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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Commission file number 0-22520

     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 such filing requirements for the past 90 days. Yes [X]       No [   ]

     The registrant had 232,631,074 shares of common stock, $0.001 par value, outstanding as of November 11, 2002.

TABLE OF CONTENTS

i

Terremark Worldwide, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

The accompanying notes are an integral part of these consolidated financial statements.

1

Terremark Worldwide, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations

The accompanying notes are an integral part of these consolidated financial statements.

2

Terremark Worldwide, Inc. and Subsidiaries
Condensed Consolidated Statement of Changes in Stockholders’ Deficit

The accompanying notes are an integral part of these consolidated financial statements.

3

Terremark Worldwide, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows

The accompanying notes are an integral part of these consolidated financial statements.

4

Terremark Worldwide, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Continued)

Supplemental Disclosure:

During the six months ended September 30, 2002, the Company in addition to cash payment, issued 800,000 warrants valued at $301,700 to third parties.

During the six months ended September 30, 2002, $3,350,000 in notes payable, $370,000 in liabilities of discontinued operations and $239,000 in accrued interest were converted to equity and reclassified to common stock and paid in capital.

During the six months ended September 30, 2002, the Company reclassified $950,000 in common stock subscriptions to common stock and paid in capital.

During the six months ended September 30, 2002, the Company retired $2,428,125 in treasury shares.

During the six months ended September 30, 2002, the Company reduced leasehold improvements and construction payables by $904,156 as a result of final agreement reached with a vendor.

During the six months ended September 30, 2002, $180,000 in common stock was issued primarily for satisfaction of a note payable.

During the six months ended September 30, 2002, 100,000 warrants valued at $60,000 were issued and subsequently converted to 100,000 shares of common stock for $61,000 through the conversion plus receipt of $1,000 in cash.

The accompanying notes are an integral part of these consolidated financial statements.

5

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

1.     Business and Organization

Terremark Worldwide, Inc. (together with its subsidiaries, the “Company”) is a multinational corporation that provides Internet infrastructure and managed services. It is the owner and operator of the NAP of the Americas, the fifth Tier-1 Network Access Point (“NAP”) in the world. The NAP of the Americas located in Miami, Florida, was fully placed in service on July 1, 2001. The Company’s strategy is to leverage its experience as the owner and operator of the NAP of the Americas by developing and operating TerreNAPSM Data Centers in Latin America and Europe. TerreNAPSM Data Centers provide exchange point, collocation and managed services to carriers, Internet service providers, other Internet companies and enterprises.

2.     Liquidity

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Through September 30, 2003, $89.1 million of the Company’s liabilities, including notes, construction and other trade payables are or will come due. Additionally $30.7 million of Convertible Subordinated Debentures have been classified as a current liability. The Company had a net working capital deficit of approximately $116.2 million and stockholder’s deficit of approximately $45.3 million at September 30, 2002 and incurred a net loss of approximately $17.4 million for the six months then ended.

Management expects the Company will need an infusion of cash to fund business operations during this fiscal year ending March 31, 2003. The Company’s liquidity needs are primarily related to repayment of construction payables and debt and to support operations. The Company has developed a plan to continue operating through the year ended March 31, 2003. Actual funding requirements are dependent upon management’s ability to meet its expectations and will be significantly impacted if some or all of the following assumptions, which underly the expectations are not met:

	•		restructuring of approximately $21.6 million of construction payables into long term payables or equity or a combination thereof;
	•		signing and installation of additional customer contracts at NAP of the Americas; and
	•		no funding under any of the Company’s guarantees.

On November 8, 2002, CRG, LLC entered into an agreement with Cupertino Electric, Inc. to purchase $18.5 million of the Company’s debt and all associated rights held by Cupertino. This amount represents the entire construction payable that the Company owes to Cupertino. On November 11, 2002, the Company entered into an agreement with CRG that provides the Company the option, upon the closing of the purchase of the debt by CRG from Cupertino, to repay the entire debt at a discount by either issuing shares of the Company’s common stock valued at $0.75 per share or making a cash payment. The Company’s option must be exercised simultaneously with the closing of CRG’s purchase of the debt from Cupertino. If the purchase by CRG of the debt from Cupertino closes on or before November 22, 2002, the Company may choose to pay $9.5 million in cash or issue 24,666,667 shares. If the purchase by CRG of the debt from Cupertino closes after November 22, 2002 and on or before December 15, 2002, the Company may choose to pay $11.0 million in cash or issue 24,666,667 shares.

