8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 1

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (date of earliest event reported): December 31, 2004

TERREMARK WORLDWIDE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	1-12475	84-0873124
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2601 S. Bayshore Drive
Miami, Florida 33133

(Address of principal executive office)

Registrant’s telephone number, including area code (305) 856-3200

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

     Terremark hereby amends and restates the Form 8-K filed on January 6, 2005, to include the financial statements and proforma financial information required by Item 9.01 not previously filed with the Form 8-K and to include references to Exhibit 10.33.

Item 1.01 Entry into a Material Definitive Agreement.

     See Item 2.01 below.

Item 2.01 Completion of Acquisition or Disposition of Assets.

     On December 31, 2004, Terremark Worldwide, Inc. (“TWW”), through Tecota Services Corp. (“Sub”), one of its wholly owned subsidiaries, completed the acquisition of the 99.16% of the membership interests in Technology Center of the Americas, LLC (“Tecota”) not already owned by Sub (the “Acquisition”) from Tecota’s other members, including LA Ref II Telecom Miami, LLC, LA Ref III Telecom Miami, LLC, LA Parallel II Telecom Miami, LLC, LA Parallel III Telecom Miami, LLC, LA Capital II Telecom Miami, LLC LA Equity III Telecom Miami, LLC, Barrow Street Tecota, LP and MHLP, LLC (f/k/a Calor Development, Ltd) (collectively, the “Sellers”). Tecota is the sole owner of a 750,000 square foot telecommunications building located in Miami, Florida (the “Tecota Building”). Prior to the Acquisition, Sub served as the managing member of Tecota. Sub purchased the remaining membership interests in Tecota from the Sellers for approximately $40 million in cash. Sub also repaid approximately $35 million in mortgage debt on the Tecota Building.

     TWW financed the Acquisition, including the repayment of the $35 million in mortgage debt on the Tecota Building, from multiple sources, including a $49 million senior mortgage loan (the “Senior Loan”) from Citigroup Global Markets Realty Corp (“Citigroup”). The Senior Loan is secured by a first mortgage on the Tecota Building, bears interest at a rate per annum equal to the greater of (a) 6.75% and (b) the sum of LIBOR plus 4.75%, and matures in February 2009. TWW and Tecota are subject to certain covenants and restrictions specified in the Senior Loan, including covenants that restrict TWW’s ability to pay dividends, make certain distributions, pledge certain assets or repay certain indebtedness. In connection with the Senior Loan, TWW issued to Citigroup, for no additional consideration, warrants (the “Citigroup Warrants”) to acquire 5 million shares of TWW common stock, $.001 par value per share (“TWW Common Stock”). The Citigroup Warrants are divided into four equal tranches, each of which expires on December 31, 2011 and are exercisable at $0.68, $0.74, $0.81 and $0.87, respectively. The number of shares for which the Citigroup Warrants are exercisable and the warrant exercise price are subject to adjustment under specified circumstances as set forth in the Citigroup Warrants. TWW granted Citigroup certain registration rights in connection with the Citigroup Warrants and shares of TWW Common Stock issuable upon exercise of such warrants, including the right to have such warrants and shares registered by June 29, 2005.

     TWW also financed the Acquisition, including the repayment of the $35 million in mortgage debt on the Tecota Building, through the sale of (i) $30 million aggregate principal amount of TWW’s Senior Secured Notes due 2009 (the “Notes”), (ii) 3,064,444 shares of TWW Common Stock (the “Common Equity”) and (iii) warrants to acquire 15 million shares of TWW Common Stock (the “Purchaser Warrants”) to three private equity investors, Falcon Mezzanine Partners, LP, Stichting Pensioenfonds Voor De Gezond-Heid Geestelijke En Maatschappelijke Belangen and Stichting Pensioenfonds ABP (collectively, the “Purchasers”). TWW received $30 million for the Notes and approximately $2 million, or $0.6535 per share, for the Common Equity. No additional consideration was received for the issuance of the Purchaser Warrants. The Notes are secured by substantially all of TWW’s and its subsidiaries’ (other than Tecota’s) assets, bear cash interest at a rate per annum of 9.875% and “payment in kind” interest

