<PAGE>   1
                                  
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549



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



For the quarter ended:     June 30, 1998

Commission file number:    33-20323


                         GlobeNet International I, Inc.
                         ------------------------------
             (Exact name of registrant as specified in its charter)


         Delaware                                               75-2224643
------------------------                                   ---------------------
(State of Incorporation)                                   (IRS Employer ID No.)

             10575 Newkirk, Suite 780, Dallas, Texas       75220
            ----------------------------------------      ---------
            (Address of principal executive offices)     (Zip code)

Registrant's telephone number, including area code:     972-401-0052

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 Act of 1934 during the past
12 months and (2) has been subject to such filing requirements for the past 90
days.

                                              X YES       NO
                                             ---       ---


Shares of common stock outstanding at June 30, 1998:


                                   13,698,680


<PAGE>   2




                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                     Page Number

<S>                                                                                    <C>  
         Item 1.           Financial Statements

                           Condensed Consolidated Balance Sheets
                           as of June 30, 1998 and December 31, 1997                    3

                           Condensed Consolidated Statements of
                           Operations for the quarters ended June 30,
                           1998 and 1997                                                4

                           Condensed Consolidated Statements of
                           Operations for the six months ended June 30,
                           1998 and 1997                                                5

                           Condensed Consolidated Statements of
                           Cash Flows for the six months ended June 30,
                           1998 and 1997                                                6

                           Notes to Condensed Consolidated Financial
                           Statements                                                   7-11

         Item 2.           Management's Discussion and Analysis
                           of Financial Condition and Results of
                           Operations                                                   12-15

PART II - OTHER INFORMATION

         Item 1.           Legal Proceedings                                            16

         Item 2.           Changes in Securities                                        16

         Item 3.           Defaults Upon Senior Securities                              16

         Item 4.           Submission of Matters to a Vote of Security
                           Holders                                                      16

         Item 5.           Other Information                                            17

</TABLE>


<PAGE>   3
PART I.   FINANCIAL INFORMATION

          GLOBENET INTERNATIONAL I, INC.
          CONDENSED CONSOLIDATED BALANCE SHEETS
          (UNAUDITED)

<TABLE>
<CAPTION>

                                                      JUNE 30,          DECEMBER 31,
                                                       1998                 1997
                                                   ------------         ------------
<S>                                                <C>                  <C>         
 ASSETS

 Current assets:
    Cash                                           $    455,158         $     10,405
    Accounts receivable                                 292,937              104,015
    Inventories                                       2,191,548            1,609,265
    Prepaids and other                                  146,605               64,482

                                                   ------------         ------------
       Total current assets                           3,086,248            1,788,167

 Property & equipment, net                              726,241              662,028

 Goodwill, net                                        2,668,647            2,747,499

 Other assets                                           263,456              136,400

 Net assets-discontinued operations                          --              274,332

                                                   ------------         ------------
                                                   $  6,744,592         $  5,608,426

                                                   ============         ============

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities:
    Current portion of long term debt              $    562,710         $     77,454
    Notes payable                                         9,459               48,671
    Accounts payable                                    763,527              305,473
    Accrued liabilities                               1,776,670              867,177

                                                   ------------         ------------
       Total current liabilities                      3,112,366            1,298,775

 Long term debt, net of current portion                 164,936              726,108

 Shareholders' equity:
    Common stock, $0.001 par value;
       50,000,000 shares authorized;
       13,698,680 and 13,536,980 shares
       issued and outstanding, respectively              13,699               13,537
    Paid in capital                                  11,855,547           11,593,209
    Accumulated deficit                              (8,397,602)          (8,020,093)
    Cumulative translation adjustment                    (4,354)              (3,110)

                                                   ------------         ------------
                                                      3,467,290            3,583,543

                                                   ------------         ------------
                                                   $  6,744,592         $  5,608,426
                                                   ============         ============
</TABLE>

 See notes to condensed consolidated financial statements 



                                       -3-
<PAGE>   4

          GLOBENET INTERNATIONAL I, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          (UNAUDITED)


