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

                                   FORM 10-KSB



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

                   For the fiscal year ended December 31, 2002

[ ] 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
---------------------------------------------- ---------------------------------
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)

444 Brickell Ave, Suite 522, Miami, Florida                    33131
---------------------------------------------- ---------------------------------
 (Address of Principal Executive Offices)                   (Zip Code)

                                 (305) 579-9922
                           ---------------------------
                           (Issuer's telephone number)

           Securities registered under Section 12 (b) of the Act:
                                      None
         --------------------------------------------------------------
                                (Title of class)

         Securities registered under Section 12(g) of the Exchange Act:
                    Common Stock, Par Value $.00001 Per Share
         --------------------------------------------------------------
                                (Title of class)

Check whether the issuer: (i) 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 (ii) 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, 2002:
$11,689,573

As of April 11, 2003, there were 605,320,283 shares of the issuer's common stock
issued and outstanding. Affiliates of the Issuer own 24,297,524 shares of the
Issuer's issued and outstanding common stock and the remaining 581,022,759
shares are held by non-affiliates. The aggregate market value of the shares held
by non-affiliates at April 22, 2003, was $12,788,914. (*)

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.

(*) 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                                               6
Item 3. Legal Proceedings                                                     6
Item 4. Submission of Matters to a Vote of Security Holders                   6

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters             7
Item 6.  Management's Discussion and Analysis of Financial Conditions and
           Results of Operations                                             11
Item 7.  Financial Statements                                                14
Item 8.  Changes In and Disagreements With Accountants on Accounting and
           Financial Disclosure                                              39

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons        39
Item 10. Executive Compensation                                              40
Item 11. Security Ownership of Certain Beneficial Owners and Management      42
Item 12. Certain Relationships and Related Transactions                      42
Item 13. Exhibits and Reports on Form 8-K                                    43
Item 14. Controls and Procedures                                             43
<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 us with the Securities and Exchange Commission and statements issued
or  may contain statements which may constitute "Forward-Looking Statements"
about our current and expected performance trends, growth plans, business goals,
and other matters.

Certain information included in this Form 10-KSB and other materials filed or to
be filed by us with the Securities and Exchange Commission (as well as
information included in oral or written statements made from time to time by
GlobeTel Communications Corp. (GlobeTel, us, we, or our) or on our behalf), 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. These 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").

                                       2
<PAGE>
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.

ITEM 1.  DESCRIPTION OF BUSINESS

General

GlobeTel Communications Corp. is a Delaware corporation, established in July
2002, engaged in the business of providing telecommunication services primarily
involving Internet telephony using Voice over Internet Protocol ("VoIP")
equipment. Our key strategic plan is to install a worldwide VoIP network. This
global network 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.

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.

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. You can see this when browsing the Internet, as the "thermometer" on your
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."

                                       3
<PAGE>

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.

Networks

To provide our services without buffering delays, we arrange with a licensed
communications carrier 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,
Jersey 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 that the virtual network allows.

At present we have virtual networks serving callers in Venezuela, Australia,
China, Brazil, Philippines and Malaysia and physical networks serving customers
in Jamaica 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 o Call forwarding o Conference calling o 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.

                                       4
<PAGE>

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.

We had a network services agreement in India in 2000, and had limited revenues
in 2000 and 2001. The Indian market has deregulated as of April 2002, and we,
together with its local Indian partner, sought to obtain a telecommunications
license enabling us to compete in the lucrative Indian telecommunications
market. However, this market is highly competitive and expensive and given the
political and business environment in India, we decided to abandon our efforts
to obtain the license and to put on hold the operations and activities in India
until the environment becomes more stable and profitable. 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. Frost &
Sullivan, a respected research company, reported in January 2002, that VoIP is
expected to account for approximately 35% of world voice services by 2007. This
expected growth will result in additional VoIP minutes and associated revenues
for the companies that position themselves properly in the market. We believe
that by structuring ourselves in the growing foreign markets with the right
associates and state-of-the-art VoIP technology, with the proprietary enhanced
services platform, we are positioning ourselves to benefit from the growth of
telecommunication minutes.

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 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 don't believe
that compliance with foreign laws will affect our operations or require us to
incur any significant expense.

                                       5
<PAGE>

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.

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 leases facilities at 444 Brickell Avenue, Suite 522, Miami, FL 33131.
The Company is under a five year lease expiring April 2005 with a present
monthly rent of $3,463. The condition of this leased facility is deemed to be
satisfactory for our business operations for the foreseeable future. During the
year 2001, we closed our offices in Hackensack, NJ, St. Louis, MO and San
Antonio, TX, for the purpose of consolidating our operations in one centralized
facility.

We have 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 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.


ITEM 3.  LEGAL PROCEEDINGS

GlobeTel is a defendant in an action commenced by two former consultants,
Matthew Milo and Joseph Quattrocchi, for compensation for services allegedly
provided under an August 1998 consulting agreement. The pending action also
relates to a loan from Milo and Quattrocchi of $50,000 of which approximately
$35,000 has been repaid.

Both Milo and Quattrocchi resigned their consulting agreement without fulfilling
their services and any services they allegedly provided proved to be
unsatisfactory. In addition, we had issued 3,000,000 shares each to Milo and
Quattrocchi as part of their consideration under the consulting agreement. The
company has taken the position that the deficiencies in Milo's and Quattrochi's
services under the consulting agreement means that they have received
compensation in excess of the value of the services they actually did perform,
as well as for the unpaid balance of the loan, in the form of those shares.
However, Milo and Quattrocchi disagreed and commenced an action against the
company that is pending in the Supreme Court of the State of New York. Messrs.
Milo and Quattrocchi claim that they are entitled to an additional 24,526,000
shares as damages under the consulting agreement and to the repayment of the
loan balance. We believe that we have meritorious defenses to the
Milo-Quattrocchi action, and we have counterclaims against Milo-Quattrocchi but
cannot project an outcome with any certainty. No settlement negotiations are in
progress. We believe that we would not be materially adversely affected by the
outcome of this proceeding. There are presently outstanding claims against us
related to two equipment leases which aggregate approximately $77,500, and which
are reflected as part of capital lease obligations, current portion. No legal
action has been commenced and there is a potential for a negotiated settlement
of these liabilities. We do not believe that we will be materially adversely
affected by these liabilities.

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

On July 24, 2002, we held a Special Meeting of stockholders for which proxies
were solicited in compliance with Regulation 14A of the Securities Exchange Act
of 1934. At the meeting, stockholders approved the Agreement and Plan of
Exchange of shares of ADGI common stock for shares of common stock of GlobeTel
Communications Corp. and GlobeTel's authorization for issuance of up to
1,500,000,000 shares of Common Stock, par value $0.00001 per share and up to
10,000,000 shares of Preferred Stock, par value $0.001 per share. 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.

                                       6
<PAGE>

The following tables summarize the votes cast at the Special Meeting:

1.       The number of shares of Common Stock of ADGI issued, outstanding and
         entitled to cast one vote per share at the Special Meeting was
         471,176,445.
2.       The total number of shares of Common Stock of ADGI represented at the
         Special Meeting was 263,357,118, all of which were represented by
         proxy, which constituted 55.89 percent of the total number of shares
         entitled to be voted at the Special Meeting and made a quorum.
3.       The total number of votes cast at the Special Meeting by proxy was
         263,357,118. These votes were cast on the three proposals presented at
         the meeting as follows:

                                        Shares: in favor    opposed   abstaining
                                               ----------- ---------- ----------
Plan for the exchange of all outstanding shares
of ADGI Common Stock for shares of GlobeTel
Communications Corp. ("GlobeTel") Common Stock 257,983,202  4,593,492   780,424

Authorization for issuance by GlobeTel of up to
  1,500,000,000 shares of Common Stock         250,588,517 11,615,647 1,152,954

Authorization for issuance by GlobeTel of up to
  10,000,000 shares of Preferred Stock         250,134,057 11,766,457 1,456,604

                                     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 OTCBB quotation system. As of April
11, 2003, there were 17 market makers in our shares. We have no preferred stock
issued or outstanding. The following information with respect to the high and
low bid price of GlobeTel shares 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 2001

Quarter Ended March 31,                                 $.11              $.06

Quarter Ended June 30,                                  $.06              $.04

Quarter Ended September 30,                             $.04              $.02

Quarter Ended December 31,                              $.03              $.02

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

(b) Holders

We believe that there are approximately 22,000 holders of our Company's common
stock.

(c) Dividends

We have never paid a dividend and does 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, 2002 and 2001, our accumulated deficit was $20,291,641
and $20,082,788, respectively. We do not expect that any dividends will be paid
for the foreseeable future.