2

at a rate per annum of 3.625% (subject to adjustment as set forth therein) and mature in March 2009. TWW and its subsidiaries are subject to certain covenants and restrictions specified in the purchase agreement with the Purchasers (the “Purchase Agreement”), including covenants that restrict their ability to pay dividends, make certain distributions or investments and incur certain indebtedness. The Purchaser Warrants are divided into four equal tranches, each of which expires on December 30, 2011 and are exercisable at $0.69, $0.75, $0.82 and $0.88, respectively. The number of shares for which the Purchaser Warrants are exercisable and the warrant exercise price are subject to adjustment under specified circumstances as set forth in the Purchaser Warrants. TWW also granted the Purchasers certain registration rights in connection with the Common Equity, Purchaser Warrants, and shares of TWW Common Stock issuable upon exercise of such warrants, including the right to have such warrants and shares registered by June 29, 2005.

     The foregoing summary of the Senior Loan, Citigroup Warrants, Notes, and Purchaser Warrants is not complete and is qualified in its entirety by reference to the agreements, which are attached hereto as Exhibits 10.26 through 10.33 and incorporated herein by reference. A copy of the press release entitled “Terremark Purchases Technology Center of the Americas,” dated as of January 4, 2005, is filed herewith as Exhibit 99.1 and is incorporated herein by reference.

Item 2.03 Creation of Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

     See Item 2.01 above.

Item 3.02 Unregistered Sales of Equity Securities.

     See Item 2.01 above. The Citigroup Warrants, Purchaser Warrants and Common Equity were issued in private placement transactions exempt from registration in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation D of the Securities Act.

Item 9.01 Financial Statements and Exhibits

     (a) Financial Statements of Businesses Acquired

     The following financial statements filed as Exhibit 99.2 hereto are incorporated herein by reference:

		Exhibit 99.2 Page
Technology Center of the Americas, LLC — Historical Financial Information
	Report of Independent Registered Certified Public Accounting Firm		1
	Balance Sheets as of September 30, 2004, December 31, 2003 and 2002		2
	Statements of Operations for the nine months ended September 30, 2004 and 2003 and the years ended December 31, 2003 and 2002		3
	Statements of Changes in Members’ Equity for the nine months ended September 30, 2004 and the years ended December 31, 2003 and 2002		4
	Statements of Cash Flows for the nine months ended September 30, 2004 and 2003 and the years ended December 31, 2003 and 2002		5
	Notes to Financial Statements		6

     (b) Pro Forma Financial Information

     The following financial statements filed as Exhibit 99.3 hereto are incorporated herein by reference:

		Exhibit 99.3 Page
Terremark Worldwide, Inc. — Pro Forma Financial Information
	Unaudited Pro Forma Condensed Consolidated Financial Statements Basis of Presentation		1
	Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2004		2
	Unaudited Pro Forma Condensed Consolidated Statement of Operations for the six months ended September 30, 2004		3
	Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended March 31, 2004		4
	Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements		5

3

     (c) Exhibits

Exhibit No.	Document
10.26	Loan Agreement dated as of December 31, 2004, by and among Technology Center of the Americas, LLC, as Borrower, Citigroup Global Markets Realty Corp., as Agent and each Lender signatory thereto.*
10.27	Form of Warrant Certificate of Terremark Worldwide, Inc. issued to Citigroup Global Markets Realty Corp.*
10.28	Purchase Agreement dated as of December 31, 2004, among Terremark Worldwide, Inc., as Issuer, the guarantors named therein, FMP Agency Services, LLC, as agent, and each of the purchasers named therein.*
10.29	Security Agreement dated as of December 31, 2004, by Terremark Worldwide, Inc., as Issuer, the guarantors named therein and FMP Agency Services, LLC, as Agent.*
10.30	Registration Rights Agreement dated as of December 31, 2004 among Terremark Worldwide, Inc. and Falcon Mezzanine Partners, LP, Stichting Pensioenfonds ABP and Stichting Pensioenfonds Voor De Gezondheid, Geestelijke En Maatschappelijke Belangen (the “Purchasers”).*
10.31	Form of Warrant Certificate of Terremark Worldwide, Inc. issued to the Purchasers.*
10.32	Form of Note of Terremark Worldwide, Inc. issued to the Purchasers.*
10.33	Guaranty of Nonrecourse Obligations dated as of December 31, 2004, executed by Terremark Worldwide, Inc. in favor of Citigroup Global Markets Realty Corp.**
23.1	Consent of PricewaterhouseCoopers LLP
99.1	Press Release dated January 4, 2005*
99.2	Technology Center of the Americas, LLC Historical Financial Information.
99.3	Terremark Worldwide, Inc. Pro Forma Financial Information.