<TABLE>
<CAPTION>
                                                             FOR THE QUARTER ENDED JUNE 30,
                                                             ------------------------------
                                                                 1998              1997
                                                             ------------      ------------
<S>                                                          <C>               <C>          
 Sales                                                       $  6,641,100      $  2,997,400
 Cost of goods sold                                             1,680,736           802,835
                                                             ------------      ------------
    Gross margin                                                4,960,364         2,194,565
 Operating expenses
    Distributor commissions                                     2,647,254         1,061,905
    Selling, general and administrative                         2,152,325         1,369,758
                                                             ------------      ------------
       Total operating expenses                                 4,799,579         2,431,663
                                                             ------------      ------------
 Income (loss) before income taxes                                160,785          (237,098)
    Provision for income taxes                                         --                --
                                                             ------------      ------------
 Income (loss) from continuing operations                         160,785          (237,098)
 Income (loss) from discontinued operations                      (103,125)           38,464
                                                             ------------      ------------
 Net income (loss)                                           $     57,660      $   (198,634)
                                                             ============      ============

 Income (loss) per share:
    Income (loss) from continuing operations per share       $       0.01      $      (0.02)
    Income (loss) from discontinued operations per share            (0.01)               --
                                                             ------------      ------------
    Net income (loss) per share                              $         --      $      (0.02)
                                                             ============      ============
    Weighted average common shares outstanding                 13,593,397        12,195,960
                                                             ============      ============
</TABLE>




See notes to condensed consolidated financial statements.



                                       -4-

<PAGE>   5

          GLOBENET INTERNATIONAL I, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          (UNAUDITED)


<TABLE>
<CAPTION>
                                                              FOR THE SIX MONTHS ENDED JUNE 30,
                                                              ---------------------------------
                                                                     1998             1997
                                                                ------------      -----------
<S>                                                             <C>               <C>        
 Sales                                                          $ 11,299,871      $ 5,765,447
 Cost of goods sold                                                2,946,599        1,541,153
                                                                ------------      -----------
    Gross margin                                                   8,353,272        4,224,294
 Operating expenses
    Distributor commissions                                        4,411,252        2,052,123
    Selling, general and administrative                            3,940,945        2,408,422
                                                                ------------      -----------
       Total operating expenses                                    8,352,197        4,460,545
                                                                ------------      -----------
 Income (loss) before income taxes                                     1,075         (236,251)
    Provision for income taxes                                            --               --
                                                                ------------      -----------
 Income (loss) from continuing operations                              1,075         (236,251)
 Income (loss) from discontinued operations                         (149,283)          38,464
                                                                ------------      -----------
 Net income (loss)                                              $   (148,208)     $  (197,787)
                                                                ============      ===========
 Income (loss) per share:
    Income (loss) from continuing operations per share          $         --
    Income (loss) from discontinued operations per share               (0.01)
                                                                ------------
    Net income (loss) per share                                 $      (0.01)
                                                                ============
    Weighted average common shares outstanding                    13,565,188
                                                                ============

 Pro forma information:
    Pro forma loss from continuing operations                                     $  (237,098)
    Pro forma income from discontinued operations                                      63,272
                                                                                  -----------
    Pro forma net loss                                                            $  (173,826)
                                                                                  ===========
    Pro forma loss from continuing operations per share                           $     (0.02)
    Pro forma income from discontinued operations per share                              0.01
                                                                                  -----------
    Pro forma net loss per share                                                  $     (0.01)
                                                                                  ===========
    Weighted average common shares outstanding                                     12,159,044
                                                                                  ===========
</TABLE>


See notes to condensed consolidated financial statements.

