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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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


                                 FORM 10-K/A-1


                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                        COMMISSION FILE NUMBER:  0-27469

                                GLOBALNET, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S>                                            <C>
                    NEVADA                                       87-0635536
       (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)

    1919 SOUTH HIGHLAND AVENUE SUITE 125-D                         60148
              LOMBARD, ILLINOIS                                  (ZIP CODE)
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (630) 652-1300

       SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:  NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

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             TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
             -------------------                 -----------------------------------------
<S>                                            <C>
   COMMON STOCK, PAR VALUE $.001 PER SHARE                NASDAQ SMALL CAP MARKET
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     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days.  Yes [X]  No [ ]

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

     The aggregate market value of the voting common stock held by
non-affiliates of the Registrant was $23,145,806 as of April 12, 2001 based on
the per share closing price of the Common Stock on the NASDAQ Small Cap Market
of $1.27 on April 12, 2001. The number of shares outstanding of the Registrant's
common equity as of April 12, 2001 was 32,230,878 shares.

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                                GLOBALNET, INC.


                        2000 FORM 10-K/A-1 ANNUAL REPORT


                               TABLE OF CONTENTS


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                                  PART I
Item 1   Business....................................................    1
Item 2   Properties..................................................   20
Item 3   Legal Proceedings...........................................   20
Item 4   Submission of Matters to a Vote of Security Holders.........   21

                                  PART II
Item 5   Market for Registrant's Common Equity and Related              22
         Stockholder Matters.........................................
Item 6   Selected Financial Data.....................................   25
Item 7   Management's Discussion and Analysis of Financial Condition    25
         and Results of Operations...................................
Item 7A  Quantitative and Qualitative Disclosures about Market          32
         Risk........................................................
Item 8   Financial Statements and Supplementary Data.................   33
Item 9   Changes and Disagreements on Accounting and Financial          52
         Disclosure..................................................

                                 PART III
Item 10  Directors and Executive Officers of the Registrant..........   52
Item 11  Executive Compensation......................................   57
Item 12  Security Ownership of Certain Beneficial Owners and            61
         Management..................................................
Item 13  Certain Relationships and Related Transactions..............   63

                                  PART IV
Item 14  Exhibits, Financial Statement Schedules, and Reports on Form   65
         8-K.........................................................
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                                     PART I

ITEM 1.  BUSINESS

ORGANIZATIONAL HISTORY


  General



     GlobalNet, Inc. (the "Company") was formed on May 30, 2000 as a result of a
"reverse merger" transaction, whereby GlobalNet International, Inc. merged with
and into a subsidiary of Rich Earth, Inc. pursuant to an agreement and plan of
merger, whereby 20,000,000 shares of Rich Earth common stock were issued in
exchange for 100% of the common stock of GlobalNet International in a
transaction accounted for as a reverse acquisition of Rich Earth by GlobalNet
International. Prior to the reverse merger, Rich Earth was a non-operating
public shell corporation with nominal assets. Following the reverse merger, the
management of GlobalNet International controlled the merged company and the
principal shareholders of GlobalNet International became principal shareholders
of the merged company. Following the closing of the reverse merger, Rich Earth
changed its name to GlobalNet, Inc. As a result of the reverse merger
transaction, GlobalNet International continued as an operating entity and as a
wholly-owned subsidiary of GlobalNet, Inc., and the historical financial
statements of GlobalNet, Inc. replaced those of Rich Earth.



     Background of the "Reverse Merger"



     During the first quarter of 2000, the management of GlobalNet International
was seeking additional equity funding in order to fully implement their business
plan for the expansion of their business. Robert J. Donahue, then President of
GlobalNet International, and Jonathan S. Greenhill, counsel for GlobalNet
International, commenced discussions with Myron Gushlak, an associate of Xenios
Xenopoulos, then the sole director of Rich Earth. In February 2000, Messrs.
Donahue and Greenhill submitted a proposed plan of reorganization to Mr.
Xenopoulos. The parties described above, along with Cummings and Lockwood,
special counsel for GlobalNet International, and Alixe Cormick of Venture Law
Corporation, special counsel for Rich Earth, negotiated the proposed plan of
reorganization which was finalized as of March 22, 2000.



     The terms of the "reverse merger" included, among other things, that:



     - Rich Earth become current in the filing of reports under the Securities
      Exchange Act of 1934;



     - Rich Earth change its name to "GlobalNet, Inc.";



     - Rich Earth consummate a private placement sale of at least 600,000 shares
      of Rich Earth common stock raising an aggregate total of $6 million
      immediately prior to the closing of the "reverse merger";



     - Holders of GlobalNet International common stock receive 20,000 shares of
      the Company's common stock for each share of GlobalNet International
      common stock issued and outstanding for a total issuance of 20 million
      shares of Company common stock to the shareholders of GlobalNet
      International;



     - The then current directors of Rich Earth resign upon consummation of the
      "reverse merger"; and



     - The Company appoint 11 new directors.



     Based upon unaudited financial information as of March 31, 2000 provided by
each of Rich Earth and GlobalNet International, immediately prior to the
combination, Rich Earth maintained total assets of $2,509,970 and no liabilities
while GlobalNet International maintained total assets and liabilities of
$11,352,412 and $12,239,854, respectively. On an unaudited pro forma basis, the
combination resulted in total assets and liabilities of $20,925,214 and
$10,066,538, respectively.



     The terms of the "reverse merger" and the valuations attributed to each
party to the combination were arrived at through arms length negotiations which
considered the cash of Rich Earth and the business and proposed business of
GlobalNet International, as well as the prior business experience of Mr. Donahue
in the


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telecommunications industry. Such arms length negotiations resulted in
then-existing Rich Earth shareholders holding approximately 32.0% of the
outstanding shares of GlobalNet and then-existing GlobalNet International
shareholders receiving approximately 64.2% of the outstanding shares of
GlobalNet, in each such case, as calculated immediately after dilution to
investors from private placement transactions of an aggregate amount of
1,205,450 shares of Rich Earth for aggregate net proceeds after offering
expenses of $11,640,106.



     The "reverse merger" is considered by the Company to be a capital
transaction in substance, rather than a business combination. That is, the
"reverse merger" is equivalent to the issuance of stock by the Company for the
net monetary assets of Rich Earth, accompanied by a recapitalization. The
accounting is identical to that resulting from a reverse acquisition, except
that no goodwill or other intangible was recorded.


COMPANY OVERVIEW

     GlobalNet provides international voice, data and Internet services over a
private, managed Internet Protocol (IP) network to international carriers and
other communication service providers in the United States and Latin America.
GlobalNet's mission is to become the premier provider of high quality,
competitively priced IP based voice, fax, and data services to Internet Service
Providers (ISPs), Postal Telecommunications and Telegraph Providers (PTT's), and
other Telecommunications Services Providers (TSPs) serving the Small-Medium
Enterprise (SME) Market in Latin America.

     GlobalNet was formed in 1996 to capitalize on the growth of the Internet
Protocol as a communications transport medium for IP Telephony and other
enhanced services. To date, the Company has focused primarily on wholesaling
international voice and facsimile communications services between the United
States and Latin American countries, predominately Mexico. GlobalNet has been
successful in establishing and maintaining relationships with Tier 1 and Tier 2
carriers as a result of its ability to procure consistent sources of supply in
the capacity constrained telecommunications corridors linking Latin America and
the United States. This has been accomplished through the development of
partnerships with several Latin American telecommunications companies.
Leveraging these relationships, the Company has grown its revenues from $793,000
in 1997 to $78.1 million in 2000, an annualized compound growth rate of over
350%.

INDUSTRY OVERVIEW

  The International Telecommunications Industry

     The international telecommunications industry is undergoing a period of
fundamental change that has, and is expected to continue to result in
significant growth in international telecommunications and revenues.

     Numerous factors have driven the growth in demand for international
telecommunications products and services. These factors include:

     - The globalization of the world's economies

     - The worldwide trend toward deregulation of telecommunications

     - Declining prices and a wider selection of products and services driven by
       greater competition as a result of deregulation

     - Increased communication accessibility made possible by technological
       advances and greater investment in telecommunications infrastructure,
       including the deployment of wireless networks

     - Increased international business and leisure travel

     - Growth in computer based transmission of voice and data information

     These trends have sharply increased the use of, and reliance upon,
telecommunications products and services throughout the world. According to a
study conducted by the Gartner Group, a market research firm, the international
telecommunications market is expected to grow to $1.9 trillion by the year 2003.

     Recent legislation and the World Trade Organization (WTO) agreement among
numerous countries are expected to lead to increased liberalization of the
majority of the world's telecommunication markets.

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Specifically, the WTO Agreement created a framework under which 69 countries
committed to liberalize their telecommunications laws to permit increased
competition and, in most cases, foreign ownership in their telecommunications
markets, beginning in 1998.

     By eroding the traditional monopolies held by PTT's, many of which are or
were wholly or partially government owned, deregulation is affording U.S.-based
providers the opportunity to negotiate more favorable agreements with both the
traditional administrations and emerging foreign providers. In addition,
deregulation in certain foreign countries is enabling U.S.-based providers to
establish local switching and transmission facilities to terminate their own
traffic and carry international long distance traffic originating in those
countries. Deregulation, privatization, the expansion of the resale market and
other trends influencing the international telecommunications market are
resulting in decreased termination costs, a proliferation of routing options and
increased competition.

     Advances in technology have created multiple ways for telecommunications
carriers to provide customer access to their networks and services. Overall,
these changes have resulted in a trend towards bypassing traditional
international long distance operating agreements as international long distance
companies seek to operate more efficiently. In markets that have not deregulated
or are in the process of implementing deregulation, international long distance
carriers have used advances in technology to develop innovative alternative
methods to meet customer demand.

     Data traffic is rapidly outpacing voice, creating a fundamental change in
the way service is provided. According to the latest reports, data transmission
has an accelerated growth rate of 30% annually throughout the world.

  The Trend Towards IP Telephony Service

     According to a study by the Phillips Group, a telecom consulting firm, the
currently structured market is expected to transform itself over a five-year
period that began in 1998. Specifically, it is expected to become a market
dominated by IP architecture applications and new business models.

     A combination of technological advances and telecommunication deregulation
is changing the way customers and service providers do business. Computers and
telecommunications are converging and networks are changing from circuit
switching technology, the prevailing technology of traditional telephone
companies, to packet-based communications. In effect, this convergence is
bringing computer intelligence to the telecommunications industry. This enhances
value added customer services, increases the transmission capacity and lowers
operation costs. As a result, new carriers with innovative market strategies,
like GlobalNet, will be better able to compete against larger, traditional
telecommunications companies.

     Specific benefits to both the end user and the service provider include:

     - Higher quality transmission

     - Enhanced voice quality

     - More efficient use of bandwidth

     - Guaranteed Quality of Service (QoS)

     - Enhanced access

     The evolution of IP technology enables the conversion of applications such
as e-mail, Internet usage, Web hosting, broadband broadcasts and Internet
telephony and further enables the inclusion of unified messaging and e-commerce.
This will drive the need for Applications Service Providers to offer
applications to businesses and consumers who cannot afford to own the necessary
applications themselves.

     The consulting and market research firm Frost & Sullivan expects Voice-over
Internet Protocol (VoIP) technology to be the most significant development in
the telecommunications industry since wireless technology. Revenues are
anticipated to grow from under $2 billion in 1999 to over $10 billion by 2005.
Although that number is small compared with the 7 trillion total minutes people
spent on traditional phone networks in 1999, it is a sign that consumers and
businesses are starting to accept Web-based phone calls.

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     Technology like VoIP will make telephony more efficient and less expensive.
While traditional voice calls require a dedicated "circuit" between the two
parties, VoIP takes a voice call, breaks it into "packets" of information, then
reassembles those packets at its final destination, much in the same way a data
transmission is handled on Internet-based networks.

     New players are entering the field to capitalize on the convergence of the
traditional telephone network with both private and public data networks.
Providers currently in the VoIP marketplace are very few, but they are starting
to mold the markets to generate demand for such technology. Established telecom
companies are in the process of redefining their platforms and have plans to
enter the IP market worldwide within the next two years. However, their existing
legacy networks will slow down their market entry.

  The Latin American Telecommunications Market

     Latin America is a deregulating, rapidly expanding telecommunications
market and the world's fastest-growing Internet market. According to market
researchers, Frost & Sullivan, the Latin American market, valued at $51 billion
two years ago, was forecast to reach $90 billion in 2000. The Yankee Group, an
independent research firm, estimates that voice traffic in Latin America is
growing by 20%, data by 93%, and the Internet by 113%.

     The Phillips Group projects an explosion in demand, with less than 2% of
the Latin American population connected to the Internet. An example of the
market opportunity is Brazil. This country has the world's 5th largest
population and the 8th largest GNP, but ranks 43rd in teledensity with only 9.5%
penetration.

     GlobalNet believes that Latin American telecommunications, including
traffic between the United States and Latin America, will continue to grow
faster than the international market as a result of:

     - Underlying economic growth within Latin America

     - Growth of regional trade from trade initiatives such as NAFTA, Mercosur
       and the Andean Pact

     - Deregulation and privatization of telecommunications carriers in the
       region

     - Projected increases in telephone density

     - Increasing demand for bandwidth-intensive applications

     There are significant opportunities created by deregulation and market
growth in the rapidly changing telecommunications markets in Latin America.
Countries in the Latin American region generally are experiencing a solid period
of economic, business and infrastructure growth, reduced inflation and economic
and political stability. Substantial opportunities exist for providers of
telecommunications equipment, system integration, value-added services and voice
and data services as Latin American countries move toward privatization and
greater liberalization of their telecommunications markets.

     We believe that GlobalNet is well positioned to capitalize on these
opportunities by providing high quality, low-cost, comprehensive
telecommunications services. As a rule, Latin American countries have
historically suffered from extremely low teledensity. Moreover, these markets
have been subject to characteristically inefficient, poor-quality service, as
well as, the unavailability of new and innovative systems and services. The
Latin American markets in which GlobalNet offers services, or seeks to compete,
are generally characterized by a lack of fiber optic cable capacity. As a
result, there is a critical and growing demand for the type of high-quality,
innovative systems, products and services that GlobalNet intends to provide.

GLOBALNET'S STRATEGY

  Current Business

     The Company was organized to engage in the telecommunications industry and
to capitalize on the growth of Internet Protocol (IP) (the transmission of
international voice, data and Internet services over a private network to
international carriers and other communications service providers in the United
States and Latin America) as a communications transport media for IP telephony
and other enhanced services.

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     To date, GlobalNet has derived its revenues primarily from wholesaling
international voice and fax services between the United States and Latin
America, predominately Mexico, using its IP-based network. Through established
partnerships with several Latin American telecommunication companies, GlobalNet
has emerged as a significant and consistent wholesale provider of supply in the
capacity-constrained U.S.-Latin American corridor. Our domestic customers
include Tier 1 and Tier 2 carriers such as MCI WorldCom, Qwest, Global Crossing,
Teleglobe and IDT.

     We have based our technology future on IP platforms. IP is a network-layer
protocol containing addressing and control information that enables packets to
be efficiently and quickly moved through a network. IP has become the protocol
of choice on the Internet due to its inherent flexibility and adaptability over
different physical transmission media and over different protocol layers such as
ATM and frame relay. Recent initiatives that address quality of service,
security and core-network switching have underscored IP's advantages and result
in its increased acceptance across proprietary networks. Additionally, IP's
flexibility and functionality allow a number of value added applications such as
VoIP, IP fax and unified messaging service to be layered on top of basic
transport.

     Our strategy is to deliver high quality communications services while
providing customers with IP inherent cost savings and global reach of the
Internet. Our business philosophy is to meet customer needs with bundled service
packages that integrate a customer's telecommunications traffic. Our growth
strategy targets partnerships with service providers with a proper license, an
established network and an in-house sales and support organization. We intend to
focus our sales and marketing efforts on strategic partners whose sales efforts
concentrate on servicing small-to-medium businesses, ISPs and TSPs. We believe
that our business success in a large part will be dependent upon our existing
management team of seasoned professionals who offer industry, operating,
marketing, technical and financial expertise. We believe that we can
successfully compete within our industry through our ability to offer turnkey
solutions which include provisioning of a billing system and the design,
staffing and implementation of state of the art customer care and network
management centers. Our solutions enable the delivery of seamless networks by
alternating and integrating critical functions, including billing, customer
care, fault isolation and repair, network management and network OSS.

     Our principal competitors in the Latin American markets include Telefonica
(Spain's privatized PTT), AT&T, MCI WorldCom Inc., Bell South and Global
Crossing. These companies are larger and better financed than the Company. We
believe that our ability to compete is based on our core management team of
experienced telecommunication professionals. Central to our ability to compete
is our aggressive pricing and product diversification and our emphasis on
superior customer care. We believe that our bundled service offering is superior
to that offered by our competitors. We also intend to compete based on a
strategy of working with carriers who concentrate on niche markets, including
ISPs and TSPs who market to small and medium sized companies, as well as our
focus on location where we can achieve a high level of on-net customers in order
to achieve our revenue and margin goals.

     We are well positioned with the development of our next-generation network
because network infrastructure costs are less; the cost of VoIP equipment is
less; and VoIP equipment occupies 90% less space in telephone exchanges than
traditional circuit-switched equipment. The industry is converging on a single
vision based on IP technology to lower costs and handle exploding data traffic.
However, traditional carriers will have trouble catching up, as they would have
to write off huge investments made in traditional circuit switched networks
designed to carry voice.

  Planned Expansion and Future Business Activities

     The Company has developed an overall plan for expanding its existing
business and enhancing its business through other related IP activity. Our
expansion plans are dependent upon our ability to secure additional debt or
equity financing. We are unable to determine when, if at all, such financing may
be obtained or the amounts, levels and terms upon which such financing may be
obtained. This uncertainty will have an effect on the timing of the
implementation of our future growth plans. The areas of our additional activity
are therefore largely proposed and intended.

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     We plan to phase in the building of up to 15 Network Access Points (NAPs)
in 13 countries to enable us to provide Latin American ISPs, TSPs and the PTT, a
local "in-country" forum for exchanging Internet and other IP-based traffic.
These planned centers will also serve as our distribution nodes for our IP-based
product offering. Our strategy is based on our goal of eliminating
"backhauling", thereby providing value to our customers. At the present time,
service providers to Latin America purchase their connectivity to the Internet
from a variety of suppliers who are either United States based or Latin American
based providers who purchase their Internet access from United States providers.
The result of this is that all Internet traffic whether it is web site access,
e-mail or file transfer, first goes to the United States and then back to Latin
America, even if both of the originating and destination points are both in
Latin America. This practice is called "backhauling" and causes a number of
problems for the Latin American providers, ranging from increased exposure to
latency, higher packet failure and retry rates to increased cost resulting from
the need to buy additional capacity to backhaul the data.

     The Company believes that its planned IP service centers will overcome the
backhauling problems and become a forum for the exchange of Internet and other
IP-based traffic. Our planned IP service centers will also be able to provide
other value added services, including Tier 1 Internet access, caching, web site
mirroring, and network management services.

     Our business model, yet to be implemented and dependent upon factors, many
of which are beyond the Company's control, is dependent upon our ability to
establish strategic alliances with qualified in-country service providers for
the deployment of the IP service centers. We intend to accomplish this through
joint venture relationships to be pursued with qualified service providers
having proper licenses, an established network and an in-house sales and support
organization.

     Our initial NAP focus will be on the Mexican market, which is presently the
predominant source of our revenue.

     The implementation of our proposed additional business activities, and
hence the need for further additional capital, will be our creation of
additional switching and transmission facilities in which we will increase fiber
optic and satellite capacity for the provisioning of voice, video, data and
Internet services. Our objectives in making the necessary capital investment to
create these facilities will be to provide on-net capacity to allow growth in
the Mexican voice service business, increase profitability for switched services
by reducing the amount of traffic terminated by other long distance carriers,
and the use of the expanded network as a platform to support advanced
bandwidth-intensive data and Internet applications.

GLOBALNET'S SERVICES

  Current Services

     The following are the services that GlobalNet currently offers to Tier 1
and Tier 2 U.S. carriers and Latin American TSPs:

     - Voice over IP (VoIP).  GlobalNet provides international providers voice
       and fax termination to Mexico, Central and South America. The Company's
       competitive advantage to these destinations is the result of unique,
       bilateral relationships, which it has cultivated with incumbent and
       emerging carriers in the respective countries. GlobalNet competes in
       other worldwide destinations through aggressively managed carrier traffic
       exchange agreements. High volume, active network management and
       aggressive acquisition and sale of international routes have all been key
       elements to the success of the international carrier program. With high
       quality VoIP routes to Latin America, GlobalNet will continue to grow the
       carrier program by executing new interconnect agreements with domestic
       U.S. and international carriers.

     - Bi-Directional Switched Voice and Fax.  GlobalNet provides international
       voice and data services over its private IP network to international
       carriers and service providers throughout Mexico, Central and South
       America. GlobalNet is able to offer international carriers the ability to
       route international voice and fax calls over its IP backbone to the
       United States and the rest of the world at reduced costs while providing
       reliable, high quality service via new technology. Many carrier customers
       have become

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       strategic partners of GlobalNet's, enabling the Company to gain direct
       access to the strategic partner's network. This reduces GlobalNet's cost
       for international traffic termination. The result is a mutually
       beneficial relationship for both parties. These partnerships provide
       GlobalNet with access to several large customer bases. GlobalNet will
       continue to expand its reach into these regions by attracting emerging
       carriers and ISP's through ongoing sales and marketing efforts.

     - IP Hosting.  GlobalNet recently began offering IP Hosting to give
       international carriers and other communication service providers quick
       entry into the rapidly expanding IP market. Services such as
       international voice, fax and enhanced data services can expand the
       customer's existing product offering and give-accelerated access to a
       worldwide network without capital expenditures or the risk of
       technological obsolescence. Carriers are provided the necessary IP
       equipment and network access to originate and terminate traffic. This
       access-replacing network can be scaled and the bandwidth matched to meet
       the customer's requirements. Customers are charged flat, recurring fees
       for international origination and termination and for the equipment
       provided. Rates will vary depending on the scale and service level plan
       established. GlobalNet will grow this segment by exploiting the "One Stop
       Shop" approach for voice, fax and data services.

     - Prepaid Phone Cards.  GlobalNet discontinued its prepaid calling card
       program to Mexico at the beginning of the fourth quarter of 2000 due to
       lack of profitability of the program. Prepaid card revenues were $590,000
       in the fourth quarter of 2000. Prepaid card revenues for the year ended
       December 31, 2000 were approximately $16,201,000.

  Planned Services

     The following are some of the future services that GlobalNet plans to offer
to the Latin American ISPs, TSPs, PTTs and SMEs through its IP Service Centers.
The development and timing of the services below is dependent on our ability to
obtain additional debt or equity financing.

     - Peering.  Peering gives ISP's, TSP's and the PTT the ability to exchange
       Internet and other IP-based traffic in-country rather than having to
       backhaul the traffic to the U.S.

     - Premium Internet Connectivity.  The IP Service Centers will make
       connectivity, normally a commodity product, a premium service by giving
       companies a single point for peer level access to the majority of Tier
       One Internet service providers.

     - Caching.  GlobalNet's caching capability will reduce bandwidth
       requirements by storing commonly accessed pages and data at the IP
       Service Center, thereby speeding up the user's response time. This
       product will be sold with connectivity.

     - Mirroring.  GlobalNet's mirroring capability will replicate existing
       Latin American sites in the U.S., thereby providing redundancy to a
       business enterprise's mission critical applications and web sites.

     - Network Management.  GlobalNet's network management services will enable
       customers to outsource the monitoring and management of their Internet
       network with guaranteed reliability and performance.

     - Unified Messaging.  Unified Messaging allows the integration of
       voicemail, e-mail, fax and paging in one mailbox. This "unified" mailbox
       is accessible from multiple sources including telephone, cell phone,
       browser, pager, etc.

     - "Z-Phone".  The Company recognizes the large market demand for Internet
       users to have the ability to place phone calls over the Internet through
       their computers. The "Z-Phone" product will incorporate proprietary
       technology to encrypt phone calls, providing users with a secure and
       private connection. This service, when introduced, has the capability of
       becoming the next generation of Internet PC/phone-based calling.

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     - "First Mile" Access.  GlobalNet has developed a strategic "first mile"
       solution comprised of several transmission methods to access customer
       premises from central offices. Where economically feasible, GlobalNet
       will deploy wireless technology as a means of provisioning customer
       access. The Company's wireless solution utilizes leading-edge packet
       radio technology. These systems provide both point-to-point and
       point-to-multipoint access and support global Internet standards. This
       gives personal computer users high-speed access to the Internet, private
       or corporate Intranets and traditional telephony networks. Wireless
       technology allows GlobalNet to rapidly deploy IP-based access at speeds
       ranging from 64 Kbps (DS-0) to 100 Mbps, bypassing conventional wire line
       networks. GlobalNet deploys this technology using a combination of tower,
       wall or rooftop mounted installations. The Company believes this modular
       compact system offers new and existing customers an opportunity to select
       more enhanced services from the GlobalNet International portfolio.

     - Intra Region IP Services.  Intra Region IP Services uses satellite
       technology operating with a native IP transport protocol. This product
       permits calling between Latin American Countries through satellite
       broadcasting with routing accomplished via IP addressing within
       countries.

GLOBALNET'S NETWORK

     GlobalNet currently manages its own telecommunications network utilizing
the transmission capacity of several carriers. The Company is increasing the
percentage of traffic it carries on its network or "on-net", enabling it to
increase margins and profitability while insuring quality. In addition, the
Company's use of multiple carriers increases cost efficiencies by establishing
additional routing capability and guarantees sufficient capacity to support
rapid growth.

     The Company's network is an IP-based platform, which provides transport and
protocol for routing. Physical transport includes the Internet, fixed cost
point-to-point fiber optic facilities, satellite and other international private
line resources. The network has expanded by:

     - Implementing packet-based technology to replace the traditional
       circuit-based systems.

     - Arranging for physical satellite teleport assets and fiber optic
       transmission capacity.

     - Installing additional IP transmission and switching equipment.

     These measures will provide increased cost efficiency and savings by
routing a higher level of traffic on-net.

  Network Infrastructure

     GlobalNet has two Lucent Excel Exchange Plus IP gateway switches with a
total capability of 34,000 ports. The New York switch serves as a gateway for
refile and carrier exchange traffic, while the San Antonio switch serves as the
gateway to Mexico, Central and South America and can provide prepaid calling
card services. Lucent's Max TNT VOIP gateways are also used between the
GlobalNet switches and the international destinations in the network providing
the Company with a scaleable solution that allows the transport of voice, data,
and multimedia as well as QoS assurances.