*     previously filed with the Commission as an Exhibit to the Form 8-K dated January 6, 2005

**  previously filed as an Exhibit to the Form S-1 filed with the Commission on February 3, 2005

4

SIGNATURES

     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 hereunto duly authorized.

	TERREMARK WORLDWIDE, INC.
Date: March 2, 2005	By:	/s/ Jose Segrera
		Name:	Jose Segrera
		Title:	Chief Financial Officer

5

Index to Exhibits

Exhibit No.	Exhibit Title
23.1	Consent of PricewaterhouseCoopers LLP
99.2	Technology Center of the Americas, LLC Historical Financial Information.
99.3	Terremark Worldwide, Inc. Pro Forma Financial Information.

6

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-118369 and 333-98331) of Terremark Worldwide, Inc. of our report dated February 6, 2004, except Note 9, which is as of December 1, 2004, relating to the financial statements of Technology Center of the Americas, LLC, which appears in the Current Report on Form 8-K/A of Terremark Worldwide, Inc. dated March 2, 2005.

/s/ PricewaterhouseCoopers LLP

Miami, Florida
March 1, 2005 EX-99.2 3 g93233exv99w2.htm TECHNOLOGY CENTER OF THE AMERICAS, LLC HISTORICAL FINANCIAL INFORMATION

Exhibit 99.2

Report of Independent Registered Certified Public Accounting Firm

To the Members of

Technology Center of the Americas, LLC:

      In our opinion, the accompanying balance sheets and the related statements of operations, of changes in members’ equity and of cash flows present fairly, in all material respects, the financial position of Technology Center of the Americas, LLC at December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

      The results of the Company’s leasing activities and its tenants’ financial condition are discussed in Note 1.

/s/ PricewaterhouseCoopers LLP

Fort Lauderdale, Florida

February 6, 2004, except Note 9,

which is as of December 1, 2004

1

TECHNOLOGY CENTER OF THE AMERICAS, LLC

BALANCE SHEETS

				December 31,
		September 30,
		2004		2003		2002
		(Unaudited)
Assets
Rental property, net		$	66,927,819	$	67,913,222	$	69,564,981
Cash and cash equivalents			1,011,315		1,364,857		2,677,869
Restricted cash			910,458		101,914		—
Tenant receivables			—		—		377,521
Deferred rents receivable			11,444,733		7,136,801		4,047,111
Deferred leasing commissions, net			2,902,589		3,055,776		3,260,288
Deferred financing costs, net			160,020		269,380		517,422
Prepaid expenses and other assets			291,134		249,876		137,567
	Total assets	$	83,648,068	$	80,091,826	$	80,582,759
Liabilities and Members’ Equity
Mortgage note payable		$	35,401,567	$	35,401,567	$	35,401,567
Accounts payable and accrued expenses			998,862		501,820		1,859,692
	Total liabilities		36,400,429		35,903,387		37,261,259
Commitments and contingencies			—		—		—
Members’ equity			47,247,639		44,188,439		43,321,500
	Total liabilities and members’ equity	$	83,648,068	$	80,091,826	$	80,582,759

