avenue, Suite 522, Miami,
Florida 33131. The Company is under a five-year lease expiring April 2005, with
a present monthly rent of $3,463. In order to provide sufficient space for
equipment and personnel for their operations, the Company leased another office
facility 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.

The Company had operations in Hackensack, N.J. which ceased operations in
February 2001. The Company moved out of the facility in March 2001, and since
the lessee found new tenants for the office, was released from the lease. The
Company is still in debt with the landlord, the amount of which is included in
accounts payable.

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.

Future minimum rental payments required under the above operating leases
subsequent to the year ended December 31 are as follows:

2004                                                         $    74,328
2005                                                              80,707
2006                                                              69,530
2007                                                              72,311
2008 and thereafter                                              113,542
                                                             -----------
                                                             $   410,418
                                                             ===========

Rent expense for 2003 and 2002 was $46,231 and $40,971, respectively.

NOTE 15.  CONSULTING AND INVESTEMENT 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.

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., 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 will
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 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. Fordham Financial agreed to receive 10% commission for the raising of the
investments. 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.

                                       29
<PAGE>

NOTE 16 - GAIN(LOSS) ON DISPOSITION OF ASSETS AND SETTLEMENT OF LIABILITIES

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 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, and the Company agreed to return
the customer deposits made by the St. Louis clients. The Company recorded a gain
of $55,842 in connection with these transactions.

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 based on an amount equal to the average bid and asked price of the
Company's shares on the date of issuance.

NOTE 17.  BAD DEBT AND DEPOSIT WRITE-OFF

During 2003, the Company wrote-off $1,409,994 as bad debts, predominantly from
the receivables from the Mexico and Brazil networks, representing amounts
receivable older than 90 days which have not been received as of the date of
this report.

During 2002, the Company recorded as a bad debt write-off the $283,051 remaining
balance due from Sigma Online (Sigma), an Indian company. In addition, the
Company charged a $50,000 deposit given to Sigma, related to its India projects,
to cost of sales. Whereas the expected payment source of the accounts receivable
balance was Sigma's anticipated revenues from operating networks in India, the
company deemed this balance uncollectible and the deposit of no realizable
value, since it does not contemplate establishing such networks in India in the
near term, due to the highly unstable political atmosphere in that country.

NOTE 18.  REINCORPORATION EXPENSES

Reincorporation expenses of $247,429 incurred during the year ended December 31,
2002, include legal, professional and shareholder communications costs related
to the merger and related transaction described in Note 6 above.

NOTE 19.  INCOME TAXES

Deferred income taxes and benefits for 2003 and 2002 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:

                                                      Current
                                                      Period
                                           2002       Changes        2003
                                        ----------   ----------  ----------

Deferred tax assets:

Accrued officers' compensation          $  452,000  $ ( 314,995) $  137,005
Allowance for doubtful accounts            437,768    ( 380,950)     56,818
Consulting services elected as start-up
  costs under IRC Sec. 195 (b)              43,793      807,464     851,257
Reincorporation expenses amortized
  Under IRC Sec. 248                          -          25,975      25,975
Accumulated depreciation                      -      (  376,829) (  376,829)
Net operating loss carryforwards         1,369,715    1,040,708   2,410,423
                                        ----------- -----------  ----------
                                         2,303,276      801,373   3,104,649
Valuation allowance                     (2,303,276)    (801,373) (3,104,649)
                                        ----------- -----------  ----------
Net deferred tax asset                  $     -     $     -      $     -
                                        =========== ===========  ==========

A reconciliation of income benefit provided at the federal statutory rate of 15%
to income tax benefit follows:

                                                          2003          2002
                                                      ----------   ----------
  Income tax benefit computed at federal
    statutory rate                                    ($ 930,379)  $  198,194
  Accrued officers' salaries                              27,505       80,326
  Allowance for doubtful accounts                     (  107,345)      46,198
  Depreciation                                        (    7,179) (     3,440)
  Losses not benefited (benefited)                     1,017,398  (   321,278)
                                                      ----------   ----------
                                                      $     -      $     -
                                                      ==========   ==========


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 2002, 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 $5,758,191 which expire at
various dates through 2021.