6

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

The Company’s debt to Cupertino is in default as it matured on October 31, 2002 and it has not yet been repaid. As part of the agreement between CRG and Cupertino, Cupertino has agreed not to enforce any of its rights against the Company, but in order to preserve its rights, on November 8, 2002 Cupertino filed an action to enforce the rights it had acquired by virtue of a construction lien. Nevertheless, the standstill will be in effect until the closing of the purchase of the debt by CRG and upon the closing of the purchase of the Company’s debt to Cupertino by CRG the action filed by Cupertino will be dismissed and the default under the debt cured. If the purchase of the debt by CRG does not occur on or before December 15, 2002 the standstill and the agreement between CRG and Cupertino will expire, and the Company will continue to owe the $18.5 million to Cupertino.

	On November 1, 2002 and November 5, 2002, approximately $2.8 million and $1.0 million of the Company’s debt owed to Kinetics came due. As a result of not having repaid these amounts, Kinetics may declare a default under the debt agreement. As of November 14, 2002 no default has been declared and the Company is currently negotiating to reach a settlement with Kinetics.

The Company’s indebtedness with Ocean Bank of $44.0 million contains a cross-default provision linked to a default under the debt agreements with Cupertino and Kinetics. The current default under the debt with Cupertino would allow Ocean Bank to call a default under the credit agreement. However, the Company has obtained a letter from Ocean Bank waiving any default under the credit agreement with them resulting from a default under the Company’s indebtedness to Cupertino or Kinetics. This waiver from Ocean Bank is effective until December 31, 2002.

The Company has not paid approximately $918,000 of accrued interest due September 30, 2002 on the convertible debentures. As a result, $30.7 million of such convertible debentures are in default and classified as a current liability in the Company’s September 30, 2002 balance sheet. As of November 14, 2002 no holder of the debentures requested an acceleration of payment. The Company has made an offer to all of the holders of the convertible debentures to convert their debentures, including accrued interest as of September 30, 2002, into the Company’s common shares at the lower of their current conversion price or a conversion price of $0.75. Approximately $26.4 million of the convertible debentures have stated conversion prices in excess of $0.75 per share. The Company has not paid approximately $28,000 due under its $803,000 note to a financial institution. Accordingly, this note is also in default.

The Company has identified additional potential customers and is actively marketing to them available services at the NAP of the Americas. The Company’s plan is predicated on obtaining additional customer contracts through March 31, 2003, which on an annual basis will generate revenues of approximately $15 million. The Company has also been pursuing and continues to seek sources of additional debt and equity financing. The Company’s failure to obtain adequate terms from creditors and additional debt or equity financing and meet its plan will result in liquidity problems and require the Company to curtail in whole or in part current operations. There can be no assurances that the Company’s plan will be adequately implemented in the time frame contemplated, even if such funds are obtained. Further, any additional equity financing if obtained will be dilutive to existing shareholders. The Company’s ability to obtain financing may be adversely affected by future declines in the technology sector and general economic conditions. As a result of these matters, substantial doubt exists about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

7

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

The Company intends to allocate its financial resources to activities that are consistent with its strategy of developing and operating TerreNAP Data Centers, including the NAP of the Americas. However, the development of the NAP of the Americas and other TerreNAP Data Centers will require substantial capital resources. As part of the Company’s business strategy, it intends to continue to evaluate potential acquisitions, joint ventures and strategic alliances in or with companies that provide services or operations that complement the Company’s existing businesses. These acquisitions may also require financing, which may not be available to it on acceptable terms.