(d) Securities Authorized for Issuance Under Equity Compensation Plans

None


                                       7
<PAGE>


Recent Sales of Unregistered Securities

The following information is given with regard to unregistered securities issued
and/or sold by us during the past three years, 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>
--------------------------------------------------------------------------------------

1/05/2001     Common Stock  21,250,000 Vivian Manevich (2)       Acquisition of Global
--------------------------------------------------------------------------------------
1/05/2001     Common Stock  25,500,000 Timothy M. Huff (2)       Acquisition of Global
--------------------------------------------------------------------------------------
1/05/2001     Common Stock  16,150,000 Thomas J. Jimenez (2)     Acquisition of Global
--------------------------------------------------------------------------------------
1/05/2001     Common Stock  4,250,000  Peter J. Lindemann (2)    Acquisition of Global
--------------------------------------------------------------------------------------
1/05/2001     Common Stock  4,250,000  James E. Ontiveros (2)    Acquisition of Global
--------------------------------------------------------------------------------------
1/05/2001     Common Stock  3,400,000  James E. Kimble (2)       Acquisition of Global
--------------------------------------------------------------------------------------
1/05/2001     Common Stock   850,000   Dinh Dung Quoc (2)        Acquisition of Global
--------------------------------------------------------------------------------------
1/05/2001     Common Stock   850,000   Florida Export Finance    Acquisition of Global
                                       Corp.(2)
--------------------------------------------------------------------------------------
1/05/2001     Common Stock  4,250,000  Crescent Holdings Ltd.(2) Acquisition of Global
--------------------------------------------------------------------------------------
1/05/2001     Common Stock  2,702,083  Frances Siegel            Conversion of Note
                                                                  of $200,000
--------------------------------------------------------------------------------------
1/05/2001     Common Stock   100,000   Harvey Birnholz           Tax Consulting
                                                                 Services valued at
                                                                 $5,000
--------------------------------------------------------------------------------------
1/05/2001     Common Stock   500,000   Gerard Haryman (3)        Conversion of $20,000
                                                                 Note
--------------------------------------------------------------------------------------
1/05/2001     Common Stock   500,000   Capital Fulfillment Group Public Relations
                                                                 Services valued at
                                                                 $25,000
--------------------------------------------------------------------------------------
1/05/2001     Common Stock   392,188   Jaime Y. Jimenez (4)      Private Placement at
                                                                 $.08 per share
--------------------------------------------------------------------------------------
1/05/2001     Common Stock   261,463   Michele J. Morgan(4)      Private Placement at
                                                                 $.08 per share
--------------------------------------------------------------------------------------
1/05/2001     Common Stock   261,463   Edward Y. Jimenez      (4) Private Placement at
                                                                 $.08 per share
--------------------------------------------------------------------------------------
1/05/2001     Common Stock   196,094   Reynaldo Y. Jimenez, Jr. (4) Private Placement at
                                                                 $.08 per share
--------------------------------------------------------------------------------------
1/05/2001     Common Stock   196,094   Reynaldo O. Jimenez (4)   Private Placement at
                                                                 $.08 per share
--------------------------------------------------------------------------------------
1/05/2001     Common Stock  1,700,000  Bretton Hill Funding LLC  Conversion of Note
                                                                 of $500,000
--------------------------------------------------------------------------------------
1/05/2001     Common Stock  4,800,000  Bretton Hill Funding LLC  Exercise of Warrant
                                                                 as part of Note
--------------------------------------------------------------------------------------
2/16/2001     Common Stock   572,000   Adell Riff (5)            Private Placement at
                                                                 $.04
--------------------------------------------------------------------------------------
9/24/2001     Common Stock  1,500,000  William Murphy            Services valued at
                                                                 $22,500
--------------------------------------------------------------------------------------
9/24/2001     Common Stock   125,000   Daniel L.Montgomery       Services to NCI
                                                                 valued at $1,875
--------------------------------------------------------------------------------------
9/24/2001     Common Stock   175,000   Kiel McIver               Services to NCI
                                                                 valued at $2,625
--------------------------------------------------------------------------------------

                                       9
<PAGE>

--------------------------------------------------------------------------------------
11/2/2001     Common Stock  8,800,000  Sigma Online Ltd.         Services valued at
                                                                 $185,000
--------------------------------------------------------------------------------------
11/2/2001     Common Stock  5,125,000  Thomas J. Craft, Jr.,P.A. Services valued at
                                                                 $46,250 and
                                                                 conversion of $5,000
                                                                 of debt
--------------------------------------------------------------------------------------
11/2/2001     Common Stock  3,000,000  Richard Rubin             Corporate Securities
                                                                 Services valued
                                                                 at $30,000
--------------------------------------------------------------------------------------
11/2/2001     Common Stock  10,000,000 Jerrold R. Hinton         Conversion of
                                                                 $218,350 of debt
--------------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------------

                                       10
<PAGE>
--------------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------------
</TABLE>

(1) These shares were issued with a restrictive legend based upon the exemption
provided under Section 4 (2) of the Act. These shares were issued in connection
with the acquisition of NCI to five shareholders of NCI.

(2) These shares were issued with a restrictive legend to the former
shareholders of Global, based upon the exemption provided under Section 4(2) of
the Act, in connection with the acquisition of Global.

(3) These shares were issued with a restrictive legend based upon the exemption
provided under Section 4 (2) of the Act, in connection with the conversion of
$20,000 of a $75,000 note payable to our former chairman.

(4) These shares were issued with a restrictive legend based upon the exemption
provided under Section 4 (2) of the Act in connection with the private placement
to the family members of GlobeTel's chief financial officer, Thomas Y. Jimenez,
an accredited investor.

(5) The shares were issued with a restrictive legend based upon the exemption
provided under Section 4 (2) of the Act upon the exercise of options that were
granted as part of the Company's unit private placement in 1998. The Company
relied upon the exemption provided in Section 4 (2) under the Act in connection
with each of the above transactions. Shares were issued to officers and
directors of the Company and its subsidiaries for services, in connection with
the acquisition of Global, upon the conversion of debt into equity by present
and former officers/directors, to third party consultants who provided services
to the Company and Global, and in connection with the private placement to
accredited investors who were members of the family of an officer of Global and
to one third party accredited investor.

See Part III, Item 11, "Security Ownership of Certain Beneficial Owners and
Management" and Item 12, "Certain Relationships and Related Transactions".

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.

2002 Compared to 2001

Results of Operations

Revenues. During our year ended December 31, 2002, we had revenues of
$11,689,573 compared to revenues of $3,381,756 during 2001, an increase of
$8,307,817 or 246%. The increase in revenues was primarily attributable to the
growth of our sales to our principal customers and the start of network
operations in Mexico and Brazil.

One of our customers, IP World Ltd., accounted for $5,717,150 or 48.90% of our
sales. This amount reflects the discounted value of shares of IPWorld's capital
stock paid to us in satisfaction of promissory notes issued by IPWorld to us in
payment of the purchase price of certain networks we built and furnished to
IPWorld. We initially discounted the value of this IPWorld stock by 20%, in
anticipation of IPWorld stock becoming admitted to trading on the Australian
Securities Exchange ("ASX"). However, ASX listing of IPWorld stock is requiring
more time than originally anticipated, and we felt it prudent to further
discount the value of the IPWorld shares paid to us. We applied a further 30%
discount, to make a total discount of 50%. Accordingly, the revenue received
from IP World Ltd. was reduced to $5,717,150 from $8,300,000. (See Note 3 to the
Notes to Financial Statements).

                                       11
<PAGE>

Cost of Sales. Our cost of sales consists primarily of the wholesale cost of
buying bandwidth purchased by us for resale, costs of depreciation of
telecommunications equipment, rent and technical services. We had cost of sales
of $6,566,944 for the year ended December 31, 2002, compared to cost of sales of
$1,711,012 during the same period in 2001. We expect cost of sales to increase
in future periods only to the extent that our sales volume increases.

Gross Margin. Our gross margin increased to $5,122,629 in for the year ended
December 31, 2002, compared to $1,670,744 in the same period in 2001, an
increase of $3,451,885 or 206.60%. However, the gross margin decreased
insignificantly to 45.6% in 2002 down from 49.7% in 2001.

Operating Expenses. Our operating expenses for the year ended December 31, 2002,
increased to $3,492,894 compared to $2,830,534 for the same period in 2001, an
increase of $662,360 or 23.40%. 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. (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).

The increase in operating expenses was principally attributable to an increase
in officers' salaries and professional fees. The officers' salaries increased
from $248,207 in 2001 to $730,000 in 2002, or an increase of $481,793. The
salaries include accrued and unpaid salaries. The professional fees increased
from $255,964 in 2001 to $539,713 in 2002, or an increase of $283,749.

Our operating expenses are expected to further decrease as a percentage of
revenue 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 from Operations. Our operating income was $1,629,735 for the year ended
December 31, 2002, as compared to an operating loss of $1,159,790 during the
same period in 2001. The income from operations is mainly attributable to our
increased sales to our principal customers. (See Note 3 to the Notes to
Financial Statements).

Other Expense. We had other expenses totaling $308,441 during the year ended
December 31, 2002 compared to $33,538 during the same period in 2001. Other
income (expense) consists of interest expense on our borrowings and interest
income earned on our cash and cash equivalents and receivables from related
parties. The increase in other expense was attributable to reincorporation costs
that totaled $247,429 and loss on forgiveness of accrued interest receivable
from officers.

Net Income. Our net income for the year ended December 31, 2002, was $1,321,294
compared to a net loss of $1,193,328 in 2001. Increase in net income was mainly
attributable to our increased sales to our principal customers (See Note 3 to
the Notes to Financial Statements).

In order for us to pay our operating expenses during 2002 and 2001, including
certain operating expenses of our then wholly-owned subsidiaries, we continued
to rely on loans provided by our executive officers or directors on a
non-interest basis. We raised $24,500 and $22,900 from the sale of restricted
common stock in 2002 and 2001 respectively. We also raised $53,593 and $265,190
from proceeds from related party payables in 2002 and 2001, respectively. During
the year 2002, we generated $1,922,488 from loans and notes payable.

Liquidity and Capital Resources

At December 31, 2002, we had total assets of $8,344,884 compared to total assets
of $2,492,414 as at December 31, 2001. Total current assets at December 31, 2002
were $3,549,490 compared to $1,699,452 at December 31, 2001. The increase in
current assets is primarily attributable to an increase in accounts receivable
to $1,747,819 (net of an allowance for doubtful accounts of $1,094,420) at year
end 2002, compared to $1,174,020 (net of an allowance for doubtful accounts of
$786,433) at year end 2001. In addition, there was an increase of $1,600,000 in
non-readily marketable securities, available-for-sale, and an additional
$4,301,500 in non-readily marketable securities, which were earned by us for
sale of networks to IPWorld Ltd.