                                       30
<PAGE>

NOTE 20. COMMON STOCK TRANSACTIONS

During the year ended December 31, 2002, the Company issued the following shares
of Common stock:

<TABLE>
<CAPTION>

Date Issued          Shares     Consideration       Valuation   Relationship
<S>                <C>         <C>                  <C>         <C>

February 12, 2002  5,500,000   Consulting services  $  92,500   Consultant/Customer

March 25, 2002    10,000,000   Investment banking     250,000   Consultant

June 26, 2002     20,000,000   Consulting             600,000   Consultant/Customer

June 26, 2002     60,000,000   Network performance       -      Charterhouse customer
                                    guarantee

July 9, 2002       1,000,000   Investment banking      30,000   Consulting

July 9, 2002       1,000,000   Investment banking      30,000   Consulting

July 9, 2002       3,000,000   Consulting              90,000   Consultant/Customer

August 22, 2002    5,837,500   Brokers' fees          116,750   Consultant

August 22, 2002      412,500   Brokers' fees            8,250   Consultant

August 26, 2002      250,000   Sale of stock            7,000   Invest/Legal Counsel

August 28, 2002    6,250,000   Investment banking     125,000   Consultant

August 28, 2002    7,500,000   Loan Collateral           -      Note Holder

September 3, 2002  7,500,000   Loan Collateral           -      Note Holder

September 30, 2002 2,220,000   Consulting              33,300   Consultant/Customer

November 7, 2002  15,000,000   Loan Collateral           -      Note Holder

November 11, 2002    500,000   Sale of stock           17,500   Invest/Legal Counsel

December 6, 2002  12,500,000   Brokers' fees          250,000   Consultant

December 6, 2002  15,000,000   Loan Collateral           -      Note Holder

December 6, 2002  30,000,000   Loan Collateral           -      Note Holder

December 30, 2002  1,000,000   Consulting              15,000   Consultant

December 31, 2002  2,000,000   Consulting              40,000   Consultant

December 31, 2002    500,000   Consulting              10,000   Consultant

December 31, 2002    673,338   Satisfaction of debt    10,000   Investor


                                       31
<PAGE>

During the year ended December 31, 2003, the Company issued the following shares
of Common stock:

March 14, 2003     2,200,000   Consulting services   $ 22,000   Consultant

March 14, 2003     1,800,000   Investment banking      18,000   Consultant

May 7, 2003        1,100,000   Consulting services     11,550   Consultant

May 7, 2003          900,000   Investment banking       9,450   Consultant

May 22, 2003       2,500,000   Loan Collateral           -      Note Holder

May 22, 2003       2,500,000   Loan Collateral           -      Note Holder

May 22, 2003      15,000,000   Conversion of debt     239,206   Investor

May 29, 2003       4,000,000   Satisfaction of debt    55,000   Shareholder/
                                                                 Former director

July 18, 2003        200,000   Severance pay            6,000   Employee

July 18, 2003        500,000   Severance pay           15,000   Employee

July 18, 2003        500,000   Severance pay           15,000   Employee

July 18, 2003        450,000   Legal services          13,500   Legal counsel/
                                                                 former corporate secretary

July 18, 2003        800,000   Consulting services     24,000   Consultant/employee

July 18, 2003     12,844,000   Conversion of debt     256,880   Investor

August 5, 2003    20,080,321   Sale of stock          500,000   Investor/consultant

August 5, 2003             -   Marketing services     100,402   Investor/consultant

August 8, 2003     3,400,000   Consulting services    102,000   Consultant/employee

August 28, 2003  (42,916,666)  Return of shares issued   -      Note Holders
                                 for loan collateral

August 28, 2003            -   Conversion of debt     125,000   Investor

August 28, 2003            -   Conversion of debt     250,000   Investor/consultant

August 28, 2003            -   Conversion of debt     125,000   Investor

August 28, 2003            -   Conversion of debt     250,000   Investor

September 3, 2003    944,444   Consulting services     11,806   Consultant

September 3, 2003    900,000   Consulting services     11,250   Consultant

September 3, 2003  1,100,000   Consulting services     13,750   Consultant

September 3, 2003  3,847,222   Consulting services     49,090   Consultant

September 29, 2003   656,687   Consulting services      8,211   Consultant

October 9, 2003    4,281,333   Additional shares due    -         Investor
                                For Conversion of debt

October 9, 2003    3,650,000   Consulting services     73,000   Consultant/employee

October 9, 2003    2,000,000   Officer's salary        40,000   Chief Financial Officer

December 31, 2003  7,500,000   Officer's salary       112,500   Chief Executive Officer


December 31, 2003  1,166,667   Officer's salary        17,500   Chief Financial Officer

December 31, 2003 (4,000,000)  Return of shares issued   -     Note Holder
                                 or loan collateral
</TABLE>

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.