                                       -5-



<PAGE>   6

          GLOBENET INTERNATIONAL I, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
          (UNAUDITED)
<TABLE>
<CAPTION>
                                                        FOR THE SIX MONTHS ENDED JUNE 30,
                                                        --------------------------------
                                                               1998            1997
                                                            -----------      ---------
<S>                                                         <C>              <C>       
 Cash flows from operating activities:
    Continuing operations
       Income (loss) from continuing operations             $     1,075      $(236,251)
       Adjustment for non-cash items:
         Depreciation and amortization                          164,800        120,805
         (Increase) decrease in accounts receivable            (189,010)       (44,884)
         (Increase) decrease in inventory                      (603,174)      (355,590)
         (Increase) decrease in prepaids and other              (83,585)       (33,223)
         (Increase) decrease in other assets                    (52,836)       (58,409)
         Increase (decrease) in accounts payable
           and accrued expenses                               1,503,037         37,944
         Increase (decrease) in notes payable                   (47,307)       (41,901)
                                                            -----------      ---------
    Cash flows from continuing operations                       693,000       (611,509)
                                                            -----------      ---------
    Discontinued operations
       Income (loss) from discontinued operations              (149,283)        38,464
       Adjustment for non-cash items:
         Depreciation and amortization                           20,254          9,467
         (Increase) decrease in accounts receivable            (105,370)            --
         (Increase) decrease in inventory                        41,458          1,382
         (Increase) decrease in other assets                    (79,838)           786
         Increase (decrease) in accounts payable
           and accrued expenses                                 (39,739)        (5,087)
                                                            -----------      ---------
    Cash flows from discontinued operations                    (312,518)        45,012
                                                            -----------      ---------
 Total cash provided by (used for) operating activities         380,482       (566,497)
                                                            -----------      ---------
 Cash flows from investing activities:
    Purchase of property and equipment                         (171,889)       (74,444)
    Proceeds from sale of equipment                                  --         15,000
    Cash flow from discontinued operations                       39,034        (98,739)
    Cash acquired by merger                                          --         61,694
                                                            -----------      ---------
 Total cash provided by (used for) investing activities        (132,855)       (96,489)
                                                            -----------      ---------
 Cash flows from investing activities:
    Proceeds from private placement                             237,500             --
    Issuance of long term debt                                       --        725,000
    Payments of long term debt and capital leases               (41,188)       (36,802)
    Repayment of advances from shareholder                           --        (51,028)
                                                            -----------      ---------
 Total cash provided by (used for) financing activities         196,312        637,170
                                                            -----------      ---------
 Effect of exchange rate changes on cash flows                      814            869
                                                            -----------      ---------
 Net increase (decrease) in cash                                444,753        (24,947)
 Cash, beginning of period                                       10,405         94,630
                                                            -----------      ---------
 Cash, end of period                                        $   455,158      $  69,683
                                                            ===========      =========
</TABLE>


See notes to condensed consolidated financial statements.



                                       -6-

<PAGE>   7


                         GLOBENET INTERNATIONAL I, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

The accompanying condensed consolidated financial statements were prepared by
management without audit. These financial statements have not been examined by
independent public accountants. Management believes that these financial
statements present fairly, in all material respects, the information set forth
therein. However, certain disclosures required by generally accepted accounting
principles have been omitted or condensed. These financial statements should be
read in conjunction with the Company's Form 10-K for the year ended December 31,
1997.

NOTE 2 - BUSINESS HISTORY:

HISTORY - The Company was organized February 12, 1988 as Jason Ray Corporation
("JRC") for the purpose of combining with other businesses. In April 1988, JRC
filed an initial public offering registration statement on Form S-1 with the
Securities and Exchange Commission ("SEC"). JRC changed its name to Seven Oaks
Farms, Ltd. ("Seven Oaks") on July 1, 1988. From approximately May 1991 until
October 1995 Seven Oaks was a dormant entity, conducting no business activities.
Effective November 1, 1995 Seven Oaks merged with Mighty Power, Inc. ("MPI").
The merger, a purchase under Accounting Principles Board Opinion 16, was
accounted for as a reverse merger with MPI being the acquirer. The Company then
changed its name to Mighty Power USA, Inc. ("Mighty Power").

Effective April 1, 1997, Mighty Power merged with GlobeNet Inc. (the "Merger").
In connection with the Merger the Company effected a one for seven reverse stock
split (all share figures have been adjusted to reflect this reverse split). The
Company then issued 7,886,415 new shares to the shareholders of GlobeNet Inc. in
exchange for 100% of the outstanding stock of GlobeNet Inc. In addition, under
the terms of the Merger agreement, certain shareholders of the Company
transferred an additional 2,541,427 shares of common stock to the GlobeNet Inc.
shareholders. As a result, the shareholders of GlobeNet Inc. obtained 86% of the
then outstanding common stock of the Company. In connection with these
transactions, the Company changed its name to GlobeNet International I, Inc.
("GNI").

The transaction, a purchase under Accounting Principles Board Opinion 16, has
been accounted for as a reverse merger with GlobeNet Inc. being the acquirer.
Therefore, GlobeNet Inc.'s historical financial statements are now the Company's
historical financial statements.

Concurrent with the Merger, an affiliate of the Company, Great Xpectations
Marketing, Inc.("GXI"), acquired all the assets and liabilities of two other
affiliates of the Company, Health Thru Nature, Inc. ("HTN") and Mighty Power USA
L. C. ("MPLC") for $100,000 in notes payable. The Company then purchased all the
outstanding common stock of GXI for an additional $100,000 note payable. These
transactions were also accounted for as purchases.