Our total current liabilities were $4,131,015 at December 31, 2002, compared to
$1,320,257 at December 31, 2001. The difference was principally due to increases
in accounts payable, deferred revenues, accrued payroll and notes payable.

Accounts payable increased from $340,121 to $ 639,323 primarily due to costs
associated with operations of the network. Deferred revenues increased from
$56,190 to $235,703 principally due to a network management agreement entered
with IPWorld, Ltd. Accrued payroll and related taxes increased from $334,291 to
$742,785. These costs include unpaid salaries and bonuses to be paid when
funds become available or in stock as may be agreed upon by the parties
involved.

                                       12
<PAGE>

Current liabilities also increased due to secured promissory notes payable
totaling $960,528 representing the balance due on the loans made during the
year; and a loan payable to consultant /customer totaling $311,960 incurred when
the party paid one of the secured promissory notes on our behalf.

The notes payable to stockholders was $55,000 at year end 2002, which remains
payable to our former chairman, Gerard Haryman. Our total liabilities increased
to $4,186,015 at December 31, 2002 from $1,380,139 at year end 2001.

We had a negative cash flow from operations of $1,038,461 in 2002 compared to
$28,145 in 2001. The significant change was primarily due to the increased level
of operations and operating activities.

We used $74,290 for investing activities in 2002 compared to $178,539 in 2001.
Net cash provided by financing activities increased substantially in 2002 to
$1,282,149 from $226,224 in 2001. The increase was principally due to proceeds
from financing and notes payable. As reflected in the accompanying consolidated
financial statements, during the year ended December 31, 2002, we had a net
income of $1,321,294 compared to a net loss of $1,193,328 during 2001.
Consequently, there is an accumulated deficit of $20,291,641 at December 31,
2002, compared to $21,612,935 at December 31, 2001.

Recent Accounting Pronouncements

In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation" an interpretation of APB Opinion No.
25 ("FIN 44"). This Interpretation clarifies the definition of "employee" for
purposes of applying Accounting Practice Board Opinion No. 25, Accounting for
Stock Issued to Employees, the criteria for determining whether a plan qualifies
as a non-compensatory plan, the accounting consequence of various modifications
to the terms of a previously fixed stock option or award, and the accounting for
an exchange of stock compensation awards in a business combination. This
Interpretation is effective July 1, 2000, but certain conclusions in this
Interpretation cover specific events that occur after either December 15, 1998,
or January 12, 2000. Management believes that the impact of FIN 44 will not have
a material effect on the financial position or results of operations of the
Company.

                                       13
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

                                GLOBETEL COMMUNICATIONS CORP.

                            f/k/a AMERICAN DIVERSIFIED GROUP, INC.

                                      FINANCIAL STATEMENTS

                                   DECEMBER 31, 2002 AND 2001

                                      TABLE OF CONTENTS

                                                                          Page
                                                                          ----
INDEPENDENT AUDITORS' REPORT                                               15

FINANCIAL STATEMENTS
  Balance Sheets                                                           16
  Statements of Income (Loss)                                              17
  Statements of Cash Flows                                                 18
  Statements of Stockholders' Equity                                       19
  Notes to Financial Statements                                            20

                                       14
<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.
f/k/a American Diversified Group, Inc. and Subsidiaries
Miami, Florida

We have audited the accompanying balance sheets of GlobeTel Communications
Corp., f/k/a American Diversified Group, Inc. as of December 31, 2002 and 2001,
and the related statements of income (loss), cash flows, and stockholders'
equity for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits 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 financial statements referred to above present fairly, in
all material respects, the financial position of GlobeTel Communications Corp.,
f/k/a American Diversified Group, Inc. and Subsidiaries, as of December 31, 2002
and 2001, and the results of its operations and its cash flows for the years
thenended in conformity with accounting principles generally accepted in the
United States of America.

                                               /s/ Dohan and Company, PA
                                               Certified Public Accountants
March 18, 2003, except for Note 3, as to
  which the date is April 17, 2003
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

                                       15
<PAGE>

                          GLOBETEL COMMUNICATIONS CORP.
             f/k/a AMERICAN DIVERSIFIED GROUP, INC. AND SUBSIDIARIES
                                 BALANCE SHEETS


                                                          December 31,
                                                      2002             2001
                                               ---------------  ---------------

                                     ASSETS
CURRENT ASSETS
  Cash and cash equivalents                   $        201,631  $        32,233
  Accounts receivable, less allowance for doubtful
    accounts of $1,094,420 and $786,433              1,747,819          301,772
  Accounts receivable, related party                      -             872,248
  Related party receivables                               -             493,199
  Non-readily marketable, available-for-sale
    equity securities                                1,600,000             -
  Deferred taxes (less valuation allowance
    of $2,303,276 and $2,315,866)                         -                -
                                               ---------------  ---------------
    TOTAL CURRENT ASSETS                             3,549,450        1,699,452
                                               ---------------  ---------------

PROPERTY AND EQUIPMENT, NET                            403,030          664,588

OTHER ASSETS
  Non-readily marketable, available-for-sale
    equity securities due from related party -
    Charterhouse Investment                          4,301,500             -
   Organization costs, net                                 283              452
   Deposits                                             90,621          127,922
   Miscellaneous receivable (less $125,000
     allowance for uncollectibility)                      -                -
                                               ---------------  ---------------
     TOTAL OTHER ASSETS                              4,392,404          128,374
                                               ---------------  ---------------

TOTAL ASSETS                                   $     8,344,884  $     2,492,414
                                               ===============  ===============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                           $        639,323  $       340,121
   Accounts payable, to be satisfied with
     non-readily marketable, available-for-sale
     equity securities                                 974,951          342,500
   Current portion of capital lease obligations         82,984           84,130
   Notes payable                                       960,528             -
   Loan payable to related party - Charterhouse
     Investment                                        311,960             -
   Accrued payroll and related taxes                    12,785          145,860
   Accrued expenses and other liabilities               48,700           46,967
   Deferred revenues                                    51,353           56,190
   Deferred revenues - related party                   184,350             -
   Accrued officers' salaries and bonuses              730,000          188,431
   Related party payables                              134,081          116,058
                                               ---------------  ---------------
     TOTAL CURRENT LIABILITIES                       4,131,015        1,320,257
                                               ---------------  ---------------
LONG-TERM LIABILITIES
   Capital lease obligations                              -               4,882
   Notes payable-shareholder                            55,000           55,000
                                               ---------------  ---------------
     TOTAL LONG-TERM LIABILITIES                        55,000           59,882
                                               ---------------  ---------------
       TOTAL LIABILITIES                             4,186,015        1,380,139
                                               ---------------  ---------------

COMMITMENTS AND CONTINGENCIES (NOTES 3 and 13)

STOCKHOLDERS' EQUITY
   Preferred stock, $.001 par value,
     10,000,000 shares authorized; none issued            -                -
   Common stock, $.00001 par value,
     1,500,000,000 shares authorized;
     605,320,283 and 467,276,945 shares issued
     and outstanding                                     6,053            4,673
   Additional paid-in capital                       24,444,457       22,720,537
   Accumulated deficit                             (20,291,641)     (21,612,935)
                                               ---------------   --------------
TOTAL STOCKHOLDERS' EQUITY                           4,158,869        1,112,275
                                               ---------------   --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY                                   $      8,344,884  $     2,492,414
                                               ===============  ===============
See accompanying notes.


                                       16
<PAGE>

                          GLOBETEL COMMUNICATIONS CORP.
             f/k/a AMERICAN DIVERSIFIED GROUP, INC. AND SUBSIDIARIES
                           STATEMENTS OF INCOME (LOSS)

                                            For the Year Ended December 31,
                                               2002                 2001
                                          --------------          -------------
REVENUES
   Sales                                 $     5,972,423         $   1,381,756
   Sales - related parties                     5,717,150             2,000,000
                                          --------------         -------------
     Total sales                              11,689,573             3,381,756
                                          --------------         -------------

   Cost of sales                               6,407,944             1,656,738
   Cost of sales - related parties               159,000                54,274
                                          --------------         -------------
     Total cost of sales                       6,566,944             1,711,012
                                          --------------         -------------
     GROSS MARGIN                              5,122,629             1,670,744
                                          --------------         -------------
EXPENSES
   Payroll and related taxes                     138,485               161,070
   Professional fees                             539,713               255,964
   Officers' salaries and bonuses                730,000               248,207
   Consulting and brokers' fees                1,230,800             1,169,733
   Bad debts                                     445,147               577,738
   Other operating expenses                       95,353                73,389
   Telephone and communications                   56,408                75,917
   Advertising and marketing                      15,987                  -
   Travel and related expenses                    73,433                49,191
   Rents                                          40,971                93,091
   Insurance and employee benefits                82,568                95,309
   Depreciation and amortization                  44,029                30,925
                                          --------------         -------------
     TOTAL EXPENSES                            3,492,894             2,830,534
                                           --------------        -------------
INCOME (LOSS) BEFORE OTHER INCOME (EXPENSE)
  AND INCOME TAXES                             1,629,735            (1,159,790)
                                           --------------        -------------
OTHER INCOME (EXPENSE)
   Insurance proceeds                               -                    4,910
   Other income                                     -                   22,418
   Interest income                                 6,528                56,987
   Interest expense                              (24,102)              (25,067)
   Reincorporation expenses                     (247,379)                 -
   Loss on forgiveness of accrued interest
     receivable from officers                    (43,488)                 -
   Loss on disposal of equipment                    -                  (85,286)
   Impairment of goodwill                           -                   (7,500)
                                           --------------        --------------
NET OTHER INCOME (EXPENSE)                      (308,441)              (33,538)
                                           --------------        --------------

NET INCOME (LOSS) BEFORE INCOME TAXES          1,321,294            (1,193,328)
                                           --------------        --------------
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)                          $    1,321,294        $   (1,193,328)
                                           ==============        ==============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
    BASIC                                     501,679,301           425,176,534
    DILUTED                                   505,617,703           425,176,534
                                           ==============        ==============
NET INCOME (LOSS) PER SHARE
    BASIC                                  $         0.00        $        (0.00)
    DILUTED                                $         0.00        $        (0.00)
                                           ==============        ==============
See accompanying notes.