                                       32
<PAGE>

NOTE 21. STOCK OPTIONS
<TABLE>
<CAPTION>

During the year ended December 31, 2003, the Company issued the following
options to acquire Common stock:

Date Issued          Shares     Consideration       Valuation   Relationship
<S>                   <C>            <C>               <C>          <C>

September 26, 2003  2,206,667   Satisfaction of debt  33,100   Former President

September 26, 2003 17,600,000   Accrued salary       264,200   Former President

September 26, 2003  8,944,467   Accrued salary       134,167   Chief Executive Officer

September 26, 2003  7,444,467   Accrued salary       111,667   Chief Operating Officer

September 26, 2003  7,444,467   Accrued salary       111,667   Chief Financial Officer

September 26, 2003  4,111,133   Accrued salary        61,667   Controller

December 18, 2003   6,666,667   Officer salary       100,000   Former President

December 18, 2003   5,333,333   Officer salary        80,000   Chief Operating Officer

December 18, 2003   3,333,333   Salary                  50,000   Controller

December 18, 2003   1,000,000   Officer salary        15,000   President

December 18, 2003   1,666,667   Accounting services   25,000   Accountants

December 18, 2003   2,666,667   Network services      40,000   Vendor
</TABLE>

According to option agreements in connection with the above shares, the option
prices were the lower of $ .015 per share or one-half of the closing market
price on the last reported sale or closing price on the date of the agreement.
The above options were issued at $.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 $ .015 per share.

All of the stock options were subsequently exercised in January 2004.

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 11. 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 22 - PREFERRED STOCK

In October 2003, the Company entered into an agreement with Fordham Financial
Management Inc. to raise funds to finance the ATC transaction. 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 he 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.

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 has been subscribed as
of January 31, 2004, and the full $2,500,000 investments had been received as of
February 6, 2004.

In May and June 2003, the Company applied for a loan with a financing company
that brokers the transaction with several major European banks. The loans were
to be collateralized with preferred stock, which the banks can only convert in
the case of a default by the Company. As of September 30, 2003, the transaction
had not been consummated and the Company withdrew its application and the
preferred stock totaling 1,194,356 shares that were being held in escrow were
cancelled.

                                       33
<PAGE>

NOTE 23 - SUBSEQUENT EVENTS

In March 2004, the Company entered into a binding letter of intent to purchase
substantially all of the assets of Sanswire Technologies, Inc., 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 agreement is subject to the completion of due diligence,
which is expected to be finalized during the second quarter of 2004. The
agreement would require an advance of $150,000 working capital to Sanswire and
initial issuance of 28,000,000 shares of common stock. There will be additional
incentives in the agreement that will be based on the performance of Sanswire
and its technology.

NOTE 24. SEGMENTS AND RELATED INFORMATION

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 company's two segments, Global and NCI had separate management
teams and infrastructures that offer different services during 2001

During the year ended December 2002, the Company merged the infrastructure and
the management teams and operated as one company. NCI's operations represented
less than 2% of gross revenues in 2002, and accordingly segment information is
not presented for 2002 as well as for 2003.

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.


                                       34
<PAGE>


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

ITEM 8a. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's President and Chief Executive Officer and
the Company's Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon the evaluation, they concluded that the
Company's disclosure controls and procedures are effective in timely alerting
them to material information relating to the Company (including its consolidated
subsidiaries) required to be included in this report. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect internal controls subsequent to the date of the
evaluation.

                                    PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
<TABLE>
<CAPTION>
Name                       Age   Position                                       Term
<S>                        <C>   <C>                                          <C>

Przemyslaw L. Kostro       41    Chairman                                     One Year

Timothy M. Huff            38    Chief Executive Officer & Director           One Year

Jerrold R. Hinton, PhD     62    Director                                     One Year

Leigh A. Coleman           55    President & Director                         One Year

Mitchell A. Siegel         57    Chief Operating Officer & Director           One Year

Thomas Y. Jimenez          45    Chief Financial Officer

</TABLE>


All directors hold office until the next annual meeting of our stockholders and
until their successors have been elected and shall qualify. Officers serve at
the discretion of our Board of Directors. 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 our current CEO. 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.
During the past year, he has been providing services to assist us in expanding
our business and services world-wide.

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.

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.

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.

                                       35
<PAGE>

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
C.C.N.Y - Bernard Baruch School of Finance.

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. Mr. Jimenez graduated from Cleveland State University with
a degree in Business Administration.

(B) 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.