     Expanding the international backbone infrastructure is the foundation of
the cost containment measures that will ensure a continuing competitive price
structure by increasing "on-net" capability. The Company is in the process of
complementing its Internet and terrestrial services transport using satellite
transponders and teleports to cover the Latin American market. Leased private
lines and other terrestrial facilities will carry traffic where economically
feasible. The Company believes that satellite assets, appropriately deployed and
opportunity driven, can provide significant advantages in the market. The
Company's satellite resources are comprised of "C" and "KU" band on a variety of
satellites whose coverage is directly coincident with the targeted markets in
Latin and North America.

     A significant feature of satellite packet technology is its versatility in
supporting multiple applications throughout the region. The underlying transport
protocol is Internet Protocol (IP), which enables the systems to perform a
virtual circuit switch function based on IP routing within the region.

                                        8
<PAGE>   11

     The Company also has a fully operational research and development lab in
Marietta, Georgia. The lab is used to develop and test products prior to
launching by duplicating the network fabric for advanced troubleshooting
scenarios in a controlled environment. The lab gives GlobalNet the ability to
develop leading edge products and expedite the rollout schedule for those
products by simulating real-world conditions.

  Network Management and Information Systems

     The Company's network management and information systems enable it to:

     - Economically and efficiently route traffic over the GlobalNet network and
       the networks of other carriers.

     - Offer reliable services with high call completion rates and voice
       quality.

     - Manage an advanced voice, data and video multi-service IP platform.

     These systems, particularly their ability to provide flexible, high quality
service to international destinations, provide the Company with a competitive
advantage relative to many other providers of telecommunications services. The
Company monitors its network and initiates changes to the overall switch network
and traffic routing where appropriate to optimize routing and minimize costs.
Because a substantial portion of the traffic carried terminates internationally
and completions vary by carrier, the Company monitors the completion
efficiencies of its suppliers. The Company's network is configured with Common
Channel Signaling System 7 ('SS7'). This technology reduces voice call setup,
connect time delays and provides additional technical capabilities and
efficiencies for call routing and network engineering.

     GlobalNet recently completed the deployment of its proprietary systems
management software -- codenamed INTE-GRATE -- that seamlessly integrates data
access for sales, operations and traffic analysis functions and significantly
enhances customer service. The INTE-GRATE system features a central data source
that eliminates duplicate entry of information and provides GlobalNet personnel
with readily accessible, real-time data to meet customer needs. Additionally,
INTE-GRATE tracks rapidly changing vendor costs to determine the most
cost-effective routing and loading the new information into the network with
minimal manual intervention. The system permits GlobalNet to make substantial
routing changes in order to take advantage of pricing changes.

     GlobalNet has also deployed an advanced suite of applications to monitor
faults and availability of services throughout its rapidly expanding high-speed
"Voice-over-Internet-Protocol" (VoIP) service network. These network
applications provide real-time, proactive monitoring of faults throughout the
GlobalNet infrastructure, allowing network engineers and operations personnel to
address potential problems before they cause disruptions in service. In
addition, the system provides GlobalNet with the capability of generating
detailed network performance analysis reports that will assist in determining
which services and customers could potentially be affected by problems on the
network today and in the future.

SIGNIFICANT CUSTOMERS

     A significant portion of the Company's revenues are concentrated among a
few large customers. For the year ended December 31, 2000, the largest customer
of the Company represented 23% of total revenue, while the next three largest
customers represented 55% of total revenue. The three largest customers of the
Company represented 96% of total revenue for each of the years ended 1999 and
1998. The loss of any of the foregoing customers would have a significant
adverse impact on the Company.

     Further discussion relating to the relationship between the Company and its
significant customers may be found in Part I, Item 1 of this Form 10-K under the
subheading, "Our Revenue Would Decline Significantly If We Lose One Or More Of
Our Most Significant Customers" under the heading, "Risk Factors," which
information is hereby incorporated by reference.

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<PAGE>   12

COMPETITION

     The international telecommunications market is highly competitive. The
principal competitive factors include price, quality of service, network
capacity, geographic coverage, reliability of the network and customer service.

     Competition comes from:

     - global carriers such as AT&T, MCI WorldCom, Telefonica and Telmex that
       operate large legacy networks, and

     - newer IP-based providers such as ITXC, IBasis, GRIC and Deltathree.com
       that utilize the Internet to transport traffic.

     GlobalNet is uniquely positioned to bridge the gap, occupying a lucrative
niche between the two sets of competitors. The Company is similar to other IP
providers in that it utilizes the Internet to transport voice and data, but has
an added advantage in that it will be able to provide a broader range of
high-end services as a result of its privately owned, IP-based network. The
Company is currently taking and will continue to take steps to respond to the
competitive pressures being placed on its IP-based network services as a result
of the recent innovations in the transport of voice and data over the Internet.
The Company's future consolidated operating results and financial condition are
substantially dependent on its ability to continue to develop improvements to
its IP-based network in order to maintain perceived functional advantages over
competing service providers.

     Further discussion relating to the competitive conditions of the
international telecommunications market and the Company's competitive position
in the market place may be found in Part I, Item 1 of this Form 10-K under the
subheading, "We May Not Be Able To Succeed In The Intensely Competitive Market
For Our Services" under the heading "Risk Factors," which information is hereby
incorporated by reference.

RESEARCH AND DEVELOPMENT

     Network research and development expenses include the expenses incurred in
the development, expansion, operation and support of the Company's global IP
network. These expenses consist primarily of the fixed monthly cost of the
leased lines that comprise the Company's network, the salary and payroll related
taxes of the employees directly involved in the development and operation of the
network and the expenses incurred in the development and support of the
Company's proprietary software. The Company continues to develop new
technologies and services and to enhance existing services. Network research and
development expenses increased by approximately $3,022,000, from $129,000 for
the year ended December 31, 1999 to $3,151,000 for the year ended December 31,
2000. The increase in network research and development expenses is primarily due
to the increase in the personnel needed to expand, develop and support the
Company's global network.

EMPLOYEES

     As of December 31, 2000, GlobalNet employs 27 people of which 11 are
located in the Company's corporate offices in Lombard, Illinois, 11 in Marietta,
Georgia and 5 in San Antonio, Texas.

     The Company has 9 employees in engineering, 7 employees in operations, 2
employees in sales and marketing and 9 employees in general and administrative
positions.

     None of the Company's employees are parties to any collective bargaining
agreements, and the Company considers its relationship with its employees to be
good.

FOREIGN AND DOMESTIC OPERATIONS AND GEOGRAPHIC DATA

     Information regarding financial data by geographic area and the risks
associated with international operations is set forth in Part II, Item 8 of this
Form 10-K at Note 12, under the heading "Geographic and Business Segment
Information," and in Part I, Item 1 of this Form 10-K under the subheadings
"International Governmental Regulation And Legal Uncertainties Could Limit Our
Ability To Provide Our Services Or Make Them More Expensive" and "Our Operations
In Mexico And Latin American Countries May Be Less Profitable Than We Have
Anticipated" under the heading "Risk Factors," which information is hereby
incorporated by reference.

                                        10
<PAGE>   13

RECENT DEVELOPMENTS

  Equipment Leases

     In April 2000, we entered into a $10,000,000 credit facility with General
Electric Capital Corporation to finance the lease of Lucent Technologies
telecommunications network and data transmission equipment. The Company had six
months from the time of the closing to finance equipment under the facility. The
total financed amount equal in the aggregate $6,951,000 of which approximately
$6,592,000 was outstanding as of December 31, 2000. Each lease bears interest at
an annual rate of 13.2% for a term of 36 months. In December 2000, the Company
drew down an additional $340,000 for equipment that was delivered in January
2001.

     In October 1999, we entered into certain capital leases for network
equipment. The equipment which was leased consisted of telecommunications
switching equipment and international gateway platforms. This lease bears
interest at the rate of 22% per annum and is for a term of 42 months. The
Company is currently attempting to refinance this lease.


     As of November 8, 1999, GlobalNet entered into capital leases with Prinvest
Financial Corp. for various network equipment with respect to which GlobalNet
recorded a capital lease obligation of approximately $5,268,000. In May 2001,
the Company refinanced this capital lease with another lender, ending an
existing dispute with PrinVest Financial Corp. As of March 31, 2001, the
outstanding balance under that lease amounted to $2,872,000. After the
refinancing, the interest cost on the lease decreased to 11.8% from 22.0%, and
the term was extended to 36 months from the 18 months remaining under the
original lease.


  Private Placements and Restricted Stock

     On December 28, 2000, GlobalNet issued 775,000 shares of restricted common
stock to various employees, vesting at the rate of 44% on September 15, 2001;
22% on May 15, 2002; and 34% on May 15, 2003.


     On March 21, 2001, the Company completed a private placement of 700,000
shares of common stock at $1.00 per share. The Company issued warrants to
purchase 75,000 shares of common stock at $1.20 to various entities assisting in
the placement. The Company received net proceeds at the closing in the amount of
$615,000, after deducting offering costs of $85,000. The Company filed a
registration statement on Form S-3 to register the shares sold in the placement
and the warrants granted to the placement agents on April 2, 2001.



     On April 9, 2001 (Closing Date), the Company entered into a securities
purchase agreement (Agreement) whereby the Company issued a $2,000,000
convertible note (Note) and the purchaser agreed to purchase from time to time
through April 9, 2002, up to $4,000,000 of the Company's common stock. The
number of shares and the price is to be determined based upon the Company's
average current trading volume and stock price as defined in the Agreement. In
addition, the purchaser has agreed not to acquire, through conversion of the
Note, exercise of warrants, or purchase of equity, more than 9.9% of the
Company's common stock as of any respective conversion, exercise or purchase
date. On the Closing Date, the purchaser made an initial purchase of 365,428
shares of the Company's common stock for an aggregate of $250,000. The Company
received net proceeds of $2,140,976, after deducting related expenses. The
Company also paid additional offering costs of approximately $230,000 and issued
warrants to two firms in connection with the Agreement to purchase an aggregate
of 333,333 shares of the Company's common stock at $0.89 per share.



     In addition, the Company issued an incentive warrant to the purchaser
representing the right to purchase 877,026 shares of the Company's common stock
for $1.0221 per share. On the Closing Date, the Company also entered into a
registration rights agreement with the purchaser whereby the Company is required
to file a registration statement on behalf of the purchaser with respect to the
shares purchased by it, the shares that may result from the conversion of the
note, and the warrant shares.



     As a result of the aforementioned transactions, the Company will record
approximately $680,000 of debt discount related to the convertible note's
beneficial conversion feature, approximately $285,000 of debt discount related
to the incentive warrant issued, approximately $65,000 of debt discount related
to the investor fees for the convertible note, and approximately $335,000 of
debt issuance costs. Each of these items will be

                                        11
<PAGE>   14


amortized over the term of the convertible note. In addition, the Company will
accrete interest expense up to the amount of the redemption prices until such
time as the convertible note is converted or redeemed.



     In further consideration for Crescent International entering into the
transactions described above, the Company issued an Incentive Warrant to
Crescent International representing the right to purchase 877,026 shares of the
Company's common stock at 150% of the price at which Crescent International
purchased its initial shares. The Company amended its prior registration
statement on Form S-3 that was filed on April 2, 2001 in order to include the
shares purchased by Crescent International, the shares that may result from the
conversion of the note and exercise of the warrant shares. Such amended
registration statement on Form S-3 has filed on May 1, 2001.


     Additional information relating to these and other recent private
placements and restricted stock is set forth in Part II, Item 5, under the
subheading, "Equity Transactions," which information is hereby incorporated by
reference.

RISK FACTORS

     The following is a summary of some of the risk factors which may have an
impact on GlobalNet's business efforts:

  Risks Related to Our Operations

     WE HAVE A RELATIVELY LIMITED OPERATING HISTORY UPON WHICH TO BASE YOUR
     INVESTMENT DECISION, AND YOU MAY INACCURATELY ASSESS OUR PROSPECTS FOR
     SUCCESS.

     We were formed in 1996 as DTA Communications Network, LLC which offered
telecommunications services. In May 2000, we became GlobalNet, Inc. after a
reverse merger with Rich Earth, Inc. Due to our limited operating history, it is
difficult for us to predict future results of operations. Moreover, we cannot be
sure that we have accurately identified all of the risks to our business,
especially because we use new, and in many cases, unproven technologies and
provide new services. As a result, our past results and rates of growth may not
be a meaningful indicator of our future results of operations. Also, our
assessment of our prospects for our success may prove inaccurate.

     WE HAVE A HISTORY OF OPERATING LOSSES, ANTICIPATE INCURRING LOSSES FOR THE
     FORESEEABLE FUTURE AND MAY NEVER BECOME PROFITABLE.

     For each of the fiscal years ending December 31, 2000, 1999 and 1998, we
had operating losses of approximately $10,647,000, $2,536,000 and $111,000,
respectively.

     At December 31, 2000, our total current liabilities exceeded our total
current assets by approximately $7,510,000. At December 31, 2000, we had an
accumulated deficit of approximately $15,625,000 and a total stockholders
deficit of approximately $1,485,000. While our management has addressed the
conditions which have left substantial doubt about our ability to continue as a
going concern, there is no certainty that we will be successful in implementing
any of the plans of management to restore us to profitability or to otherwise
ensure that we will be able to continue as a going concern.

     FLUCTUATIONS IN OUR QUARTERLY RESULTS OF OPERATIONS THAT RESULT FROM
     VARIOUS FACTORS INHERENT IN OUR BUSINESS MAY CAUSE THE MARKET PRICE OF OUR
     COMMON STOCK TO FALL.

     Our revenue and results of operations have been volatile and may continue
to fluctuate significantly from quarter to quarter in the future due to a number
of factors, many of which are not in our control, including, among others:

     - the amount of traffic we are able to sell to our customers, and their
       decisions on whether to route traffic over our network;

     - pricing pressure in the international long distance market;

     - the percentage of traffic that we are able to carry over the Internet, or
       over our dedicated international private circuit lines, rather than over
       the more costly traditional public-switched telephone network;

     - loss of arbitrage opportunities resulting from declines in international
       settlement rates or tariffs;

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<PAGE>   15

     - our ability to negotiate changes in the termination fees charged by our
       local providers when our margins deteriorate;

     - capital expenditures required to expand or upgrade our network;

     - changes in call volume among the countries to which we complete calls;

     - technical difficulties or failures of our network systems or third-party
       delays in expansion or provisioning system problems; and

     - our ability to offer value-added services that are appealing to the
       market.

     Because of these factors, you should not rely on quarter-to-quarter
comparisons of our results of operations as an indication of our future
performance. It is possible that, in future periods, our results of operations
will be significantly lower than the estimates of public market analysts and
investors. Such a discrepancy could cause the price of our common stock to
decline significantly.

     OUR PENDING LITIGATION COULD POTENTIALLY HAVE A MATERIAL ADVERSE EFFECT ON
     OUR BUSINESS OPERATIONS.

     The pending litigation discussed in Item 3 "Legal Proceedings" could
potentially have a material adverse effect on our business operations.

    OUR STOCK BASED COMPENSATION POLICY MAY RESULT IN FUTURE (NON-CASH)
    OPERATING LOSSES DUE TO ACCOUNTING TREATMENT WE ARE REQUIRED TO ADOPT.

     As a result of the issuance by us of certain restricted shares to officers,
directors, employees and consultants, which vest over time, we have recorded
approximately $9,348,000 of deferred compensation as of December 31, 2000. As
the number of restricted shares representing the deferred compensation vests in
years 2001, 2002 and 2003, the amortization of the fair value of these
restricted shares over their vesting periods, as calculated at the time of their
issuance will result in a (non-cash) charge to our consolidated statement of
operations over their vesting periods, thereby increasing the amount of our
(non-cash) operating expenses by the amount of such charge and resulting in an
increase in the amount of our losses, if any, or decreasing the amount that
would otherwise be reportable as earnings. In addition, increases in losses
attributable to the stock based compensation will increase the amount of
shareholders' deficit.

     THE MARKET PRICE OF OUR COMMON STOCK MAY EXPERIENCE EXTREME PRICE AND
     VOLUME FLUCTUATIONS FOR REASONS OVER WHICH WE HAVE LITTLE CONTROL.

     The stock market has, from time to time, experienced, and is likely to
continue to experience, extreme price and volume fluctuations. Prices of
securities of Internet-related companies have been especially volatile and have
often fluctuated for reasons that are unrelated to the operating performance of
the affected companies. The market price of shares of our common stock has
fluctuated greatly since their inception of trading on the NASDAQ Small Cap
Market and could continue to fluctuate due to a variety of factors. In the past,
companies that have experienced volatility in the market price of their stock
have been the objects of securities class action litigation. If we were the
object of securities class action litigation, it could result in substantial
costs and a diversion of our management's attention and resources.

    THE MARKET PRICE OF OUR COMMON STOCK MAY BE AFFECTED BY THE REGISTRATION OF
    ADDITIONAL SHARES.

     We currently have 32,230,878 shares of common stock issued and outstanding,
of which 22,270,878 shares may be deemed restricted securities, as defined under
the Securities Act of 1933, as amended. These restricted securities may be sold
in the future only pursuant to registration under the Securities Act or an
exemption such as Rule 144 under the Securities Act of 1933, as amended. On
April 2, 2001, we filed a registration statement on Form S-3 for the
registration of 700,000 shares (plus an additional 75,000 shares issuable in
connection with warrants) which will become eligible for immediate resale. These
shares, as well as the eligibility for additional restricted shares to be sold
in the future, either pursuant to future registrations under the Securities Act
or an exemption such as Rule 144 under the Securities Act of 1933, as amended,
may have a dilutive effect on the market for the price of our common stock.

                                        13
<PAGE>   16

     THERE IS NO ASSURANCE THAT WE WILL REMAIN LISTED ON AN ACTIVE TRADING
     MARKET.

     Although our common stock is quoted on the NASDAQ Small Cap Market, there
can be no assurance that we will, in the future, be able to meet all the
requirements for continued quotation thereon. In the absence of an active
trading market or if our common stock cannot be traded on the NASDAQ Small Cap
Market, our common stock could instead be traded on the Electronic Bulletin
Board or in the Pink Sheets. In such event, the liquidity and stock price in the
secondary market may be adversely affected. In addition, in the event our common
stock was delisted, broker-dealers have certain regulatory burdens imposed upon
them which may discourage broker-dealers from effecting transactions in our
common stock, further limiting the liquidity of our common stock.

     THE INABILITY TO OBTAIN NECESSARY ADDITIONAL CAPITAL IN THE FUTURE ON
     ACCEPTABLE TERMS COULD DELAY US FROM EXECUTING OUR BUSINESS PLAN OR PREVENT
     US FROM DOING SO ENTIRELY.

     We expect to need additional capital in the future to fund our operations,
finance investments in equipment and corporate infrastructure, expand our
network, increase the range of services we offer and respond to competitive
pressures and perceived opportunities. Cash flow from operations, and cash on
hand may not be sufficient to cover our operating expenses and capital
investment needs. We cannot assure you that additional financing will be
available on terms acceptable to us, if at all. A failure to obtain additional
funding could prevent us from making expenditures that are needed to allow us to
grow or maintain our operations. Because GlobalNet is internally financed,
increases in business can temporarily reduce the Company's working capital due
to cash flow lags.

     If we raise additional funds by selling equity securities, the relative
equity ownership of our existing investors could be diluted or the new investors
could obtain terms more favorable than previous investors. If we raise
additional funds through debt financing, we could incur significant borrowing
costs. The failure to obtain additional financing when required could result in
us being unable to grow as required to attain profitable operations.

     WE MAY NEVER GENERATE SUFFICIENT REVENUE TO ATTAIN PROFITABILITY IF
     TELECOMMUNICATIONS CARRIERS AND OTHER COMMUNICATIONS SERVICE PROVIDERS ARE
     RELUCTANT TO USE OUR SERVICES, INCLUDING ANY NEW SERVICES, IN SUFFICIENT
     VOLUME.

     If the market for Internet telephony and new services does not develop as
we expect, or develops more slowly than expected, our business, financial
condition and results of operations will be materially and adversely affected.

     Our customers may be reluctant to use our services for a number of reasons,
including:

     - perceptions that the quality of voice transmitted over the Internet is
       low;

     - perceptions that Internet telephony is unreliable; and

     - our inability to deliver traffic over the Internet with significant cost
       advantages.

     The growth of our business depends on carriers and other communications
service providers generating an increased volume of international voice and fax
traffic and selecting our network to carry at least some of this traffic. If the
volume of international voice and fax traffic fails to increase, or decreases,
and these third-parties do not employ our network, our ability to become
profitable will be materially and adversely affected.

     We cannot assure you that communications service providers and their
end-user customers will be receptive to, and subscribe for, any unified
communications services we are able to offer, or any other additional services
we elect to deploy on our network. Any perceived problems with the reliability
or functionality of any new services that we offer could discourage
communications service providers from offering these services to their
customers. In addition, the development of new services, such as unified
communications, may require substantial capital expenditures to be made well in
advance of generating any revenue from such services or demonstrating any market
acceptance of such services. If carriers and communications service providers do
not employ our network to offer any new services to their customers, or if
                                        14
<PAGE>   17

their customers do not subscribe for the services when offered, our financial
condition and results of operations will be materially adversely affected.

     We cannot assure you that end-users will continue to purchase services from
our customers or that our customers will maintain a demand for our services.

     WE MAY FACE QUALITY AND CAPACITY PROBLEMS OVER OUR NETWORK DUE TO FAILURES
     BY THIRD PARTIES.

     Vendors.  We rely upon third-party vendors to provide us with the equipment
and software that we use to transfer and translate calls from traditional voice
networks to the Internet, and vice versa. We cannot assure you that we will be
able to continue purchasing such equipment and software from our current vendors
on acceptable terms, if at all. If we become unable to purchase from our current
vendors the equipment needed to maintain and expand our network as currently
configured, we may not be able to maintain or expand our network to accommodate
growth and we may consequently be unable to grow revenues sufficiently to become
profitable.

     Parties that Maintain Phone and Data Lines.  Our business model depends on
the availability of the Internet to transmit voice and fax calls, and to provide
other value-added services. Third parties maintain, and in many cases own, the
traditional voice networks as well as data networks and other components that
comprise the Internet. Some of these third parties are national telephone
companies. They may increase their charges for using these lines at any time and
decrease our profitability. They may also fail to properly maintain their lines
and disrupt our ability to provide service to our customers. Any failure by
these third parties to maintain these lines and networks that leads to a
material disruption of our ability to complete calls over the Internet could
discourage our customers from using our network, which could have the effect of
delaying or preventing our ability to become profitable.

     Local Communications Service Providers.  We maintain relationships with
local communications service providers in many countries, some of whom own the
equipment that translates voice to data in that country. We rely upon these
third parties to both provide lines over which we complete calls and to increase
their capacity when necessary as the volume of our traffic increases. There is a
risk that these third parties may be slow, or fail, to provide lines, which
would affect our ability to complete calls to those destinations. We cannot
assure you that we will be able to continue our relationships with these local
service providers on acceptable terms, if at all. Because we rely upon entering
into relationships with local service providers to expand into additional
countries, we cannot assure you that we will be able to increase the number of
countries to which we provide service. We also may not be able to enter into
relationships with enough overseas local service providers to handle increases
in the volume of calls that we receive from our customers. Finally, any
technical difficulties that these providers suffer would affect our ability to
transmit calls to the countries that those providers help serve.

     Strategic Relationships.  We depend in part on our strategic relationships
to expand our distribution channels and develop and market our services. In
particular, we depend in large part on our joint marketing and product
development efforts with in-country service providers to achieve market
acceptance and brand recognition in certain markets. Our strategic relationship
partners may choose not to renew existing arrangements on commercially
acceptable terms, if at all. In general, if we lose this key strategic
relationship, or if we fail to develop new relationships in the future, our
ability to expand the scope and capacity of our network, and to maintain
state-of-the-art technology, would be materially adversely affected.

     WE MAY NOT BE ABLE TO SUCCEED IN THE INTENSELY COMPETITIVE MARKET FOR OUR
     SERVICES.

     The market for Internet voice, fax and other value-added services is
extremely competitive and will likely become more competitive. Internet protocol
and Internet telephony service providers, such as IBasis, Inc. and ITXC Corp.,
route traffic to destinations worldwide and compete directly with us. Also,
Internet telephony service providers, such as Net2Phone, that presently focus on
retail customers may, in the future enter our market and compete with us. In
addition, major telecommunications carriers, such as AT&T, Deutsche Telekom, MCI
WorldCom and Qwest Communications, have all entered or announced plans to enter
the Internet telephony market. Many of these companies are larger than we are
and have substantially greater
                                        15
<PAGE>   18

managerial and financial resources than we do. Intense competition in our
markets can be expected to continue to put downward pressure on prices and
adversely affect our profitability. We cannot assure you that we will be able to
compete successfully against our competitors and we may lose customers or fail
to grow our business as a result of this competition.

     WE ARE SUBJECT TO DOWNWARD PRICING PRESSURES AND A CONTINUING NEED TO
     RENEGOTIATE OVERSEAS RATES WHICH COULD DELAY OR PREVENT OUR PROFITABILITY.

     As a result of numerous factors, including increased competition and global
deregulation of telecommunications services, prices for international long
distance calls have been decreasing. This downward trend of prices to end-users
has caused us to lower the prices we charge communications service providers for
call completion on our network. If this downward pricing pressure continues, we
cannot assure you that we will be able to offer Internet telephony services at
costs lower than, or competitive with, the traditional voice network services
with which we compete. Moreover, in order for us to lower our prices, we have to
renegotiate rates with our overseas local service providers who complete calls
for us. We may not be able to renegotiate these terms favorably enough, or fast
enough, to allow us to continue to offer services in a particular country. The
continued downward pressure on prices and our failure to renegotiate favorable
terms in a particular country would have a material adverse effect on our
ability to operate our network and business profitably.

    A VARIETY OF RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS COULD
    MATERIALLY ADVERSELY AFFECT OUR BUSINESS.

     Because we provide substantially all of our services internationally, we
are subject to additional risks related to operating in foreign countries. These
risks include:

     - unexpected changes in tariffs, trade barriers and regulatory requirements
       relating to Internet access or Internet telephony;

     - economic weakness, including inflation, or political instability in
       particular foreign economies and markets;

     - difficulty in collecting accounts receivable; and

     - foreign taxes.

     These and other risks associated with our international operations may
materially adversely affect our ability to attain or maintain profitable
operations.

     During the fiscal year ended December 31, 2000, a significant portion of
our revenue was generated by delivering calls to Latin America, especially
Mexico. Many countries in these geographic regions have experienced political
and economic instability over the past decade. Repeated political or economic
instability in countries to which we deliver substantial volumes of traffic
could lead to difficulties in completing calls through our regional service
providers or decreased call volume to such countries.