                                       17
<PAGE>
                          GLOBETEL COMMUNICATIONS CORP.
             f/k/a AMERICAN DIVERSIFIED GROUP, INC. AND SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS


                                           For the Year Ended December 31,
                                               2002                 2001
                                          --------------         --------------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                       $    1,321,294        $   (1,193,328)
   Adjustments to reconcile net income
     (loss) to net cash used by operating
     activities:

     Depreciation and amortization                134,262               132,864
     Amortization of deferred consulting fees        -                  212,500
     Loss on disposal of asset                       -                   85,286
     Impairment on goodwill                          -                    7,500
     Common stock exchanged for services        1,690,800               947,250
     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                       (1,446,047)             (785,312)
     Accounts receivable, related party           872,248                  -
     Receivable from related parties                 -                 (250,000)
     Prepaid expenses                                -                   11,519
     Deposits                                      37,301               188,278
   Increase (decrease) in liabilities:
     Accounts payable                             299,202               381,206
     Accounts payable, to be satisfied with
       non-readily marketable, available-for-
       for sale equity securities                 632,451                  -
     Accrued payroll and related taxes           (133,075)              188,431
     Accrued officers' payroll and bonuses        541,569                81,660
     Accrued expenses and other liabilities       250,330              (32,882)
     Deferred revenues                             (4,837)               (3,117)
     Deferred revenues - related party            184,350                  -
                                           --------------        --------------
     NET CASH USED BY OPERATING ACTIVITIES     (1,038,461)              (28,145)

CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of property and equipment          (77,512)             (158,875)
   Payments for related party
     receivables (net)                              3,222               (19,664)
                                           --------------        --------------
     NET CASH USED BY INVESTING ACTIVITIES        (74,290)             (178,539)
                                           --------------        --------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Sale of common stock                            24,500                22,900
   Payments on capital lease financing             (6,029)              (17,233)
   Proceeds from notes and loans payable        1,922,488                  -
   Payments on notes and loans payable           (650,000)                 -
   Proceeds from related party payables             8,593               265,190
   Payments on related party payables             (17,403)              (44,633)
                                           --------------        --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES       1,282,149               226,224
                                           --------------        --------------
NET INCREASE IN CASH AND EQUIVALENTS              169,398                19,540

CASH AND EQUIVALENTS - BEGINNING                   32,233                12,693
                                           --------------        --------------
CASH AND EQUIVALENTS - ENDING              $      201,631        $       32,233
                                           ==============        ==============

SUPPLEMENTAL DISCLOSURES
  Cash paid during the period for:
     Interest                              $       24,102        $       25,067
     Income taxes                          $         -           $        4,407

In addition to amounts reflected above,
  common stock was issued for:
     Common stock issued for accrued
      compensation                         $          -          $      164,200
     Settlement of debt                    $       10,000        $       74,150
     Common stock issued for loan
      collateral, 75,000,000 shares
      issued at par value                  $          -          $         -
     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.


                                       18
<PAGE>


<TABLE>
<CAPTION>

                          GLOBETEL COMMUNICATIONS CORP.
             f/k/a AMERICAN DIVERSIFIED GROUP, INC. AND SUBSIDIARIES
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                                                                                                  Total
                              Common Stock      Additional        Deferred      Accumulated    Stockholders'
Description                 Shares    Amount  Paid-in Capital  Consulting Fees    Deficit         Equity
<S>                         <C>        <C>        <C>                <C>           <C>             <C>

Balance, Dec. 31, 2000   422,439,858  $4,224  $22,012,486      $     (212,500)  $(20,419,607)  $1,384,603

Shares issued
 for services             39,775,000     398      946,852                -              -         947,250

Amortization of deferred        -       -            -                 212,500          -         212,500
 consulting fees

Shares issued for
 extinguishment of debt   11,000,000     110      238,240                -              -         238,350

Reverse shares issued for
 extinguishment of
 debt in prior year       (6,510,413)    (65)    (499,935)               -              -        (500,000)

Shares issued for cash       572,500       6       22,894                -              -          22,900

Net loss                        -       -            -                   -        (1,193,328)  (1,193,328)
                         -----------  ------- -----------      ---------------  ------------   ----------

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                -              -            -
Contingent shares (Note 3)      -          -          -                  -              -            -
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
                         ===========  ======  ===========      ===============  ============   ==========
<FN>
See accompanying notes.
</FN>

</TABLE>


                                       19
<PAGE>

GLOBETEL COMMUNICATIONS CORP.
F/K/A AMERICAN DIVERSIFIED GROUP, INC. AND SUBSIDIARIES
NOTES TO 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 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.


Reclassification

Amounts in the prior year financial statements have been reclassified for
comparative purposes to conform with the presentation of the current year
financial statements. Such reclassifications reflect principally results from
the retroactive effect given to the mergers and reincorporation and for purposes
of comparative financial statement 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.


                                       20
<PAGE>

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 network is
delivered and accepted by the customer. Sales of computer hardware, equipment,
and installation are recognized when products are shipped to customers.
Provisions for estimated returns and allowances are provided for in the same
period the related sales are recorded. Revenues on service contracts are
recognized ratably over applicable contract periods. Amounts billed and
collected before services are performed are included in deferred revenues.


Income Taxes

Income taxes are computed under the provisions of the Financial Accounting
Standards Board (FASB) Statement 109 No. (SFAS 109), Accounting for Income
Taxes. SFAS 109 is an asset and liability approach that requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences
of the difference in events that have been recognized in the Company's financial
statements compared to the tax returns.


Advertising and Marketing Costs

Advertising and marketing costs are charged to operations in the period
incurred. Advertising expense for the year ended December 31, 2002, was $15,987.


Deferred Consulting Fees

The Company issued shares of its common stock to consultants for services
rendered and services to be rendered. The fair market value of the shares issued
for future services is recorded as deferred consulting fees and is shown as a
separate component of stockholders' equity. The deferred fees are amortized to
expense on a straight-line basis over the term of the respective consulting
agreements. There were no unamortized deferred consulting fees as of the balance
sheet dates presented.


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. At times, cash balances may be in excess of the FDIC insurance
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. The Company is also dependent
upon the realization of amounts recorded for stock investments in an Australian
corporation.


                                       21
<PAGE>

Recently Issued Accounting Pronouncements Applicable to the Company

In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." This statement provides accounting and reporting standards for
costs associated with the retirement of long-lived assets. It requires entities
to record the fair value of a liability for an asset retirement obligation in
the period in which it is incurred. When the liability is initially recorded,
the entity capitalizes a cost by increasing the carrying amount of the related
long-lived asset. Over time, the liability is accreted to its present value each
period, and the capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon settlement. The
Company has not yet determined the effect that this new accounting standard may
have on our results of operations, financial position and cash flows. The
Company will be required to implement this standard effective January 1, 2003.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement replaces SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." However, it maintains the fundamental provisions of SFAS No.
121 for recognition and measurement of the impairment of long-lived assets to be
held and used and for measurement of long-lived assets to be disposed of by
sale. This statement applies to all long-lived assets, including discontinued
operations, and replaces the provisions of APB Opinion No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business," for the disposal of segments of a business. This statement requires
that those long-lived assets be measured at the lower of carrying amount or fair
value less cost to sell and in management's opinion, this statement has not had
a material effect on the financial statements


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.


Goodwill

The Company follows FASB Statement (SFAS 142) "Goodwill and Other Intangible
Assets." SFAS requires that, instead of being amortized, the Company
periodically perform an evaluation of the value of goodwill and charge any
reduction to expense. During 2001, the Company charged $7,500 to impairment of
goodwill.


Net Income (Loss) Per Common Share

Basic net loss per common share has been computed based upon the weighted
average number of shares of common stock outstanding during each period. The
basic net loss is computed by dividing the net loss by the weighted average
number of common shares outstanding during each period. Available stock options
at December 31, 2002, were dilutive and were considered common stock equivalents
for the purpose of computing net income per common share. Available stock
options at December 31, 2001, were anti-dilutive and not considered common stock
equivalents for purposes of computing net loss per common share.


Segment Reporting and Related Information

In June 1997, the FASB issued Statement No. 131 (SFAS No. 131), "Disclosures
about Segments of an Enterprise and Related Information", which establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements. The provisions of this
statement were effective for fiscal years beginning after December 15, 1997, and
have been adopted by the Company.


Impairment of Long-Lived Assets

The Company follows FASB Statement No. 121 (SFAS 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
SFAS 121 requires that impairment losses are to be recorded when 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. There have been no material adjustments for impairment of
long-lived assets.

                                       22
<PAGE>

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

Three customers accounted for 92.58% of the Company's sales for 2002 and three
customers accounted for 72.6% of the Company's sales for 2001. 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 and
$2,000,000 or 64.24% for 2001. The other customers that accounted for the
Company's sales were different customers.

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, 2002
were $5,204,778 or 44.24% of total sales. This amount represents $1,978,910 or
16.82% from Brazil and $3,225,878 or 27.42% from Mexico. For the year ended
December 31, 2001, sales attributable to foreign operations were $2,361,357 or
69.83%, the full amount generated from the Mexico network. 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.