                                       36
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                                      Long Term Compensation
                                                                            --------------------------------------------
                                              Annual Compensation                        Awards               Payouts
------------------------------------------------------------------------------------------------------------------------
              (a)               (b)     (c)        (d)           (e)              (f)              (g)          (h)       (i)
---------------------------------------------------------------------------------------------------------------------------------
Name and Principal Position     Year   Salary     Bonus      Other Annual      Restricted      Securities    LTIP       All
                                                             Compensation     Stock Award      Underlying    Payouts   other
                                                                                               Options/SAR             compensation
<S>                             <C>    <C>        <C>             <C>            <C>               <C>       <C>       <C>
---------------------------------------------------------------------------------------------------------------------------------
                                        ($)        ($)           ($)              ($)             (#)           ($)        ($)
---------------------------------------------------------------------------------------------------------------------------------
Przemyslaw L. Kostro            2003     0           0            0                0                0            0         0
Chairman since Nov. 2001
---------------------------------------------------------------------------------------------------------------------------------
Przemyslaw L. Kostro            2002     0           0            0                0                0            0         0
Chairman since Nov. 2001
---------------------------------------------------------------------------------------------------------------------------------
Przemyslaw L. Kostro            2001     0           0            0                0                0            0         0
Chairman since Nov. 2001
CEO, Nov 2002 - July 2002
---------------------------------------------------------------------------------------------------------------------------------
Timothy M. Huff                 2003 $175,000(a)     0            0                0                0            0         0
CEO
---------------------------------------------------------------------------------------------------------------------------------
Timothy M. Huff                 2002 $150,000(a)     0            0                0                0            0         0
CEO
---------------------------------------------------------------------------------------------------------------------------------
Jerrold R. Hinton               2003 $100,000(a)     0            0                0                0            0         0
President
---------------------------------------------------------------------------------------------------------------------------------
Jerrold R. Hinton CEO,          2002 $100,000(a)     0            0                0                0            0         0
President
---------------------------------------------------------------------------------------------------------------------------------
Jerrold R. Hinton CEO,          2001 $100,000(a)     0            0                0                0            0         0
President
---------------------------------------------------------------------------------------------------------------------------------
Mitchell A. Siegel              2003 $150,000(a)     0            0                0                0            0         0
COO
---------------------------------------------------------------------------------------------------------------------------------
Mitchell A. Siegel              2002 $125,000(a)     0            0                0                0            0         0
COO
---------------------------------------------------------------------------------------------------------------------------------
Thomas Y. Jimenez               2003 $150,000 (a)    0            0                0                0            0         0
CFO
---------------------------------------------------------------------------------------------------------------------------------
Thomas Y. Jimenez               2002 $125,000 (a)    0            0                0                0            0         0
CFO
---------------------------------------------------------------------------------------------------------------------------------
Thomas J. Craft, Jr.,           2002     0           0            0                0                0            0         0
Secretary, Counsel and a
Director until November 2001
---------------------------------------------------------------------------------------------------------------------------------
Thomas J. Craft, Jr.,           2001     0           0         $46,250             0                0            0         0
Secretary, Counsel and a
Director until November 2001
---------------------------------------------------------------------------------------------------------------------------------
Vivian Manevich                 2002 $75,000         0            0                0                0            0         0
CAO
---------------------------------------------------------------------------------------------------------------------------------
Vivian Manevich, President,
Director Global                 2001 $75,000         0            0                0                0            0         0
---------------------------------------------------------------------------------------------------------------------------------
<FN>
   (a)

    Effective January 1, 2002, GlobeTel entered into a 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, 2003 and 2002, the executives all agreed not to receive
    bonuses they are entitled to pursuant to the employment agreements.

    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.
</FN>
</TABLE>

                                       37
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

At April 12, 2004, we had 741,771,766 shares issued and outstanding. The table
below sets forth the share ownership of our executive officers and directors,
individually and as a group, and the executive officers of GlobeTel. No other
person is the beneficial owner of more than 5% of our issued and outstanding
shares