    IF WE ARE NOT ABLE TO KEEP UP WITH RAPID TECHNOLOGICAL CHANGE IN A
    COST-EFFECTIVE MANNER, THE RELATIVE QUALITY OF OUR SERVICE COULD SUFFER.

     The technology upon which our services depend is changing rapidly.
Significant technological changes could render the equipment which we use
obsolete, and competitors may begin to offer new services that we are unable to
offer. We must adapt to our rapidly changing market by continually improving the
responsiveness, reliability, services and features of our network and by
developing new features and applications to meet customer needs. If we are
unable to successfully respond to these developments or do not respond in a
cost-effective way, we may not be able to offer competitive services.

    WE MAY NOT BE ABLE TO EXPAND AND UPGRADE OUR NETWORK ADEQUATELY TO
    ACCOMMODATE FUTURE GROWTH.

     Our business requires that we handle a large number of international calls
simultaneously. As we expand our operations, we expect to handle significantly
more calls. We will need to expand and upgrade our hardware
                                        16
<PAGE>   19

and software to accommodate such increased traffic. If we do not expand and
upgrade quickly enough, we will not have sufficient capacity to handle the
traffic and our operating performance would suffer. Consequently, we could
develop a negative reputation with our customers and lose business.

    IF WE FAIL TO MANAGE OUR GROWTH, WE COULD LOSE CUSTOMERS.

     We have grown rapidly to date and expect to continue to grow rapidly. In
order to increase the number of our customers and the size of our operations, we
will need to improve our administrative, accounting and operating systems and
controls. We may need to redesign several internal systems. Our attention to
these matters may distract us from other aspects of our business. Moreover,
failure to implement new systems and controls may hamper our ability to provide
services to customers and may impair the quality of our services which could
result in the loss of customers.

    OUR REVENUE WOULD DECLINE SIGNIFICANTLY IF WE LOSE ONE OR MORE OF OUR MOST
    SIGNIFICANT CUSTOMERS.

     A significant portion of our revenues are concentrated among a few large
customers. For the year ended December 31, 2000, our largest customer
represented approximately $18.3 million or 23% of total revenue, while the next
three largest customers represented approximately $42.8 million or 55% of total
revenue. Our three largest customers represented 96% of total revenue for each
of the years ended 1999 and 1998. The loss of any of the foregoing customers
could have a significant adverse impact on us.

    WE DEPEND ON OUR KEY PERSONNEL AND MAY HAVE DIFFICULTY RETAINING THE KEY
    PERSONNEL WE NEED TO EXECUTE OUR GROWTH PLANS.

     GlobalNet is presently dependent upon the executive abilities of its
Chairman and Chief Executive Officer, Robert J. Donahue, its President, Daniel
M. Wickersham, and its other executive officers. Our business and operations to
date chiefly have been implemented under the direction of these individuals, who
presently are, and in the future will be, responsible for the implementation of
our anticipated plans and programs. While we have entered into employment
agreements with our principal executive officers, the loss or unavailability of
the services of one or more of our principal executives would have an adverse
effect on us. Given our present financial condition, we may encounter difficulty
in our ability to recruit and ultimately hire any replacement or additional
executive officers having similar background, experience and qualifications as
those of our current executive officers.

    WE WILL NEED TO ATTRACT SKILLED PERSONNEL TO EXECUTE OUR GROWTH PLANS.

     Our future success will depend, in large part, on our ability to attract,
retain and motivate highly skilled employees, particularly engineering and
technical personnel. Competition for such employees in our industry is intense.
We have from time to time in the past experienced, and we expect to continue to
experience in the future, difficulty in hiring and retaining employees with
appropriate qualifications. We may not be able to retain our employees or
attract, assimilate or retain other highly qualified employees in the future. If
we do not succeed in attracting and retaining skilled personnel, we may not be
able to grow at a sufficient rate to attain profitable operations.

  Risks Related to the Internet and the Internet Telephony Industry.

     IF THE INTERNET DOES NOT CONTINUE TO GROW AS A MEDIUM FOR VOICE AND FAX
     COMMUNICATIONS, OUR BUSINESS WILL SUFFER.

     The technology that allows voice and fax communications over the Internet,
and the delivery of other value-added services, is still in its early stages of
development. Historically, the sound quality of calls placed over the Internet
was poor. As the Internet telephony industry has grown, sound quality has
improved, but the technology requires further refinement. Additionally, as a
result of the Internet's capacity constraints, callers could experience delays,
errors in transmissions or other interruptions in service. Transmitting
telephone calls over the Internet must also be accepted as an alternative to
traditional voice and fax service by communications service providers. Because
the Internet telephony market is new and evolving, predicting the size of this

                                        17
<PAGE>   20

market and its growth rate is difficult. If our market fails to develop, then we
will be unable to grow our customer base and our results of operations will be
adversely affected.

     IF THE INTERNET INFRASTRUCTURE IS NOT ADEQUATELY MAINTAINED, WE MAY BE
     UNABLE TO MAINTAIN THE QUALITY OF OUR SERVICES AND PROVIDE THEM IN A TIMELY
     AND CONSISTENT MANNER.

     Our future success will depend upon the maintenance of the Internet
infrastructure, including a reliable network backbone with the necessary speed,
data capacity and security for providing reliability and timely Internet access
and services. To the extent that the Internet continues to experience increased
numbers of users, frequency of use or bandwidth requirements, the Internet may
become congested and be unable to support the demands placed on it and its
performance or reliability may decline thereby impairing our ability to complete
calls using the Internet at consistently high quality. The Internet has
experienced a variety of outages and other delays as a result of failures of
portions of its infrastructure or otherwise. Any future outages or delays could
adversely affect our ability to complete calls. Moreover, critical issues
concerning the commercial use of the Internet, including security, cost, ease of
use and access, intellectual property ownership and other legal liability
issues, remain unresolved and could materially and adversely affect both the
growth of Internet usage generally and our business in particular.

     WE CANNOT BE CERTAIN THAT OUR ABILITY TO PROVIDE OUR COMMUNICATIONS
     SERVICES USING THE INTERNET WILL NOT BE ADVERSELY AFFECTED BY COMPUTER
     VANDALISM.

     Recently, computer vandals have caused certain leading Internet sites to
shut down temporarily and have materially affected the performance of the
Internet during key business hours by bombarding targeted sites with numerous
false requests for data. While we do not operate any websites like those
recently affected, we do rely on the Internet to deliver our international
communications services. If the overall performance of the Internet is seriously
downgraded by such website attacks or other acts of computer vandalism, our
ability to deliver our communication services over the Internet could be
adversely impacted, which could cause us to have to increase the amount of
traffic we have to carry over alternative networks, including the more costly
public-switched telephone network. In addition, traditional business
interruption insurance may not cover losses we could incur because of any such
disruption of the Internet. While some insurers are beginning to offer insurance
products purporting to cover these losses, we do not have any of this insurance
at this time.

     INTERNATIONAL GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES COULD LIMIT
     OUR ABILITY TO PROVIDE OUR SERVICES OR MAKE THEM MORE EXPENSIVE.

     The regulatory treatment of Internet telephony outside of the United States
varies widely from country to country. A number of countries currently prohibit
or limit competition in the provision of traditional voice telephony services.
Some countries prohibit, limit or regulate how companies provide Internet
telephony. Some countries have indicated they will evaluate proposed Internet
telephony service on a case-by-case basis and determine whether to regulate it
as a voice service or as another telecommunications service, and in doing so
potentially imposing settlement rates on Internet telephony providers. Finally,
many countries have not yet addressed Internet telephony in their legislation or
regulations. Increased regulation of the Internet and/or Internet telephony
providers, or the prohibition of Internet telephony in one or more countries,
could limit our ability to provide our services or make them more expensive.

     In addition, as we make our services available in foreign countries, and as
we work to enable sales by our customers to end-users in foreign countries, such
countries may claim that we are required to qualify to do business in that
particular country, that we are otherwise subject to regulation, including
requirements to obtain authorization, or that we are prohibited in all cases
from conducting our business in that foreign country. Our failure to qualify as
a foreign corporation in a jurisdiction in which we are required to do so or to
comply with foreign laws and regulations could seriously restrict our ability to
provide services in such jurisdiction, or limit our ability to enforce contracts
in that jurisdiction. Our customers also currently are, or in the future may
become, subject to these same requirements. We cannot assure you that our
customers are currently in compliance with any such requirements or that they
will be able to continue to comply with any such requirements. The failure of
our customers to comply with applicable laws and regulations could prevent
                                        18
<PAGE>   21

us from being able to conduct business with them. Additionally, it is possible
that laws may be applied by the United States and/or other countries to
transport services provided over the Internet, including laws governing:

     - sales and other taxes;

     - user privacy;

     - pricing controls;

     - characteristics and quality of products and services;

     - consumer protection;

     - cross-border commerce, including laws that would impose tariffs, duties
       and other import restrictions;

     - copyright, trademark and patent infringement; and

     - claims based on the nature and content of Internet materials, including
       defamation, negligence and the failure to meet necessary obligations.

     If foreign governments or other bodies begin to regulate or prohibit
Internet telephony, this regulation could have a material adverse effect on our
ability to attain or maintain profitability.

     OUR OPERATIONS IN MEXICO AND LATIN AMERICAN COUNTRIES MAY BE LESS
     PROFITABLE THAN WE HAVE ANTICIPATED.

     The Company's Latin American strategy is founded on the deregulation of
countries in the region. This deregulation may not occur or could be delayed in
each of the targeted counties.

     Operations in each of the targeted countries will be less profitable or
prevented completely if there is non-performance or malfeasance on the part of
any of the partners in the targeted countries, as the Company's business plan
relies on cooperation from local partnerships.

     There are additional economic risks in operating in Latin American
countries. Changes in a targeted country's national or local economy could
adversely impact our business. In addition, exchange rate changes in each of
these countries could also negatively affect the Company.

     Political unrest or civil war is a possibility and could adversely affect
the Company.

     Inherent in the strategy of selecting highly profitable emerging markets to
conduct business is that these markets attract other companies seeking
deregulation, and may result in markets with increased competition. This
increased competition may result in reduced profitability for the Company.

    THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO DOMESTIC GOVERNMENTAL
    REGULATION AND LEGAL UNCERTAINTIES COULD LIMIT OUR ABILITY TO PROVIDE OUR
    SERVICES OR MAKE THEM MORE EXPENSIVE.

     While the Federal Communications Commission has tentatively decided that
information service providers, including Internet telephony providers, are not
telecommunications carriers for regulatory purposes, various companies have
challenged that decision. Congress is dissatisfied with the conclusions of the
FCC and the FCC could impose greater or lesser regulation on our industry. The
FCC is currently considering, for example, whether to impose surcharges or other
regulations upon certain providers of Internet telephony, primarily those that,
unlike us, provide Internet telephony services to end-users located within the
United States.

     Aspects of our operations may be, or become, subject to state or federal
regulations governing universal service funding, disclosure of confidential
communications, copyright and excise taxes. We cannot assure you that government
agencies will not increasingly regulate Internet-related services. Increased
regulation of the Internet may slow its growth. This regulation may also
negatively impact the cost of doing business over the Internet and materially
adversely affect our ability to attain or maintain profitability.

                                        19
<PAGE>   22

ITEM 2.  PROPERTIES

     GlobalNet's principal executive office is located in Lombard, Illinois,
where the Company leases approximately 6,700 square feet at a cost of $9,668 per
month. The lease expires on February 28, 2004.

     GlobalNet's engineering department and research and development lab is
located in Marietta, Georgia, where the Company leases approximately 3,700
square feet of office space. Monthly lease payments amount to $4,500 per month
and the lease expires on August 31, 2001, however, it is renewable at the
Company's option. We currently intend to reoccupy the space at that time.

     GlobalNet's operations department and international gateway for Latin
America are located in San Antonio, Texas, where GlobalNet leases approximately
6,100 square feet of office space. The monthly lease payments amount to $4,905
per month and the lease expires on April 30, 2005.

     The Company also leases space in Garden City, New York in accordance with a
co-location agreement with MCI Worldcom Network Services, Inc., where it has its
international gateway for the rest of the world. Monthly payments under the
co-location agreement amount to $9,100 per month and the lease expires on
September 19, 2001, however, it is renewable at the option of MCI Worldcom.

     We believe our facilities are sufficient to meet our current and reasonably
anticipated future requirements or that additional or substitute space will be
available on commercially reasonable terms. See Note 6 of Notes to Consolidated
Financial Statements.

ITEM 3.  LEGAL PROCEEDINGS

     GlobalNet is involved in a variety of legal proceedings that affect its
business. These include proceedings relating to private sales of GlobalNet's
common stock, the financing arrangements with respect to our equipment leases,
certain contractual disputes and other litigation proceedings. The nature of
these proceedings, and the effect that adverse determinations in the proceedings
could have on GlobalNet and its business, financial condition and results of
operations, are described below.

  Rubin v. Gushlak

     On December 26, 2000, an action entitled Rubin v. Gushlak, et. al, Case No.
00-13406, was filed in the United States District Court for the Central District
of California. This action is against Myron Gushlak, a former director of
GlobalNet until his resignation in April 2001, and 13 other named defendants,
including GlobalNet. The action arises out of the purchase by the plaintiff of
1,000,000 shares of the Company's common stock at a price of $5 per share in a
private transaction which Mr. Gushlak allegedly facilitated. The primary relief
sought in the action is the rescission of the contract of purchase; and damages
in the alternative. The action alleges violations of Sections 5 and 12 of the
Securities Act of 1933, as amended, and alleged violations of Section 10(b) of
the Securities and Exchange Act of 1934 and common law fraud. The complaint
alleges that defendant Gushlak allegedly induced the plaintiff to purchase
shares of GlobalNet's common stock and, in doing so, allegedly violated various
provisions of the federal securities laws. While alleging various violative
conduct and activity on the part of Mr. Gushlak, the complaint asserts that
several of the named defendants, allegedly made untrue statements of material
facts or omitted to state facts necessary to be stated in order to make certain
facts stated not misleading. The complaint also alleges that GlobalNet failed to
cooperate with the plaintiff in its efforts to confirm Gushlak's beneficial
ownership of shares. The action is only in its formative stages and discovery or
substantive proceedings have not as yet been initiated. We believe that the
Company has good and meritorious defenses to the action.

     On or about April 2, 2001, the Plaintiff filed an Amended Complaint in the
action, setting forth various additional allegations principally relating to
alleged wrongful conduct and activity by all defendants other than the Company
and setting forth affirmative specified allegations that the wrongful acts and
conduct which is complained of was allegedly undertaken and carried out by all
defendants other than GlobalNet. The only specific allegation relating to the
Company is that the Company had not cooperated with the Plaintiff in Plaintiff's
efforts to confirm the beneficial ownership of shares and to supply to the
Plaintiff books and records of the Company's transfer agent, and otherwise
failed to take action to effect the reversal of the sale of the
                                        20
<PAGE>   23


shares to Plaintiff. GlobalNet has submitted its answer to the Amended
Complaint, and the Company intends to make a substantive motion seeking
dismissal of the Amended Complaint, as well as other relief.


  The Selway Group Inc.

     On November 20, 2000, an action was initiated in the United States District
Court for the Northern District of Illinois against GlobalNet by the Selway
Group Inc. This action alleges that the plaintiff is owed 3% of the gross
revenues derived by GlobalNet from a telecommunications intercommunication
agreement entered into between GlobalNet and Protel, S.A. de C.V. The action
seeks unspecified monetary damages in excess of the monetary federal
jurisdictional limit. GlobalNet has moved to dismiss the complaint for lack of
jurisdiction and, at the present time, the motion remains before the court.
GlobalNet believes that it has good and meritorious defenses to this action
which it intends to assert if the court determines that jurisdiction exists. The
action is in its formative stages and no discovery or other substantive
proceedings in the action have been undertaken.

  Justice Telcom Corporation

     On January 2, 2001, GlobalNet commenced an action in the Supreme Court of
the State of New York against Justice Telcom Corporation a/k/a Justice
Technology Corp. for the non-payment of services rendered by GlobalNet.
Subsequent to the commencement of this action, GlobalNet learned that a company
known as Total Access.com Inc. allegedly purchased the assets and liabilities of
Justice Telecom. Pending settlement discussions, GlobalNet granted an extension
of time to answer to February 19, 2001. No answer has been received by
GlobalNet, nor have there been any communications to GlobalNet relating to the
settlement discussions. GlobalNet has applied to the court for a default
judgment in the amount of $109,309.

  North American Gateway Inc.

     On January 2, 2001, GlobalNet commenced an action in the Supreme Court of
the State of New York against North American Gateway Inc. for the non-payment of
services rendered by GlobalNet. The defendant defaulted in appearing or
answering, and GlobalNet has applied to the court for a default judgment in the
amount of $99,798.

  Wholesale Telecom Corporation

     On December 23, 2000, GlobalNet commenced an action in the Supreme Court of
the State of New York against Wholesale Telecom Corporation for the non-payment
of services rendered by GlobalNet in the amount of $563,578. The defendant has
sought to dismiss the action on various jurisdictional grounds and to otherwise
stay the action pending arbitration. The motion presently remains outstanding
before the court, which has not issued its decision. This action is only in the
formative stages and no discovery or other proceedings have been initiated.

  Other Litigation

     We are involved in various other legal proceedings which arise in the
normal course of business. These matters include contract disputes and other
matters. We could incur significant legal fees in connection with these matters
but based upon currently available information, GlobalNet believes that the
resolution of these cases is not likely to have a material adverse effect on our
business, financial position or future results of operations.

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

     No matters were submitted to a vote of security holders during the fourth
quarter of 2000.

                                        21
<PAGE>   24

                                    PART II

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

     Our common stock is listed and traded on the NASDAQ Small Cap Market. For
the period January 1999 through May 2000 (the pre-reverse merger period), shares
of the Company traded on the Over the Counter Bulletin Board as Rich Earth,
Inc., a publicly traded shell company. There are no available historical
quotations for Rich Earth common stock during the pre-reverse merger period. As
a result of the reverse merger between Rich Earth and GlobalNet International,
Inc., shares of the Company continued to trade on the Over the Counter Bulletin
Board, but under the GlobalNet name, from May 2000 through November 2000. On
November 24, 2000, our common stock commenced trading on the NASDAQ Small Cap
Market. The following table sets forth the high and low closing bid quotations
per share on the Over the Counter Bulletin Board or NASDAQ Small Cap Market, as
the case may be, based upon information supplied by The Wall Street Journal.

<TABLE>
<CAPTION>
                                                                MARKET PRICE
                                                              ----------------
PERIOD                                                         HIGH      LOW
------                                                        ------    ------
<S>                                                           <C>       <C>
2000:
  Second Quarter............................................  $26.88    $17.25
  Third Quarter.............................................   25.50     15.25
  Fourth Quarter............................................   14.75      0.63
2001:
  First Quarter.............................................  $ 2.77    $ 0.78
  Second Quarter (through April 12, 2001)...................    1.27      0.72
</TABLE>

     On April 12, 2001, the last reported sale price of GlobalNet common stock
on the NASDAQ Small Cap Market was $1.27. We had approximately 1,882 holders of
record of our common stock on that date, including various banks and brokers
holding our common stock in "street name" for the benefit of their customers.

     We have never declared or paid any cash dividends on our common stock. We
presently intend to retain all future earnings for use in our business and do
not anticipate paying any cash dividends on our common stock in the foreseeable
future.

EQUITY TRANSACTIONS


     The Company consummated the following equity transactions, each exempt from
the registration requirements under Section 4(2) and Rule 506 of Regulation D of
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, and were sold only to accredited investors whose status
as such were verified by us through investor representations:



  Rich Earth Private Placements


     During the period from March 2000 through July 2000, we sold 1,205,450
shares of common stock in two transactions. The first transaction at $10 per
unit for an aggregate of $6,000,000, consisted of 600,000 shares of common stock
and warrants to purchase 300,000 shares of common stock exercisable at $15 per
share for a period of six months from the date of grant. The second placement of
605,450 units at $10 per unit consisted of the sale of 605,450 shares of common
stock and warrants to purchase 605,450 shares of common stock, exercisable at
$15 per share. We also issued warrants to purchase 310,000 shares of common
stock exercisable at $15 per share to various individuals and firms assisting in
these placements. The aggregate of the 905,450 warrants issued in the two
private placements and the 310,000 warrants issued to the individuals and firms
assisting in the private placements expired without being exercised and were no
longer outstanding at December 31, 2000. On December 7, 2000, we issued an
aggregate of 1,215,450 warrants, exercisable at $5 per share, to the individuals
who formerly held the expired warrants. The net proceeds for the private
placements amount to $11,640,106 after deducting a placement fee of $414,394.

                                        22
<PAGE>   25


     All the shares and warrants issued in connection with the private
placements are restricted securities and could not be sold to the public for a
period of one year from the date of purchase or until such securities are
qualified under a registration statement registering the resale of such
securities. In addition, the Company has agreed to register for resale shares of
GlobalNet common stock issued in connection with the private placements or to be
issued in connection with the exercise of warrant sold in the private
placements.



  Restricted Stock Issuances


     On May 15, 2000, GlobalNet issued an aggregate of 2,025,000 shares of
restricted stock to various employees, directors and consultants, vesting at the
rate of 44% on September 15, 2001; 22% on May 15, 2002; and 34% on May 15, 2003.
Of these shares, 650,000 shares were forfeited in the fourth quarter of 2000.

     On December 28, 2000, GlobalNet issued 775,000 shares of restricted common
stock to various employees, vesting at the rate of 44% on September 15, 2001;
22% on May 15, 2002; and 34% on May 15, 2003.


     Additional information relating to these restricted stock issuances is set
forth in Part II, Item 7, under the subheading "Non-Cash Stock Compensation,"
which information is hereby incorporated by reference.



  March Private Placement



     On March 21, 2001, the Company completed a private placement of 700,000
shares of common stock of $1.00 per share. The Company issued warrants to
purchase 75,000 shares of common stock at $1.20 to various entities assisting in
the placement. The Company received net proceeds at the closing in the amount of
$615,000, after deducting offering costs of $85,000. The Company filed a
registration statement on Form S-3 to register the shares sold in the placement
and the warrants granted to the placement agents on April 2, 2001.



  Crescent Private Placement


     On April 9, 2001, we entered into a Securities Purchase Agreement with
Crescent International Ltd. pursuant to which we sold, and Crescent
International purchased, a $2,000,000 Convertible Note due April 9, 2004.
Crescent International also agreed to purchase, from time to time through April
9, 2002, up to $4,000,000 worth of the our Common Stock; the number of shares
and purchase price to be determined based upon trading volumes for our Common
Stock and the market prices for our Common Stock for the 22 trading day period
prior to the time a sale is to be made. At the closing, Crescent International
made an initial purchase of 365,428 shares of our Common Stock for an aggregate
of $250,000. Under the terms of the Securities Purchase Agreement, we may sell
up to an additional $3,750,000 of our Common Stock to Crescent International at
the prices and subject to the limitations as to the amount as provided for in
the Securities Purchase Agreement. The Securities Purchase Agreement contains
"anti-shorting" provisions that prohibit Crescent International from directly or
indirectly engaging in short sales of the shares purchased, the note conversion
shares and the warrant shares issued pursuant to warrants granted to Crescent
International.


     GlobalNet received net proceeds at the closing in the amount of $2,140,976,
after deducting certain fees to be paid to GreenLight (Switzerland) S.A., the
investor representative of Crescent International; Crescent International's due
diligence expenses; and a portion of Crescent International's counsel fees. The
Company also paid additional offering costs of approximately $230,000 and issued
warrants to two firms in connection with the securities purchase agreement to
purchase an aggregate of 333,333 shares of the Company's common stock at $0.89
per share. In addition, the Company issued an incentive warrant to the purchaser
representing the right to purchase 877,026 shares of the Company's common stock
for $1.0221 per share.



     As a result of the aforementioned transactions, the Company will record
approximately $680,000 of debt discount related to the convertible note's
beneficial conversion feature, approximately $285,000 of debt discount related
to the incentive warrant issued, approximately $65,000 of debt discount related
to the investor fees for the convertible note, and approximately $335,000 of
debt issuance costs. Each of these items will be amortized over the term of the
convertible note. In addition, the Company will accrete interest expense up to
the amount of the redemption prices until such time as the convertible note is
converted or redeemed.


                                        23
<PAGE>   26

     At the closing, GlobalNet issued and delivered its Convertible Note payable
to the order of Crescent International in the amount of $2,000,000 and due April
9, 2004. The note does not bear interest unless we are in default in delivering
conversion shares to Crescent International, or fail to pay the principal of the
note when due, in which case the note will bear interest at a fixed rate of 8%
per annum calculated from April 9, 2001.

     GlobalNet retains the right to redeem the note at certain times and under
certain circumstances at redemption prices ranging from 112.5% to 140%,
depending upon the time when any notice of redemption is given. Additionally, we
can force the conversion of the note into shares of our Common Stock if we meet
certain requirements, including a significant appreciation in our Common Stock
price.

     The holder of the note may convert the note in whole or in part at a
conversion price equal to the lower of 106% of the average of the bid prices
during the 10 trading days preceding April 9, 2001 and 94% of the average of the
lowest three consecutive bid prices for our Common Stock for the 22 trading day
period preceding a conversion date. The conversion price and the number of note
conversion shares is subject to certain standard anti-dilution adjustments
including reclassification, consolidation, merger or mandatory share exchange;
subdivision or combination of shares; stock dividends; and the issuance of
additional capital shares by us at prices less than the conversion price.


     In furtherance of the transaction, GlobalNet entered into a Registration
Rights Agreement, whereby it is required to file a registration statement on
behalf of Crescent International with respect to the shares purchased by it, the
note conversion shares, and warrant shares issuable pursuant to warrants issued
to Crescent International. Similar registration statements are to be filed for
each subsequent purchase of securities made by Crescent International. The
failure of GlobalNet to effect its registration statements as required under the
Registration Rights Agreement may subject it to certain financial penalties. The
Company amended its prior registration statement on Form S-3 that was filed on
April 2, 2001 in order to include the shares purchased by Crescent
International, the shares that may result from the conversion of the note and
exercise of the warrant shares. Such amended registration statement on Form S-3
was filed on May 1, 2001.


     In further consideration for Crescent International entering into the
Securities Purchase Agreement, GlobalNet issued an Incentive Warrant to Crescent
International representing the right to purchase 877,026 shares of the its
Common Stock at $1.0221 per share (150% of the price at which Crescent
International purchased its initial shares). The Incentive Warrant is
exercisable for a five-year period commencing April 9, 2001, and provides for
adjustment in the price and number of warrant shares upon the occurrence of
certain events triggering anti-dilution adjustments, and Crescent International
may not exercise its warrant if, at the time of exercise, the number of shares
that it would receive, together with all other shares of the Company's Common
Stock which it beneficially owns, would result in Crescent International owning
more than 9.9% of the Company's Common Stock as would be outstanding on the
exercise date.