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. 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). The agreement specified the network's
overall operating specifications shall be consistent with industry standards for
carrier grade communications for networks of similar size and technology and
compatible with the standards required by major international and domestic
carriers. The agreement also provided that the Company shall complete the
build-out and deliver the network having purchased all equipment that the
Company deemed necessary and of sufficiency to provide the capabilities
consistent with the network's required capacity and overall quality of service,
transferring free and clear title of the equipment at the time IPW accepts and
purchases the network. The Company shall arrange for the third party services at
the time of delivery and acceptance necessary for call transmissions, including,
but not limited to, bandwidth, local loops and co-location space which the
Company deems necessary for the operation of the network. IPW may continue with
these third party service providers, in whole or in part, or replace these third
party service providers with new providers of its own choosing. The cost of all
such third party services shall be solely the expense and responsibility of IPW.
In July 2002, the Company entered into another Network Purchase Agreement with
IPW, pursuant to which, 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 the Philippines ("Philippines
Network"). The terms of this agreement are substantially the same as the terms
of the Brazil Network agreement.

The Company completed the build-out and testing of each of the networks,
confirming that each network was fully operational and ready for traffic
delivery. IPW accepted delivery of each of the networks and advised that the
testing of each network had been undertaken and completed satisfactorily and
operation of each network had begun.

Each network agreement provided that the purchase price of each network as
described above shall be $3,200,000. In payment for each network IPW issued a
promissory note in the amount of $3,200,000, due in 90 days with interest at
10%, which was to be paid in cash and/or marketable securities by agreement
between the Company and IPW, provided however that if there was no agreement the
note shall be paid in cash at the expiration of ninety (90) days after delivery
and acceptance. The Company agreed to accept 32 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 Network. Further, the Company agreed to accept 32 million
shares of IPW stock, at an agreed-upon value of $.10 (US) per share, in full
payment of the promissory note for the Philippines Network. At the time the
Company agreed to accept as payment the shares of IPW stock, totaling 68 million
shares, valued at $6.8 million, the IPW shares were, although available for
sale, not-readily marketable. The IPW shares were not listed for sale on the
Australian Stock Exchange (ASX) or any other domestic or international
securities exchange. However, 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.

                                       23
<PAGE>

The Company believes such valuation ($.10 per share) was reasonable based on the
following:

     (1) the shares issued reflected the value of the networks as
         agreed-upon by the Company and IPW;
     (2) the opening value of the IPW to be re-listed on the ASX was
         $AU .20 or $.123 US, the $.10 per share reflected at a
         discount of approximately 19%;
     (3) the value declared in prospectuses, disclosure statements, other
         stock placement memorandums and other various public disclosures
         issued by IPW, including offers to issue shares in private
         placements; and
     (4) representations by various brokerage houses to undertake
         selling IPW shares at such price,

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 is no
longer an operating company and has been dissolved.

Subsequent to the Brazil network sale, as described above, IPW and
Charterhouse agreed to terminate previous agreements and entered into modified
agreements, whereby IPW issued to Charterhouse 210,000,000 shares of IPW in
exchange for procuring a total of six networks (two existing and four to be
built). Under such agreements, Charterhouse was to become the Company's customer
(i.e., the entity purchasing the networks and contracting for the network
installation and maintenance by the Company), and, in turn, IPW would acquire
the networks and related services from Charterhouse (i.e., Charterhouse
functions as IPW's vendor and IPW as Charterhouse's customer). Accordingly, the
Company would not transact directly with IPW, and IPW would have no liability to
the Company.

In April 2003, the Company, Charterhouse, and IPW entered into a tri-party
agreement to clarify each party's rights and obligations and supercede all prior
arrangements. This agreement provides for the following:

     (1) The customer/vendor relationship shall be as described in the previous
         paragraph above;

     (2) IPW is not liable to the Company in connection with the acquisition of
         the Brazilian and Philippine networks.

     (3) IPW has free and clear title to the Brazilian and Philippine networks;

     (4) IPW shall be entitled to receive from the Company 25% of the gross
         revenue network, less network operational costs and the monthly
         allocation of a three amortized cost recovery for the network
         equipment.

Under the terms and conditions of the agreement, GlobeTel will present 10
million shares for each network built as a security bond against the yearly
performance of the network. If the network does not reach $1,000,000 per month
in gross revenues within year from the date of network acceptance to meet this
requirement, then the shares will be issued to IPW in satisfaction of this
performance requirement.

In connection with other 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 will maintain 70 million
IPW shares in escrow for the Company, and, accordingly, the Company is deemed
beneficial owner of the shares.

The contract further provides that monthly and quarterly reports are to be
submitted to IPW and that a joint bank account will be opened from which
payments to IPW will be made. To date, the Company has not been sending the
reports and has not opened a joint bank account. The Company will begin sending
the reports upon notification by IPW of the format they will expect to receive
the reports and the Company also expects to open a joint bank account for the
purpose of fulfilling the obligations in the agreement.


                                       24
<PAGE>

Service and Installation Agreements

In June 2002, the Company also 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
will be recognized ratably over the term of the agreement, beginning in October
2002. Revenue of $60,000 for maintenance services was initially recognized
during 2002.

Securities Valuation

To date the anticipated re-listing of the IPW shares has not yet occurred. The
Company has been informed that IPW has been undertaking to respond to comments
and requests for additional disclosures required by the Australian Stock
Exchange (ASX) prior to receiving approval for re-listing. Furthermore, the 68
million shares of IPW common stock held by Charterhouse for the benefit of the
Company are restricted and may not be received by and available for sale by the
Company until on or about June 2004. The Company valued the networks sold, based
on our evaluating the IPW shares held by Charterhouse for the Company, at
$.06145 per share, based on one-half of the opening value of $1.1229 (AU$.20).

Furthermore, in its prospectus filed in January 2003 and pursuant to concerns
expressed by ASX, IPW valued the networks based on the net present value method
employed by DMR Ltd., an Australian company, which prepared the valuation of IPW
and the ASX and valued the net present value of the network to be approximately
$836,000. The Company valued the networks sold, based on revaluing the IPW
shares held by Charterhouse for the Company, at $ .06145 per share, based on
one-half of the opening value of $ .1229 ($.20 AU).

Management believes this valuation is reasonable based on the following: (1) the
valuation of the restricted IPW shares at one-half of the value of free-trading
shares is consistent with the Company's policy for valuing issuances of its own
restricted shares (see Note 11); and (2) the DMR valuation was prepared prior to
the networks beginning operations and did not account for the significant voice
traffic, revenues, and cash flows generated by the networks through the
remainder of 2002 and through to-date (see Note 12).

Furthermore, management believes the amounts reflected on the Company's balance
sheet as of December 31, 2002, based on the valuation described above, is fully
realizable, whereas the management of IPW has represented that, based on
anticipated acceptance of the tri-party agreement by the ASX, the IPW stock will
in fact be re-listed in the near term, and certain creditors of the Company have
agreed to accept the IPW stock from the Company is payment of certain debt.

Sales - Global VoIP

In March 2002, the Company recognized revenue of $1,600,000 in connection an
agreement with Global VoIP (GVoIP), a related party as described above, which
granted GVoIP the right to use the Enhanced Services Operating system as a
Network Installation in the Network as set forth in a Network Provisioning
Agreement. In May 2002, the Company agreed to accept from GVoIP 16 million
shares of IPW stock, valued at $ .10 per share, in full payment of this amount.
These shares are considered non-readily marketable securities, available for
resale, and are unrestricted. The Company believes this amount is fully
realizable as it anticipates the stock will become tradable on the ASX, as
described above.

                                       25
<PAGE>

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

                                             2002                 2001
                                        -----------          -----------

Telecommunications equipment            $   476,808          $   712,780
Office furniture and equipment              185,682              179,061
Vehicles                                     12,440               12,440
                                        -----------          -----------
                                            674,930              904,281
Accumulated depreciation                   (271,900)            (239,693)
                                        -----------          -----------
Property and equipment,
  net book value                        $   403,030          $   664,588
                                        ===========          ===========

Total depreciation expense for the years ended December 31, 2002 and 2001
amounted to $134,034 and $132,751, respectively. Included in cost of sales is
$90,233 in 2002 and $101,939 in 2001.

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 5. BUSINESS ACQUISITIONS AND 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 6. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities consisted of the following:


                                            2002                2001
                                        -----------          -----------

Professional fees                       $    28,600          $    33,825
Customer deposits and overpayments             -                   5,490
Interest                                     20,100                7,652
                                        -----------          -----------

                                        $    48,700          $    46,967
                                        ===========          ===========

NOTE 7.  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.

                                       26
<PAGE>

NOTE 8. CAPITAL LEASE OBLIGATIONS

Capital lease obligations consisted of the following:


                                             2002                2001
                                        ------------        -------------
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.                       $    82,984          $    89,012

Current obligations under
  capital leases                            (82,984)             (84,130)
                                        -----------          -----------
Long-term obligations under
 capital leases                         $      -             $     4,882
                                        ===========          ===========

Future minimum lease payments under capital leases for years subsequent to
December 31, 2002 are as follows:


2003                                                         $   132,110
2004                                                               1,589
Amount representing interest                                     (50,715)
                                                             -----------
Present value of future
 minimum lease payments                                      $    82,984
                                                             ===========

Interest expense recorded on all capital lease obligations of the Company
amounted to $11,704 and $7,716 for the years ended December 31, 2002 and 2001,
respectively. The assets subject to the above capital lease obligations consist
primarily of telecommunications equipment.

NOTE 9.  ACCRUED OFFICERS' SALARIES AND BONUSES

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, 2002, the executives all agreed not to receive
bonuses they are entitled to as per the employment agreement.