                                       -7-
<PAGE>   8


After the merger, GXI conducted the business operations formerly conducted by
Mighty Power, GXI, HTN and MPLC (the "Great Xpectations Division"). GNI and
three subsidiaries, Royal BodyCare, Inc., Arlington Laboratories, Inc. and Royal
BodyCare, Inc. (Canada), conducted the business operations formerly conducted by
GlobeNet Inc. (the "Royal BodyCare Division").

As described in Note 3, in June 1998, the Company announced plans to spin off
GXI to the Company's shareholders. As a result, the operations of GXI are
classified in the accompanying financial statements as discontinued operations.

OPERATIONS - The Company is engaged in the marketing of nutritional supplements
and personal care products. As described above, prior to the GXI spin off, the
Company operated its business through two divisions: the Royal BodyCare Division
and the Great Xpectations Division. The two divisions represented the separate
business strategies and product lines of GlobeNet Inc. and Mighty Power
preceding the Merger described above.

GlobeNet Inc. was incorporated in Texas in June 1995 by Clinton H. Howard, to
serve as a holding company for certain companies affiliated with Mr. Howard. In
July 1995, all of the outstanding capital stock of these affiliated companies
was contributed to GlobeNet Inc. by Mr. Howard and his immediate family.

The Company's principle operations are conducted through the Royal BodyCare
Division. It's primary U.S. marketing operations are conducted through Royal
BodyCare, Inc. ("RBC-US"), formed by Mr. Howard in 1991. In 1991 Mr. Howard
formed Arlington Laboratories, Inc. ("Arlington"), for the purpose of operating
a facility to test the Company's products and perform certain private label
manufacturing activities. In 1992 Mr. Howard formed Royal BodyCare, Inc.
(Canada) ("RBC-Canada") to market products in Canada through a network of
independent distributors. RBC-Canada owns all of the outstanding stock of Pure
Life International Products, Inc. ("Pure Life") which it purchased in 1992. Pure
Life has been in business since 1982.

In 1995 the Company entered into separate agreements to license the exclusive
rights to sell its products in Indonesia and Sweden through office/warehouse
facilities owned and operated by third parties in the respective countries. In
1996 the Company entered into a similar arrangement with a third party licensee
to market the Company's products in Japan. Under these agreements distributors
in these countries are compensated according to the same compensation plan as
that is used for the Royal BodyCare Division independent distributors.

NOTE 3 - GXI SPIN OFF:

In June 1998, the Company announced plans to spin off GXI to the Company's
shareholders. The spin off will be accomplished through the issuance of one
share of GXI for each two shares of the Company to shareholders of record of the
Company as of June 5, 1998. For accounting purposes, this spin off was effective
at the close of business on June 30, 1998. The Company is in process of
preparing a registration statement on Form S-1 covering the issuance of the GXI
shares. GXI is being spun off because management believes that the Company and
GXI will be more effective as separate entities in attracting new distributors
and promoting



                                       -8-

<PAGE>   9


sales of their respective products. In connection with the spin off, the Company
recorded a dividend of $225,048 in the second quarter of 1998. The Company has
classified the operations of GXI as discontinued operations in the accompanying
financial statements.

NOTE 4 - EARNINGS (LOSS) PER SHARE:

Earnings (loss) per share ("EPS") are calculated in accordance with Statement of
Financial Accounting Standards No. 128 "Earnings per Share" ("SFAS 128"), which
was adopted in 1997 for all years presented. Basic EPS is computed by dividing
income (loss) available to common shareholders by the weighted average number of
common shares outstanding during the period. Diluted EPS is not presented since
it would be anti-dilutive or not represent a material change.

SEC Staff Accounting Bulletin Number 1B.2 "Pro Forma Financial Statements and
Earnings per Share" ("SAB 1B.2"), requires pro forma statement of operations
information and EPS when historical financial statements are not indicative of
ongoing activity. As a result of the Company's Merger in April 1997, the
statement of operations for the six months ended June 30, 1997 does not reflect
the complete historical earnings (losses) of the combined entities. Therefore
unaudited pro forma information has been presented on the bottom of the
consolidated statement of operations for the six months ended June 30, 1997
which reflects the Company's income (loss) and EPS as if the Merger had occurred
at the beginning of 1997.