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

2

TECHNOLOGY CENTER OF THE AMERICAS, LLC

STATEMENTS OF OPERATIONS

		For the Nine Months Ended					For the Year Ended
		September 30,					December 31,
		2004		2003			2003			2002
		(Unaudited)		(Unaudited)
Revenues
Rental		$	7,702,549	$	4,584,017		$	6,808,912		$	5,896,505
Operating expense reimbursements			656,383		686,632			776,740			1,053,599
Other income			45,661		67,207			81,496			53,399
	Total revenues		8,404,593		5,337,856			7,667,148			7,003,503
Operating Expenses
General and administrative			246,161		259,324			398,317			499,341
Security			338,857		185,307			300,446			482,988
Marketing			114,853		140,650			176,001			210,516
Utilities			263,706		261,594			338,761			358,496
Insurance			207,932		262,181			335,628			298,770
Real estate taxes			683,036		521,859			791,924			1,310,112
Real estate tax settlement			—		—			(427,200	)		—
Repairs and maintenance			244,068		173,210			236,662			220,589
Cleaning			23,160		17,575			21,606			30,910
Management fees			137,949		140,403			184,133			149,346
Write-off of straight-line rent accruals			—		—			—			1,792,888
Write-off of deferred leasing commissions			—		—			—			1,277,933
	Total operating expenses		2,259,722		1,962,103			2,356,278			6,631,889
Other Expenses
Interest expense			1,635,388		2,014,516			2,561,094			3,094,763
Depreciation and amortization			1,450,283		1,411,948			1,882,837			2,000,244
	Total other expenses		3,085,671		3,426,464			4,443,931			5,095,007
	Net income (loss)	$	3,059,200	$	(50,711	)	$	866,939		$	(4,723,393	)

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

3

TECHNOLOGY CENTER OF THE AMERICAS, LLC

STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

	Class A Members
	TLAB Group
				Barrow
				Street						Calor
	Class B			TECOTA,			LA			Development,
	Member			L.P.			Group			Ltd.			Total
Members’ equity at January 1, 2002	$	402,243		$	19,913,048		$	19,913,048		$	7,816,554		$	48,044,893
Net loss		(39,545	)		(1,957,693	)		(1,957,693	)		(768,462	)		(4,723,393	)
Members’ equity at December 31, 2002		362,698			17,955,355			17,955,355			7,048,092			43,321,500
Net income		7,258			359,318			359,318			141,045			866,939
Members’ equity at December 31, 2003		369,956			18,314,673			18,314,673			7,189,137			44,188,439
Net income (Unaudited)		25,612			1,267,939			1,267,939			497,710			3,059,200
Members’ equity at September 30, 2004 (Unaudited)	$	395,568		$	19,582,612		$	19,582,612		$	7,686,847		$	47,247,639

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

4

TECHNOLOGY CENTER OF THE AMERICAS, LLC

STATEMENTS OF CASH FLOWS

					For the Nine Months Ended						For the Year Ended
					September 30,						December 31,
					2004			2003			2003			2002
					(Unaudited)			(Unaudited)
Cash flows from operating activities
	Net income (loss)				$	3,059,200		$	(50,711	)	$	866,939		$	(4,723,393	)
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Depreciation and amortization				1,450,283			1,411,948			1,882,837			2,000,244
		Amortization of deferred financing costs				109,360			455,067			541,917			940,843
		Write-off of straight-line rent accruals				—			—			—			1,792,888
		Write-off of deferred leasing commissions				—			—			—			1,277,933
		Changes in assets and liabilities:
			Tenant receivables			—			383,941			377,521			(309,455	)
			Deferred rents receivable			(4,307,932	)		(1,936,916	)		(3,089,690	)		(2,836,867	)
			Deferred leasing commissions			—			—			—			(149,019	)
			Prepaid expenses and other assets			(41,258	)		(246,721	)		(112,309	)		37,703
			Accounts payable and accrued expenses			497,042			(399,231	)		(1,357,872	)		1,102,189
				Net cash provided by (used in) operating activities		766,695			(382,623	)		(890,657	)		(866,934	)
Cash flows from investing activities
	Restricted cash					(808,544	)		(1,275,000	)		(101,914	)		—
	Additions to rental property					(311,693	)		(26,566	)		(26,566	)		(509,895	)
	Construction payables					—			—			—			(971,263	)
				Net cash used in investing activities		(1,120,237	)		(1,301,566	)		(128,480	)		(1,481,158	)
Cash flows from financing activities
	Borrowings on mortgage note payable					—			—			—			4,117,725
	Payments on mortgage note payable					—			—			—			(1,190,992	)
	Additions to deferred financing costs					—			—			(293,875	)		(606,750	)
				Net cash used in (provided by) financing activities		—			—			(293,875	)		2,319,983
Net decrease in cash and cash equivalents						(353,542	)		(1,684,189	)		(1,313,012	)		(28,109	)
Cash and cash equivalents, beginning of period						1,364,857			2,677,869			2,677,869			2,705,978
Cash and cash equivalents, end of period					$	1,011,315		$	993,680		$	1,364,857		$	2,677,869
Supplemental disclosure
	Cash paid for interest				$	1,692,146		$	1,537,244		$	2,029,424		$	169,283
Non-cash transactions During 2002, the Company reduced rental property and construction payable by $132,692 based upon final settlement with a contractor.