<TABLE>
<CAPTION>

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

Title of Class     Name and Address of Beneficial Owner                            Amount and Nature Of          Percentage
                                                                                    Beneficial Ownership         of Class(1)
<S>               <C>                                                              <C>                           <C>
-----------------------------------------------------------------------------------------------------------------------------
Common Stock      Przemyslaw L. Kostro, Chairman,
                   9050 Pines Blvd.  Suite 110  Pembroke Pines, FL  33024                9,100,000 shares            1.22%
-----------------------------------------------------------------------------------------------------------------------------
Common Stock      Timothy M. Huff, CEO,
                   9050 Pines Blvd.  Suite 110  Pembroke Pines, FL  33024               26,744,467 shares            3.60%
-----------------------------------------------------------------------------------------------------------------------------
Common Stock      Jerrold R. Hinton, PhD., Board Member
                  9050 Pines Blvd.  Suite 110  Pembroke Pines, FL  33024                26,562,358 shares (2)        3.58%
-----------------------------------------------------------------------------------------------------------------------------
Common Stock      Mitchell A. Siegel, COO,
                  9050 Pines Blvd.  Suite 110  Pembroke Pines, FL  33024                12,777,800 shares           1.72%
-----------------------------------------------------------------------------------------------------------------------------
Common Stock      Leigh Coleman, President
                  9050 Pines Blvd.  Suite 110  Pembroke Pines, FL  33024                   500,000 shares            0.06%
-----------------------------------------------------------------------------------------------------------------------------
Common Stock      Thomas Y. Jimenez, CFO,
                  9050 Pines Blvd.  Suite 110  Pembroke Pines, FL  33024                 9,517,634 shares            1.28%
-----------------------------------------------------------------------------------------------------------------------------
Common Stock      Vivian Manevich, Controller,
                  9050 Pines Blvd.  Suite 110  Pembroke Pines, FL  33024                 8,479,466 shares            1.15%
-----------------------------------------------------------------------------------------------------------------------------
Common Stock      All executive officers and directors of the
                   Company as a group (seven persons)                                   93,681,725 shares            12.61%
-----------------------------------------------------------------------------------------------------------------------------
<FN>

(1) Based upon 741,771,766 shares issued and outstanding on April 12, 2004. (2)
The shares owned beneficially by Jerrold R. Hinton also include 50,000 shares
owned of record by Higher Ground, a corporation controlled by Mr. Hinton, which
may be deemed beneficially owned by Mr. Hinton.

</FN>
</TABLE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

See Note 9, Common Stock Transactions, to the Notes to Consolidated Financial
Statements and Item 5, Recent Sales of Unregistered Securities above.


                                       38
<PAGE>


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>

(A) EXHIBITS
------------------------------------------------------------------------------------------------------------------------------

EXHIBIT NO.   DESCRIPTION
<S>           <C>

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

3.1           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 Agreement
              (filed as Exhibits to Registration 10.1 Statements on Form S-8 and
              post-effective amendments thereto and incorporated herein by reference)
------------------------------------------------------------------------------------------------------------------------------
              Share Purchase Agreement between the Company and the shareholders of  Global Transmedia
10.2          Communications Corporation (filed as an exhibit to our Annual Report on Form 10-KSB for our year
              ended December 31, 1999 and incorporated by reference)
------------------------------------------------------------------------------------------------------------------------------
10.3          Amendment to Share Purchase Agreement between the Company and the shareholders of Global (filed as an
              exhibit to our Form 8-K on January 10, 2001 and incorporated by reference)
------------------------------------------------------------------------------------------------------------------------------
31.1          Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a)
------------------------------------------------------------------------------------------------------------------------------
31.2          Certification of Chief Financial 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.
-------------------------------------------------------------------------------------------------------------------------------
32.2          Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section
              906 of the Sarbanes-Oxley Act of 2002.
-------------------------------------------------------------------------------------------------------------------------------
99.1          Safe Harbor Compliance Statement for Forward-Looking Statements filed herewith
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(B) REPORTS ON FORM 8-K

NONE

Item 14. Principal Accountant Fees and Services

Audit Fees

Dohan and Company CPA's billed $66,284 for professional services rendered for
the audit of our annual financial statements for fiscal year 2002, 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 2003, we
anticipate the amount billed and/or accrued for the same services to be $67,322.

The above fees were pre-approved by the audit committee based on estimated
budgets presented to the audit committee.







                                       39
<PAGE>


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

GLOBETEL COMMUNICATIONS CORP.



By: /s/ Timothy M. Huff
Timothy M. Huff, CEO
Miami, Florida
Dated: April 27, 2004


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.

GLOBETEL COMMUNICATIONS CORP.
Registrant

By: /s/ Timothy Huff
Timothy Huff, Chief Executive Officer and Director
Dated: April 27, 2004


By: /s/ Thomas Y. Jimenez
Thomas Y. Jimenez, Chief Financial Officer
Dated: April 27, 2004


By: /s/ Leigh A. Coleman
Leigh Coleman, President and Director
Dated: April 27, 2004

By: /s/ Mitchell A. Siegal
Mitchell A. Siegal, Chief Operating Officer and Director
Dated:  April 27, 2004


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