NOTE 5 - INVENTORIES:

<TABLE>
<CAPTION>
                                 June 30, 1998    December 31, 1997
                                 -------------    -----------------
<S>                                <C>                <C>       
 Finished goods                    $1,713,775         $1,345,041
 Packaging materials and other        477,773            264,224
                                   ----------         ----------
                                   $2,191,548         $1,609,265
                                   ==========         ==========
</TABLE>




NOTE 6 - GOODWILL:

Goodwill was recorded as a result of several acquisitions made by the Company
(including certain pre Merger acquisitions by GNI):

<TABLE>
<CAPTION>

                                          June 30, 1998      December 31, 1997
                                          -------------      -----------------
<S>                                        <C>                  <C>        
 Pure Life                                 $   843,622          $   843,622
 Light Force, Inc. ("Light Force")           2,284,215            2,284,215
                                           -----------          -----------
                                             3,127,837            3,127,837
 Less - accumulated amortization              (459,190)            (380,338)
                                           -----------          -----------
                                           $ 2,668,647          $ 2,747,499
                                           ===========          ===========
</TABLE>



Goodwill is amortized over 20 years and is reviewed for impairment on an annual
basis.






                                       -9-

<PAGE>   10

NOTE 7 - ACCRUED LIABILITIES:

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>

                                June 30, 1998    December 31, 1997
                                -------------    -----------------
<S>                               <C>                <C>     
 Distributor commissions          $1,122,195         $570,962
 Sales and other taxes               312,238           70,665
 Accrued payroll expenses            196,881          147,464
 Other                               145,356           78,086
                                  ----------         --------
                                  $1,776,670         $867,177
                                  ==========         ========

</TABLE>

NOTE 8 - LONG TERM DEBT:

Long term debt consists of the following:

<TABLE>
<CAPTION>
                               June 30, 1998    December 31, 1997
                               -------------    -----------------
<S>                             <C>                <C>      
 Convertible notes              $ 513,000          $ 538,000
 Notes payable - banks             90,632            122,630
 Debentures                        25,000             25,000
 Capital leases                    99,014            117,932
                                ---------          ---------
                                  727,646            803,562
 Less - current portion          (562,710)           (77,454)
                                ---------          ---------
                                $ 164,936          $ 726,108
                                =========          =========
</TABLE>


In 1997, the Company sold convertible debentures aggregating $730,000. The notes
bear interest at 10% payable quarterly, and are due two years from the date of
issuance. The notes are convertible into common stock of the Company at any time
prior to maturity at the option of the holder based on a per share conversion
price of $1.32. As of June 30, 1998, $217,000 of these notes had been converted
into shares of the Company's common stock.

Included in notes payable-banks are three notes assumed in connection with the
acquisition of Light Force in June 1996. These notes bear interest at prime plus
5% and are due in monthly payments aggregating $3,311 plus interest through
November 2000. One note was assumed at the time of the acquisition and two
additional notes were assumed in 1997 in lieu of a cash payment for commissions
payable (see Note 13).

Included in notes payable-banks is a note made in January 1995 by RBC-Canada
whereby it borrowed funds for a three-year term payable in monthly principal
installments of $600, plus interest, with interest calculated at prime plus
1.5%. Proceeds of this borrowing were used to purchase leasehold improvements at
RBC-Canada's office/warehouse facility in Vancouver, B.C.

In 1994, RBC-US sold a $25,000 debenture, the proceeds of which were used for
working capital. The principal portion of this debenture is due upon maturity in
2002. Interest on the debenture is payable monthly at a rate of 15%.




                                      -10-

<PAGE>   11

Certain purchases of telephone and computer equipment by RBC-US have been
financed through capital leases. Such leases have terms ending in 2002 and have
various interest rates approximating 15%.

NOTE 9 - SHAREHOLDERS' EQUITY:

In connection with private placements of its common stock in October 1997 and
June 1998, the Company issued to the purchasers five year warrants to purchase
an aggregate of 1,142,857 shares of unregistered common stock of the Company at
an exercise price of $2.00 per share. The investors also received certain
registration rights covering the private placement and warrant shares
exercisable under certain circumstances described in the stock purchase
agreements.

In April 1998, in connection with an agreement to perform certain financial
consulting services, the Company issued a two year warrant to purchase 600,000
shares of unregistered common stock of the Company at an exercise price of $.75
per share, which was the market price of the common stock at the date of
issuance.

In addition, the Company has granted options to purchase an additional 817,540
shares of common stock at exercise prices ranging from $.89 to $2.40 through
2002. All options were issued at or above market price at the time of issuance.

NOTE 10 - INCOME TAXES:

The Company has adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". The Statement requires the use of an asset and
liability approach for the accounting and financial reporting of income taxes.
Deferred tax assets resulting from net operating loss carry-forwards have not
been recorded as there is doubt about the Company's ability to use them during
the carry-forward period. Therefore such deferred tax assets have been fully
offset by a valuation allowance.