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

5

TECHNOLOGY CENTER OF THE AMERICAS, LLC

NOTES TO FINANCIAL STATEMENTS

September 30, 2004 (Unaudited), December 31, 2003 and 2002

1. Organization

      Technology Center of the Americas, LLC (the “Company”) is a Delaware limited liability company whose Class A Members are the TLAB Group and MHLP, LLC. (collectively “the Members”). The TLAB Group consists of Class B Members, Barrow Street TECOTA, L.P. and the LA Group. At September 30, 2004, December 31, 2003 and 2002, the sole Class B member was TECOTA Services Corporation, formerly known as Telecom Routing Exchange Developers, Inc. (“Managing Member”). The LA Group consists of LA REF III Telecom Miami, LLC and LA Parallel III Telecom Miami, LLC. The Company was formed on September 5, 2000 to own and operate a telecommunications data center in Miami, Florida (the “Property”).

      The Members’ capital account is equal to each Member’s initial capital contribution and is increased by each additional contribution, less any distribution as defined in the Limited Liability Company Operating Agreement (“Agreement”). Under the terms of the Agreement, net income and losses are allocated to each Member’s capital account equal to the amount of cash the Member would receive if the Company were to immediately sell all of its assets for an amount equal to the Gross Asset Value, as defined in the Agreement, and distribute the sale proceeds in accordance with the Agreement.

      Generally, distributable cash from operations and capital transactions are distributed to the MHLP, LLC. and to the TLAB Group in proportion to their respective percentage interests. Within the groups, there are further allocations of cash based upon the provisions in the Agreement.

      The Company expects to meet its cash requirements for operations through rental income and existing cash balances. The Company’s real estate asset is located in Miami, Florida and its tenants service the telecommunications industry. Consequently, changes in this market could have an effect on the leases the Company enters into with tenants. At December 31, 2003, tenants consisted of five entities occupying approximately 395,000 square feet, or 54% of total leasable square footage. Of the total leasable square footage, approximately 40% is occupied by Terremark Worldwide, Inc., the Managing Member’s parent, an entity which has publicly disclosed that its liquidity deficit and negative cash flows raise substantial doubt about its ability to continue as a going concern. At December 31, 2003 and 2002, $4,102,264 and $2,335,712 in deferred rents receivable and $1,763,695 and $1,863,058 in deferred leasing commissions, net relate to this entity, respectively. While management believes that the other tenants are credit tenants, their leases are not sufficient to cover operating expenses. Should additional funding be required to meet obligations as they come due, the Company expects to be able to rely on additional financial support from its Members.

2. Summary of Significant Accounting Policies

      A summary of significant accounting principles and practices used in the preparation of the financial statements follows:

Basis of Financial Statement Presentation

      The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclose contingent assets and liabilities at the date of the financial statements and report amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

      The interim financial data as of September 30, 2004 and for the nine-months ended September 30, 2004 and 2003 of the Company is unaudited; however, in the opinion of Company management, the interim financial data includes all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the financial position and the results of operations for the interim period presented. The results of operations for the nine months ended September 30, 2004 are not necessarily indicative of the results that could be expected for the entire fiscal year ending December 31, 2004.

6

TECHNOLOGY CENTER OF THE AMERICAS, LLC

NOTES TO FINANCIAL STATEMENTS — (Continued)

September 30, 2004 (Unaudited), December 31, 2003 and 2002

Rental Property

      Rental property is stated at cost and consists of land, costs associated with building construction and improvements and furniture and fixtures. The building is depreciated on the straight-line method over its estimated useful life of 39 years. Tenant improvements are depreciated over the term of the related tenant lease. Furniture and fixtures and other improvements are depreciated over 5 years. Expenditures for major renewals and betterments are capitalized and depreciated over their estimated useful lives. Expenditures for repairs and maintenance are expensed when incurred.

      Management reviews its rental property for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Management determines whether impairment in value has occurred by comparing the estimated future undiscounted cash flows of the rental property, including its residual value, to its carrying value. If an impairment is indicated, the assets are adjusted to their estimated fair value.