     The Company also issued a Protective Warrant to Crescent International
which only becomes exercisable on the effective date of the registration
statement which the Company is obligated to file relating to the initial shares
purchased by Crescent International, and then only if the price for the
Company's Common Stock on such effective date is lower than the price for the
Company's Common Stock on the date of Crescent International's initial purchase.
In such case, the Protective Warrant only becomes exercisable to purchase a
number of shares determined by subtracting the amount paid by Crescent
International for its initial purchase of the Company's Common Stock, i.e.
$250,000, divided by the purchase price, from an amount which is equal to
250,000 divided by the price of the Common Stock for the Company as computed on
the effective date of the Company's registration statement. Under the terms of
the Protective Warrant, if the price for the Company's Common Stock as computed
on the effective date of the registration statement filed on behalf of Crescent
International is higher than the purchase price for the Company's Common Stock,
as computed on the date Crescent International purchased such shares, the
Protective Warrant does not become exercisable.

     The foregoing description of the private placement with Crescent
International does not purport to be a complete description and is qualified in
its entirety by reference to a Current Report on Form 8-K, dated April 9, 2001,
filed with the Securities and Exchange Commission on April 13, 2001, which
information is hereby incorporated by reference.
                                        24
<PAGE>   27

ITEM 6.  SELECTED FINANCIAL DATA

     The selected consolidated financial data presented below for each of the
five years in the period ended December 31, 2000 has been derived from our
consolidated financial statements. The consolidated financial statements for
each of the three years in the period ended December 31, 2000 were audited. The
consolidated financial statements for the years ended December 31, 1996 and
December 31, 1997 are unaudited. The selected consolidated financial data should
be read in conjunction with the Consolidated Financial Statements and the Notes
thereto and other financial information appearing elsewhere in this Report.

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                     -------------------------------------------------------------------
                                        1996          1997          1998         1999           2000
                                     -----------   -----------   ----------   -----------   ------------
                                     (UNAUDITED)   (UNAUDITED)
<S>                                  <C>           <C>           <C>          <C>           <C>
Statement of Operations Data:
  Total revenues...................   $     --      $ 792,654    $4,046,246   $24,926,891   $ 78,090,535
Income loss from continuing
  operations.......................         --       (256,082)     (111,490)   (2,535,640)   (10,646,993)
  Net income (loss) per common
     share.........................                     (0.01)        (0.01)        (0.17)         (0.47)
Balance Sheet Data:
  Total assets.....................   $241,000      $ 452,518    $  210,692   $ 6,605,400   $ 19,732,888
  Long-term obligations............         --             --            --     3,773,443      5,680,002
</TABLE>

     Prior to May 30, 2000, when the Company completed a reverse merger, the
financial results were those of GlobalNet International, Inc. (formerly DTA
Communications Network, L.L.C.). After May 30, 2000, the financial results
presented are ours. For a description of the reverse merger, please refer to
Note 1 to the consolidated financial statements. All per share data is
calculated based upon 20,000,000 shares outstanding prior to the reverse merger
on May 30, 2000 as these shares were received by the former owners of GlobalNet
International, Inc.

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

ORGANIZATIONAL HISTORY

     GlobalNet was formed on May 30, 2000 as a result of a "reverse merger"
transaction, whereby GlobalNet International, Inc. (GlobalNet International)
merged with and into a subsidiary of Rich Earth, Inc. (Rich Earth) pursuant to
an agreement and plan of merger, whereby 20,000,000 shares of Rich Earth common
stock were issued in exchange for 100% of the common stock of GlobalNet
International in a transaction accounted for as a reverse acquisition of Rich
Earth by GlobalNet International. Prior to the reverse merger, Rich Earth was a
non-operating public shell corporation with nominal assets. Following the
reverse merger, the management of GlobalNet International controlled the merged
company and the principal shareholders of GlobalNet International became
principal shareholders of the merged company. Following the closing of the
reverse merger, Rich Earth changed its name to GlobalNet, Inc. As a result of
the reverse merger transaction, GlobalNet International continued as an
operating entity and as a wholly-owned subsidiary of GlobalNet, Inc., and the
historical financial statements of GlobalNet, Inc. replaced those of Rich Earth.


     The "reverse merger" is considered by the Company to be a capital
transaction in substance, rather than a business combination. That is, the
"reverse merger" is equivalent to the issuance of stock by the Company for the
net monetary assets of Rich Earth, accompanied by a recapitalization. The
accounting is identical to that resulting from a reverse acquisition, except
that no goodwill or other intangible was recorded.


OVERVIEW

     GlobalNet provides international voice, data and Internet services over a
private, managed Internet Protocol (IP) network to international carriers and
other communication service providers in the United States and Latin America.
GlobalNet's mission is to become the premier provider of high quality,
competitively priced IP based voice, fax, and data services to Internet Service
Providers (ISPs), PTT's, and other Telecommunications Services Providers (TSPs)
serving the Small -- Medium Enterprise (SME) Market in Latin America.

                                        25
<PAGE>   28

     GlobalNet was formed in 1996 to capitalize on the growth of the Internet
Protocol as a communications transport medium for IP Telephony and other
enhanced services. To date, the Company has focused primarily on wholesaling
international voice and facsimile communications services between the United
States and Latin American countries, predominately Mexico. GlobalNet has been
successful in establishing and maintaining relationships with Tier 1 and Tier 2
carriers as a result of its ability to procure consistent sources of supply in
the capacity constrained telecommunications corridors linking Latin America and
the United States. This has been accomplished through the development of
partnerships with several Latin American telecommunications companies.
Leveraging these relationships, the Company has grown its revenues from $793,000
in 1997 to $78,091,000 in 2000, an annualized compound growth rate of over 350
percent.


     GlobalNet has experienced operating losses since its inception. Operating
losses amounted to approximately $10,647,000 and $2,536,000 for the years ended
December 31, 2000 and December 31, 1999, respectively. These operating losses
can be attributed primarily to the "start-up" stage of the Company, the costs
incurred in connection with the reverse merger and the losses associated with
the prepaid telephone card business that the Company exited in the fourth
quarter of 2000.



     GlobalNet's stock price has experienced a substantial decline since
GlobalNet went public through a reverse merger in May 2000. The stock price
volatility and decline can be attributed primarily to the adverse market
conditions that affected the telecommunications industry, and especially the
Voice over IP segment of this industry, in the second half of 2000.


RESULTS OF OPERATIONS

2000 COMPARED TO 1999

     REVENUE.  Our primary source of revenue is the fees that we receive from
customers for completing calls over our network. This revenue is dependent on
the volume of voice and fax traffic carried over the network, which is measured
in minutes. We charge our customers fees per minute of traffic that are
dependent on the length and destination of the call and recognize this revenue
in the period in which the call is completed. We also derive revenue from
supplying the underlying services, including value-added applications and the
use of the Company's network, to issuers of prepaid phone cards.

     Net revenue increased by 213% or $53,164,000, from $24,927,000 for the year
ended December 31, 1999 to $78,091,000 for the year ended December 31, 2000. The
increase in revenue was primarily due to the increase in number of customers as
well as to the increase of the traffic from existing customers. GlobalNet's
customer base increased from 11 customers in 1999 to 29 customers in 2000.
Additionally, as a percentage of total revenues, the largest customer decreased
from 82% in 1999 to 23% in 2000.

     In April 1999, the Company started providing prepaid phone card services.
As a percentage of total revenues, prepaid card revenues represented 20.7% and
10.9% for the years ended December 31, 2000 and December 31, 1999, respectively.

     In the fourth quarter of 2000, the Company decided to exit the prepaid card
business due to its lack of profitability. As a result, as a percentage of total
revenues, GlobalNet's core business, the wholesale Voice over IP (VoIP),
increased from 73% in the third quarter of 2000 to 98% in the fourth quarter.
Wholesale VoIP revenues increased by 34.4%, from $17,223,000 for the three
months ended September 30, 2000 to $23,096,000 for the three months ended
December 31, 2000.

     DATA COMMUNICATIONS AND TELECOMMUNICATIONS.  Data communications and
telecommunications cost is comprised primarily of termination costs, purchased
minutes, and other expenses associated with data communications and
telecommunications. Termination fees are paid to local service providers to
terminate calls received from our network. This traffic is measured in minutes,
and the per minute rates charged for terminating calls are negotiated with the
local service provider and included in our contract with our local service
provider. Our contracts with our providers typically provide us with the right
to negotiate the per minute termination fees.

                                        26
<PAGE>   29

     Data communications and telecommunications cost increased by 194% or
$49,032,000, from $25,299,000 for the year ended December 31, 1999 to
$74,331,000 for the year ended December 31, 2000. This increase resulted
primarily from a significant increase in traffic (consistent with the increased
revenue discussed above), which in turn increased the termination costs and
purchased minutes. As a percentage of net revenue, data communications and
telecommunications costs decreased by 6.3 percentage points, from 101.5% for the
year ended December 31, 1999 to 95.2% for the year ended December 31, 2000. The
negative gross margins in 1999 were primarily due to the losses experienced by
the Company's prepaid card programs.


     In April 1999, the Company entered into an agreement with Operadora Protel,
S.A. de C.V. ("Protel"), a Mexican long-distance carrier, to equally share in
the originating costs incurred in the United States by GlobalNet and the
terminating costs incurred in Mexico by Protel for all the wholesale and prepaid
card traffic between the two carriers. This cost-sharing agreement was
temporarily suspended in the second quarter of 2000 and, as a result,
GlobalNet's gross margins in that quarter were adversely affected since the
prepaid card program was experiencing losses and GlobalNet was bearing most of
the costs during that period. The cost-sharing agreement was terminated on
October 31, 2000, as a result of the discontinuance of the prepaid card program
due to its lack of profitability. The gross margin for the fourth quarter of
2000 increased to $1,776,000 or 7.5% of revenues, from 7.0% of revenues for the
previous quarter, primarily as a result of the exit of the prepaid card program.


     NETWORK RESEARCH AND DEVELOPMENT.  Network research and development
expenses include the expenses incurred in the development, expansion, operation
and support of the Company's global IP network. These expenses consist primarily
of the fixed monthly cost of the leased lines that comprise the Company's
network, the salary and payroll related taxes of the employees directly involved
in the development and operation of the network and the expenses incurred in the
development and support of the Company's proprietary software.


     Network research and development expenses increased by approximately
2,342.6%, or $3,022,000, from $129,000 for the year ended December 31, 1999 to
$3,151,000 for the year ended December 31, 2000. The increase in network
research and development expenses is primarily due to the increase in the
personnel needed to expand, develop and support the Company's global network.


     Additionally, in the third quarter of 2000, the Company completed the
development and initial deployment of "INTE-GRATE", an internally-developed
systems management software. "INTE-GRATE" is the Company's proprietary software
that integrates the data access for sales, operations and traffic analysis
functions and significantly enhances customer service. This software tracks
rapidly changing vendor costs to determine the most cost-effective routing and
permits GlobalNet to make substantial routing changes in order to take advantage
of pricing changes. The Company did not capitalize any software development
costs.

     SELLING AND MARKETING.  Selling and marketing expenses include the expenses
incurred in the development and promotion of the Company's image, products and
services. Selling and marketing expenses include primarily the salaries, payroll
taxes, benefits and commissions paid to the sales personnel as well as the fees
paid to investor relations firms and consultants.


     Selling and marketing expenses increased by 697.0%, from $132,000 for the
year ended December 31, 1999 to $1,052,000 for the year ended December 31, 2000.
The increase in selling and marketing expenses is primarily due to the addition
of new sales and marketing personnel and the retention of an outside investor
relations firm.



     BAD DEBT EXPENSE.  Bad debt expense amounted to $482,000 or 0.6% of
revenues for the year ended December 31, 2000. The majority of bad debt expense
was recorded in the fourth quarter and corresponds to three customers. The
Company did not experience any bad debt in 1999.



     GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative expenses
include the expenses incurred for general corporate functions, including
administration, finance and accounting, facilities, human resources, and
professional services. General and administrative expenses of $4,318,000
increased by 323.3%, or $3,298,000, for the year ended December 31, 2000 as
compared to the corresponding period in 1999.


                                        27
<PAGE>   30

     The increase in general and administrative expenses was primarily due to
the increase in headcount and salary expense that resulted from the expansion of
the Company's global network. Additionally, professional fees (i.e., accounting
and legal) increased significantly as a result of the Company completing its
reverse merger in the second quarter of 2000.


     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expenses of
$2,903,000 for the year ended December 31, 2000 were 228.8%, or $2,020,000,
higher than those of the corresponding period in 1999. The increase in
depreciation expense is due to the acquisition of additional property and
equipment. GlobalNet's property and equipment (before accumulated depreciation)
increased by 153.0% or $8,159,000, from $5,332,000 as of December 31, 1999 to
$13,491,000 as of December 31, 2000.


     Additionally, in the first quarter of 2000, the Company recorded $2,000,000
of intangible assets in the acquisition of the 25% minority interest in
GlobalNet L.L.C. The Company is amortizing the intangible assets on a
straight-line basis over a five-year period. The amortization expense associated
with the intangible assets amounted to approximately $333,000 for the year ended
December 31, 2000.

     NON-CASH STOCK COMPENSATION.  The non-cash stock compensation expense
resulted primarily from the issuance of restricted stock to certain employees,
consultants and directors in May 2000. The stock was issued to motivate and
retain key employees and has a vesting period of three years.


     The following table sets forth the people who received restricted stock
during the year ended December 31, 2000 and the amount so received:



                                GLOBALNET, INC.


                            RESTRICTED STOCK GRANTS



<TABLE>
<CAPTION>
                                             SHARES FORFEITED
                                                   FROM
                                 SHARES        MAY 16, 2000            SHARES
                               GRANTED ON           TO               GRANTED ON
                              MAY 15, 2000   DECEMBER 27, 2000    DECEMBER 28, 2000      TOTAL
                              ------------   -----------------    -----------------    ---------
<S>                           <C>            <C>                  <C>                  <C>
EMPLOYEES
  Robert Donahue............          --                --              75,000            75,000
  Colum Donahue.............          --                --              75,000            75,000
  Dan Wickersham............     375,000                --              50,000           425,000
  Pere Valles...............          --                --             425,000           425,000
  Barry Toser(1)............     250,000          (250,000)                 --                --
  Bruce Ogden(1)............     200,000          (200,000)                 --                --
  Rick Ganon(1).............     200,000          (200,000)                 --                --
  Donna Janick..............     100,000                --              25,000           125,000
  Fred Bigney...............     100,000                --              25,000           125,000
  Chuck Roelle..............      90,000                --              25,000           115,000
  Ted Broa..................      50,000                --              25,000            75,000
  Mike Dombrowski...........      10,000                --              25,000            35,000
  Ed Geoffrey...............          --                --               5,000             5,000
  Debbie Dalton.............          --                --               5,000             5,000
  Leo Graham................          --                --               7,500             7,500
  Chris Ortiz...............          --                --               7,500             7,500
                               ---------         ---------            --------         ---------
                               1,375,000          (650,000)            125,000         1,500,000
                               ---------         ---------            --------         ---------
DIRECTORS
  Carm Adimando.............     175,000                --                  --           175,000
  Greenhill Partners........      25,000                --                  --            25,000
                               ---------         ---------            --------         ---------
                                 200,000                --                  --           200,000
                               ---------         ---------            --------         ---------
</TABLE>


                                        28
<PAGE>   31


<TABLE>
<CAPTION>
                                             SHARES FORFEITED
                                                   FROM
                                 SHARES        MAY 16, 2000            SHARES
                               GRANTED ON           TO               GRANTED ON
                              MAY 15, 2000   DECEMBER 27, 2000    DECEMBER 28, 2000      TOTAL
                              ------------   -----------------    -----------------    ---------
<S>                           <C>            <C>                  <C>                  <C>
CONSULTANTS
  Patrick Kealy.............     300,000                --                  --           300,000
  Nick Mastrondardi.........     150,000                --                  --           150,000
                               ---------         ---------            --------         ---------
                                 450,000                --                  --           450,000
                               ---------         ---------            --------         ---------
Total Shares Granted........   2,025,000          (650,000)            125,000         2,150,000
                               =========         =========            ========         =========
</TABLE>



Notes

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


(1)These employees left the Company before their shares vested.



(2)Other than the stock grant to Greenhill Partners which vested immediately,
   the stock grants are subject to the following vesting schedule:



<TABLE>
<S>                                                      <C>
15-Sep-01..............................................   44%
15-May-02..............................................   22%
15-May-03..............................................   34%
                                                         ---
                                                         100%
                                                         ===
</TABLE>



     INTEREST EXPENSE.  Interest expense (net of interest income) increased by
72.7% from $752,000 for the year ended December 31, 1999 to $1,299,000 for the
year ended December 31, 2000. As a percentage of revenue, interest expense
decreased from 3.0% for the year ended December 31, 1999 to 1.7% for the year
ended December 31, 2000. The interest expense consists primarily of the capital
leases used by the Company to finance the acquisition of new network equipment.



     The capital leases outstanding as of December 31, 2000 amounted to
$9,716,000, of which approximately $6,592,000 corresponded to a credit facility
with General Electric Capital Corporation and $3,124,000 to a facility with
Prinvest Corp. The Company is currently negotiating other credit facilities to
finance the acquisition of additional equipment and to refinance its current
capital leases and reduce its financing costs.


     INCOME TAXES.  No income tax benefit was recorded for the year ended
December 31, 2000 due to the uncertainty of the realization of deferred tax
assets.

1999 COMPARED TO 1998

     NET REVENUE.  Net revenue increased by $20,881,000 or 516.1%, from
$4,046,000 for the year ended December 31, 1998 to $24,927,000 for the year
ended December 31, 1999. The increase in net revenue is primarily due to the
increase in the number of customers and the increase in the traffic from
existing customers.


     DATA COMMUNICATIONS AND TELECOMMUNICATIONS.  Data communications and
telecommunications cost increased by 650.7%, from $3,370,000 for the year ended
December 31, 1998 to $25,299,000 for the year ended December 31, 1999 primarily
as a result in the increase in the traffic handled by the Company's network.


     As a percentage of net revenue, data communications and telecommunications
cost increased from 83.3% for the year ended December 31, 1998 to 101.5% for the
year ended December 31, 1999. In April 1999, the Company started providing
prepaid phone card services. The negative gross margins in 1999 are primarily
due to the losses associated with the prepaid card programs.

                                        29
<PAGE>   32

     NETWORK RESEARCH AND DEVELOPMENT.  Network research and development
expenses amounted to approximately $129,000 for the year ended December 31,
1999. In 1998, the Company was not a facility-based carrier and did not have
network research and development expenses.

     SELLING AND MARKETING.  Selling and marketing expenses amounted to
approximately $132,000 for the year ended December 31, 1999. In 1998, the
Company had only four employees who work in operational, sales and marketing and
administrative functions. The Company did not have a clear segregation of duties
among those employees and, therefore, recorded all the expenses as "general and
administrative".

     BAD DEBT EXPENSE.  The Company did not experience any bad debt in 1999 or
1998.


     GENERAL AND ADMINISTRATIVE.  General and administrative expenses increased
by approximately 29.4%, or $232,000, from $788,000 for the year ended December
31, 1998 to $1,020,000 for the year ended December 31, 1999. As a percentage of
net revenues, general and administrative expenses decreased from 19.5% for the
year ended December 31, 1998 to 4.1% for the year ended December 31, 1999.


     The increase in general and administrative expenses in dollar terms is
primarily due to the increase in headcount from four employees in 1998 to nine
employees in 1999. The decrease as a percentage of total revenues is due to the
significant increase in revenues in 1999.

     DEPRECIATION.  Depreciation expense amounted to approximately $883,000 for
the year ended December 31, 1999. The Company did not record any depreciation
expense in 1998 since it did not own any equipment.


     OTHER EXPENSES.  Other expenses (net of other income) decreased by 76.6%,
from $175,000 for the year ended December 31, 1998 to $41,000 for the year ended
December 31, 1999. The amounts paid were for legal expenses related to an
affiliated entity that filed for bankruptcy, and for amounts due to a creditor
of the affiliated entity. Currently, there are no obligations or claims against
the Company related to that affiliated entity.



     INTEREST EXPENSE.  Interest expense (net of interest income) increased by
9,300.0%, from $8,000 for the year ended December 31, 1998 to $752,000 for the
year ended December 31, 1999. The interest expense incurred in 1999 corresponds
primarily to capital leases entered in that year. The Company was not leasing
any equipment in 1998.


LIQUIDITY AND CAPITAL RESOURCES

     Our liquidity and capital needs are primarily related to the development
and implementation of our network infrastructure, our network research and
development activities, our marketing efforts and our general and administrative
functions. Our capital needs have been met primarily through the issuance of
common stock and through equipment financing through capital leases.

     During March, April and May 2000, Rich Earth issued approximately 1,200,000
shares of common stock in connection with the sale of units to investors in two
private placement transactions resulting in net proceeds of over $11.6 million.
The Company acquired the cash held by Rich Earth in its merger on May 30, 2000.


     On March 21, 2001, the Company completed a private placement of 700,000
shares of common stock at $1.00 per share. The Company received net proceeds at
the closing in the amount of $670,000, after deducting a finder's fee of
$30,000.



     On April 9, 2001 (Closing Date), the Company entered into a securities
purchase agreement (Agreement) whereby the Company issued a $2,000,000
convertible note (Note) and the purchaser agreed to purchase from time to time
through April 9, 2002, up to $4,000,000 of the Company's common stock. The
number of shares and the price is to be determined based upon the Company's
average current trading volume and stock price as defined in the Agreement. In
addition, the purchaser has agreed not to acquire, through conversion of the
Note, exercise of warrants, or purchase of equity, more than 9.9% of the
Company's common stock as of any respective conversion, exercise or purchase
date. On the Closing Date, the purchaser made an initial purchase of 365,428
shares of the Company's common stock for an aggregate of $250,000. The


                                        30
<PAGE>   33


Company received net proceeds of $2,140,976, after deducting related expenses.
The Company also paid additional offering costs of approximately $230,000 and
issued warrants to two firms in connection with the Agreement to purchase an
aggregate of 333,333 shares of the Company's common stock at $0.89 per share.


     Additional information relating to these private placements is set forth in
Part II, Item 5, under the subheading, "Equity Transactions," which information
is hereby incorporated by reference.

     The Company maintains credit facilities with GE Capital and Prinvest Corp.,
to finance the lease of telecommunications network and data transmission
equipment.

     GlobalNet is currently negotiating other credit facilities to finance the
acquisition of additional equipment and to refinance its current capital leases
and reduce financing costs. Considering the Company's deficit working capital,
the Company may need to seek additional capital through the issuance of equity
securities and/or facilities within the next 12 months.

CASH FLOW DATA -- YEAR ENDED DECEMBER 31, 2000 AND 1999

     During the year ended December 31, 2000, net cash used in operating
activities totaled $3,856,000, as compared to net cash used in operating
activities totaling $265,000 in 1999. Cash used in operating activities in 2000
was primarily the result of net losses and increases in accounts receivable and
other current assets. The cash loss (i.e., net loss before depreciation and
amortization and non-cash compensation expense) amounted to approximately
$6,543,000 and $2,395,934 for the years ended December 31, 2000 and December 31,
1999, respectively.

     Net cash used in investing activities amounted to approximately $676,000
and $241,000 for the years ended December 31, 2000 and December 31, 1999,
respectively. Cash used in investing activities was primarily the result of the
purchase of miscellaneous furniture and computer equipment needed to support the
increase in headcount. The Company financed all its purchases of
telecommunications equipment through capital leases. Purchases of
telecommunications equipment amounted to approximately $7,356,000 and $5,092,000
for the years ended December 31, 2000 and December 31, 1999, respectively.

     During the year ended December 31, 2000, net cash provided by financing
activities of $6,773,000 consisted principally of the $9,513,000 (net of the
$2,127,000 used to purchase the 25% minority interest in GlobalNet L.L.C.) of
collected proceeds from the Company's private placements, net of $2,123,000 and
$617,000 of payments on capital leases and term loan obligations, respectively.


     At December 31, 2000, our total current liabilities exceeded our total
current assets by approximately $7,511,000 primarily as a result of our history
of operating losses. Additionally, the credit terms that we receive from our
vendors are generally more favorable than those that we offer to our customers.
Considering the Company's working capital deficit, the Company may need to seek
additional capital through the issuance of equity securities and/or credit
facilities within the next 12 months.


RECENTLY ISSUED ACCOUNTING STANDARDS

     During 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (as amended by SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities -- Deferral of the Effective Date of FASB
Statement No. 133 and SFAS No. 138, Accounting for Certain Derivative
Instruments and Hedging Activities), which is effective for all fiscal years
beginning after June 15, 2000. SFAS No. 133 establishes a comprehensive standard
for the recognition and measurement of derivative instruments and hedging
activities. The Company does not expect the adoption of the new standard to have
a material effect on our consolidated financial position, liquidity, or results
of operations.

"SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     This report includes "forward-looking statements" within the meaning of
various provisions of the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical facts, included in

                                        31
<PAGE>   34

this report that address activities, events or developments that the Company
expects or anticipates will or may occur in the future, future capital
expenditures (including the amount and nature thereof), business strategy and
measures to implement strategy, including any changes to operations, goals,
expansion and growth of the Company's business and operations, plans, references
to future success and other such matters are forward-looking statements and
involved a number of risks and uncertainties. Among the factors that could cause
actual results to differ materially are the following: the availability of
sufficient capital to finance the Company's business plan on terms satisfactory
to the Company, competitive factors, changes in costs, including termination and
transmission costs, general business and economic conditions and other risk
factors described herein or from time to time in the Company's reports filed
with the Securities Exchange Commission. Consequently, all of the
forward-looking statements made in this report, which speak only as of the date
made, are qualified by these cautionary statements. See "Risk Factors" in Item
1.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We have minimal interest rate risk. Our capital lease obligations contain
fixed rates of interest ranging from 13.2% to 22%, which are not subject to
market fluctuations.

     As all of our assets are located in the United States, we have no direct
exposure related to foreign currency exchange risk. To the extent that foreign
currency prices change significantly, such changes could impact our pricing
decisions.

     To date, GlobalNet has not engaged in trading market risk trading
instruments or in purchasing hedging instruments that could expose us to market
risk (i.e., interest rate, foreign currency exchange, commodity price or equity
price risk).

                                        32
<PAGE>   35

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
GlobalNet, Inc.:

     We have audited the accompanying consolidated balance sheets of GlobalNet,
Inc. and subsidiary (the Company) as of December 31, 2000 and 1999 and the
related consolidated statements of operations, stockholders' deficit, and cash
flows for each of the years in the three-year period ended December 31, 2000.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of GlobalNet,
Inc. and subsidiary as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America.