In 2003, the base compensation increases 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.

Effective October 1, 1996, the Company entered into a three-year employment
agreement with its President wherein the Company agreed to pay compensation of
$100,000 annually, payable monthly at the rate of $8,333. In accordance with the
agreement, this compensation has been accrued but remained unpaid as of the year
ended December 31, 1999, due to the Company's lack of positive cash flow. In
March 2000, the accrued but unpaid compensation was converted into 10 million
shares of common stock (See Note 11). In December 2000, this employment
agreement was renewed for a one-year term through December 2001, for $100,000
annual compensation. In December 2001, the accrued but unpaid compensation for
2001 was settled with shares of common stock (See Note 18). In December 2001,
this employment agreement was renewed for a one-year term through December 2002,
for $100,000 annual compensation. The compensation will be deferred until the
Company has adequate cash flows, unless the President decides to accept a
convertible note for his services. In 2003 there is a continuing employment
agreement for the Company's president to serve at the pleasure of the CEO and
the Board, with a 90 day termination clause.

Pursuant to the above employment agreements, the Company recorded accrued
officers' salaries totaling $519,168 as of December 31, 2002 and $188,431 as of
December 31, 2001, pursuant to previously existing compensation arrangements.
These unpaid salaries have been accrued as of the end of the year and have not
been paid to date. The compensation will be deferred until the Company has
adequate cash flows, or unless each executive decides to accept a convertible
note for his or her services.


                                       27
<PAGE>

NOTE 10.  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
payment of 6 million shares of common stock of GlobeTel, 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.

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.

                                       28
<PAGE>

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.

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.

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.

To-date, no amounts due pursuant to the above convertible promissory notes had
been converted to shares.

                                       29
<PAGE>

NOTE 11. DEFERRED CONSULTING FEES

In April 2000, Global entered into a one-year agreement with J. Randolph Dumas
with the intent to form a legally binding business relationship which will focus
on international telecommunications and telecommunications-related business
activities of Global and its direct and indirect affiliates. In connection with
the agreement, Dumas was to acquire or otherwise make available a Dutch company
or other offshore company, which was to become the exclusive operating vehicle
for this business relationship between the parties. Dumas was to be designated
the Chairman and Chief Executive Officer of this company. Following the
formation of this new company, the parties to this agreement agreed to each
contribute $25,000 into the capital account of the new company for the purpose
of meeting the travel, administrative and related business expenses of this
entity.

During the two year period between the first anniversary and third anniversary
of this agreement, Dumas had the right but not the obligation to sell or "put"
his shares in this entity to ADGI (or to any successor entity which exists at
that time) at a price equal to the price/earnings multiple existing for ADGI (or
other successor public entity which may exist at the time of the "put"),
multiplied by the net income of the new company for the calendar year in which
the "put" is exercised. At Dumas's option, the purchase consideration provided
that it may take the form of all cash, all unrestricted stock in ADGI (or other
successor which may exist at the time) or a combination of each.

After the third anniversary of this agreement, Global had the one-time right
within 60 days of the third anniversary, but not the obligation, to purchase or
"call" all or a portion of Dumas's ordinary shares in the new company at a price
based on the same formulas as described above. The purchase consideration may be
formulated in whatever combination of cash and/or stock as Global may determine
in its sole discretion. Global's "call" option may be advanced at any time
should Global or ADGI (or its successor company) be the subject of a bid by an
unrelated/third party acquirer. In such event, the pricing formula for the
buy-out of the new company would reflect the same pro rata terms being offered
by the acquiring company for Global/ADGI.

In accordance with the contract, the Company issued 4,250,000 free-trading
shares of its common stock, valued at .05 a share, based on the market value on
or about the date of issuance, for a total of $212,500, in exchange for current
and future consulting services. These shares were held in Global's treasury
pending the passage of twelve (12) months from the date of this agreement. After
twelve (12) months these shares would be deemed to be fully vested and would be
delivered unconditionally to Dumas. The fair market value of these future
services were amortized over the term of the agreement. The Company amortized
$212,500 during 2001 and included this amount in consulting fees expense and
delivered the shares to Dumas. All of this expense was recorded in 2001 and none
of the expense was recorded in 2000 because the Company deemed that the services
must be rendered in full before the Company became liable for the compensation.
The agreement was also terminated in 2001 with general releases to each of the
parties and neither the Company or neither Global on the one hand, nor Dumas on
the other hand have any further rights or obligations under this agreement.

NOTE 12. RELATED PARTY TRANSACTIONS

Receivable from Related Parties

As of December 31, 2002 and 2001, the Company had the following amounts
receivable from related parties:

                                            2002                  2001
                                        ----------           -----------

Note receivable - GVoIP                 $    -               $   250,000
Officer                                      -                    62,634
Corporation owned by officer                 -                   180,565
                                        -----------          -----------

Receivable from related parties         $    -               $   493,199
                                        ===========          ===========

                                       30
<PAGE>

The note receivable from GVoIP, which is related by common control, was due
December 19, 2001, with interest at 10%, and was paid on February 4, 2002.

The amount receivable from the officer and from a corporation owned by an
officer were short term advances, due on demand, and included accrued interest
at 10%.On June 21, 2002, the Board of Directors agreed to forgive the accrued
interest from officers and corporation owned by an officer totaling $11,749 and
other related party of $31,739, upon satisfaction of the principal balances of
$52,195 and $152,641, respectively. The principal balances, totaling $204,836,
were offset as follows: $105,836 against accrued but unpaid officers' salaries
and $99,000 against accounts payable to a related party. During 2002, the
Company recorded a loss of $43,488 on the forgiveness of the accrued interest
receivable.

Related party payables

As of December 31, 2002 and 2001, related party payables are as follows:

                                            2002                 2001
                                        -----------          -----------

Corporation owned by consultant         $    24,990          $    52,851
Consultant                                     -                   3,207
Officers                                     33,100                 -
Consultant and officer                       57,500               60,000
IPW                                          18,491                 -
                                        -----------          -----------

Related party payables                  $   134,081          $  116,058
                                        ===========          ===========

These payables principally represent short terms advances, due on demand with
interest at 10%, to the Company by officers, consultants, and related
corporations.

Notes Payable - Stockholder


As of December 31, 2002 and 2001, the Company is obligated under a convertible
promissory note payable to stockholder and former director for $55,000,
principally representing advances to the Company. There is no formal repayment
plan, the notes bear no interest and are convertible into common stock.

NOTE 13. COMMITMENTS AND CONTINGENCIES

Litigation

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.

Letters of Credit

The Company has available up to $500,000 letter 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 our Mexican telecom
provider that provides local connectivity. In March, 2003 we issued another
$100,000 to the same Mexican telecom provider. The remaining $200,000 is not
issued as of the date of this report, however, the Company expects to issue the
letter of credit to the telecom service provider in Brazil.

                                       31
<PAGE>

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, TGVI 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 Brazil network was built by the Company, and, although the network was sold
to Charterhouse and owned by IPW, the Company is entitled to the gross revenues
generated by the network (see Note 3 above) and is obligated to make payment to
IPW and TGVI, as discussed below.

During 2002, the Company recognized revenue of $1,976,135 and included in cost
of revenues of $916,628 (substantially all of which was paid directly to
third-party suppliers by TGVI), in connection with the Brazil network. As of
December 31, 2002, $69,631 due to IPW and $55,704 was due to TGVI and these
amounts were included in costs of sales. The amount due to IPW represents 25% of
the project income (after allocated costs of $780,985), payable pursuant to the
Company's current agreement with Charterhouse and IPW, as described in Note 2.
The amount due to TGVI represents 20% of the project income (after allocated
costs of $780,985), payable pursuant to the Company's arrangements with TGVI, as
described above.

Service Provider Agreement - Mexico Network

On June 26, 2002, GlobeTel signed a memorandum of understanding with Qualnet
Telecom, LLC to 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 within
several weeks.

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.

                                       32
<PAGE>

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).

During 2002, the Company recognized revenue of $3,198,502 and included in cost
of revenues of $2,674,552 (substantially all of which was paid directly to
third-party suppliers by Qualnet), in connection with the Mexico network. The
amount due to Qualnet is 20% of the project income (after allocated costs of
$780,985), payable pursuant to the Company's arrangements with Qualnet, as
described above. As of December 31, 2002, no amounts were due to Qualnet for the
Mexico network, whereas, the project realized a loss for 2002.

The network is currently still operating at or near capacity and the
relationship continues as that of a service provider. GlobeTel is in the process
of incorporating its enhanced service platform in the network so that it can
provide other services that will be a new source of revenue.

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, including
wireless Internet access, Internet cafes, text messaging, governmental services,
educational uses, telemedicine, Voice over IP, and such other similar
communication services to deliver mobile data and to do all business
applications and transactions incidental thereto in the countries of, but not
limited to, Malaysia, Bangladesh, Indonesia, Poland and Australia and to do all
things necessary, appropriate or advisable in furtherance thereof as may be
approved by the Board of Directors.

The joint venture is in the process of securing contracts in various countries
and has not had any material transaction completed as of the date of this
filing.