Cash and Cash Equivalents

      The Company considers all amounts held in highly liquid instruments with original purchased maturities of three months or less as cash and cash equivalents. Cash and cash equivalents consist primarily of a demand deposit account and approximates fair value due to the relatively short period to maturity of this instrument. Management believes the credit risk associated with cash and cash equivalents is considered low due to the quality of the financial institution in which this asset is held.

Deferred Leasing Commissions

      Leasing commissions are capitalized and amortized over the initial term of the related lease using the straight-line method. Accumulated amortization was $707,777, $554,590 and $350,078 at September 30, 2004, December 31, 2003 and 2002, respectively. In connection with a lease termination and renegotiation, the Company in the year ended December 31, 2002 wrote-off $1,277,933 in deferred leasing commissions.

Deferred Financing Costs

      Deferred financing costs, principally loan origination and related fees, are deferred and amortized to interest expense on the straight-line method over the loan’s term, which approximates the effective interest method. Accumulated amortization was $135,402, $24,496 and $89,328 at September 30, 2004, December 31, 2003 and 2002, respectively.

Revenue Recognition

      Tenant leases are classified as operating leases. Base minimum rents are recognized monthly using the straight-line method. Base minimum rents in excess of actual tenant billings are classified as deferred rent receivables. Operating expense reimbursements are charged to tenants for estimated operating expenses incurred by the Company. Reimbursements for these operating expenses are billed monthly to the tenants with periodic adjustments based on actual expenses incurred. In connection with a lease termination and renegotiation, in 2002 the Company wrote-off $1,792,888 in uncollectible deferred rents receivable.

Income Taxes

      Under the provisions of the Internal Revenue Code and applicable state tax laws, the Company is not subject to taxation of income. The tax consequences of Company profits and losses accrue to the Members. Certain costs may be treated differently in the Company’s income tax return than in the accompanying financial statements.

7

TECHNOLOGY CENTER OF THE AMERICAS, LLC

NOTES TO FINANCIAL STATEMENTS — (Continued)

September 30, 2004 (Unaudited), December 31, 2003 and 2002

Therefore, income in the financial statements may not be the same as that reported in the Members’ income tax returns.

3. Rental Property

      Rental property is summarized as follows:

				December 31,
	September 30,
	2004			2003			2002
	(Unaudited)
Land	$	10,139,683		$	10,139,683		$	10,139,683
Building and improvements		62,190,009			61,878,316			61,878,317
Furniture and fixtures		130,981			130,981			104,414
		72,460,673			72,148,980			72,122,414
Accumulated depreciation		(5,532,854	)		(4,235,758	)		(2,557,433	)
	$	66,927,819		$	67,913,222		$	69,564,981

4. Accounts Payable and Accrued Expenses

      Accounts payable and accrued expenses are generated through the normal course of business operations and consist of the following:

			December 31,
	September 30,
	2004		2003		2002
	(Unaudited)
Real estate taxes	$	683,035	$	—	$	1,317,814
Mortgage interest		—		129,806		140,053
Tenant payable		112,963		101,674		203,214
Accounts payable and other		202,864		270,340		198,611
	$	998,862	$	501,820	$	1,859,692

      During 2003, the Company reached final settlement with local tax authorities to reduce its real estate taxes. As a result, the Company recorded $427,200 in accrued real estate taxes at December 31, 2002 as a reduction in operating expenses.

5. Mortgage Note Payable

      The Company has a mortgage note payable with a financial institution, which is secured by a first mortgage on the Property. Interest is payable monthly at Citibank, N.A.’s prime rate plus 1.5%. During 2003, the mortgage note payable maturity date was extended to November 7, 2005. The note is guaranteed to a maximum of approximately $5,500,000 by the Managing Member’s parent.