     The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 15 to the
financial statements, the Company has suffered recurring losses from operations
and has working capital and net capital deficiencies that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 15. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

                                                       /S/ KPMG LLP
                                          --------------------------------------
                                                         KPMG LLP

Chicago, Illinois
March 12, 2001, except as to Notes 13, 15 and 16,
which are as of April 9, 2001

                                        33
<PAGE>   36

                         GLOBALNET, INC. AND SUBSIDIARY

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                  2000           1999
                                                              ------------    ----------
<S>                                                           <C>             <C>
                                         ASSETS
Current assets:
  Cash......................................................  $  2,545,459       304,626
  Restricted cash...........................................       157,872       473,019
  Accounts receivable, net of allowance for doubtful
     accounts of $364,000 and $0, respectively..............     5,050,121     1,199,283
  Due from related party....................................            --        41,319
  Prepaid expenses and other current assets.................       273,989       137,427
                                                              ------------    ----------
          Total current assets..............................     8,027,441     2,155,674
Property and equipment, net.................................    10,038,779     4,449,726
Intangible assets, net......................................     1,666,668            --
                                                              ------------    ----------
          Total assets......................................  $ 19,732,888     6,605,400
                                                              ============    ==========

                         LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable..........................................  $ 11,070,623     2,925,798
  Accrued expenses..........................................       431,862        94,694
  Salaries and wages payable................................            --       176,083
  Deferred revenue..........................................            --     1,582,661
  Term loan.................................................            --       617,039
  Current portion of capital lease obligations..............     4,035,682     1,114,677
                                                              ------------    ----------
          Total current liabilities.........................    15,538,167     6,510,952
Capital lease obligations, net of current portion...........     5,680,002     3,773,443
Stockholders' deficit:
  Common stock; 100,000,000 shares authorized, $0.001 par
     value; 31,165,450 shares issued and outstanding at
     December 31, 2000......................................        31,165            --
  Additional paid-in-capital................................    23,457,290            --
  Accumulated deficit.......................................   (15,625,769)           --
  Deferred compensation.....................................    (9,347,967)           --
  Members' deficit..........................................            --    (3,678,995)
                                                              ------------    ----------
          Total stockholders' deficit.......................    (1,485,281)   (3,678,995)
                                                              ------------    ----------
          Total liabilities and stockholders' deficit.......  $ 19,732,888     6,605,400
                                                              ============    ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        34
<PAGE>   37

                         GLOBALNET, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

<TABLE>
<CAPTION>
                                                           2000           1999          1998
                                                       ------------    ----------    ----------
<S>                                                    <C>             <C>           <C>
Revenue..............................................  $ 78,090,535    24,926,891     4,046,246
Operating expenses:
  Data communications and telecommunications.........    74,330,916    25,298,531     3,370,153
  Network research and development (exclusive of
     $266,667 for the year ended December 31, 2000
     reported below as non-cash stock
     compensation)...................................     3,151,171       129,454            --
  Selling and marketing (exclusive of $46,499 for the
     year ended December 31, 2000 reported below as
     non-cash stock compensation)....................     1,051,814       131,815            --
  General and administrative (exclusive of $2,187,214
     for the year ended December 31, 2000 reported
     below as non-cash stock compensation)...........     4,318,335     1,020,092       787,583
  Bad debt expense...................................       482,007            --            --
  Depreciation and amortization......................     2,902,905       882,639            --
  Non-cash stock compensation........................     2,500,380            --            --
                                                       ------------    ----------    ----------
     Total operating expenses........................    88,737,528    27,462,531     4,157,736
                                                       ------------    ----------    ----------
     Operating loss..................................   (10,646,993)   (2,535,640)     (111,490)
  Other expense......................................            --       (40,865)     (174,780)
  Interest income (expense), net.....................    (1,299,452)     (752,068)       (8,070)
                                                       ------------    ----------    ----------
     Loss before minority interest and income
       taxes.........................................   (11,946,445)   (3,328,573)     (294,340)
  Minority interest..................................            --        50,000            --
  Income taxes.......................................           327            --            --
                                                       ------------    ----------    ----------
     Net loss........................................  $(11,946,772)   (3,278,573)     (294,340)
                                                       ============    ==========    ==========
  Pro forma weighted average number of shares
     outstanding.....................................    25,223,877    20,000,000    20,000,000
                                                       ============    ==========    ==========
  Pro forma basic and diluted loss per share.........  $      (0.47)        (0.16)        (0.01)
                                                       ============    ==========    ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        35
<PAGE>   38

                         GLOBALNET, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
<TABLE>
<CAPTION>
                                                                  GLOBALNET, INC.
                                       ---------------------------------------------------------------------
                                           COMMON STOCK       ADDITIONAL                    TREASURY STOCK
                                       --------------------    PAID-IN-     ACCUMULATED    -----------------
                                         SHARES     AMOUNT      CAPITAL       DEFICIT       SHARES    AMOUNT
                                       ----------   -------   -----------   ------------   --------   ------
<S>                                    <C>          <C>       <C>           <C>            <C>        <C>
Balance at December 31, 1997.........          --   $   --    $        --   $        --          --   $  --
Net Loss.............................          --       --             --            --          --      --
                                       ----------   -------   -----------   ------------   --------   -----
Balance at December 31, 1998.........          --       --             --            --          --      --
Issuance of member's interests by
 subsidiary..........................          --       --             --            --          --      --
Net loss.............................          --       --             --            --          --      --
                                       ----------   -------   -----------   ------------   --------   -----
Balance at December 31, 1999.........          --       --             --            --          --      --
Exchange of members' interests for
 common stock........................          --       --             --            --
Contribution by shareholders.........          --       --             --            --          --      --
Issuance of restricted stock.........          --       --             --            --          --      --
Exchange of common shares in
 connection with merger with Rich
 Earth, Inc. ........................  19,875,000   19,875     16,180,002    (3,678,997)    125,000     125
Capital of Rich Earth, Inc. at time
 of merger...........................  10,997,061   10,997     10,179,183            --          --      --
Issuance of common stock from private
 placement, net......................     168,389      168      1,449,758            --          --      --
Forfeiture of restricted stock by
 employees upon termination..........    (650,000)    (650)    (5,200,000)           --     650,000     650
Issuance of restricted stock from
 treasury............................     775,000      775        581,250            --    (775,000)   (775)
Issuance of options and warrants to
 nonemployees........................          --       --        267,097            --          --      --
Amortization of deferred
 compensation........................          --       --             --            --          --      --
Net loss.............................          --       --             --   (11,946,772)         --      --
                                       ----------   -------   -----------   ------------   --------   -----
Balance at December 31, 2000.........  31,165,450   $31,165   $23,457,290   $(15,625,769)        --   $  --
                                       ==========   =======   ===========   ============   ========   =====

<CAPTION>
                                                       GLOBALNET INTERNATIONAL, INC.
                                       --------------------------------------------------------------
                                        COMMON STOCK      ADDITIONAL                  TREASURY STOCK
                                       ---------------     PAID-IN-     ACCUMULATED   ---------------
                                       SHARES   AMOUNT     CAPITAL        DEFICIT     SHARES   AMOUNT
                                       ------   ------   ------------   -----------   ------   ------
<S>                                    <C>      <C>      <C>            <C>           <C>      <C>
Balance at December 31, 1997.........      --    $--     $         --   $       --       --      $--
Net Loss.............................      --     --               --           --       --      --
                                       ------    ---     ------------   -----------    ----      --
Balance at December 31, 1998.........      --     --               --           --       --      --
Issuance of member's interests by
 subsidiary..........................      --     --               --           --       --      --
Net loss.............................      --     --               --           --       --      --
                                       ------    ---     ------------   -----------    ----      --
Balance at December 31, 1999.........      --     --               --           --       --      --
Exchange of members' interests for
 common stock........................   2,000      2               --   (3,678,997)
Contribution by shareholders.........    (215)    --               --           --      215      --
Issuance of restricted stock.........     203     --       16,200,000           --     (203)     --
Exchange of common shares in
 connection with merger with Rich
 Earth, Inc. ........................  (1,988)    (2)     (16,200,000)   3,678,997      (12)     --
Capital of Rich Earth, Inc. at time
 of merger...........................      --     --               --           --       --      --
Issuance of common stock from private
 placement, net......................      --     --               --           --       --      --
Forfeiture of restricted stock by
 employees upon termination..........      --     --               --           --       --      --
Issuance of restricted stock from
 treasury............................      --     --               --           --       --      --
Issuance of options and warrants to
 nonemployees........................      --     --               --           --       --      --
Amortization of deferred
 compensation........................      --     --               --           --       --      --
Net loss.............................      --     --               --           --       --      --
                                       ------    ---     ------------   -----------    ----      --
Balance at December 31, 2000.........      --    $--     $         --   $       --       --      $--
                                       ======    ===     ============   ===========    ====      ==

<CAPTION>
                                            DTA
                                       COMMUNICATIONS
                                        NETWORK, LLC
                                          MEMBERS'        DEFERRED        TOTAL
                                          DEFICIT       COMPENSATION     DEFICIT
                                       --------------   ------------   ------------
<S>                                    <C>              <C>            <C>
Balance at December 31, 1997.........   $  (256,082)    $        --    $   (256,082)
Net Loss.............................      (294,340)             --        (294,340)
                                        -----------     ------------   ------------
Balance at December 31, 1998.........      (550,422)             --        (550,422)
Issuance of member's interests by
 subsidiary..........................       150,000              --         150,000
Net loss.............................    (3,278,573)             --      (3,278,573)
                                        -----------     ------------   ------------
Balance at December 31, 1999.........    (3,678,995)             --      (3,678,995)
Exchange of members' interests for
 common stock........................     3,678,995              --              --
Contribution by shareholders.........            --              --              --
Issuance of restricted stock.........            --     (16,200,000)             --
Exchange of common shares in
 connection with merger with Rich
 Earth, Inc. ........................            --              --              --
Capital of Rich Earth, Inc. at time
 of merger...........................            --              --      10,190,180
Issuance of common stock from private
 placement, net......................            --              --       1,449,926
Forfeiture of restricted stock by
 employees upon termination..........            --       5,200,000              --
Issuance of restricted stock from
 treasury............................            --        (581,250)             --
Issuance of options and warrants to
 nonemployees........................            --         (58,388)        208,709
Amortization of deferred
 compensation........................            --       2,291,671       2,291,671
Net loss.............................            --              --     (11,946,772)
                                        -----------     ------------   ------------
Balance at December 31, 2000.........   $        --     $(9,347,967)   $ (1,485,281)
                                        ===========     ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        36
<PAGE>   39

                         GLOBALNET, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

<TABLE>
<CAPTION>
                                                                  2000           1999         1998
                                                              ------------    ----------    --------
<S>                                                           <C>             <C>           <C>
Cash flows from operating activities:
  Net loss..................................................  $(11,946,772)   (3,278,573)   (294,340)
  Adjustments to reconcile net loss to net cash provided by
    (used in) operating activities:
    Depreciation and amortization...........................     2,902,905       882,639          --
    Provision for doubtful accounts.........................       482,007
    Non-cash stock compensation.............................     2,500,380            --          --
    Minority interest.......................................            --       (50,000)         --
    Changes in assets and liabilities:
      Restricted cash.......................................       315,147      (473,019)         --
      Accounts receivable...................................    (4,332,845)   (1,199,283)    141,735
      Due from related party................................        41,319       (33,375)      6,660
      Prepaid expenses and other current assets.............      (136,562)     (131,949)     (5,478)
      Accounts payable......................................     8,144,825     2,478,323     329,190
      Salaries and wages payable............................      (176,083)      (66,307)     57,721
      Deferred revenue......................................    (1,582,661)    1,511,412     (96,751)
      Accrued expenses......................................       (67,819)       94,694          --
                                                              ------------    ----------    --------
         Net cash provided by (used in) operating
           activities.......................................    (3,856,159)     (265,438)    138,737
                                                              ------------    ----------    --------
Cash flows from investing activities -- purchase of property
  and equipment.............................................      (675,724)     (240,530)         --
                                                              ------------    ----------    --------
         Net cash used in investing activities..............      (675,724)     (240,530)         --
                                                              ------------    ----------    --------
Cash flows from financing activities:
  Proceeds from term loan...................................            --       734,517          --
  Repayments of principal on term loan......................      (617,039)     (117,478)         --
  Principal payments on capital lease obligations...........    (2,123,153)     (203,715)         --
  Advances from Rich Earth, Inc. prior to merger with Rich
    Earth, Inc..............................................       800,000            --          --
  Cash acquired from merger with Rich Earth, Inc............     7,262,982            --          --
  Proceeds from private placements..........................     1,449,926            --          --
  Contribution from minority interest of subsidiary.........            --       200,000          --
                                                              ------------    ----------    --------
         Net cash provided by financing activities..........     6,772,716       613,324          --
                                                              ------------    ----------    --------
         Net increase in cash...............................     2,240,833       107,356     138,737
Cash at beginning of year...................................       304,626       197,270      58,533
                                                              ------------    ----------    --------
Cash at end of year.........................................  $  2,545,459       304,626     197,270
                                                              ============    ==========    ========
Supplemental disclosure of cash flow information -- cash
  paid for interest.........................................  $  1,434,000       657,374       8,070
                                                              ============    ==========    ========
Supplemental disclosure of noncash investing and financing
  activities:
  Payment for purchase of 25% minority interest and certain
    assets of GlobalNet L.L.C. by Rich Earth, Inc. on behalf
    of the Company..........................................     2,127,198            --          --
                                                              ============    ==========    ========
  Cancellation of notes payable to Rich Earth, Inc. in
    connection with Merger with Rich Earth, Inc.............     2,927,198            --          --
                                                              ============    ==========    ========
  Equipment acquired under capital leases...................     7,355,704     5,091,835          --
                                                              ============    ==========    ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                        37
<PAGE>   40

                         GLOBALNET, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

(1)  NATURE OF ORGANIZATION AND BUSINESS

     GlobalNet, Inc. ("GlobalNet" or the "Company") provides global
telecommunications, including high quality voice, fax, and other value-added
applications over the Internet and other networks.

     GlobalNet was formed on May 30, 2000, when GlobalNet International, Inc.
("GII") merged with a subsidiary of Rich Earth, Inc. ("Rich Earth") pursuant to
an agreement (the "Merger Agreement") whereby 20,000,000 shares of Rich Earth
common stock were exchanged for 100% of the common stock of GII in a transaction
accounted for as a reverse acquisition ("Merger") of Rich Earth by GII using the
purchase method of accounting. Prior to raising approximately $2.5 million to
fund an acquisition by GII in a contemplated transaction as described herein,
Rich Earth was a non-operating public shell corporation with nominal assets. GII
management now controls the combined company after the transaction. After the
closing of the merger, Rich Earth changed its name to GlobalNet, Inc.

     As a result of the reverse merger, the operating entity, GII, will continue
as the operating entity under the GlobalNet, Inc. name, and its historical
financial statements will replace those of Rich Earth.


     The Merger is considered by the Company to be a capital transaction in
substance, rather than a business combination. That is, the Merger is equivalent
to the issuance of stock by the Company for the net monetary assets of Rich
Earth, accompanied by a recapitalization. The accounting is identical to that
resulting from a reverse acquisition, except that no goodwill or other
intangible was recorded.


     GII was formed in March 2000, when the members of DTA Communications
Network, L.L.C. ("DTA") exchanged their members' interests in DTA for common
stock of GII, a newly formed C-corporation ("Reorganization"). DTA was organized
in Illinois on May 22, 1996 as a limited liability company. On April 20, 1999,
DTA and a Texas limited liability company formed an Illinois limited liability
company, later named GlobalNet L.L.C. DTA's interest in GlobalNet L.L.C. was 75%
at December 31, 1999. GlobalNet L.L.C. was formed to provide wholesale carrier
voice and fax, value-added applications, and third-generation application
service provider (ASP) products via an international Internet protocol-based
network.

     On March 6, 2000, DTA agreed to purchase and subsequently did purchase the
remaining 25% minority interest and certain assets from the minority owner of
GlobalNet, L.L.C. for $2,000,000 and $127,198, respectively. The purchase of the
minority interest increased DTA's interest in GlobalNet L.L.C. to 100% and was
accounted for under the purchase method of accounting. The assets acquired have
been recorded at their estimated fair values at the date of acquisition. The
acquired customer base related to the transaction was $1,000,000 and is being
amortized over a period of five years. Goodwill related to the transaction was
$1,000,000 and is being amortized over a period of five years. The effect on the
pro forma results of operations had the acquisition occurred at the beginning of
2000 was not significant.

     The Company is subject to risks and uncertainties common to growing
telecommunications-based companies, including rapid technological changes, low
costs to customers of switching from carrier to carrier, failed alliances, and
pricing pressures in the international long distance market.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

     The 2000 consolidated financial statements include the accounts of
GlobalNet, Inc. and its wholly-owned subsidiary, GlobalNet International, Inc.
and Rich Earth, Inc. from May 30, 2000, the date of acquisition.

     The 1999 consolidated financial statements include the accounts of DTA
Communications Network, L.L.C., and its majority-owned subsidiary, GlobalNet
L.L.C. from its date of formation in 1999, whereas the 1998 consolidated
financial statements consist only of DTA Communications Network, L.L.C.

                                        38
<PAGE>   41
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ISSUANCE OF MEMBERS' INTERESTS BY SUBSIDIARY

     Prior to the Merger Agreement, the Company accounted for issuances of
members' interests by its subsidiary as equity transactions, thereby recording
the amount in excess of the parent's carrying value to members' equity.

USE OF ESTIMATES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of revenue and
expenses during the reporting period. Actual results may differ from those
estimates.

RECLASSIFICATION

     Certain reclassifications have been made to the prior year consolidated
financial statements to conform to the 2000 presentation.

RESTRICTED CASH

     At December 31, 2000, $157,872 was held in an account which the Company's
lessor had primary control of. The lessor deducts monthly payments due on the
lease from this account. Additional disbursements from this account must be
approved by the lessor.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     Financial instruments consist principally of cash, accounts receivable,
accounts payable and capital leases. The estimated fair value of these
instruments approximates their carrying value.

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE

     The allowance for doubtful accounts receivable was $364,000 at December 31,
2000, and $-0- at December 31, 1999 and 1998. Provisions for bad debts were
$482,007 for 2000 and $-0- for 1999 and 1998. Write-offs of uncollectible
accounts were $118,007 for 2000 and $-0- for 1999 and 1998.

ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS

     Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of, requires that long-lived assets and certain identifiable intangibles to be
held and used by any entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. If an indication of a potential impairment exists,
recoverability of the respective assets is determined by comparing the
forecasted undiscounted net cash flows of the operation to which the assets
relate, to the carrying amount, including associated intangible assets, of such
operation. If the operation is determined to be unable to recover the carrying
amount of its assets, then intangible assets are written down first, followed by
the other long-lived assets of the operation, to fair value. Fair value is
determined based on the discounted cash flows or appraised values, depending on
the nature of the assets. In determining the estimated future cash flows, the
Company considers current and projected future levels of income as well as
business trends, prospects and market and economic conditions.

                                        39
<PAGE>   42
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The carrying amount of the Company's long-lived assets at December 31, 2000
and 1999 primarily represent the original amounts invested less the recorded
depreciation and amortization. Management believes the carrying amount of these
investments is not impaired.

REVENUE RECOGNITION

     The Company recognizes revenue from two types of telecommunication
services. The majority of the Company's revenue consists of the sale of
wholesale carrier voice and fax, via an international network. Revenue is
recognized as services are rendered. In order to mitigate risk of loss, several
customers prepay for their services, in which case revenue is deferred and is
recognized as services are rendered.

     The remaining revenue is generated from supplying underlying services,
including value added applications and the use of the Company's network, to
issuers of prepaid phone cards. Those issuers prepay for some or all of the
services provided. Payments received in advance for such services are recorded
as deferred revenue and are recognized as the prepaid phone cards are used.
These cards may expire without being fully used as they have lives of up to
three months after the first use. The unused value is referred to as breakage
and is recorded as revenue at the date of expiration. Subsequent to October
2000, the Company no longer provided prepaid phone service.

     In December 1999, the Securities and Exchange Commission (SEC) released
Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial
Statements. SAB No. 101 summarizes some views of the SEC on applying accounting
principles generally accepted in the United States of America to revenue
recognition in financial statements. The SEC believes that revenue is realized
or realizable and earned when all of the following criteria are met: persuasive
evidence of an arrangement exists, delivery has occurred or services have been
rendered, the seller's price to the buyer is fixed or determinable and
collectibility is reasonable assured. The Company believes that its current
revenue recognition policy complies with the SEC guidelines.

RESEARCH AND DEVELOPMENT EXPENSES

     The Company charges research and development expenses incurred in the
development, expansion, operation and support of the Company's global IP network
to network research and development as incurred.

STOCK-BASED COMPENSATION

     SFAS No. 123, Accounting for Stock-Based Compensation, requires the
measurement of the fair value of stock options or warrants to be included in the
consolidated statements of operations or disclosed in the notes to consolidated
financial statements. The Company has determined that it will account for
stock-based compensation for employees under the intrinsic value-based method of
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees, and elect the disclosure-only alternative under SFAS No. 123. The
Company accounts for stock-based compensation for nonemployees under the fair
value method prescribed by SFAS No. 123.

DERIVATIVES

     In June 1998, the Financial Accounting Standards Board issued Statement No.
133, (SFAS 133 "Accounting for Derivative Instruments and Hedging Activities,"
("SFAS 133") which was later amended by Statement No. 137, "Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the effective date
of FASB Statement No. 133" and by Statement No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities -- an Amendment of FASB
Statement No. 133" (collectively, the "Standard"). The Standard requires
companies to record derivative instruments on the balance sheet as assets or
liabilities measured at fair value. The accounting treatment of gains and losses
resulting from changes

                                        40
<PAGE>   43
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

in the value of derivatives depends on the use of the derivatives and whether
they qualify for hedge accounting. The Standard is required to be adopted for
financial statements issued for the fiscal year ending December 31, 2001. As the
Company does not currently engage in derivatives or hedging transactions, there
will be no impact to the Company's results of operations, financial position or
cash flows upon the adoption of SFAS 133.

INCOME TAXES

     Subsequent to the Reorganization, the Company accounts for income taxes in
accordance with the provisions of Statement of Financial Accounting Standards
No. 109 ("Statement 109"), "Accounting for Income Taxes". Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to the difference
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under Statement
109, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date.

     Prior to the Reorganization, the Company operated in the form of a limited
liability company and accordingly, the Company's income tax liabilities were the
responsibility of its members.

NET LOSS PER SHARE

     Basic earnings per share is based on the weighted average number of shares
outstanding and excludes the dilutive effect of unexercised common stock
equivalents. Diluted earnings per share is based on the weighted average number
of shares outstanding and includes the dilutive effect of unexercised common
stock equivalents to the extent they are not anti-dilutive.

     Shares issuable from securities that could potentially dilute basic
earnings per share in the future that were not included in the computation of
earnings per share because their effect was anti-dilutive were: 2,301,000 stock
options, 1,215,450 warrants, and 2,150,000 shares of unvested restricted common
stock at December 31, 2000.

     The pro forma weighted-average number of shares outstanding for the years
ended December 31, 2000, 1999 and 1998 represent the weighted-average number of
shares of GlobalNet International Inc. as if the exchange of common shares in
the merger with Rich Earth, Inc. was in effect as the beginning of all periods
presented.

COMPREHENSIVE INCOME

     In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS
No. 130, Reporting Comprehensive Income. The Company does not have any
components of comprehensive income (loss) other than its reported net loss.

(3)  INCOME TAXES

     No provision for U.S. federal and state income taxes was recorded prior to
March 2000, as such liability was the responsibility of the members of DTA,
rather than of the Company. As a result of the change from an L.L.C. to a
C-corporation, the Company recorded an initial net deferred income tax asset of
$5,825,052 to reflect the establishment of deferred tax assets and liabilities.
However, due to the lack of certainty of recovery, a full valuation allowance
was recorded against the initial and subsequent net deferred income taxes. The
remaining provisions for income taxes for the year ended December 31, 2000
relate to the period subsequent to March 2000.

                                        41
<PAGE>   44
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     At December 31, 2000, the Company has federal net operating loss
carryforwards approximating $10,020,000. Such losses are available to offset
future taxable income and expire in 2020. In addition, if certain substantial
changes in the Company's ownership are deemed to have occurred, there would be
an annual limitation on the amount of carryforwards which could be utilized.

     The provision for income taxes consist of the following during the year
ended December 31, 2000:

<TABLE>
<CAPTION>
                                                              AMOUNT
                                                              ------
<S>                                                           <C>
Current taxes:
  Federal...................................................   $ --
  State.....................................................    327
                                                               ----
     Total..................................................    327
Deferred taxes:
  Federal...................................................     --
  State.....................................................     --
                                                               ----
     Total..................................................     --
                                                               ----
Provision for income taxes..................................   $327
                                                               ====
</TABLE>

     The total tax provision for the year ended December 31, 2000 differs from
the amount computed by applying the federal income tax rate of 35% to the loss
before income taxes for the following reasons:


<TABLE>
<CAPTION>

<S>                                                           <C>
Expected income tax benefit at federal income tax rate......  $(4,181,256)
Increase (decrease) in taxes resulting from State income tax
  benefit...................................................     (699,259)
  Meals and entertainment...................................        7,508
  Deferred income and expenses recognized on LLC tax
     return.................................................     (802,767)
  Amortization of goodwill..................................      105,000
  Change in valuation allowance.............................    5,571,101
                                                              -----------
                                                              $       327
                                                              ===========
</TABLE>


     Deferred tax assets (liabilities) are comprised of the following at
December 31, 2000:

<TABLE>
<S>                                                           <C>
Deferred tax assets
  Non-cash stock compensation expense.......................  $ 1,045,975
  Professional fees related to merger.......................      627,490
  Continuing operations NOL carryforward....................    4,193,248
                                                              -----------
          Total deferred tax assets.........................    5,866,713
Valuation allowance.........................................   (5,825,052)
                                                              -----------
Deferred tax liabilities:
  Depreciation..............................................  $   (39,927)
  Federal impact of state NOL carryforward..................       (1,734)
                                                              -----------
          Total deferred tax liabilities....................      (41,661)
                                                              -----------
          Net deferred income taxes.........................  $        --
                                                              ===========
</TABLE>

     The net change in the total valuation allowance for the year ended December
31, 2000 was an increase of $5,825,052. In assessing the realizability of
deferred tax assets, the Company considers whether it is more likely than not
that some portion or all of the deferred tax assets will be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the period in which these

                                        42
<PAGE>   45
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

temporary differences become deductible. This assessment was performed
considering the scheduled reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies. Due to the Company's operating
losses, there is uncertainty surrounding whether the Company will ultimately
realize its deferred tax assets. Accordingly, these assets have been fully
reserved.