The deployment of the Company’s TerreNAP Data Center strategy will require the Company to expend substantial resources for leases, assets, equipment and hiring of network, administrative, customer support and sales and marketing personnel. These expenditures commence well before a TerreNAP Data Center opens, and it may take an extended period for the Company to approach break-even. To date, the Company has funded its operations through private debt and equity offerings. However, because the Company has not yet achieved positive cash flow from operations, the Company will continue to require capital support until it is cash flow positive. The Company intends to continue to allocate its financial resources to activities that are consistent with its expansion strategy, such as making additional significant investments in sales and marketing and the development of new services. The Company’s business could be adversely affected if it were unable to obtain necessary licenses and approvals in order to expand its services and enter new markets.

The market for Internet infrastructure services has only recently begun to develop and is evolving rapidly. The market for Internet infrastructure services is extremely competitive and subject to rapid technological change. Management believes that the Company has some competitive advantages. However, the market for Internet infrastructure services is characterized by few barriers to entry. Current and potential competitors include: providers of data center services; global, regional and local telecommunications companies and regional Bell operating companies; and information technology outsourcing firms. As the Company continues to expand operations in markets outside the United States, it will also encounter new competitors and competitive environments. The Company believes that the market for Internet infrastructure services is likely to consolidate in the near future, which could result in increased price and other competition.

The Company’s strategy includes the expansion of operations through the opening of additional TerreNAP Data Centers. Some of the Company’s customers are emerging growth companies that may have negative cash flows and the Company may not be able to collect receivables on a timely basis. If the Company were unable to effectively manage its expansion it would have a material adverse effect on its business. The Company’s success is substantially dependent on the continued

8

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

growth of its customer base and the retention of current customers. The Company’s customer service could suffer if it is unable to obtain satisfactory services from local communications providers. The loss of one or more of the Company’s suppliers may slow its growth or cause it to lose customers. The Company’s business could be harmed by prolonged electrical power outages, shortages or increased costs of energy. The Company’s success is also dependent on its Chairman, Manuel D. Medina.

The Company conducts business internationally and its operations could be subject to various foreign taxes. Distributions and other payments from the Company’s subsidiaries and affiliates may also be subject to foreign taxes, reducing its earnings. The Company does not have plans to pay dividends on its common stock and covenants in its financing agreements prohibit the payment of dividends. If the Company’s stock were to be delisted from the American Stock Exchange, its stockholders could find it difficult to sell the Company’s stock and the price of the Company’s stock could be adversely affected.

3.     Summary of Significant Accounting Policies

     Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles for complete annual financial statements. The unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary to present a fair presentation of the results for the interim periods presented. Operating results for the quarter ended September 30, 2002 may not be indicative of the results that may be expected for the year ending March 31, 2003. Amounts as of March 31, 2002, included in the condensed consolidated financial statements have been derived from audited consolidated financial statements as of that date.

	These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended March 31, 2002.

     Use of estimates

The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include revenue and costs related to construction contracts and impairment of long-lived assets.

9

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

     Reclassifications

	Certain reclassifications have been made to the prior periods’ financial statements to conform with current presentation.

     New accounting standards

As of April 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 141 (FASB 141), Business Combinations, and Statement of Financial Accounting Standards No. 142 (FASB 142), Goodwill and Other Intangible Assets. FASB 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. FASB 142 changes the accounting for goodwill from an amortization method to an impairment-only approach.

As of April 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144 (FASB 144), Accounting for the Impairment or Disposal of Long-Lived Assets. FASB 144 supercedes FASB 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of business. FASB 144 retains the requirements of FASB 121 for recognition and measurement of an impairment loss on long-lived assets, and establishes a single accounting model for all long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. The adoption of FASB 143 and 144 has had no impact on the Company’s September 30, 2002 financial results.

In April 2002, the Financial Accounting Standards Board (FASB) approved SFAS 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections. In addition to rescinding SFAS 4, 44, and 64 and amending SFAS 13, SFAS 145 establishes a financial reporting standard for classification of extinguishment of debt in the financial statements in accordance with APB 30. SFAS 145 will be effective for the Company’s fiscal year ended March 31, 2004. Management does not expect the adoption of SFAS 145 to have a material effect on the Company’s financial position or results of operations.

In June 2002, the FASB approved SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146 will be effective for exit or disposal activities initiated after December 31, 2002, with early application encouraged. Management does not expect the adoption of SFAS 146 to have a material effect on the Company’s financial position or results of operations.