8

TECHNOLOGY CENTER OF THE AMERICAS, LLC

NOTES TO FINANCIAL STATEMENTS — (Continued)

September 30, 2004 (Unaudited), December 31, 2003 and 2002

6. Operating Leases

      The Company has operating leases with tenants for telecommunications/data center space, which expire over periods ranging from 10 to 20 years and contain various renewal options. Future minimum base rentals to be received under non-cancelable leases in effect at December 31, 2003 are as follows:

2004		$	4,596,211
2005			6,838,181
2006			7,986,045
2007			8,557,069
2008			8,724,495
Thereafter			163,287,730
	Total minimum base rentals	$	199,989,731

7. Transactions with Related Parties

      A summary of transactions with related parties follows:

Lease Agreements with Related party

      In November 2003, the Company entered into an agreement with its Managing Member’s parent to lease the Property’s third floor and to extend the parent’s existing second floor lease until May 2025. Commencing in April 2005, the third floor lease requires $200,000 in monthly base rent payments. At September 30, 2004, the second floor lease required approximately $211,000 in monthly base rent payments. Both leases require annual increases. Base rents contractually due from the Managing Member’s parent totaled approximately $1,899,000, $2,478,000 and $2,045,000 for the nine month period ended September 30, 2004 and the years ended December 31, 2003 and 2002, respectively.

Property Management and Leasing Agreement

      The Company has entered into an agreement with the Managing Member to manage operations of the Property for a fee. Under the terms of the agreement, fees are due monthly and are equal to the greater of $8,333 or 3.5% of gross receipts, as defined in the agreement, plus reimbursement for all or a pro rata share of direct personnel and related costs for the Managing Member’s employees devoting time to managing the Property. During the nine month period ended September 30, 2004 and the years ended December 31, 2003 and 2002, the Company incurred $137,949, $184,133 and $149,346 in management fees, respectively.

      In conjunction with the property management agreement, the Managing Member receives a leasing commission in connection with each executed lease, one half due at lease signing and one half due upon tenant occupancy. There was no commission charged for leasing in November 2003 the Property’s third floor. During the nine month period ended September 30, 2004 and the year ended December 31, 2003, the Company did not incur related commissions. During the year ended December 31, 2002, the Company incurred $99,019 in related commissions.

Construction Costs

      During the nine month period ended September 30, 2004 and the years ended December 31, 2003 and 2002, the Company paid $0, $2,000 and $470,250, respectively, to its Managing Member for building and tenant improvements.

9

TECHNOLOGY CENTER OF THE AMERICAS, LLC

NOTES TO FINANCIAL STATEMENTS — (Continued)

September 30, 2004 (Unaudited), December 31, 2003 and 2002

Public Relations

      During the nine month period ended September 30, 2004 and the years ended December 31, 2003 and 2002, the Company paid $56,000, $56,000 and $0, respectively, to its Managing Member for public relations services.

8. Contingencies and Commitments

      The Company is in discussions with the Property’s general contractor and certain subcontractors for future repair work required as a result of alleged substandard work relating to exterior building finishing. While the Company believes the required repair work, which could exceed $150,000, is covered under the contractors’ warranties, an unfavorable resolution could adversely impact these financial statements.

9. Subsequent Events

      Terremark Worldwide Inc. (“TWW”), currently owns a .84% interest in the Company. TWW is the Managing Member’s parent company. In July 2004, TWW entered into an agreement under which it assumed the obligation to purchase the other equity interests in the Company. In connection with the assumption of the agreement to purchase the Company, TWW has deposited $5 million which is nonrefundable except in the case of default by the sellers. TWW is currently exploring financing options for this transaction. The transaction is expected to close by December 31, 2004.

      In its June 14, 2004 report on TWW’s March 31, 2004 financial statements, TWW’s independent registered certified public accounting firm deleted the previous years’ references as to TWW’s ability to continue as a going concern.

* * * * *

10 EX-99.3 4 g93233exv99w3.htm TERREMARK WORLDWIDE, INC. PRO FORMA FINANCIAL INFORMATION

Exhibit 99.3

TERREMARK WORLDWIDE, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION

      The following unaudited pro forma condensed consolidated financial statements are derived from and should be read in conjunction with historical consolidated financial statements and related notes of Terremark Worldwide Inc. (“TWW”) and Technology Center of the Americas, LLC (“TECOTA”). From February 23, 2001 until December 31, 2004, TWW, through a wholly owned subsidiary, owned 0.84% equity interest in TECOTA. In July 2004, TWW entered into an agreement under which it assumed the obligation to purchase the other equity interests in TECOTA. On December 31, 2004, TWW completed this acquisition of TECOTA.