(4)  PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                             -------------------------
                                                                2000           1999
                                                             -----------    ----------
<S>                                                          <C>            <C>
Leasehold improvements.....................................  $    40,362    $       --
Network equipment under capital leases.....................   12,623,269     5,267,565
Furniture and equipment....................................      827,360        64,800
                                                             -----------    ----------
                                                              13,490,991     5,332,365
Less accumulated depreciation and amortization.............    3,452,212       882,639
                                                             -----------    ----------
  Property and equipment, net..............................  $10,038,779    $4,449,726
                                                             ===========    ==========
</TABLE>

     Property and equipment are stated at cost. Equipment held under capital
leases is stated at the lower of fair value of the asset or the net present
value of the minimum lease payments at the inception of the lease. Depreciation
and amortization expense is calculated using the straight-line method over the
estimated useful lives of the assets which range from three to five years.

     Depreciation and amortization for the years ended December 31, 2000, 1999
and 1998 was $2,569,573, $882,639, and $-0-, respectively. Accumulated
depreciation of assets recorded under capital leases was $3,338,965 and $877,926
at December 31, 2000 and 1999, respectively.

(5)  INTANGIBLE ASSETS

     On March 6, 2000, DTA agreed to purchase and subsequently did purchase the
remaining 25% minority interest and certain assets from the minority owner of
GlobalNet L.L.C. for $2,000,000 and $127,198, respectively. As a result, the
Company recorded intangible assets of $2,000,000, which are being amortized over
useful lives of five years. The purchase price has been allocated $1,000,000 to
acquired customer base and $1,000,000 to goodwill. The Company has recorded
$333,332 of intangible asset amortization for the year ended December 31, 2000.

(6)  LEASES AND COMMITMENTS

     The Company leases various office facilities, cars and equipment under
operating leases with remaining terms of up to 4.5 years. Rent expense under
operating leases was $315,658, $27,950, and $9,754 for the years ended December
31, 2000, 1999, and 1998, respectively.

     In April 2000, the Company entered into a $10,000,000 credit facility with
General Electric Capital Corporation (GE Capital) to finance the lease of
telecommunications network and data transmission equipment. The credit facility
had a term of six months at which time any unused portions of the credit
facility expired. During 2000, the Company utilized $6,950,717 under the credit
facility Each lease bears interest at an annual rate of 13.2% and has a 36-month
lease term. The obligations under capital leases are secured by the underlying
leased assets.

     In November 1999, GlobalNet entered into capital leases with Prinvest
Financial Corp. (Prinvest) for various network equipment with respect to which
GlobalNet recorded a capital lease obligation of approximately $5,267,565. The
leases have a 42-month term, with annual interest at a rate of 22%. The leased

                                        43
<PAGE>   46
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

equipment secures all leases. The lease agreements contains a purchase option of
$1 at the end of the lease. The lease is secured by a first priority interest in
substantially all the Company's assets, including, but not limited to accounts
receivable, general intangibles, and fixed assets. The lease is also secured by
a second priority interest in the Company's assets under capital leases with
other lessors.

     Future minimum lease payments under capital leases and noncancelable
operating leases at December 31, 2000 are as follows:

<TABLE>
<CAPTION>
                                                              OPERATING      CAPITAL
                                                              ---------    -----------
<S>                                                           <C>          <C>
2001........................................................  $359,972     $ 4,877,197
2002........................................................   194,200       4,943,601
2003........................................................   191,887       1,844,339
2004........................................................    81,411              --
2005 and thereafter.........................................    19,620              --
                                                              --------     -----------
     Total future minimum lease payments....................  $847,090      11,665,137
                                                              --------     -----------
Less amount representing interest......................................      1,949,453
                                                                           -----------
     Net present value of minimum lease payments.......................      9,715,684
Less current portion...................................................      4,035,682
                                                                           -----------
Long-term portion, net of current portion..............................    $ 5,680,002
                                                                           ===========
</TABLE>

     During December 2000, the Company entered into a capital lease agreement
for network equipment totaling $337,194. This equipment was accepted by the
Company during January 2001, which serves as the commencement date of the
capital lease. The lease term is 36 months with a purchase option of $1 at the
end of the term.

     Additionally, the Company renewed its operating lease for office space in
Georgia for an additional six month period beginning March 1, 2001.

(7)  RELATED PARTIES

     On June 28, 2000 (Purchase Date) and in connection with the Merger
described in Note 1, an officer of the Company sold 700,000 shares of the
Company's common stock to a director of the Company for $1 per share in
accordance with a stock purchase agreement dated May 22, 2000, as amended on
June 28, 2000.

     During 2000, the Company paid $271,997 to a law firm for legal services
provided by a partner who is a director of the Company.

     During the years ended December 31, 1999, and 1998, the majority owner
borrowed funds from the Company totaling $39,606, and $16,627, respectively. The
majority owner repaid the funds in full during 2000. At December 31, 2000 and
1999, amounts due from the majority owner were $-0- and $41,319, respectively.

(8)  TERM LOAN

     On October 1, 1999, GlobalNet, Inc. entered into a term loan for $734,517
at an annual interest rate of 19.75%, payable in periodic installments. In July
2000, the term loan matured and was paid in full by the Company.

                                        44
<PAGE>   47
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(9)  STOCKHOLDERS' EQUITY

  Common Stock

     On May 30, 2000, GlobalNet Inc. was formed when GlobalNet International,
Inc. (GII) merged with a subsidiary of Rich Earth, Inc. (Rich Earth) in a
transaction accounted for as a reverse acquisition of Rich Earth by GII using
the purchase method of accounting pursuant to an agreement (the Merger
Agreement) whereby 20,000,000 shares of Rich Earth common stock were exchanged
for 100% of the common stock of GlobalNet International Inc. At the time of the
Merger, Rich Earth had 9,960,000 common shares issued and outstanding.


     The Merger is considered by the Company to be a capital transaction in
substance, rather than a business combination. That is, the Merger is equivalent
to the issuance of stock by the Company for the net monetary assets of Rich
Earth, accompanied by a recapitalization. The accounting is identical to that
resulting from a reverse acquisition, except that no goodwill or other
intangible was recorded.


     During the period from March 2000 through July 2000, 1,205,450 shares of
common stock were issued in connection with two private placement transactions.
The first private placement transaction sold 600,000 units at $10 a unit and
resulted in the issuance of 600,000 common shares and grant of warrants to
purchase an additional 300,000 shares of common stock at $15 per share. The
second private placement transaction sold 605,450 units at $10 a unit and
resulted in the issuance of 605,450 shares of common stock and the grant of
warrants to purchase an additional 605,450 shares of common stock at $15 per
share.

STOCK-BASED COMPENSATION

  Warrants

     During 2000, the Company's board of directors approved and the Company
issued warrants to purchase 905,450 shares of common stock at $15 per share to
investors from the private placement transactions. In connection with the
private placements, the Company granted additional warrants to purchase 310,000
shares of common stock at $15 per share to underwriters for services performed,
resulting in a total of 1,215,450 warrants granted to "Original Warrant
Holders". The warrants had a six-month expiration period and expired unexercised
on November 30, 2000. The warrants were issued as part of the private placement
and therefore no expense has been recorded related to these warrants.

     On December 14, 2000, the Company's board of directors authorized the grant
of one warrant to purchase one share of common stock at $5 per share for each
warrant the Original Warrant Holders were originally granted, for a total of
1,215,450 warrants. The warrants were fully exercisable and nonforfeitable at
the date of grant and expire on November 30, 2001. The Company estimated the
fair value of each warrant using the Black-Scholes option-pricing model using
the following assumptions: term of one year, expected volatility of 75%,
expected dividend yield of 0%, and a risk free interest rate of 5.73%. The fair
value of $48,981 was recorded as expense on the date of grant. All warrants were
outstanding and exercisable at December 31, 2000.

  Restricted Common Stock

     On May 15, 2000, the Company's board of directors authorized the issuance
of 2,150,000 shares of restricted common stock to employees, directors, and
consultants. Shares aggregating 2,025,000 were granted on May 15, 2000 at an
estimated fair value of $16,200,000, which will be amortized over the vesting
period of three years.

     During the fourth quarter of 2000, three employees that were granted a
total of 650,000 shares of restricted common stock with an estimated fair value
of $5,200,000 were terminated resulting in the forfeiture of the shares. All
amounts recorded as stock-based compensation during 2000 related to these
650,000 shares were reversed in the period of forfeiture.

                                        45
<PAGE>   48
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     On December 28 2000, the Company issued 775,000 shares of restricted common
stock to employees at an estimated fair value of $581,250, which will be
amortized over the vesting period. The shares vest at a rate of 44% on September
15, 2001, 22% on May 15, 2002 and 34% on May 15, 2003.

     The Company recorded $2,291,671 of stock based compensation during 2000
related to issuances of restricted common stock. At December 31, 2000, there
were 2,150,000 restricted common shares outstanding and none were vested.

  Stock Incentive Plan

     On May 3, 2000, the Company's board of directors adopted the "2000 Stock
Plan," (the "Plan") under which the maximum aggregate number of shares that may
be subject to option and sold under the plan is 3,000,000 shares. Under the
terms of the Plan, options vest based on the vesting period as determined by the
plan administrator.

     The Company granted 1,540,000 and 226,000 options to employees on May 15,
2000, and December 28, 2000, respectively. A total of 360,000 options were
canceled during 2000. All employee options have a term of 5 years from the date
of vesting and vest 33% on May 15, 2001, 33% on May 15, 2002 and the remainder
on May 15, 2003.

     On May 15, 2000, the Company granted 50,000 options to members of its board
of directors. These options have a term of 5 years from the date of vesting and
vest 33% on May 15, 2001, 33% on May 15, 2002 and the remainder on May 15, 2003.
In addition, each current non-employee Director was granted 100,000 options on
September 14, 2000, and all future non-employee Directors will receive 50,000
options upon their initial elections, while all current non-employees will
receive an annual grant of 25,000 options on the date of the annual
stockholders' meeting. These options will vest on the second anniversary of the
grant date and expire on the 10th anniversary of the grant date.

     During 2000, the Company granted 145,000 options to consultants for
services provided. Options for 35,000 shares of common stock were immediately
vested, while the remaining 110,000 options vest over a period of six months to
three years and have terms from 5 to 10 years. The Company recorded $159,728 of
non-cash stock compensation related to these options during 2000 and $58,388 was
recorded as deferred compensation at December 31, 2000.

     Stock option activity for the year ended December 31, 2000, is as follows:

<TABLE>
<CAPTION>
                                                                  WEIGHTED      WEIGHTED
                                                                  AVERAGE     AVERAGE FAIR
                                                     NUMBER OF    EXERCISE      VALUE ON
                                                      SHARES       PRICE       GRANT DATE
                                                     ---------    --------    ------------
<S>                                                  <C>          <C>         <C>
Outstanding, December 31, 1999.....................         --        --
Granted............................................  2,661,000     $9.43         $ 5.04
Forfeited..........................................   (360,000)     7.80
                                                     ---------     -----
Outstanding, December 31, 2000.....................  2,301,000     $9.68
                                                     =========     =====
</TABLE>

                                        46
<PAGE>   49
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes information relating to currently
outstanding and exercisable stock options as of December 31, 2000:

<TABLE>
<CAPTION>
                                                                     WEIGHTED
                                                                      AVERAGE      WEIGHTED
                                                                     REMAINING     AVERAGE
                                                       OPTIONS      CONTRACTUAL    EXERCISE
RANGE OF EXERCISE PRICES                             OUTSTANDING       LIFE         PRICE
------------------------                             -----------    -----------    --------
<S>                                                  <C>            <C>            <C>
$0.75 -- 0.77                                           266,000        6.23         $ 0.75
$8.00                                                 1,285,000        6.25         $ 8.00
$12.00 -- 16.00                                         750,000        9.71         $15.73
                                                      ---------        ----         ------
$0.75 -- 16.00                                        2,301,000        7.38         $ 9.68
                                                      =========        ====         ======
</TABLE>

     There were no options exercisable at December 31, 2000

     At December 31, 2000, options to purchase 699,000 common shares were
available for future grants under the Plan.

     SFAS No. 123, Accounting for Stock-Based Compensation, requires the
measurement of the fair value of stock options or warrants to be included in the
consolidated statements of operations or disclosed in the notes to the
consolidated financial statements. The Company has determined that it will
continue to account for stock-based compensation for employees under the APB
Opinion No. 25 and elect the disclosure-only alternative under SFAS No. 123 for
options granted in 2000, using the Black-Scholes option-pricing model to
estimate the fair value of the option grants.

     The following weighted average assumptions were used during 2000:

<TABLE>
<S>                                                           <C>
Risk-free interest rate.....................................        6.40%
Expected dividend yield.....................................           0%
Expected lives..............................................  3.60 years
Volatility..................................................          66%
</TABLE>

     Had compensation expense from the Company's Plan been determined consistent
with SFAS No. 123, net loss and net loss per share would have been approximately
as follows:

<TABLE>
<S>                                                           <C>
Net loss applicable to common stockholders
  As reported...............................................  $11,946,772
  Pro forma.................................................   13,906,445
                                                              ===========
Basic and diluted net loss per share
  As reported...............................................  $     (0.47)
  Pro forma.................................................        (0.55)
                                                              ===========
</TABLE>

STOCK SPLIT

     All share information has been adjusted to reflect a 10,000 to 1 exchange
as a result of the Merger.

(10)  AGREEMENT WITH OPERADORA PROTEL, S.A. DE C.V.

     On August 1, 1999, the Company entered into a five-year agreement
(Agreement) with Operadora Protel, S.A. DE C.V., a Mexico corporation (Protel),
whereby Protel provides the platform for prepaid debit card calls and the use of
its network for traffic originating and terminating between Mexico and the
United States.

                                        47
<PAGE>   50
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In addition, the Agreement provides that Protel and GlobalNet L.L.C. agree
to share equally in the gross profits generated from services provided under the
agreement. Accordingly, the Company adjusts its cost of revenue to reflect each
month, amounts due to or from Protel under the Agreement.

     During October 2000, the two companies agreed to terminate the Agreement.
Subsequent to October 2000, the Company did not generate revenue or incur
expenses related to this Agreement.

     The Company continues to conduct business with Protel to provide wholesale
carrier voice and fax telecommunication services in Mexico.

(11)  CREDIT AND BUSINESS CONCENTRATIONS

     SFAS No. 105, Disclosure of Information About Financial Instruments With
Off-Balance Sheet Risk, requires disclosure of any significant off-balance-sheet
and credit risk concentrations. The Company has no significant off-balance-sheet
concentrations such as foreign exchange contracts, option contracts or other
foreign hedging arrangements. The Company maintains the majority of its cash in
one financial institution.

     Although the Company has been able to significantly expand and diversify
its customer base during 2000, a significant portion of the Company's revenues
are still concentrated among a few large customers. In 2000, the largest
customer represented 23% of total revenue while the next three largest customers
represented 55% of total revenue in 2000. The three largest customers
represented 96% of total revenue in 1999 and 1998. Accounts receivable from
these customers were approximately $2,293,429 and $666,886 at December 31, 2000
and 1999, respectively.

     The Company currently uses one primary wholesale carrier voice and fax
telecommunication services provider. Accounts payable to this supplier was
$7,052,970 at December 31, 2000, net of the Company's receivable from the
supplier of $517,309. An unfavorable change in this supplier's payment terms or
a change in primary supplier could have an adverse effect on the Company's
business and liquidity.

(12)  GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION

     The Company has adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which establishes standards for reporting
information regarding operating segments in annual financial statements and
requires select information for those segments to be presented in interim
financial reports issued to stockholders. SFAS No. 131 also establishes
standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about
which separate discrete financial information is available for evaluation by the
chief operating decision maker, or decision-making group, in deciding how to
allocate resources and assess performance. The Company's chief decision-maker,
as defined under SFAS No. 131 is the Chief Executive Officer. To date, the
Company has viewed its operations and manages its business as one operating
segment- telecommunication services. The Company eliminated its prepaid phone
card service during October 2000. The Company recorded revenues of approximately
$16,201,000 during the year ended December 31, 2000 from the prepaid card
service.

                                        48
<PAGE>   51
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

          Data relating to the Company's operations by geographic area is set
     forth below:

<TABLE>
<CAPTION>
                                   UNITED STATES      MEXICO        OTHER         TOTAL
                                   -------------    ----------    ----------    ----------
<S>                                <C>              <C>           <C>           <C>
2000
  Revenues.......................   $        --     37,312,408    40,778,127    78,090,535
  Identifiable assets............    10,038,779             --            --    10,038,779
1999
  Revenues.......................            --     12,565,945    12,360,946    24,926,891
  Identifiable assets............     4,449,726             --            --     4,449,726
1998
  Revenues.......................            --      4,046,246            --     4,046,246
  Identifiable assets............            --             --            --            --
</TABLE>

     The Company's revenues are primarily generated by providing
telecommunication services to Mexico and other Latin America countries on behalf
of the Company's customers. However, all of the tangible assets of the Company
are located in the United States.

(13)  LITIGATION

     The Company is from time to time subject to routine litigation incidental
to its business. The Company believes that the results of the following asserted
and potential litigation and other potential legal proceedings will not have a
material adverse effect on its business, financial condition, results of
operations, or liquidity of the Company.


     Rubin v. Gushlak -- On December 26, 2000, an action entitled Rubin v.
Gushlak, et al, Case No. 00-13406, was filed in the United States District Court
for the Central District of California, which was subsequently amended on April
2, 2001. This action is against Myron Gushlak, a director of GlobalNet until his
resignation on April 4, 2001, and thirteen other named defendants, including
GlobalNet. The action arises out of the purchase by the plaintiff of 1,000,000
shares of the Company's common stock from Mr. Gushlak, allegedly acting as agent
for another shareholder, at a price of $5 per share in a private transaction
which Mr. Gushlak allegedly facilitated. The primary relief sought in the action
is the rescission of the contract of purchase from Mr. Gushlak, allegedly acting
as agent for another shareholder; and damages in the alternative. The complaint
alleges that defendant Gushlak allegedly induced the plaintiff to purchase
shares of GlobalNet's common stock from Mr. Gushlak, allegedly acting as agent
for another shareholder and, in doing so, allegedly violated various provisions
of the federal securities laws. The complaint also alleges that GlobalNet failed
to cooperate with the plaintiff in its efforts to confirm Gushlak's beneficial
ownership of shares. The action is only in its formative stages and discovery or
substantive proceedings have not as yet been initiated.



     The Selway Group, Inc. -- On November 20, 2000, an action was initiated in
the United States District Court for the Northern District of Illinois against
GlobalNet by the Selway Group Inc. This action alleges that the plaintiff is
owed 3% of the gross revenues derived by GlobalNet from a telecommunications
intercommunication agreement entered into between GlobalNet and Protel, S.A. de
C.V. The action seeks unspecified monetary damages in excess of the monetary
federal jurisdiction limit. GlobalNet has moved to dismiss the complaint for
lack of jurisdiction and, at the present time, the motion remains before the
court. GlobalNet believes that it has good and meritorious defenses to this
action which it intends to assert if the court determines that jurisdiction
exists. The action is in its formative stages and no discovery or other
substantive proceedings in the action have been undertaken.


     PrinVest Financial Corp. -- As of November 8, 1999, GlobalNet entered into
capital leases with Prinvest Financial Corp. (PrinVest) for various network
equipment with respect to which GlobalNet recorded a capital

                                        49
<PAGE>   52
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

lease obligation of approximately $5,268,000. A dispute currently exists between
GlobalNet and PrinVest with respect to compliance by GlobalNet under a financing
and security agreement dated as of November 8, 1999 and a lease agreement dated
as of that date. As of December 31, 2000, the amount outstanding under the
capital lease facility with PrinVest Financial Corp. amounted to approximately
$3,124,000. In an attempt to resolve the dispute, GlobalNet and PrinVest entered
into a forbearance agreement on October 27, 2000 whereby PrinVest would forebear
from declaring acceleration of the indebtedness of GlobalNet under these leases.
This forbearance agreement expired on January 26, 2001. As of April 9, 2001, no
formal proceedings have been initiated.

(14)  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

     The following tables set forth an unaudited summary of quarterly financial
data for the years ended December 31, 2000 and 1999. This quarterly information
has been prepared on the same basis as the annual consolidated financial
statements and, in management's opinion, reflects all adjustments necessary for
a fair presentation of the information for the periods presented. The operating
results for any quarter are not necessarily indicative of results for a full
fiscal year.

<TABLE>
<CAPTION>
                                           FIRST         SECOND          THIRD         FOURTH
2000                                      QUARTER        QUARTER        QUARTER        QUARTER
----                                    -----------    -----------    -----------    -----------
<S>                                     <C>            <C>            <C>            <C>
Total revenues........................  $14,486,390    $16,283,132    $23,635,285    $23,685,728
Operating expenses....................   14,929,518     19,926,349     26,767,990     27,113,671
Operating loss........................     (443,128)    (3,643,217)    (3,132,705)    (3,427,943)
Net loss..............................     (725,575)    (3,899,091)    (3,492,707)    (3,829,399)
Pro forma basic and diluted loss per
  share...............................        (0.04)         (0.17)         (0.12)         (0.13)
</TABLE>

<TABLE>
<CAPTION>
                                           FIRST         SECOND          THIRD         FOURTH
1999                                      QUARTER        QUARTER        QUARTER        QUARTER
----                                    -----------    -----------    -----------    -----------
<S>                                     <C>            <C>            <C>            <C>
Total revenues........................  $ 1,639,078    $ 3,289,554    $ 5,517,418    $14,480,841
Operating expenses....................    1,637,937      3,248,054      6,233,789     16,342,751
Operating income (loss)...............        1,141         41,500       (716,371)    (1,861,910)
Net income (loss).....................        6,141        (58,220)    (1,025,658)    (2,200,836)
Pro forma basic and diluted loss per
  share...............................         0.00          (0.00)         (0.05)         (0.11)
</TABLE>

(15)  MANAGEMENT'S PLANS AND INTENTIONS FOR CONTINUING OPERATIONS

     The Company has negative working capital at December 31,2000 and has
experienced negative operating cash flows as well as continuing net losses since
its inception in 1996. This raises substantial doubt about the Company's ability
to continue as a going concern.

     Management is exploring different alternatives to address the Company's
short-term and long-term financing needs. Such alternatives include issuing
stock in private placements, securing additional vendor financing and securing a
working capital credit facility. As discussed in Note 16, the Company recently
closed two private placements generating net proceeds of approximately
$2,811,000. Additionally, the Company has a commitment from an existing
shareholder to purchase an additional $3,750,000 worth of common stock subject
to certain trading volume and stock price conditions. There can be no
assurances, however, these funds will be sufficient, or that the Company will be
successful in completing additional private placements or in securing additional
financing.

                                        50
<PAGE>   53
                         GLOBALNET, INC. AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Management continues to believe that the Company is well suited to take
advantage of the current market opportunities. The Company will continue to
aggressively pursue business in higher-margin geographic regions, increase
margins and monitor costs in order to accelerate its path to profitability.


(16)  SUBSEQUENT EVENTS



     On March 21, 2001, the Company completed a private placement of 700,000
shares of common stock at $1 per share. The Company received net proceeds at the
closing in the amount of $615,000, after deducting offering costs of $85,000. In
addition, the Company issued warrants to purchase 75,000 shares of common stock
at $1.20 to various entities assisting in the private placement. The Company
filed a registration statement on Form S-3 to register the shares sold in the
placement and the warrants granted to the placement agents on April 2, 2001.



     On April 9, 2001 (Closing Date), the Company entered into a securities
purchase agreement (Agreement) whereby the Company issued a $2,000,000
convertible note (Note) and the purchaser agreed to purchase from time to time
through April 9, 2002, up to $4,000,000 of the Company's common stock. The
number of shares and the price is to be determined based upon the Company's
average current trading volume and stock price as defined in the Agreement. In
addition, the purchaser has agreed not to acquire, through conversion of the
Note, exercise of warrants, or purchase of equity, more than 9.9% of the
Company's common stock as of any respective conversion, exercise or purchase
date. On the Closing Date, the purchaser made an initial purchase of 365,428
shares of the Company's common stock for an aggregate of $250,000. The Company
received net proceeds of $2,140,976, after deducting related expenses. The
Company also paid additional offering costs of approximately $230,000 and issued
warrants to two firms in connection with the Agreement to purchase an aggregate
of 333,333 shares of the Company's common stock at $0.89 per share.



     The Note has a maturity date of April 9, 2004 and does not bear interest
unless the Company is in default in delivering conversion shares to the
purchaser, or fails to repay the Note by the maturity date, in which case the
Note bears interest at a rate of 8% per annum calculated from April 9, 2001. The
Company also has the right to redeem the Note at redemption prices ranging from
112.5% to 140% of the principal amount of the Note, depending upon the time the
Note is redeemed.



     In addition, the Company issued an incentive warrant to the purchaser
representing the right to purchase 877,026 shares of the Company's common stock
for $1.0221 per share. On the Closing Date, the Company also entered into a
registration rights agreement with the purchaser whereby the Company is required
to file a registration statement on behalf of the purchaser with respect to the
shares purchased by it, the shares that may result from the conversion of the
note, and the warrant shares.



     The Company also issued a protective warrant to the purchaser which only
becomes exercisable on the effective date of the registration statement
(Registration Statement) related to the Agreement. Under the terms of the
protective warrant, if the price of the Company's common stock as computed on
the effective date of the Registration Statement is lower than the purchase
price of the common stock on the Closing Date, the protective warrant becomes
exercisable for a certain number of shares as defined in the Agreement. As of
April 9, 2001, based upon the closing stock price of the Company on that date,
the protective warrant was not exercisable for any shares of common stock of the
Company.



     As a result of the aforementioned transactions, the Company will record
approximately $680,000 of debt discount related to the convertible note's
beneficial conversion feature, approximately $285,000 of debt discount related
to the incentive warrant issued, approximately $65,000 of debt discount related
to the investor fees for the convertible note, and approximately $335,000 of
debt issuance costs. Each of these items will be amortized over the term of the
convertible note. In addition, the Company will accrete interest expense up to
the amount of the redemption prices until such time as the convertible note is
converted or redeemed.


                                        51
<PAGE>   54

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

     On May 30, 2000, GlobalNet selected KPMG LLP to serve as its independent
public accountants for fiscal 2000 and, accordingly, terminated Anderson,
Anderson & Strong (Anderson), Rich Earth, Inc.'s independent public accountants.
The decision to engage KPMG and terminate Anderson was approved by the Audit
Committee and the Board of Directors of GlobalNet.