10

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

     Significant concentrations

	Two customers accounted for approximately $628,000 and $473,000 in data center revenues for the six months ended September 30, 2002, respectively. Two customers accounted for approximately $420,000 and $240,000 in data center revenues for the three months ended September 30, 2002, respectively.

4.     Identifiable Intangible Assets and Goodwill

Identifiable intangible assets consist primarily of certain rights and contracts. In accordance with FAS 142, the Company ceased amortization of its intangible assets as of April 1, 2002 and therefore recorded no amortization for the six months ended September 30, 2002. During the six months ended September 30, 2002, intangible assets were amortized on the straight-line method over five years. Intangible assets will be tested for impairment annually. The Company does not currently believe its intangible assets are impaired. Identifiable intangible assets and goodwill at September 30, 2002 and March 31, 2002 consist of TECOTA promote interest of $904,964, NAP of the Americas intangible of $9,999,871 and Post Shell goodwill of $2,315,336, net of accumulated amortization of $4,773,029. If in subsequent periods anticipated construction contracts are not entered into, an additional impairment charge for the Post Shell goodwill may be required.

	A reconciliation of net loss and loss per share to exclude amortization expense in the prior year period follows:

11

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

5. Notes Payable

	Notes payable consist of the following:

12

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

	See Note 2 for debt currently in default.
	In May 2002, the Company obtained a $1.5 million loan at 10% interest from its Chief Executive Officer. During September 2002 the Company repaid $500,000 plus accrued interest of $48,493 on this note.

On September 5, 2001, the Company closed on a $48 million loan. During August 2002, the Company modified the facility. Under the modified terms, the initial maturity date has been extended to September 2003 and the Company has the option to exercise two six-month extension periods each at a cost of 0.5% of the principal balance outstanding together with a principal repayment of $2.5 million. During each period under extension, a $250,000 monthly principal repayment plus interest is due. At closing, the total amount of the loan was disbursed except for approximately $6.6 million that was held as an interest reserve. Through June 2002, the interest reserve was disbursed monthly to make interest payments. The amendment reduced the annual interest rate to 7.50%. The Company commenced making monthly interest payments in July 2002. All other material provisions of the credit facility have remained unchanged. To obtain the original loan, the Company paid a $720,000 commitment fee to the lender. The proceeds of the original credit facility were used to:

	•		repay a $10 million short-term loan from Manuel D. Medina, the Company’s Chief Executive Officer, the proceeds of which the Company had used to fund the build out of the NAP of the Americas (he, in turn, used the $10 million to repay a personal $10 million short-term loan from the bank);
	•		repay $3.5 million of debt that the Company owed to the bank under a line of credit personally guaranteed by Mr. Medina;

13

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

	•		pay $1.2 million in loan costs related to the $48 million credit facility (including $720,000 commitment fee); and
	•		fund the NAP of the Americas build out costs.

	The credit facility is secured by all of the Company’s assets and allows for up to a $25 million junior lien position on the assets of our NAP of the Americas, Inc. subsidiary. Mr. Medina has personally guaranteed the $48 million credit facility.

In addition to Mr. Medina’s personal guarantee of the credit facility, and in order to obtain the facility, the bank further required Mr. Medina, prior to the bank disbursing funds under the credit facility, to (i) provide $5.0 million certificate of deposit to the bank as collateral on certain personal loans that Mr. Medina has with the bank and (ii) commit to accelerate the maturity date of those personal loans to December 31, 2001. Subsequent to September 2001, Mr. Medina and the bank changed the maturity date on the personal loans, first to December 31, 2001 and later to July 1, 2002. In the event of the Company’s default under the credit facility Mr. Medina also agreed to subordinate debt that the Company owed to Mr. Medina. Mr. Medina has repaid part of those personal loans to the bank through liquidation of the $5.0 million certificate of deposit in January 2002 leaving an outstanding principal balance of approximately $5.4 million and he exercised his right under such personal loan agreements to extend their maturity date from July 1, 2002 to December 31, 2002.