Upon commencement of activities related to this joint venture agreement, the
Company will account for this venture under the equity method of accounting and
will record its share (50%) of the joint venture's net income or loss on the
Company's statement of income and adjust the investment account accordingly on
the Company's balance sheet. To-date, no revenues have been recorded in
connection with this joint venture agreement

Leases and Rents

The Company currently occupies the Miami, Florida office, which is the Company's
primary operating facility. The monthly payment for this office in Miami is
$3,463 per month and the lease expires in May 2005. The Company previously
leased facilities in four other cities (Hackensack, NJ, Jersey City, NJ, San
Antonio, TX, and St. Louis, MO) under three and five-year operating leases
expiring at various dates. The leases have since expired or the company was
otherwise able to terminate the lease commitments:

Effective September 1, 1999, NCI leased its facilities under a one-year lease
agreement with monthly rent payments of $700 and renewed the lease in September
2000. NCI vacated the facilities in May 2001, with no further commitments due to
the lessee. Effective February 1, 1999, the Company leased its executive office
premises in North Carolina under a one-year lease agreement with monthly rent
payments of $605. Effective February 1, 2000, the lease was renewed for one year
with monthly rent payments of $640. The lease was not subsequently renewed.

During 2001, but prior to the end of the lease, the Company closed its
operations in Hackensack, New Jersey. The Company moved out of the Hackensack
facility in March 2001..The lessee found new tenants for the office and
effectively released the Company from the lease. The Company is still in debt
with the landlord, the amount of which is included in the accounts payable.
Rental expense on this facility was included in results of operations for 2001
from January through May.

                                       33
<PAGE>

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.

During 2001, but prior to the end of the lease term, Global vacated the San
Antonio, TX office. The remaining amounts due under the lease were settled in
full with payment of three months rent ($1,788 per month).

In January 2001, prior to the end of the lease term, the Company vacated the St.
Louis, MO office and notified the lessee of the Company's intention not to renew
the lease as allowed for in the contract. The original lease expiration date was
April 2003 and the monthly rent was $1,149. The Company moved from this
facility in April 2001. There remained a one-month period where the lessee
claims is owed and which the Company disputes. To date the Company has not been
required or requested to make the remaining payment, although the no formal
agreement to settle the lessee exists. If and when any amounts are subsequently
paid to the lessee, the Company will expense such amounts when incurred.

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

2003                                                         $    41,550
2004                                                              41,550
2005                                                              17,313
                                                             -----------
                                                             $   100,413
                                                             ===========

Rent expense for 2002 and 2001 was $40,971 and $93,091, respectively.

NOTE 14.  CONSULTING AGREEMENTS

In August 2001, the Company entered into a consulting agreement with a
consultant to provide the company with: (a) services and opportunities related
to marketing the Company's network capacity; and (b) advice and consulting of
the Company's telecommunication services as it relates to servicing local market
demands. In 2002, the company issued 500,000 free trading shares, valued at $
..02 per share, to pay for the consulting fees totaling $10,000 and charged this
amount to expense in 2002.

Also in August 2001, the Company entered into a consulting agreement with a
corporation in the Philippines to provide the Company with consulting services
in relation to the completion of network connectivity in the Philippines. In
2002, the Company issued 2,000,000 free trading shares valued at $.02 per share
to pay for the consulting fees of $40,000 and charged this amount to expense in
2002.

In January 2002, the Company entered into an agreement with Hornblower & Weeks
Financial Corporation to provide finance and business consulting services to be
performed during the year 2002. The agreement provides for the payment of an
engagement fee of $30,000 on execution, a monthly fee of $10,000 for services
from January through March 2002, the issuance by the Company of 40 millions
restricted shares, with 10 million shares upon execution and 10 million
restricted shares on March 15, July 15 and September 15, 2002. The agreement
also provided for the issuance by the Company of the transfer by third parties
of an additional 8 million shares issuable on each of March 1, April 1, July 1,
and September 2002. Through June 30, 2002, the Company has only issued the
initial 10 million restricted shares on execution of the agreement in January
2002. The 10 million shares issued by the Company were for services provided by
the consultant in three months ended June 30, 2002. In reference to these
shares, during the three months ended June 30, 2002 and the nine months ended
September 30, 2002, the Company charged $250,000 to consulting expense, based
upon 50% of the closing bid price of the shares on the date of issuance.

During the three-month period ended March 31, 2002, Global VoIP, a principal
customer and related party to the Company, paid Hornblower & Weeks $30,000. In
addition, Global VOIP, on behalf of the Company, and to satisfy the Company's
March 15, 2002 obligation, transferred 10 millions shares to Hornblower & Weeks,
having a value of $200,000. In connection with this payment and transfer by
Global VOIP, the Company recorded consulting expense of $230,000 and offset this
amount against Global VoIP's account receivable balance to the Company by such
amount.

In July 2002, the Company terminated its agreement with Hornblower & Weeks and
maintains that no additional compensation is owed to Hornblower & Weeks in
excess of the amounts paid to-date as described above.

                                       34
<PAGE>

NOTE 15.  INVESTMENT BANKING AGREEMENT

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 provides for the Company to pay Charles Morgan a monthly fee of
$5,000 which shall continue for six months. After six months, the fee shall be
$10,000 per month until the term of the contract. The Company will also pay an
engagement fee of $30,000 upon initial funding. The monthly fee is payable in
cash or common stock at the Company's election. If paid in common stock of the
Company, then it is agreed that the Company will pay with stock having a value
of 125% of the cash payment alternative, based on the closing bid price of the
common stock of the Company on the due date of the payment.

The agreement also provides for the Company to pay a fee of 1.4 million shares
of common stock of the Company for services provided, as described above, on or
before October 1, 2002, 1.3 million shares on or before December 15, 2002 and a
final payment of 1.3 million shares on or before February 15, 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 three months ended September 30, 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 $30,000. This amount, was
offset against the remaining accounts receivable balance owed by Global VoIP to
the Company.

In January, 2003, Charles Morgan assigned its agreement with GlobeTel to Fordham
Financial Management, Inc. (Fordham Financials), an investment banking firm,
based in New York City and accordingly, all functions and responsibilities of
Charles Morgan were assumed by Fordham Financials.

NOTE 16.  BAD DEBT AND DEPOSIT WRITE-OFF

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 17.  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 2 above.

                                       35
<PAGE>

NOTE 18.  INCOME TAXES

Deferred income taxes and benefits for 2002 and 2001 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
                                           2001      Changes        2002
                                        ----------  ----------  ----------
Deferred tax assets:

Accrued officers' compensation          $   87,500  $  364,500  $  452,000
Allowance for doubtful accounts            314,573     123,195     437,768
Consulting services elected as start-up
  costs under IRC Sec. 195 (b)           1,178,803  (1,135,010)     43,793
Net operating loss carryforwards           734,990     634,725   1,369,715
                                        ----------- ----------- ----------
                                         2,315,866     (12,590)  2,303,276
Valuation allowance                     (2,315,866)     12,590 (2,303,276)
                                        ----------- ----------- ----------
Net deferred tax asset                  $     -     $     -     $     -
                                        =========== =========== ==========

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

                                                         2002          2001
                                                      ----------   -----------
  Income tax benefit computed at federal
    statutory rate                                    $  198,194  ($  179,000)
  Accrued officers' salaries                              80,326       12,504
  Allowance for doubtful accounts                         46,198       84,850
  Depreciation                                        (    3,440) (     9,643)
  Other
  Losses not benefited (benefited)                    (  321,278)       91,289
                                                      ----------   ------------
                                                      $    --      $     --
                                                      ==========   ============

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 2020.

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.

                                       36
<PAGE>

NOTE 19. COMMON STOCK TRANSACTIONS

During the year ended December 31, 2001, the Company issued the following shares
of Common stock:
<TABLE>
<CAPTION>

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

January 5, 2001      500,000   Satisfaction of debt  $ 20,000   Former director

February 10, 2001  2,000,000   Consulting services    160,000   Consultant

February 10, 2001    400,000   Accounting services     32,000   Accountants


February 10, 2001  1,200,000   Consulting services     96,000   Consultant

February 10, 2001    450,000   Consulting services     36,000   Consultant

September 24, 2001 1,500,000   Consulting services     22,500   Consultant

September 24, 2001   125,000   Consulting services      1,875   Consultant

September 24, 2001   175,000   Consulting services      2,625   Consultant

September 24, 2001   572,500   Sale of stock           22,900   Investor

November 2, 2001   3,000,000   Consulting services     30,000   Consultant

November 2, 2001     500,000   Consulting services      5,000   Consultant

November 2, 2001   1,000,000   Consulting services     10,000   Consultant

November 2, 2001   4,250,000   Consulting services     42,500   Corporate
                                                                 secretary/
                                                                 legal counsel

November 2, 2001   8,800,000   Consulting services    185,000   Consultant/Customer

November 2, 2001     500,000   Satisfaction of debt     5,000   Corporate
                                                                 secretary/
                                                                 legal counsel

November 2, 2001  10,000,000   Satisfaction of debt   218,350   President

December 4, 2001  16,000,000   Consulting services    320,000   Consultant

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
</TABLE>


                                       37
<PAGE>

In addition to the above, the Company issued 85,000,000 in exchange for Global
shares in 2001, and 1,000,000 in 2000 in exchange for NCI shares. Both issuances
have been applied retroactively to the beginning balances as a pooling of
interests.

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.

NOTE 20. STOCK OPTIONS

Options Pursuant to Private Placements

In connection with the Company's private placement of its common stock in April
1997, the Company issued a total of 3,250,000 shares at $.04 per share together
with 3,250,000 common stock purchase options exercisable by the holders to
purchase additional 3,250,000 shares at a price of $.08 per share, which were to
expire April 15, 2000. In 1999, the Company agreed to extend the options to
January 1, 2001. The Company had agreed to register the shares underlying the
options in a registration statement of Form SB-2 as soon as reasonably
practicable as part of a Registration Statement. In March 1998, the Company
issued an additional 1,550,000 shares under the same terms as the April 1997
private placement. The Company has no present plans to file an SB-2 registration
statement for either of these private placement.