The Company files a consolidated tax return with its subsidiaries. Deferred
income taxes are the result of temporary differences between the amount of
assets and liabilities recognized for financial reporting and tax purposes for
the Company's Canadian subsidiaries.







                                      -11-

<PAGE>   12

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Quarter Ended June 30, 1998 Compared with the Quarter Ended June 30, 1997

Sales for the quarter ended June 30, 1998 were $6,641,000 compared with same
quarter sales in the prior year of $2,997,000, an increase of $3,644,000 or
122%. This increase was mainly attributable to increasing sales of the Company's
antioxidant product, Microhydrin(TM), and growth in the Company's independent
distributor base in the U.S. Microhydrin(TM) was introduced in September 1997
and accounted for approximately 30% of second quarter 1998 sales.

Cost of goods sold for the quarter ended June 30, 1998 was $1,681,000 compared
with same quarter cost of goods sold in the prior year of $803,000, an increase
of $878,000 or 109%. As a percentage of sales, cost of goods sold was 25% in the
second quarter of 1998 compared with 27% in the second quarter of 1997. This
improvement in the cost of goods sold percentage was due to a decline, as a
percentage of total sales, of export sales to the Company's licensees. Export
sales have a lower gross margin since the Company does not pay distributor
commissions on these sales. The improvement in the percentage of cost of goods
sold was also attributable to the change in product sales mix. Microhydrin(TM)
has a lower cost of goods sold percentage than the average of the Company's
other products.

Distributor commissions for the quarter ended June 30, 1998 were $2,647,000
compared with same quarter distributor commissions in the prior year of
$1,062,000, an increase of $1,585,000 or 149%. As a percentage of sales,
distributor commissions in the second quarter of 1998 were 40% compared with 36%
in the second quarter of 1997. The increase in distributor commissions as a
percentage of sales was partially due to an increase in the percentage of the
Company's distributors who qualified to receive maximum commission percentages
under the distributor compensation plan. This increase was also due to the
decline, as a percentage of sales, of export sales to the Company's licensees.
The Company does not pay distributor commissions on export sales.

Selling, general and administrative expenses ("S,G&A") for the quarter ended
June 30, 1998 were $2,152,000 compared with same quarter S,G&A in the prior year
of $1,370,000, an increase of $782,000 or 57%. As percentage of sales, S,G&A in
the second quarter of 1998 was 32% compared with 46% in the second quarter of
1997. The improvement in S,G&A as a percentage of sales resulted from certain
investments made by the Company in the second quarter of 1997 to attract new
distributors and promote sales of its products. The distributors added to the
Company as a result of these investments were a key factor in generating the
growth in sales and the independent distributor base that the Company began to
experience in September of 1997 with the introduction of Microhydrin(TM).





                                      -12-

<PAGE>   13

Income from continuing operations for the quarter ended June 30, 1998 was
$161,000, or $.01 per share, compared with a same quarter loss from continuing
operations in the prior year of $237,000, or $.02 per share. The Company
incurred a loss from continuing operations in the second quarter of 1997
primarily due to the expenses incurred to attract new distributors and to
promote sales of its products.

Discontinued operations represent the operations of GXI. The loss from
discontinued operations for the quarter ended June 30, 1998 was $103,000, or
$.01 per share, compared with income from discontinued operations in the same
quarter of the prior year of $38,000, or $.00 per share. This decline was due to
a decline in 1998 sales compared to 1997 sales that was attributable to a
decline in GXI's distributor base. GXI management believes that GXI will be able
to more effectively promote sales of its products and attract distributors after
its spin off from the Company.

Net income for the quarter ended June 30, 1998 was $58,000, or $.00 per share,
compared with same quarter net loss in the prior year of $199,000, or $.02 per
share. This improvement was due to the factors described above.

Six Months Ended June 30, 1998 Compared with the Six Months Ended June 30, 1997

Sales for the six months ended June 30, 1998 were $11,300,000 compared with
sales in the first six months of the prior year of $5,765,000, an increase of
$5,535,000 or 96%. This increase was attributable to increasing sales of the
Company's antioxidant product, Microhydrin(TM), and growth in the Company's
independent distributor base in the U.S. Microhydrin(TM) was introduced in
September 1997 and accounted for approximately 25% of sales during the first six
months of 1998.