     Anderson's reports on Rich Earth, Inc.'s financial statements for the 1999
fiscal year did not contain an adverse opinion or disclaimer opinion, nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the 1999 fiscal year and through May 30, 2000, there was no
disagreement with Anderson regarding any matter of accounting principles or
practices, financial statement disclosure or audit scope or procedure, which
disagreement, if not resolved to the satisfaction of Anderson, would have caused
Anderson to make reference thereto in their reports.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     GlobalNet was formed on May 30, 2000 as a result of a "reverse merger"
transaction, whereby GlobalNet International, Inc. merged with and into a
subsidiary of Rich Earth, Inc. pursuant to an agreement and plan of merger,
whereby 20,000,000 shares of Rich Earth common stock were issued in exchange for
100% of the common stock of GlobalNet International in a transaction accounted
for as a reverse acquisition of Rich Earth by GlobalNet International. Prior to
the reverse merger, Rich Earth was a non-operating public shell corporation with
nominal assets. Following the reverse merger, the management of GlobalNet
International controlled the merged company and the principal shareholders of
GlobalNet International became principal shareholders of the merged company.
Following the closing of the reverse merger, Rich Earth changed its name to
GlobalNet, Inc. As a result of the reverse merger transaction, GlobalNet
International continued as an operating entity and as a wholly-owned subsidiary
of GlobalNet, and the historical financial statements of GlobalNet replaced
those of Rich Earth. Each of the Directors and Executive Officers listed below
became Directors and Executive Officers of GlobalNet as a result of the "reverse
merger" transaction.

DIRECTORS

     Listed below are the Directors of the Company whose one-year terms expire
at the 2001 annual meeting of shareholders.


<TABLE>
<CAPTION>
NAME                                                   AGE                 POSITION
----                                                   ---                 --------
<S>                                                    <C>   <C>
Robert J. Donahue....................................  61    Chairman and Chief Executive Officer
Daniel M. Wickersham.................................  55    President
Pere Valles..........................................  30    Chief Financial Officer
Colum P. Donahue.....................................  27    Chief Operating Officer and Secretary
Carmine F. Adimando..................................  56    Director
Jonathan S Greenhill.................................  47    Director
Richard E. Wilson....................................  58    Director
Paul Fritz...........................................  59    Director
Philip R. Zimmermann.................................  47    Director
Myron Gushlak(1).....................................  31    Director
Robert H. Kohn(2)....................................  43    Director
</TABLE>


---------------
(1) On April 4, 2001, Mr. Gushlak tendered his resignation from the Board of
    Directors. Mr. Gushlak served as a Director of the Company during the period
    covered by this Report. At this time, the Company has no immediate plans to
    fill Mr. Gushlak's vacant Board seat.


(2)On June 11, 2001, Mr. Kohn tendered his resignation from the Board of
   Directors. Mr. Kohn served as a Director of the Company during the period
   covered by this Report. At this time, the Company has no immediate plans to
   fill Mr. Kohn's vacant Board seat.


     All Officers are also Directors and serve at the discretion of the Board of
Directors. None of the Officers or Directors are related to each other, except
for Colum P. Donahue who is the son of Robert J. Donahue.

                                        52
<PAGE>   55

     Robert J. Donahue.  Mr. Donahue founded GlobalNet in 1996, and has been
serving as Chairman and Chief Executive Officer since that time. His career
began in 1961 in the defense unit of GTE Automatic Electric, where he was
introduced to various aspects of telecommunications. In 1977, Mr. Donahue became
Vice President of United Telephone. That same year, he founded Donahue Telecom
Associates, Inc. and his experience in the international telecommunications
arena began. That enterprise provided customized telecom consulting services to
major multinational corporations. In 1986, Mr. Donahue founded Standard Telecom,
Inc., which served as a major rebiller for telecommunications giants including
Sprint and AT&T, and was one of the original fifteen charter members of the TRA.
In 1995, Mr. Donahue founded DTA Communications Networks, LLC, now merged with
GlobalNet, which provided international transport and billing services.

     Mr. Donahue is presently involved in a lawsuit involving DTA Communications
LLC (which was owned by Mr. Donahue and which filed for Chapter 7 bankruptcy in
1997) in which Mr. Donahue is suing a former customer of DTA Communications LLC
for $500,000. DTA Communications LLC does not, and never has had any
relationship with GlobalNet.


     Daniel M. Wickersham.  Mr. Wickersham joined the Company in January 2000 as
President with more than 30 years of telecommunications industry experience. He
brings international and domestic hands-on expertise in telecommunication and
information technology, ranging from engineering, operating and business
management to sales/marketing. From March 1998 through January 1999, Mr.
Wickersham was President and COO of WorldPort Communications, Inc. From February
1996 through March 1998, Mr. Wickersham was a Director at Equant
Telecommunication network experience includes Tenneco, U.S. Army, several Bell
Operating Companies and a number of local cable organizations. He was also the
owner of a consulting company called Global Telecom Ventures, Inc. from January
1999 through March 2000. In parallel with his civilian accomplishments, Mr.
Wickersham recently retired form the U.S. Army Active Reserve as a Lieutenant
Colonel with over 30 years of continuous combined Active and Active Reserve
service. His career was mostly comprised of service as a signal Corp Officer
with a specialty in Telecommunications and Information Management.



     Pere Valles.  Mr. Valles joined the Company as Chief Financial Officer in
August 2000. Prior to that, Mr. Valles was a Senior Manager in KPMG LLP's
Transaction Services Group in Miami, Florida from May 1997 through August 2000.
At KPMG, Mr. Valles provided acquisition advisory and financial due diligence
services to corporations and private equity groups doing international
transactions in the U.S., Latin America and Europe. His primary focus was on the
telecommunications industry in Latin America.



     Colum P. Donahue.  Mr. Donahue began his career in telecommunications with
DTA Communications Network, LLC, now merged with GlobalNet, in 1997. Starting in
technical support, Mr. Donahue gained hands-on experience in every aspect of
telecom business. He was responsible for the start-up activities and service
coordination of new and existing international networks. Mr. Donahue was also
responsible for establishing new customers, arranging for network
interconnection and negotiating international carrier rates. In his position at
GlobalNet as Chief Operating Officer, Mr. Donahue supervises and directs all
network support activities in the U.S. and abroad, including the design and
implementation of the GlobalNet Networks Operations Center.



     Carmine F. Adimando.  Mr. Adimando was elected a Director in May 2000. Mr.
Adimando is Chairman and President of CARMCO Investments, LLC. Mr. Adimando is
also Chairman of Cordillers Asset Management, a money management firm in Denver,
Colorado. Mr. Adimando retired from Pitney Bowes in 1996 where he had been Vice
President, Treasurer and Chief Financial Officer. Prior to joining Pitney Bowes,
Mr. Adimando held positions with American Airlines, Burndy Corporation,
Deloitte, Haskins & Sells and Morgan Guaranty Trust. He is a member of the board
of Directors of Sensory Science, Inc., CNF Technologies, Inc. and Counsel Press,
LLC. He is on the Board of Oversees of the University of Connecticut School of
Business and the Board of Regents of Sacred Heart University. He is also on the
Advisory Board for the Franciscan Friars of the Atonement and Board of Directors
of St. Vincent's Hospital Foundation, Fairfield, CT.



     Jonathan S. Greenhill.  Mr. Greenhill was elected a Director in May 2000.
Mr. Greenhill is a partner and principal in the New York firm of Greenhill


Partners, P.C. and has been with Greenhill Partners since


                                        53
<PAGE>   56


August 1990, specializing in commercial transactions, litigation, and insurance
defense. Mr. Greenhill was admitted to practice in New York and in U.S. District
court for the Southern and Eastern Districts of New York (1981) and the U.S.
Court of Appeals, 4th Circuit (1996). Prior to entering private practice, Mr.
Greenhill served for a decade in the U.S. Foreign Service, as a Political and
Economic officer, in Latin America and Europe, and was Assistant Director of the
Public Affairs Program at the University of Denver. He is a member of the
Association of the Bar of the City of New York, the American Bar Association,
the Loss Executives Association and the Johns Hopkins Alumni, New York Board of
Directors.


     Richard E. Wilson.  Mr. Wilson was elected a Director in May 2000. Mr.
Wilson is currently the Chief Executive Officer and President of the North
American division of Open Telecommunications, an Australian telecommunications
software and consulting company. Prior to that, Mr. Wilson was President of REW
& Associates, a consulting firm that specializes in international carriers, both
foreign and domestic. From 1993 to 1996, he was Vice President of Acquisitions
for Midcom, a $200 million provider of long distance services. Mr. Wilson was
founder of Feek's Telcom and sold this company to McCaw Communications. He has
also held management positions for Communications Network, Inc. and Motorola.
Mr. Wilson was one of the founders and has been Chairman/Board of Directors of
the Telecommunications Resellers Association (TRA) and a past President of TRA.


     Paul Fritz.  Mr. Fritz was elected a Director in May 2000. Mr. Fritz is the
founder, Chairman and President of CCC Technologies, Inc., Elk Grove Village,
Illinois. His company is one of the leading distributors of voice and data
equipment for Lucent Technologies, Cisco and Avaya Communications. CCC
Technologies, Inc. markets, installs and maintains systems throughout the United
States. Mr. Fritz has held positions related to sales and marketing with
Rolm/IBM Corporation, CENTEL Corporation, and Honeywell.



     Philip R. Zimmermann.  Mr. Zimmermann became a Director in July 2000. Mr.
Zimmermann currently serves as Chief Cryptographer at Hush Communications, and
is also consulting with a number of companies (including GlobalNet) and industry
organizations on matters of cryptography. Mr. Zimmermann is the creator of
Pretty Good Privacy (PGP), the most widely used email encryption software in the
world. Before founding PGP Inc, Zimmermann was a software engineer with more
than 20 years of experience, specializing in cryptography and data security,
data communications, and real-time embedded systems. He has received numerous
technical and humanitarian awards for his pioneering work in cryptography.
InfoWorld named Zimmermann one of the Top 10 Innovators in E-business (2000). He
received the Louis Brandeis Award (1999) from Privacy International, a Lifetime
Achievement Award (1998) from Secure Computing Magazine, and the Norbert Wiener
Award (1996) from Computer Professionals for Social Responsibility for promoting
the responsible use of technology. He also received the Chrysler Award for
Innovation in Design (1995), the Pioneer Award (1995) from the Electronic
Frontier Foundation, the PC Week IT Excellence Award (1996), and the Network
Computing Well-Connected Award (1996) for "Best Security Product." PGP was
selected by Information Week as one of the Top 10 Most Important Products of
1994. Time Magazine also named Zimmermann one of the "Net 50", the 50 most
influential people on the Internet (1995).


     Myron Gushlak.  Mr. Gushlak was elected a Director in May 2000. Mr. Gushlak
currently serves as Managing Director of Imperium Capital, a San Francisco based
private venture capital Company that provides financing and ongoing management
to technology companies, with a specific focus on the media/entertainment and
telephony. Accomplishments include the initial funding and public listing of
Emusic.com, the leading provider of downloadable music; and the initial funding
and public listing of netValue Holdings, Inc., a leading public internet
incubator. He also is a co-founder and on the board of directors of Laugh.com,
Sticky Networks, a multiplayer search tool company founded by the former CEO of
Infoseek; and, is on the board of advisors of netValue Holdings, Inc. Also, Mr.
Gushlak sits on the board of directors of Netmaster, Inc. a Canadian based Linux
software company. Prior to this, he was a broker at one of Canada's largest
independent brokerage firms.

     On April 4, 2001, Mr. Gushlak tendered his resignation from the Board of
Directors. Mr. Gushlak served as a Director of the Company during the period
covered by this Report. At this time, the Company has no immediate plans to fill
Mr. Gushlak's vacant Board seat.

                                        54
<PAGE>   57


     Robert H. Kohn.  Mr. Kohn was elected a Director in May 2000. Mr. Kohn is a
co-founder and Chairman of the Board of Emusic. Prior to 1998, he was Vice
President, Business Development and General Counsel of Pretty Good Privacy,
Inc., a developer and marketer of Internet encryption and security software.
From 1987 until 1996, he was Senior Vice President of Corporate Affairs of
Borland International, a software company of which he remains a member of the
board of directors. Mr. Kohn served as chief legal counsel for Ashton-Tate
Corporation and as an attorney for Ruden & Richman, an entertainment law firm
whose clients included Frank Sinatra, Liza Minelli, Cher and Warner Brothers
Music. He was also an Associate Editor of the Entertainment Law Reporter, for
which he continues to serve as a member of the Advisor Board. A Member of the
California Bar Association, Mr. Kohn co-authored Kohn on Music Licensing, a
treatise on music industry laws for lawyers, music publishers and songwriters.
Mr. Kohn is also an adjunct Professor of Law at the Monterey College of Law,
where he teaches Corporate Law.



     On June 11, 2001, Mr. Kohn tendered his resignation from the Board of
Directors. Mr. Kohn served as a Director of the Company during the period
covered by this Report. At this time, the Company has no immediate plans to fill
Mr. Kohn's vacant Board seat.


     Messrs. Adimando, Greenhill and Wilson served on the Company's Compensation
Committee during 2000. Messrs. Adimando, Kohn and Gushlak served on the
Company's Audit Committee during 2000.

EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

     The following sets forth certain information regarding executive officers
and certain significant employees of the Company. Information pertaining to
executive officers who are both a director and executive officer of the Company
may be found in the section entitled "Directors."

     Fred Bigney.  Mr. Bigney joined the Company in May 2000, bringing with him
25+ years of experience in traffic analysis, routing, provisioning, contract
negotiations, and a wide variety of other experiences. Prior to joining the
company, Mr. Bigney worked as VP-Network Planning for World Access, where he
managed the routing, buying, provisioning, and traffic analysis departments. He
was also involved in vendor bill approvals, sales support, and vendor
negotiations. The 8 years prior to World Access, were spent with LCI (now Qwest)
involved with traffic management, provisioning, 800 portability, mergers and
acquisitions, billing, and engineering. His work experience prior to LCI
included assignments with other carriers and companies, all focused in the
Telecommunications arena. Mr. Bigney is currently Vice President of Network
Planning for the Company.


     Ted Broa.  Mr. Broa began his telecommunications career 21 years ago by
installing large PBX's and paging equipment in California. Mr. Broa has
experience in engineering, installation and maintenance of telecommunications
equipment. He has diverse experience in telecommunication equipment from small
key systems, large PBX systems, Tandem switches to satellite and microwave
technology. He has been certified in installation and maintenance of
telecommunications equipment by Siemens, NEC, Lucent, Toshiba, Newbridge, Cisco
and many more. Mr. Broa was responsible for designing, installing and
maintaining two large hubs in the San Antonio area. For the last ten years, Mr.
Broa has extensively worked with networks throughout Mexico and Central America.
From December 1993 through November 1998, Mr. Broa was employed with American
TeleSource International, Inc. He then worked at C&L Communications until he
commenced employment with the Company. As Director of Operations, Mr. Broa
oversees the daily operation and personnel, along with maintenance of the San
Antonio, New York and Latin American hubs for GlobalNet. Mr. Broa is currently
Director of Operations for the Company.



     Mike Dombrowski.  Mr. Dombrowski joined as the Company's Director of
Engineering in March 2000. Mr. Dombrowski has a broad range of knowledge in
infrastructure engineering and operations. Mr. Dombrowski was Director of
Network Optimization for WorldPort Communications, where he developed and
managed global translations and least cost routing for the global network.
During his tenure at WorldPort between September 1998 and November 1999, he also
deployed the OSS and Support network to manage the global network. While at
WorldPort, he also directed the implementation, installation and turn-up of
WorldPort's global switching platform. Prior to this, for 18 years, he held
various positions in the sales support and network operations organization for
Sprint Communications from February 1985 through November 1999.


                                        55
<PAGE>   58

     Donna Janick.  Ms. Janick is the Director of Administration. Her
responsibilities include, but are not limited to: Assistant to the Chairman and
CEO of GlobalNet, the administration of all payroll, the initiation, set up and
administration of employee benefit plans, all administrative and essential
support activities including office and systems management, communications,
training, contract administration and purchasing, investor relations and Board
of Directors. She has been with GlobalNet since its inception and has more than
fifteen years of experience in telecommunications. Prior to her time at
GlobalNet she served with Standard TelCom, Inc. and DTA Communications Network,
LLC for more than ten years.


     Chuck Roelle.  Mr. Roelle is the Company's Controller and has reported
directly to the Chief Financial Officer of GlobalNet since March 1999. His
responsibilities include, but are not limited to, accounting matters for the
Company, billing for customers and collections of payments, vendor payments,
approval of Company expenditures, expense budgeting and cash flow forecasting,
reconciling accounting books alongside financial auditors, reconciling bank
accounts and supervising the accounts payable department. Prior to joining the
Company, Mr. Roelle worked at the Chicago Board of Trade from June 1997 through
February 1999 and, prior to that, worked for West Suburban Bank from 1992
through May 1997.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
securities ownership and changes in such ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten percent
shareholders also are required by rules promulgated by the Securities and
Exchange Commission to furnish the Company with copies of all Section 16(a)
forms they file.

     Based solely upon a review of the copies of such forms furnished to the
Company, the absence of a Form 3 or Form 5 or written representations that no
Forms 5 were required, the Company believes that, during the fiscal year 2000,
its officers, directors and greater than ten percent beneficial owners did not
timely comply with all applicable Section 16(a) filing requirements for the
reasons set forth below:

     On May 30, 2000 GlobalNet International, Inc. ("GII"), a privately held
company of which the officers, directors and greater than ten percent beneficial
owners were each principal officers, directors and greater than ten percent
beneficial owners, merged into a subsidiary of Rich Earth, Inc. ("Rich Earth")
in a "reverse merger" transaction (the "Merger"). As a result of the Merger,
GII, continued as the operating entity under the GlobalNet, Inc. ("GlobalNet" or
the "Issuer") name, and its historical financial statements replaced those of
Rich Earth. Prior to the Merger, Rich Earth filed a Form 10 with the Securities
and Exchange Commission (the "Commission") under the Securities Exchange Act of
1934, as amended (the "Exchange Act") causing Rich Earth to become subject to
the reporting requirements under the Exchange Act. Immediately prior to the
Merger, the officers, directors and greater than ten percent beneficial owners
were each officers, directors and greater than ten percent beneficial owners of
GII. Immediately after giving effect to the Merger, the officers, directors and
greater than ten percent beneficial owners each became an officer, director
and/or ten percent beneficial owner of GlobalNet. All of the officers, directors
and greater than ten percent beneficial owners ownership interests in the
Company were reported in the Schedule 14C Definitive Information Statement (the
"Information Statement") filed with the Commission pursuant to Section 14(c) of
the Exchange Act by Issuer (f/k/a Rich Earth). It was only recently, after
Issuer engaged a new law firm as its outside counsel, that the officers,
directors and greater than ten percent beneficial owners were advised of their
ongoing reporting obligations under the Exchange Act. With the exception of any
filings required to be made by Myron Gushlak, a former director of the Company,
and to the knowledge of the Company, all officers, directors and greater than
ten percent beneficial owners have filed the requisite information under Section
16(a) of the Exchange Act. The failure to timely file such filings with the
Commission was not willful or deliberate, but rather was the result of the
officers, directors and greater than ten percent beneficial owners not being
made aware of the ongoing reporting provisions set forth in the Exchange Act.

                                        56
<PAGE>   59

INDEMNIFICATION OF OFFICERS AND DIRECTORS

     Article 15 of our Articles of Incorporation provides for us to indemnify
any and all directors and officers whom it shall have power to indemnify under
Section 78.751 of the Nevada Revised Statutes from and against any and all of
the expenses, liabilities or other referred to in or covered by such Section
shall not be deemed exclusive of any other rights to which the persons so
indemnified may be entitled under our By-laws, agreement, vote of shareholders
or disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity by holding such office,
and shall continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such
person.

ITEM 11.  EXECUTIVE COMPENSATION

     GlobalNet was formed on May 30, 2000 as a result of a "reverse merger"
transaction, whereby GlobalNet International, Inc. merged with and into a
subsidiary of Rich Earth, Inc. pursuant to an agreement and plan of merger,
whereby 20,000,000 shares of Rich Earth common stock were issued in exchange for
100% of the common stock of GlobalNet International in a transaction accounted
for as a reverse acquisition of Rich Earth by GlobalNet International. Prior to
the reverse merger, Rich Earth was a non-operating public shell corporation with
nominal assets. Following the reverse merger, the management of GlobalNet
International controlled the merged company and the principal shareholders of
GlobalNet International became principal shareholders of the merged company.
Following the closing of the reverse merger, Rich Earth changed its name to
GlobalNet, Inc. As a result of the reverse merger transaction, GlobalNet
International continued as an operating entity and as a wholly-owned subsidiary
of GlobalNet, Inc., and the historical financial statements of GlobalNet, Inc.
replaced those of Rich Earth. However, the information provided in this Item 11
is presented on an annualized basis rather than pro rated over the period of
time such executive was with the Company.

     All Officers are also Directors and serve at the discretion of the Board of
Directors. None of the Officers or Directors are related to each other, except
for Colum P. Donahue who is the son of Robert J. Donahue.

SUMMARY OF COMPENSATION

     The following table summarizes compensation information for the last three
fiscal years for (i) Robert J. Donahue, the Chief Executive Officer, and (ii)
the four most highly compensated executive officers other than the Chief
Executive Officer who were serving as executive officers of the Company at the
end of the fiscal year (collectively, the "Named Executive Officers"):

<TABLE>
<CAPTION>
                                                                         LONG-TERM COMPENSATION
                                                                       --------------------------
                                            ANNUAL COMPENSATION         RESTRICTED      OPTIONS
                                         --------------------------    STOCK AWARDS     (NO. OF
                                         ANNUALIZED                      (NO. OF       UNDERLYING
NAME AND POSITION                 YEAR     SALARY     BONUS   OTHER      SHARES)        SHARES)
-----------------                 ----   ----------   -----   -----    ------------    ----------
<S>                               <C>    <C>          <C>     <C>      <C>             <C>
Robert J. Donahue...............  1998    168,000        --   6,750(1)        --             --
  CEO and Chairman                1999    207,000     5,000   6,750(1)        --             --
                                  2000    230,000        --   6,750(1)    75,000(2)     250,000(3)

Daniel M. Wickersham............  1998        N/A       N/A     N/A          N/A            N/A
  President                       1999        N/A       N/A     N/A          N/A            N/A
                                  2000    200,000        --   3,200(4)   425,000(5)     225,000(6)

Pere Valles.....................  1998        N/A       N/A     N/A          N/A            N/A
  CFO                             1999        N/A       N/A     N/A          N/A            N/A
                                  2000    175,000        --   1,250(7)   425,000(8)     150,000(9)

Colum P. Donahue................  1998     14,000             5,000           --             --
  COO and Secretary               1999     37,000     5,000   5,000           --             --
                                  2000    150,000        --   5,800(10)    75,000(11)   200,000(12)
</TABLE>

                                        57
<PAGE>   60

<TABLE>
<CAPTION>
                                                                         LONG-TERM COMPENSATION
                                                                       --------------------------
                                            ANNUAL COMPENSATION         RESTRICTED      OPTIONS
                                         --------------------------    STOCK AWARDS     (NO. OF
                                         ANNUALIZED                      (NO. OF       UNDERLYING
NAME AND POSITION                 YEAR     SALARY     BONUS   OTHER      SHARES)        SHARES)
-----------------                 ----   ----------   -----   -----    ------------    ----------
<S>                               <C>    <C>          <C>     <C>      <C>             <C>

Fred Bigney.....................  1998        N/A       N/A     N/A          N/A            N/A
  VP of Network Planning          1999        N/A       N/A     N/A          N/A            N/A
                                  2000    180,000        --      --      125,000(13)    100,000(14)
</TABLE>

---------------
 (1) The Company leases a vehicle that is used by Robert Donahue.

 (2) On December 28, 2000, the Company granted Robert J. Donahue 75,000 shares
     of common stock. The stock vests in the following manner: 44% on September
     15, 2001, 22% on May 15, 2002 and 34% on May 15, 2003.

 (3) On May 15, 2000, the Company granted Robert J. Donahue 250,000 options to
     purchase common stock at an exercise price of $8.00 per share. The options
     vest in the following manner: 33% on May 15, 2001, 33% on May 15, 2002 and
     33% on May 15, 2003.

 (4) Daniel M. Wickersham receives a car allowance of $800 per month.

 (5) On May 15, 2000, the Company granted Daniel M. Wickersham 375,000 shares of
     common stock. On December 28, 2000, the Company granted Daniel M.
     Wickersham an additional 50,000 shares of common stock. The stock vests in
     the following manner: 44% on September 15, 2001, 22% on May 15, 2002 and
     34% on May 15, 2003.

 (6) On May 15, 2000, the Company granted Daniel M. Wickersham 225,000 options
     to purchase common stock at an exercise price of $8.00 per share. The
     options vest in the following manner: 33% on May 15, 2001, 33% on May 15,
     2002 and 33% on May 15, 2003.

 (7) The Company leases a vehicle that is used by Pere Valles.

 (8) On December 28, 2000, the Company granted Pere Valles 425,000 shares of
     common stock. The stock vests in the following manner: 44% on September 15,
     2001, 22% on May 15, 2002 and 34% on May 15, 2003.

 (9) On December 28, 2000, the Company granted Pere Valles 150,000 options to
     purchase common stock at an exercise price of $0.75 per share. The options
     vest in the following manner: 33% on May 15, 2001, 33% on May 15, 2002 and
     33% on May 15, 2003.

(10) The Company leases a vehicle that is used by Colum P. Donahue.

(11) On December 28, 2000, the Company granted Colum P. Donahue 75,000 shares of
     common stock. The stock vests in the following manner: 44% on September 15,
     2001, 22% on May 15, 2002 and 34% on May 15, 2003.

(12) On May 15, 2000, the Company granted Colum P. Donahue 200,000 options to
     purchase common stock at an exercise price of $8.00 per share. The options
     vest in the following manner: 33% on May 15, 2001, 33% on May 15, 2002 and
     33% on May 15, 2003.

(13) On May 15, 2000, the Company granted Fred Bigney 100,000 shares of common
     stock. On December 28, 2000, the Company granted Mr. Bigney an additional
     25,000 shares of common stock. The stock vests in the following manner: 44%
     on September 15, 2001, 22% on May 15, 2002 and 34% on May 15, 2003.

(14) On May 15, 2000, the Company granted Fred Bigney 100,000 options to
     purchase common stock at an exercise price of $8.00 per share. The options
     vest in the following manner: 33% on May 15, 2001, 33% on May 15, 2002 and
     33% on May 15, 2003.

(15) The Company currently is in the process of determining whether to
     distribute bonuses to certain executive officers and significant employees
     for the fiscal year ended December 31, 2000 and reserves the right to
     distribute such bonuses in the future.

                                        58
<PAGE>   61

OPTION GRANTS IN LAST FISCAL YEAR

     The following table provides information about option grants to the Named
Executive Officers during the fiscal year 2000.