On September 5, 2001 and in consideration of Mr. Medina’s agreeing to repay his indebtedness to the bank earlier than otherwise required, pledging the certificate of deposit to the bank and personally guaranteeing the $48 million credit facility and approximately $21 million of construction payables, the Company entered into an amended and restated employment agreement with him. Under the terms of the amended and restated employment agreement, the Company will indemnify Mr. Medina from any personal liability related to his guarantees of the Company’s debt, use commercially reasonable efforts to relieve Mr. Medina of all his guarantees of the Company’s debt, provide up to $6.5 million of cash collateral to the bank should Mr. Medina be unable to repay the personal loans when due and provide a non interest-bearing $5.0 million loan to Mr. Medina for as long as his guarantees of the Company’s debt exist. If the loan to Mr. Medina becomes in default, the Company has a right of offset against all amounts payable by the Company to Mr. Medina, the aggregate of which is approximately $3.0 million as of September 30, 2002. The note receivable from Mr. Medina is shown as an adjustment to equity. The $48 million credit facility and the note receivable from Mr. Medina have been approved by the Board of Directors.

In July 2002, the Company and Mr. Medina modified the terms of his $5.0 million non-interest bearing note payable to the Company. As amended, the note has a maturity date of December 5, 2004 and bears interest subsequent to September 5, 2002 at 2%, the applicable federal rate. Interest is due in bi-annual installments. On a quarterly basis, the Company will review the collectibility of this note. As of November 14, the Company owed Mr. Medina approximately $3.0 million. The Company has the right to withhold payment to Mr. Medina of $1,375,000 in amounts owed.

The terms of the Company’s note payable to a financial institution with an $803,168 balance at September 30, 2002 was modified and extended in August 2002. Under the terms of the modified note, the maturity date has been extended to December 2002 and principal and interest payments will be made monthly with remaining amount due at maturity. The note to the financial institution was personally guaranteed by a former officer of a company which the Company acquired during 2000. In connection with that acquisition, the Company agreed to obtain the release of the former officer's personal guarantee and collateral. The Company, the financial institution and the former officer entered into an agreement pursuant to which the former officer's personal guarantee of the note was released. As part of the transaction, $146,832 which had been pledged to the financial institution by the former officer was applied to the loan balance. In addition, the Company paid the former officer $25,000, forgave $25,000 of a loan to the former officer and issued 400,000 shares of the Company's common stock to the former officer. In addition, a $10,000 obligation of the former officer to the Company was modified to provide that any proceeds received by the former officer from the sale of the 400,000 shares shall be applied to the obligation and such obligation shall be repaid no later than August 2003. The Company has agreed to register the shares under the Securities Act. The Company has not paid $29,000 in principal and interest due October 31, 2002 related to this note payable. As a result of not having paid this amount, the financial institution may declare a default under the note.

14

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

6.     Construction Payables – Property and Equipment

Construction payables include approximately $21.6 million of amounts due to two vendors under promissory notes maturing from October 2002 through November 2002 and bearing interest at annual rates ranging from 8.5 to 10 percent (see Note 2). Approximately $18 million of the amounts due under the promissory notes are guaranteed by Mr. Medina. These amounts relate to construction of the NAP of the Americas and the Company’s colocation facility in Santa Clara, California.

7.     Convertible Debt

The Company has outstanding approximately $26.4 million and $4.3 million of 13% and 13.125% subordinated convertible debt as of September 30, 2002. The 13% debt matures on December 31, 2005 and the 13.125% debt matures on August 30, 2004. The debt is convertible into the Company’s stock at a weighted average conversion price of $1.87 and $0.66 for the convertible debt issued at 13% and 13.125%, respectively. Prepayment by the Company is permitted under both debt instruments, but will entitle holders of the 13% subordinated debentures to warrants or a premium over their outstanding principal and interest based upon the following schedule:

	The Company has not paid the accrued interest due on September 30, 2002, of approximately $918,000 (see Note 2).

8.     Changes to Stockholders’ Equity

	During the six months ended September 30, 2002, the Company entered into the following equity transactions:

     Common stock

	In April 2002, the Company received a binding commitment from two directors and some of the Company’s shareholders for the purchase of $7.5 million of common stock at $0.75 per share. In May 2002, the transaction was completed by receiving $3.6 million in cash and the conversion of $3.9 million in short term promissory notes to equity.