Cost of goods sold for the six months ended June 30, 1998 was $2,947,000
compared with cost of goods sold in the first six months of the prior year of
$1,541,000, an increase of $1,406,000 or 91%. As a percentage of sales, cost of
goods sold was 26% in the first six months of 1998 compared with 27% in the
first six months of 1997. This improvement in the cost of goods sold percentage
was due to a decline, as a percentage of total sales, of export sales to the
Company's licensees. Export sales have a lower gross margin since the Company
does not pay distributor commissions on these sales. The improvement in the
percentage of cost of goods sold was also attributable to the change in product
sales mix. Microhydrin(TM) has a lower cost of goods sold percentage than the
average of the Company's other products.

Distributor commissions for the six months ended June 30, 1998 were $4,411,000
compared with distributor commissions in the first six months prior year of
$2,052,000, an increase of $2,359,000 or 115%. As a percentage of sales,
distributor commissions in the first six months of 1998 were 39% compared with
36% in the first six months of 1997. The increase in distributor commissions as
a percentage of sales was partially due to an increase in the percentage of the
Company's distributors who qualified to receive maximum commission percentages
under the distributor compensation plan. This increase was also due to the
decline, as a percentage of sales, of export sales to the Company's licensees.
The Company does not pay distributor commissions on export sales.



                                      -13-
<PAGE>   14

Selling, general and administrative expenses ("S,G&A") for the six months ended
June 30, 1998 were $3,941,000 compared with S,G&A in the first six months of the
prior year of $2,408,000, an increase of $1,533,000 or 64%. As percentage of
sales, S,G&A in the first six months of 1998 was 35% compared with 42% in the
first six months of 1997. The improvement in S,G&A as a percentage of sales
resulted from certain investments made by the Company in the second quarter of
1997 to attract new distributors and promote sales of its products. The
distributors added to the Company as a result of these investments were a key
factor in generating the growth in sales and the independent distributor base
that the Company began to experience in September of 1997 with the introduction
of Microhydrin(TM).

Income from continuing operations for the six months ended June 30, 1998 was
$1,000, or $.00 per share, compared with a loss from continuing operations in
the first six months of the prior year of $236,000. The Company incurred a loss
from continuing operations in the first six months of 1997 primarily due to the
expenses incurred to attract new distributors and to promote sales of its
products.

Discontinued operations represent the operations of GXI. The loss from
discontinued operations for the six months ended June 30, 1998 was $149,000, or
$.01 per share, compared with income from discontinued operations in the same
period of the prior year of $38,000. This decline was due to a decline in 1998
sales compared to 1997 sales that was attributable to a decline in GXI's
distributor base. GXI management believes that GXI will be able to more
effectively promote sales of its products and attract distributors after its
spin off from the Company.

Net loss for the six months ended June 30, 1998 was $148,000, or $.01 per share,
compared with a net loss in the first six months of the prior year of $198,000.
This improvement was due to the factors described above.

There have been no economic events or changes that have materially effected the
sales or operating results of the Company and the Company is not aware of any
economic trends or uncertainties that the would have a material impact on future
sales or the operating results. The Company believes that it has purchased its
products at the best price available and that any price increases in the
foreseeable future will be small. Any such price increases would be passed
through to the Company's customers. In addition, the Company does not believe at
this time that inflation will have a material impact on its operating results.

LIQUIDITY AND CAPITAL RESOURCES

During the first six months of 1998, the Company had a net increase in cash of
$445,000. This increase in cash resulted primarily from net cash provided by
operating activities of $380,000, and $237,000 in net proceeds from the private
placement of common stock, that was partially offset by the net cash used by
investing activities of $172,000. The net cash used by investing activities
resulted from the Company's purchase of property and equipment. The net cash
provided by operations was primarily the result of an increase in accounts
payable and accrued liabilities (primarily accounts payable and accrued
distributor commissions) of $1,503,000 that was partially offset by an increase
in inventory and accounts receivable of $603,000 and $189,000 respectively. This
increase was related to the significant sales increase experienced by the
Company.



                                      -14-

<PAGE>   15


Consistent with industry practice, most of the Company's sales are paid at the
time of order. Therefore, the Company's primary working capital need is to fund
the increases in inventory necessary to support sales growth. Because the
Company's sales are generated through independent distributors who do not
maintain a significant inventory, it is necessary for the Company to have
products on hand when the distributors place their orders. During periods of
sales growth, the Company must purchase the inventory in anticipation of sales
which creates the need for additional working capital.