                       OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                           NUMBER OF SECURITIES       VALUE OF UNEXERCISED
                                                          UNDERLYING UNEXERCISED          IN-THE-MONEY
                                 SHARES                     OPTIONS AT FISCAL           OPTIONS AT FISCAL
                                ACQUIRED       VALUE          YEAR-END (#):               YEAR-END($):
                               ON EXERCISE    REALIZED         EXERCISABLE/               EXERCISABLE/
NAME                               (#)          ($)          UNEXERCISABLE(1)             UNEXERCISABLE
----                           -----------    --------    ----------------------    -------------------------
<S>                            <C>            <C>         <C>                       <C>
Robert J. Donahue............      --           --               250,000                          --
Daniel M. Wickersham.........      --           --               225,000                          --
Pere Valles..................      --           --               150,000                     $78,000(2)
Colum P. Donahue.............      --           --               200,000                          --
Fred Bigney..................      --           --               100,000                          --
</TABLE>

---------------
Notes:

(1) The options have the following vesting schedule: 33% on May 15, 2001. 33% on
    May 15, 2002 and the remainder on May 15, 2003.

(2) As of April 11, 2001, the value of unexercised "in-the-money" options held
    by Mr. Valles amounts to approximately $78,000. This amount is calculated
    based on the difference between the stock price on April 12, 2001 ($1.27)
    and the exercise price of the options ($0.75) multiplied by the number of
    options held by Mr. Valles (150,000). These options are subject to the
    vesting schedule described in [1] above.

OPTIONS EXERCISED AND YEAR-END OPTION HOLDINGS

     The options to purchase shares of common stock held by Executive Officers
were unvested as of December 31, 2000. The Executive Officers did not exercise
any of their options in the fiscal year 2000.

COMPENSATION OF DIRECTORS

     Outside directors do not receive any cash remuneration for serving as
directors. All directors are eligible to participate in our stock option plan.
Each of Messrs. Adimando, Greenhill, Wilson, Fritz, Kohn, Gushlak and Zimmerman
were granted options to purchase 100,000 shares of Common Stock at an exercise
price of $16.00 per share upon appointment to the board of directors. These
options vest on September 14, 2002.

     On April 4, 2001, Mr. Gushlak resigned from the board of directors, at
which time he forfeited unvested options to purchase 100,000 shares of Common
Stock.


     On June 11, 2001, Mr. Kohn resigned from the board of directors, at which
time he forfeited unvested options to purchase 100,000 shares of Common Stock.


                                        59
<PAGE>   62

EMPLOYMENT AGREEMENTS

     The Company entered in employment agreements with its Executive Officers
and the following key employees:

<TABLE>
<CAPTION>
                                                              DATE     EXPIRATION
EMPLOYEE                             POSITION                ENTERED      DATE
--------                             --------               ---------  ----------
<S>                      <C>                                <C>        <C>
Robert J. Donahue......  Chief Executive Officer and        15-May-00  15-May-03
                         Chairman
Daniel M. Wickersham...  President                          15-May-00  15-May-03
Pere Valles............  Chief Financial Officer            28-Dec-00  15-May-03
Colum P. Donahue.......  Chief Operating Officer and        15-May-00  15-May-03
                         Secretary
Fred Bigney............  VP of Network Planning             15-May-00  15-May-03
Mike Dombrowski........  Director of Engineering            15-May-00  15-May-03
Ted Broa...............  Director of Operations             15-May-00  15-May-03
Chuck Roelle...........  Controller                         15-May-00  15-May-03
Donna Janick...........  Director of Administration         15-May-00  15-May-03
</TABLE>

     The table summarizes the principal terms of the employment agreements:

<TABLE>
<CAPTION>
                                                                  OPTION GRANTS
                                                                ------------------
                                        BASE      RESTRICTED    NO. OF    EXERCISE   SEVERANCE
EMPLOYEE                               SALARY    STOCK GRANTS   OPTIONS    PRICE      PAYMENT
--------                               -------   ------------   -------   --------   ---------
<S>                                    <C>       <C>            <C>       <C>        <C>
Robert J. Donahue....................  230,000      75,000      250,000     8.00     18 Months
Daniel M. Wickersham.................  200,000     425,000      225,000     8.00     12 Months
Pere Valles..........................  175,000     425,000      150,000     0.75     12 Months
Colum P. Donahue.....................  150,000      75,000      200,000     8.00     12 Months
Fred Bigney..........................  180,000     125,000      100,000     8.00      6 Months
Mike Dombrowski......................  125,000      35,000      100,000     8.00      6 Months
Ted Broa.............................  110,000      75,000       75,000     8.00      6 Months
Chuck Roelle.........................   75,000     115,000      100,000     8.00      6 Months
Donna Janick.........................   70,000     125,000      100,000     8.00     12 Months
</TABLE>

     The stock granted to the employees vests in the following manner: 44% on
September 15, 2001, 22% on May 15, 2002 and 34% on May 15, 2003. The options
have the following vesting schedule: 33% on May 15, 2001, 33% on May 15, 2002
and 33% on May 15, 2003.

     The Company may terminate the employment agreements only for cause. In case
of termination without cause, the employee is entitled to the severance payment
shown on the table above and to the acceleration in the vesting of the stock and
options granted.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The members of the compensation committee during 2000 were Carmine F.
Adimando, Jonathan S. Greenhill and Richard E. Wilson. None of Messrs. Adimando,
Greenhill or Wilson was ever an officer or an employee of the Company or any of
its subsidiaries, and none of them had any relationship requiring disclosure by
the Company under Item 404 of Regulation S-K for 2000.

COMPANY STOCK PERFORMANCE

     Our common stock is listed and traded on the NASDAQ Small Cap Market. For
the period January 1999 through May 2000 (the pre-reverse merger period), shares
of the Company traded on the Over the Counter Bulletin Board as Rich Earth,
Inc., a publicly traded shell company. There are no available historical
quotations for Rich Earth common stock during the pre-reverse merger period. As
a result of the reverse merger between Rich Earth and GlobalNet International,
Inc., shares of the Company continued to trade on the Over the Counter Bulletin
Board, but under the GlobalNet name, from May 2000 through

                                        60
<PAGE>   63

November 2000. On November 24, 2000, our common stock commenced trading on the
NASDAQ Small Cap Market. Due to the limited trading history of our common stock
on the NASDAQ Small Cap Market, there are no reliable parameters with which to
chart our stock performance over the prior three years. See Part II, Item 5,
relating to the market for our common equity, which information is hereby
incorporated by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information with respect to the beneficial
ownership of our Common Stock as of April 12, 2001 with respect to (i) each
stockholder known by us to be the beneficial owner of more than 5% of our Common
Stock; (ii) each of our directors; (iii) each Named Executive Officer listed in
the Summary Compensation Table under the heading "Executive Compensation" and
(iv) all directors and executive officers as a group. On the table date,
32,230,878 shares of Common Stock were issued and outstanding. Unless otherwise
indicated, all persons named as beneficial owners of Common Stock have sole
voting power and sole investment power with respect to the shares indicated as
beneficially owned.

<TABLE>
<CAPTION>
                                                                 SHARES       PERCENTAGE OF
                                                              BENEFICIALLY     COMMON STOCK
NAME OF BENEFICIAL OWNER(1)                                      OWNED        OUTSTANDING(2)
---------------------------                                   ------------    --------------
<S>                                                           <C>             <C>
Robert J. Donahue
119 West Adams
Villa Park, Illinois 60181..................................    8,237,748          25.6%(1)
Colum P. Donahue
2S572 Route 53
Glen Ellyn, IL 60137........................................    2,201,240           6.8%(2)
Daniel M. Wickersham
1889 Pine Log Church
Brasstown, NC 28902.........................................      425,000           1.3%(3)
Pere Valles
820 Muirhead Avenue
Naperville, Illinois 60565..................................      425,000           1.3%(4)
Paul Fritz
833 Cumberland Avenue
Park Ridge, Illinois 60068..................................    1,296,846           4.0%(5)
Myron Gushlak
P.O. Box 31485 SMB
Casa Coyoba/Cayman Islands..................................      700,000           2.2%(6)
Carmine F. Adimando
47 Cherry Gate Lane
Trumbull, Connecticut 6611..................................      175,000             *(7)
Jonathan S. Greenhill
819 The Parkway
Mamaroneck, New York 10543..................................       45,000             *(8)
Richard E. Wilson
6252 Harbour Heights Parkway
Mukilteo, Washington 98275..................................           --             *(9)
Robert H. Kohn
1991 Broadway
Redwood City, California 94063..............................           --             *(10)
Philip R. Zimmermann
1536 Vancouver Avenue
Burlingame, California 94014................................           --             *(11)
Fred Bigney
3003 Stonebrook Road
Lisle, Illinois 60148.......................................      125,000             *(12)
</TABLE>

                                        61
<PAGE>   64

<TABLE>
<CAPTION>
                                                                 SHARES       PERCENTAGE OF
                                                              BENEFICIALLY     COMMON STOCK
NAME OF BENEFICIAL OWNER(1)                                      OWNED        OUTSTANDING(2)
---------------------------                                   ------------    --------------
<S>                                                           <C>             <C>
All Directors and Named Executive Officers as a Group (12
persons in number)..........................................   13,630,834          42.3%
Crescent International, Ltd
84 Avenue Louis-Casai
1216 Geneva, Cointrin
Switzerland.................................................    3,164,279           9.2%(13)
</TABLE>

---------------
* Less than one percent.

 (1) Includes 75,000 shares of restricted common stock granted on December 28,
     2000 with the following vesting schedule: 42% on September 15, 2001, 22% on
     May 15, 2002 and 34% on May 15, 2003. Additionally, on May 15, 2000, Mr.
     Donahue was granted 250,000 options to purchase shares of common stock at
     $8.00 per share. The options have the following vesting schedule.

 (2) Includes 75,000 shares of restricted common stock granted on December 28,
     2000 with the following vesting schedule: 42% on September 15, 2001, 22% on
     May 15, 2002 and 34% on May 15, 2003. Additionally, on May 15, 2000, Mr.
     Donahue was granted 200,000 options to purchase shares of common stock at
     $8.00 per share. The options have the following vesting schedule: 33% on
     May 15, 2001, 33% on May 15, 2002 and 33% on May 15, 2003.

 (3) Includes 425,000 shares of restricted common stock (375,000 shares granted
     on May 15, 2000 and 50,000 shares granted on December 28, 2000) with the
     following vesting schedule: 42% on September 15, 2001, 22% on May 15, 2002
     and 34% on May 15, 2003. Additionally, on May 15, 2000, Mr. Wickersham was
     granted 225,000 options to purchase shares of common stock at $8.00 per
     share. The options have the following vesting schedule: 33% on May 15,
     2001, 33% on May 15, 2002 and 33% on May 15, 2003.

 (4) Includes 425,000 shares of restricted common stock granted on December 28,
     2000 with the following vesting schedule: 42% on September 15, 2001, 22% on
     May 15, 2002 and 34% on May 15, 2003. Additionally, on December 28, 2000,
     Mr. Valles was granted 150,000 options to purchase shares of common stock
     at $0.75 per share. The options have the following vesting schedule: 33% on
     May 15, 2001, 33% on May 15, 2002 and 33% on May 15, 2003.

 (5) In addition to shares shown above, on September 14, 2000, Mr. Fritz was
     granted 100,000 options to purchase shares of common stock at $16.00 per
     share as compensation for serving as a Director. The options vest on
     September 14, 2002.

 (6) On June 28, 2000, Myron Gushlak bought from Robert J. Donahue 700,000
     shares of common stock at $1.00 per share in accordance with a stock
     purchase agreement executed on May 22, 2000 and previously disclosed on
     Form 8-K filed on July 28, 2000. Additionally, on September 14, 2000, Mr.
     Fritz was granted 100,000 options to purchase shares of common stock at
     $16.00 per share as compensation for serving as a Director. On April 4,
     2001, Myron Gushlak resigned from the Board of Directors before the options
     had vested.

 (7) In addition to shares shown above, on September 14, 2000, Mr. Adimando was
     granted 100,000 options to purchase shares of common stock at $16.00 per
     share as compensation for serving as a Director. The options vest on
     September 14, 2002.

 (8) In addition to shares shown above, on September 14, 2000, Mr. Greenhill was
     granted 100,000 options to purchase shares of common stock at $16.00 per
     share as compensation for serving as a Director. The options vest on
     September 14, 2002.

 (9) On September 14, 2000, Mr. Wilson was granted 100,000 options to purchase
     shares of common stock at $16.00 per share as compensation for serving as a
     Director. The options vest on September 14, 2002.


(10) On September 14, 2000, Mr. Kohn was granted 100,000 options to purchase
     shares of common stock at $16.00 per share as compensation for serving as a
     Director. The options vest on September 14, 2002. On June 11, 2001, Robert
     Kohn resigned from the Board of Directors before the options had vested.


                                        62
<PAGE>   65

(11) On September 14, 2000, Mr. Zimmermann was granted 100,000 options to
     purchase shares of common stock at $16.00 per share as compensation for
     serving as a Director, and 50,000 options to purchase shares of common
     stock at $12.00 per share for consulting work. The options that Mr.
     Zimmermann received as a Director vest on September 14, 2002. The options
     for the consulting work have the following vesting schedule: 33% on May 15,
     2001, 33% on May 15, 2002 and 33% on May 15, 2003.

(12) Includes 125,000 shares of restricted common stock (100,000 shares granted
     on May 15, 2000 and 25,000 shares granted on December 28, 2000) with the
     following vesting schedule: 42% on September 15, 2001, 22% on May 15, 2002
     and 34% on May 15, 2003. Additionally, on May 15, 2000, Mr. Bigney was
     granted 100,000 options to purchase shares of common stock at $8.00 per
     share. The options have the following vesting schedule: 33% on May 15,
     2001, 33% on May 15, 2002 and 33% on May 15, 2003.

(13) Includes (i) 500,000 shares of common stock purchased in the private
     placement that the Company effected in February 2001, (ii) 365,428 shares
     of common stock purchased on April 9, 2001, and (iii) 2,298,851 shares of
     common stock that could result from the conversion of the $2,000,000 note
     that Crescent International purchased on April 9, 2001. Crescent
     International could potentially convert the note at a 6% premium on the
     average closing bid prices for the ten days preceding April 9, 2001 (i.e.,
     approximately $0.87). In the calculation of Crescent International's
     ownership percentage, we included the 2,298,851 shares that would results
     from the conversion of the note in total shares outstanding.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     GlobalNet was formed on May 30, 2000 as a result of a "reverse merger"
transaction, whereby GlobalNet International, Inc. merged with and into a
subsidiary of Rich Earth, Inc. pursuant to an agreement and plan of merger,
whereby 20,000,000 shares of Rich Earth common stock were issued in exchange for
100% of the common stock of GlobalNet International in a transaction accounted
for as a reverse acquisition of Rich Earth by GlobalNet International. Prior to
the reverse merger, Rich Earth was a non-operating public shell corporation with
nominal assets. Following the reverse merger, the management of GlobalNet
International controlled the merged company and the principal shareholders of
GlobalNet International became principal shareholders of the merged company.
Following the closing of the reverse merger, Rich Earth changed its name to
GlobalNet, Inc. As a result of the reverse merger transaction, GlobalNet
International continued as an operating entity and as a wholly-owned subsidiary
of GlobalNet, and the historical financial statements of GlobalNet replaced
those of Rich Earth.

     On June 28, 2000 and in connection with the reverse merger transaction, Mr.
Donahue sold Mr. Gushlak, a then outside director of GlobalNet and a Managing
Director of Imperium Capital (USA), 700,000 shares of GlobalNet common stock for
$1.00 per share in accordance with a Stock Purchase Agreement dated May 22,
2000, as amended on June 28, 2000 (as amended, the "SPA").

     Greenhill Partners, P.C., of which Jonathan S. Greenhill, a Director of
GlobalNet, is a partner, from time to time renders legal services, including but
not limited to advice relating to certain litigation matter involving GlobalNet,
to GlobalNet. For the period covered by this Report, the Company paid Greenhill
Partners an aggregate amount of $271,996.56 for services rendered to GlobalNet.

     Pere Valles, the Company's Chief Financial Officer, was a Senior Manager in
KPMG LLP's Transaction Services Group prior to joining GlobalNet in August 2000.
Mr. Valles was never involved in the audit of GlobalNet while he was with KPMG.
However, he was the project manager responsible for advising GlobalNet in a
potential acquisition that it considered in Mexico in June 2000, but never
pursued.

  Employment Agreements

     See Part III, Item 11, under the subheading "Employment Agreements," for
information relating to certain employment agreements between the Company and
its executive officers and significant employees, which information is hereby
incorporated by reference.

                                        63
<PAGE>   66

              REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
                      DIRECTORS ON EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

     The Compensation Committee of the board of directors (the "Committee") is
composed solely of non-employee directors. The Committee is responsible for
setting and administering the policies that determine the compensation of the
Chief Executive Officer ("CEO") and other executive officers of the Company.

  Compensation Philosophy

     The Company's executive compensation policies seek to attract, retain,
motivate and reward executive officers who contribute to the Company's success.
By aligning the financial interests of its executive officers with the
performance of the Company, the executive compensation policies ensure a direct
relationship between executive pay and shareholder value, as well as motivating
executive officers to achieve the Company's business objectives and rewarding
individual performance. The Company continues to operate under the 2000 Stock
Plan, which was adopted at a meeting of the shareholders on May 3, 2000.

     The Committee considers the following factors in setting compensation level
and individual objectives:

     - The level of compensation paid to executive officers in similar positions
       in companies of similar maturity, size and product offerings -- To ensure
       that pay is competitive, the Committee, from time to time, compares the
       Company's executive compensation packages with those offered by other
       companies in the same or similar industries or with other similar
       attributes. Compensation surveys used by the Committee typically include
       public and private companies comparable in size, products or industry to
       the Company.

     - Corporate performance -- Corporate performance is evaluated by factors
       such as performance relative to competitors, performance relative to
       business conditions and progress in meeting the Company's objectives and
       goals as typically reflected in the annual operating plan.

     - The individual performance of each executive officer -- Individual
       performance includes meeting individual performance objectives and
       demonstration of job knowledge, skills and teamwork.

     - The responsibility and authority of each position relative to other
       positions.

     The Committee considers these factors as a whole in establishing executive
compensation. Specifically, these components are established as follows:

BASE SALARY

     Base salaries are established for each executive officer at levels that are
intended to be competitive with salaries for comparable positions at other
software and computer industry companies of similar maturity, size and product
offerings. The Company seeks to pay salaries to executive officers that are
commensurate with their qualifications, duties and responsibilities and that are
competitive in the marketplace. In conducting periodic compensation reviews, the
Committee considers each individual executive officer's achievements in meeting
Company financial and business objectives during the prior fiscal year, the
executive officer's performance of individual responsibilities and the Company's
financial position and overall performance. The Committee periodically considers
the low, midpoint and upper ranges of base salaries published by compensation
surveys in establishing base salaries for each executive officer.

ANNUAL INCENTIVE

     Annual incentives for executive officers reflect the Company's belief that
management's contribution to shareholder returns comes from achieving operating
results that maximize the Company's revenue growth, earnings and cash flow over
a multi-year time horizon. The Company believes that the achievement of its
performance objectives depends on: (i) delivering outstanding products and
services to its clients; (ii) establishing and maintaining a position of
strength in its chosen markets; (iii) effective generation and use

                                        64
<PAGE>   67

of cash; and (iv) movement toward profitability. For purposes of annual
incentive compensation, progress toward these performance objectives is measured
against the results established in the Company's annual operating plan, which is
approved by the board of directors.

     The Company believes that this incentive compensation structure closely
links the incentives paid to its executive officers with the results necessary
to create long-term value for shareholders.

LONG-TERM INCENTIVE

     The Committee also endorses the position that stock ownership by management
is beneficial in aligning management and shareholder interests in enhancing
shareholder value. In that regard, stock options also are used to retain
executive officers and motivate them to improve long-term stock market
performance. Stock options will have value only if the Company's stock price
increases. As part of its periodic review of compensation, the Compensation
Committee reviews the stock option holdings of the Company's officers and senior
executives, and recommends additional stock option grants as appropriate.

     The Committee determines the number of options to be granted to executive
management based on: (i) competitive practice within the peer group used in
determining base salary; (ii) historical performance of the executive officer;
and (iii) the amount of prior grants held by the executive officer, including
the number of vested and unvested options. When using comparative data, the
Company targets its option grants in the mid to high range of comparable
companies.

DEDUCTIBILITY OF EXECUTIVE COMPENSATION

     Section 162(m) of the Internal Revenue Code generally limits the Company's
ability to deduct for federal income tax purposes in excess of $1.0 million of
compensation paid to certain Named Executive Officers in any taxable year.
Compensation above $1.0 million may be deducted if it is "performance-based
compensation" within the meaning of the Code. Stock options granted under the
Incentive Plan with an exercise price at least equal to the fair market value of
the Company's Common Stock on the date of grant are considered to be
"performance-based compensation."

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

     Robert J. Donahue, the Company's Chief Executive Officer and Chairman,
received $230,000 for the services he performed for the Company in fiscal year
2000.

CONCLUSION

     A significant portion of the Company's executive officers' compensation is
contingent on Company performance and realization of benefits closely linked to
increases in long-term shareholder value. The Company remains committed to this
philosophy of pay for performance, recognizing that the competitive market for
talented executives and the volatility of the Company's business may result in
significant incentive and long-term variable compensation in specific periods.

                     MEMBERS OF THE COMPENSATION COMMITTEE

     Carmine F. Adimando, Jonathan S. Greenhill and Richard E. Wilson

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

     (a) The following documents are filed as a part of this report:

        1.  Financial Statements. The Consolidated Financial Statements of
            GlobalNet, Inc and Subsidiary in Item 8 hereof are filed as part of
            this Annual Report on Form 10-K.

                                        65
<PAGE>   68

        2.  Exhibits. The exhibits listed on the accompanying Index to Exhibits
            immediately following the signature page are filed as part of, or
            incorporated by reference into, this Annual Report on Form 10-K.

     (b) Reports on Form 8-K:


<TABLE>
<CAPTION>
                           ITEMS
DATE OF REPORT            REPORTED                      DESCRIPTION
--------------            --------                      -----------
<S>                       <C>         <C>
May 30, 2000............   Item 4     Current Report -- Change of Accountants
May 30, 2000............   Item 4     Amended Current Report -- Change of Accountants
April 4, 2001...........   Item 6     Current Report -- Resignation of Director
April 9, 2001...........   Item 5     Current Report -- Financing Transaction with
                                      Crescent International, Ltd.
June 11, 2001...........   Item 6     Current Report -- Resignation of Director
</TABLE>


                                        66
<PAGE>   69

                                   SIGNATURES

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

                                          GlobalNet, Inc.

                                          By:     /s/ ROBERT J. DONAHUE
                                            ------------------------------------
                                            Robert J. Donahue
                                            Chairman and Chief Executive Officer


Dated: June 13, 2001



     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on June 13, 2001.



<TABLE>
<CAPTION>
                 SIGNATURE                                         TITLE
                 ---------                                         -----
<C>                                             <S>

           /s/ ROBERT J. DONAHUE                Chairman and Chief Executive Officer
--------------------------------------------
             Robert J. Donahue

          /s/ DANIEL M. WICKERSHAM              President (Principal Executive Officer)
--------------------------------------------
            Daniel M. Wickersham

              /s/ PERE VALLES                   Chief Financial Officer (Principal Financial
--------------------------------------------    and Accounting Officer)
                Pere Valles

            /s/ COLUM P. DONAHUE                Chief Operating Officer and Secretary
--------------------------------------------
              Colum P. Donahue

                                                Director
--------------------------------------------
            Carmine F. Adimando

                                                Director
--------------------------------------------
           Jonathan S. Greenhill

               /s/ PAUL FRITZ                   Director
--------------------------------------------
                 Paul Fritz

           /s/ RICHARD E. WILSON                Director
--------------------------------------------
             Richard E. Wilson

                                                Director
--------------------------------------------
            Philip R. Zimmermann
</TABLE>


                                        67
<PAGE>   70

                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
<C>       <S>
  3.1     Articles of Incorporation(1)

  3.2     Amended Articles of Incorporation(2)

  3.3     By-laws of Registrant(1)

  4.1     Form of Common Stock Certificate of Registrant(5)

  4.2     See Exhibits 3.1, 3.2 and 3.3 for provisions of the Amended
          Articles of Incorporation and By-laws of the Registrant
          defining the rights of holders of Common Stock of the
          Registrant

  4.3     Registration Rights Agreement, dated February 2001, by and
          among GlobalNet and Investor(3)

  4.4     Registration Rights Agreement, dated April 9 2001, by and
          between GlobalNet and Crescent International, Ltd.(4)

  4.5     Form of Warrant dated February 2001(3)

  4.6     Incentive Warrant, dated April 9, 2001, by and between
          GlobalNet and Crescent International, Ltd.(4)

  4.7     Protective Warrant, dated April 9, 2001, by and between
          GlobalNet and Crescent International, Ltd.(4)

  4.8     Convertible Note, dated April 9, 2001, issued to Crescent
          International, Ltd.(4)

  4.8     Form of Subscription Agreement relating to March 2001
          Private Placement(5)

 10.1     2000 Stock Plan and Stock Option Agreement(2)

 10.2     Agreement and Plan of Reorganization(2)

 10.3     Securities Purchase Agreement, dated April 9, 2001, by and
          between GlobalNet and Crescent International, Ltd.(4)

 10.4     Summary of Principal Terms of Employment Agreement between
          the Registrant and each of its directors and executive
          officers and Employment Agreement between the Registrant and
          Robert J. Donahue(6)

 10.5     Lease Agreement between Registrant and PrinVest Financial
          Corp.(6)

 10.6     Master Lease Agreement between Registrant and General
          Electric Capital Corporation(6)

 21.1     List of Subsidiaries(6)
</TABLE>


---------------
(1) Previously filed on October 18, 1999 with GlobalNet's (f/k/a Rich Earth,
    Inc.) Registration Statement on Form 10SB/A, incorporated herein by
    reference.

(2) Previously filed on May 30, 2000 with GlobalNet's Information Statement on
    Form 14C, incorporated herein by reference.

(3) Previously filed on April 2, 2001, with GlobalNet's Registration Statement
    on Form S-3, incorporated herein by reference.

(4) Previously filed on April 13, 2001, with GlobalNet's Current Report on Form
    8-K dated April 9, 2001, incorporated herein by reference.


(5)Previously filed on June 13, 2001 with GlobalNet's Pre-Effective Amendment
   No. 2 to Registration Statement on Form S-3, incorporated by reference
   herein.



(6) Filed herewith.


                                        68