The Company has not registered these stock options because the options extension
period has expired, and no option holders elected to exercise the options. The
Company believes there were and are no implications resulting from the fact that
the registration did not occur in a timely manner, because these shareholders
ultimately received registered shares upon satisfaction of the holding period
requirements. Furthermore, during the option period the Company's shares did not
trade above the option price, and, evidently, the holders did not perceive the
option price to be a favorable investment.

Options Pursuant to Convertible Promissory Notes

On December 16, 2002, the Company filed an SB2 registration statement to
register shares pursuant to the convertible promissory notes as described Note
10. The Company received a communication from the U.S. Securities Exchange
Commission, dated January 23, 2003, with inquiries pertaining to both the SB2
filing as well as 10-KSB and 10-QSB filings. The Company is presently in the
process of communicating with the SEC to address all questions being raised.

NOTE 21. 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% or gross revenues in 2002, and accordingly segment information is
not presented for 2002.

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.

Segment information for the year ended December 31, 2001 is as follows:
<TABLE>
<CAPTION>
                                            SEGMENT
                                    ------------------------
                                      GLOBAL          NCI     Unallocated      Total
<S>                                 <C>             <C>       <C>              <C>

                                    --------------------------------------------------
Net sales from external
   Customers                         $3,113,139     $268,617  $     -       $3,381,756
Cost of sales                         1,646,187       64,825        -        1,711,012
                                    --------------------------------------------------
Gross margins                         1,466,952      203,792        -        1,670,744
                                    ==================================================
Operating profit (loss)                 385,528      (44,673)  (1,500,645)  (1,159,790)
Depreciation and amortization           123,336        5,270        4,256      132,862
Interest income                          56,987         -           -           56,987
Interest expense                         24,014        1,053        -           25,067
Income taxes                               -            -           -             -
Total assets                          2,441,515       45,238        5,661    2,492,414
Capital expenditures                    158,875         -           -          158,875
</TABLE>

                                       38
<PAGE>


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

None.
                                    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       40    Chairman                                     One Year

Timothy M. Huff            37    Chief Executive Officer & a Director         One Year

Jerrold R. Hinton, PhD     61    President & a Director                       One Year


Mitchell A. Siegel         56    Chief Operating Officer & a Director         One Year

Thomas Y. Jimenez          44    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.

Jerrold R. Hinton, President, has served on the board of directors since March
1995. He had previously served both as chief executive officer 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.

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.



                                       39
<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            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                 2002 $150,000(a)     0            0                0                0            0         0
CEO
---------------------------------------------------------------------------------------------------------------------------------
Jerrold R. Hinton               2002 100,000(a)      0            0                0                0            0         0
President
---------------------------------------------------------------------------------------------------------------------------------
Jerrold R. Hinton CEO,          2001 100,000(a)      0            0(b)             0                0            0         0
President
---------------------------------------------------------------------------------------------------------------------------------
Jerrold R. Hinton CEO,          2000 100,000(a)     (1)           0(b)             0                0            0         0
President
---------------------------------------------------------------------------------------------------------------------------------
Mitchell A. Siegel              2002 125,000(a)      0            0                0                0            0         0
COO
---------------------------------------------------------------------------------------------------------------------------------
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(c)           0                0            0         0
Secretary, Counsel and a
Director until November 2001
---------------------------------------------------------------------------------------------------------------------------------
Thomas J. Craft, Jr.,           2000     0           0            0(c)             0                0            0         0
Secretary, Director
---------------------------------------------------------------------------------------------------------------------------------
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
---------------------------------------------------------------------------------------------------------------------------------
Vivian Manevich, President,     2000 90,000          0            0                0                0            0         0
Secretary and a Director of
Global
---------------------------------------------------------------------------------------------------------------------------------

<FN>
(a) Dr. Hinton originally entered into an employment agreement with us for a
    period of three years, commencing October 1996, which provided for annual
    compensation of $100,000, which agreement was extended for an additional three
    year term in October 1999. This salary was accrued but unpaid through December
    31, 1999 and subsequent to the end of the year ended December 31, 1999, Mr.
    Hinton entered into an agreement to waive the accrued but unpaid salary through
    the year ended 1999 in consideration for the issuance of shares.

                                       40
<PAGE>

    In March 2000, the accrued but unpaid compensation was converted into 10
    million shares of common stock (See Note 11). In December 2000, this
    employment agreement was renewed for a one-year term through December 2001,
    for $100,000 annual compensation. In December 2001, the accrued but unpaid
    compensation for 2001 was settled with shares of common stock (See Note 18).
    In December 2001, this employment agreement was renewed for a one-year term
    through December 2002, for $100,000 annual compensation. The compensation
    will be deferred until the Company has adequate cash flows, unless the
    President decides to accept a convertible note for his services. In 2003
    there is a continuing employment agreement for the Company's president to
    serve at the pleasure of the CEO and the Board, with a 90 day termination
    clause.

    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, 2002, the executives all agreed not to receive bonuses
    they are entitled to as per the employment agreement.

    In 2003, the base compensation increases 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.

    Pursuant to the above employment agreements, the Company recorded accrued
    officers' salaries totaling $519,168 as of December 31, 2002 and $188,431 as
    of December 31, 2001, pursuant to previously existing compensation
    arrangements. These unpaid salaries have been accrued as of the end of the
    year and have not been paid to date. The compensation will be deferred until
    the Company has adequate cash flows, or unless each executive decides to
    accept a convertible note for his or her services.

(b) Mr. Hinton was also issued shares in registration statements on Form
    S-8, shares with a restrictive legend in consideration for continued
    services to the Company, shares with restrictive legend upon conversion of
    debt into equity and shares upon exercise of options as discussed below. In
    addition, shares were issued to Higher Ground, Inc., a corporation
    controlled by Mr. Hinton. Mr. Hinton also exercised options during 2001 to
    purchase 6 million shares, at an exercise price of $.08.

(c) Mr. Craft was also issued shares in registration statements on Form S-8,
    shares with a restrictive legend in consideration for continued services to
    the Company, shares with restrictive legend upon conversion of debt into
    equity and shares with restrictive legend upon exercise of options as
    discussed below. Mr. Craft has the right under an option to acquire an
    additional 6 million shares at an exercise price the lower of $.08 per share
    or fifty percent of the closing bid price of the shares on the date(s) of
    exercise of the options, in whole or in part. In addition, in November 2001,
    Mr. Craft was issued 5,125,000 restricted shares for services valued at
    $46,250 and $5,000 for conversion of debt.
</FN>
</TABLE>

                                       41
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

At April 11, 2003, we had 605,320,283 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>

-----------------------------------------------------------------------------------------------------------------------------
                                                                                       14,955,524 shares (2)
Common Stock      Jerrold R. Hinton, PhD.,  444 Brickell Avenue,  Suite 522  Miami                                  2.40%
                  FL  33131
-----------------------------------------------------------------------------------------------------------------------------
                                                                                          6,000,000 shares
Common Stock      Timothy M. Huff, CEO, 444 Brickell Avenue  Suite 522  Miami, FL                                  .009%
                  33131
-----------------------------------------------------------------------------------------------------------------------------
Common Stock      Przemyslaw L. Kostro, Chairman,  444 Brickell Avenue  Suite 522                0                   0
                  Miami, FL  33131
-----------------------------------------------------------------------------------------------------------------------------
                  Vivian Manevich, CAO,  444 Brickell Avenue, Suite 522, Miami, FL      2,445,000 shares (3)      0.004%
Common Stock      33131
-----------------------------------------------------------------------------------------------------------------------------

                  Thomas Y. Jimenez, CAO,  444 Brickell Avenue, Suite 522, Miami, FL       896,500 shares         0.001%
Common Stock      33131
-----------------------------------------------------------------------------------------------------------------------------
                                                                                         24,297,024 shares        2.414%
Common Stock      All executive officers and directors of  the Company as a group (4
                  persons, including executive officer of Global)
-----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Based upon 605,320,283 shares issued and outstanding on April 10, 2003. (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. (3) The shares issued to Vivian
Manevich, in connection with the Share Purchase Agreement, as amended, between
the Company and Global Transmedia and Global Transmedia's shareholders,
effective on February 19, 2000.
</FN>
</TABLE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During the past two years, the Company had transactions with persons who are
(were) its executive officers, directors as set forth in Item 5, Recent Sales of
Unregistered Securities. Mr. Hinton was issued the restricted shares in
consideration for the conversion of debt into equity and upon the exercise of an
option to purchase 6 million shares at $.08 per share.

Ms. Manevich was issued 21,250,000 restricted shares having a value of $.08, in
connection with the Company's acquisition of Global.

Thomas J. Craft, Jr., our corporate counsel and secretary, and who was a member
of the board of directors during 2000 and 2001 until November 2001, was issued
restricted shares upon the conversion of debt and as non-cash compensation for
services.

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


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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)
------------------------------------------------------------------------------------------------------------------------------
99.1          Safe Harbor Compliance Statement for Forward-Looking Statements filed herewith

------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(B) REPORTS ON FORM 8-K

We filed a Form 8-K on January 10, 2001, reporting the amendment to the Share
Purchase Agreement between the Company and the former shareholders of Global,
reflecting the change in the nature and amount of consideration.

We filed a Form 8-K on July 25, 2002, to report the results of the shareholder
meeting on July 24, 2002 and completion of the reincorporation of the Company as
a Delaware corporation. We also announced the approval of the the exchange of
all outstanding shares of ADGI common stock for an equal number of shares of
GTEL common stock, thereby merging ADGI into GlobeTel.

Item 14.  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.

                                   SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment to the 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 22, 2003



                                   SIGNATURES

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

Dated: April 22, 2003


By:  /s/ Thomas Y. Jimenez
Thomas Y. Jimenez, Chief Financial Officer

Dated: April 22, 2003


                                       43
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