The Company believes that it will be able to continue to fund moderate sales
increases through its operations. Should sales growth increase beyond the
Company's ability to finance its growth internally, the Company would seek
outside sources of capital including bank borrowings, other types of debt
financing or an equity offering. There is no assurance, however, that the
Company would be able to obtain any additional outside financing. The Company
has no plans or requirements for any significant capital expenditures during the
next twelve months. Other than those factors already described, the Company is
not aware of any trends or uncertainties that would significantly effect its
liquidity or capital resources in the future.

FORWARD LOOKING STATEMENTS

Important Considerations Related to Forward-Looking Statements. It should be
noted that this discussion contains forward looking statements, which are
subject to substantial risks and uncertainties. There are a number of factors,
which could cause actual results to differ materially from those anticipated by
statements made herein. Such factors include, but are not limited to, changes in
general economic conditions, the growth rate of the market for the Company's
products and services, the timely availability and market acceptance of these
products and services, and the effect of competitive products and pricing, as
well as a number of other risk factors which could effect the future performance
of the Company.





                                      -15-

<PAGE>   16

PART II. OTHER INFORMATION



Item 1.           Legal Proceedings.

         Don Whigham and Whigham & Associates, Inc., plaintiffs vs. Clinton H.
Howard, Royal BodyCare, Inc. and GlobeNet International, Inc., defendants, in
the County Court at Law No. 3, Dallas County, Texas, Cause No. 97-08040-C. On
August 28, 1997, plaintiffs, former distributors of Registrant's products, sued
Registrant asserting causes of action for, inter alia, breach of contract and
fraud. Plaintiffs have not specified the amount of actual damages, exemplary
damages or statutory damages being sought. Registrant has filed an answer
denying all the material allegations of the complaint and asserting
counter-claims for breach of contract, negligence and tortious interference with
business relations. The parties are currently engaged in discovery. Registrant's
motion to compel arbitration was denied; the Registrant has appealed this
ruling. This case is not currently set for trial.

         Naterra International, Inc., plaintiff, vs. Royal BodyCare, Inc.,
defendant, in the 68th Judicial District Court of Dallas County, Texas, cause
number DV98-5504. On July 17, 1998, plaintiff sued Registrant asserting causes
of action for breach of contract, arising from an alleged breach of Sales and
Manufacturing Agreement, dated May 22, 1995. The plaintiff is also asserting a
claim in a suit on a sworn account. The plaintiff has asserted damages for this
claim in the amount of $4,946.11. The plaintiff has not specified the amount of
actual damages being sought in the claim for breach of contract. The plaintiff
has not plead exemplary or punitive damages. The defendant has filed an answer
denying all the material allegations of the complaint and is asserting
counter-claims against the plaintiff for breach of contract and breach of
express and implied warranties. The case is not yet set for trial.

Item 2.           Changes in Securities.

         None

Item 3.           Defaults Upon Senior Securities.

         None

Item 4.           Submission of Matters to a Vote of Security Holders.

         The Company held its Annual Meeting of Shareholders on July 10, 1998.
At this meeting, certain matters were submitted to a vote of shareholders. The
results of shareholder voting were as follows:



                                      -16-
<PAGE>   17


         a.       The following persons were elected to serve as directors until
                  the 1999 Annual Meeting of Shareholders:

                                  Clinton H. Howard
                                  Andrew V. Howard
                                  Steven E. Brown
                                  Forrest E. Watson
                                  R. Leon York
                                  Frank E. Franasiak

         b.       The shareholders approved the adoption of the Company's 1998
                  Stock Option Plan covering 500,000 shares of the Company's
                  common stock. The Plan is an incentive stock option plan under
                  which incentive stock options and non-qualified stock options
                  may be granted to certain employees as well as non-employees
                  who render services to the Company.

         c.       The shareholders approved a proposal to redomesticate the
                  Company to the State of Nevada. As of the date of this report,
                  this redomestication has not been completed.

         d.       The shareholders approved the appointment of Osborn, Swalm, 
                  Thomas & Associates, P. L. L. C. as the Company's
                  independent public accountants.

Item 5.           Other Information.

         None



                                      -17-
<PAGE>   18

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                Globenet International I, Inc.
                                Registrant



                                By: /s/ Clinton H. Howard
                                   -------------------------------------
                                Its: President





DATE:   August 12, 1998
        Dallas, Texas




                                      -18-
<PAGE>   19
                                INDEX TO EXHIBITS

<TABLE>           
<CAPTION>
           EXHIBIT
           NUMBER                                 EXHIBIT
           -------                                -------
             <S>                                <C>
             27                                 Financial Data Schedule
</TABLE>