15

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

In April 2002, the Company entered into a Put and Warrant purchase agreement with TD Global Finance (“TDGF”). On July 19, 2002, the Company exercised its right to sell TDGF 17,648,824 common shares for $0.58 per share for a total of $10.2 million. In conjunction with the sale, the Company issued three call warrants, each granting TDGF the right to purchase 1,176,588 shares of the Company’s common stock. The warrants expire on January 16, 2003 and may be exercised in any order at $0.57, $0.67 and $0.77 per share, respectively. During August 2002, the Company received the $10.2 million in related cash. The Company used these proceeds and will use the proceeds from any exercise of the warrants for general corporate purposes.

	In June 2002, the NAP de las Americas – Madrid purchased 5 million shares of the Company’s common stock at $1.00 per share. As a result of the sale of common shares to TDGF in July 2002 the Company is obligated to issue an additional 3.6 million shares to NAP de las Americas-Madrid S.A. As of November 14, 2002 these shares have not yet been issued.

	In August 2002, the Company issued 100,000 warrants valued at $60,000 which were subsequently converted to 100,000 shares of common stock for $61,000 through the conversion plus receipt of $1,000 in cash.

     Common stock warrants

	On April 1, 2002, the Company issued warrants to purchase 600,000 shares of common stock to a third party for services. The exercise price of the warrants is $0.40 per share with a $220,800 estimated value. The warrants were immediately exercisable and have a five year life.

	In July 2002, the Company issued warrants to purchase 100,000 shares of common stock to a third party for services. The exercise price of the warrants is $0.54 per share with a $20,900 estimated value. The warrants were immediately exercisable and have a one year life.

	In August 2002, in conjunction with the exercise of the Put and Warrant purchase agreement, the Company issued warrants to purchase 1,176,588 shares of common stock to an international financial institution. The exercise price of the warrants is $0.57, $0.67 and $0.77 per share, respectively, with a $669,479 estimated value. The warrants expire January 16, 2003 and may be exercised in any order.

16

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

9.     Related Party Transactions

	Due to the nature of the following relationships, the terms of the respective agreements might not be the same as those that would result from transactions among wholly unrelated parties. All significant related party transactions require approval by the Company’s Board of Directors.

	In October 2002, the Company made interest payments of approximately $162,000 related to notes payable to shareholders and directors.

	In June 2002, the Company acquired for $250,000, 10% of the equity in the NAP de las Americas-Madrid S.A. During the six months ended September 30, 2002, the Company recognized approximately $268,000 in revenues from NAP de las Americas-Madrid S.A.

	Included in the September 30, 2002 and March 31, 2002 balance sheet are amounts due from related parties including $5.0 million note receivable (Note 5), approximately $4.6 million and $7.2 million in notes payable (Note 5) and approximately $4.5 million in convertible debt (Note 7).

	Included in accounts receivable is a non-trade receivable of approximately $210,000 due from a related party. There is also a corresponding payable of approximately $59,000 to the same related party.

10.      Information about the Company’s Operating Segments

As of September 30, 2002 and March 31, 2002, the Company had two reportable business segments, data center operations and real estate services. The data center operations segment provides Tier 1 NAP, Internet infrastructure and managed services in a data center environment. The real estate services segment constructs, develops and manages real estate projects primarily related to Telecom space. The Company’s reportable segments are strategic business operations that offer different products and services.

During the six months ended September 30, 2001, the Company had an additional segment, telecom facilities management, which developed, managed and leased facilities catering primarily to the telecommunications industry. In conjunction with the Company’s change in its strategy related to its colocation facility in Santa Clara, California, the Company no longer considers the remaining operations to be separate from its other two segments. Therefore, amounts unrelated to the colocation facility have been reclassified in the prior period presentations to their respective September 30, 2002 segments.

	The accounting policies of the segments are the same as those described in significant accounting policies. Revenues generated among segments are recorded at rates similar to those recorded in third-party transactions. Transfers of assets and liabilities between segments are recorded at cost. The Company evaluates performance based on the segment’s net operating results.

17

Terremark Worldwide, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
September 30, 2002

	The following presents information about reportable segments.