      The unaudited pro forma condensed consolidated statements of operations for the six months ended September 30, 2004, and the year ended March 31, 2004, give effect to (i) TWW’s acquisition of TECOTA; (ii) certain adjustments that are directly attributable to the acquisition of TECOTA and will have a continuing impact; and (iii) TWW’s financing of the TECOTA acquisition. The unaudited pro forma condensed combined statements of operations assume that each of these transactions was consummated at April 1, 2003.

      The unaudited pro form condensed consolidated balance sheet presents the consolidated financial position of TWW and TECOTA as if TWW’s acquisition of TECOTA was consummated on September 30, 2004, and gives effect to (i) the acquisition of TECOTA; (ii) certain adjustments that are directly attributable to the acquisition of TECOTA; and (iii) the estimated incremental debt. The unaudited pro forma condensed consolidated financial statements have been prepared based upon currently available information and assumptions that are deemed appropriate by TWW’s management.

      The pro forma information is for informational purposes only and is not intended to be indicative of the actual consolidated results that would have been reported had the transactions occurred on the dates indicated, nor does the information represent a forecast of the combined financial results of TWW and TECOTA for any for future period.

1

Terremark Worldwide, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2004

	Historical			Historical			Pro Forma			Pro Forma
	Terremark			TECOTA			adjustments			Terremark
	(Note 1)			(Note 1)			(Note 3)
ASSETS
Current assets:
Cash and cash equivalents	$	21,831,286		$	1,011,315		$	(3,500,000	)[h]	$	23,742,601
								2,000,000	[m]
								2,400,000	[l]
Accounts receivable, net		2,207,564			—						2,207,564
Deferred rent receivable		—			11,444,733			(7,955,751	)[d]		—
								(3,488,982	)[b]
Contracts receivable		112,151			—						112,151
Prepaid and other current assets		751,720			291,134						1,042,854
Deferred costs under government contracts		3,592,328			—						3,592,328
Total current assets		28,495,049			12,747,182						30,697,499
Investment in unconsolidated subsidiaries		391,884			—			(391,884	)[e]		—
Restricted cash		794,018			910,458			4,000,000	[a]		5,704,476
Land and building		—			66,927,819			(705,731	)[c]		66,222,088
Property and equipment, net		56,884,223			—						56,884,223
Debt issuance costs and other assets		10,392,631			3,062,609			(3,062,609	)[b]		20,275,564
								(2,400,000	)[l]
								12,282,933	[h]
Goodwill		9,999,870			—						9,999,870
TOTAL ASSETS	$	106,957,675		$	83,648,068					$	189,783,719
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of notes payable	$	3,890,802		$	—					$	3,890,802
Construction payable		2,954,530			—						2,954,530
Accounts payable and accrued expenses		7,865,135			998,862						8,863,997
Current portion of capital lease obligations		1,272,666			—						1,272,666
Interest payable		2,459,515			—						2,459,515
Total current liabilities		18,442,648			998,862						19,441,510
Mortgage payable		—			35,401,567			43,598,433	[a]		79,000,000
Convertible debt		51,971,488			—						51,971,488
Derivatives embedded within convertible debt		21,804,000			—						21,804,000
Deferred rent		9,716,260			—			(7,955,751	)[d]		1,760,509
Capital lease obligations, less current portion		102,335			—						102,335
Deferred revenue		3,225,056			—						3,225,056
Series H redeemable convertible preferred stock		601,711			—						601,711
TOTAL LIABILITIES		105,863,498			36,400,429						177,906,609
Minority Interest		142,885			—						142,885
Commitments and Contingencies		—			—						—
Series G convertible preferred stock		1			—						1
Series I convertible preferred stock		1			—						1
Common stock		359,761			—						359,761
Common stock warrants		4,933,016			—			8,782,933	[h]		13,715,949
Common stock options		1,545,375			—						1,545,375
Partner’s capital		—			48,404,025			(48,404,025	)[f]		—
Additional paid-in capital		236,023,806			—			2,000,000	[m]		238,023,806
Accumulated deficit		(234,577,155	)		(1,156,386	)		1,156,386	[f]		(234,577,155	)
Accumulated other comprehensive loss		(112,876	)		—						(112,876	)
Treasury Stock		(7,220,637	)		—						(7,220,637	)
TOTAL STOCKHOLDERS’ EQUITY		951,292			47,247,639						11,734,225
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	106,957,675		$	83,648,068					$	189,783,719

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

2

Terremark Worldwide, Inc

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the six month period ended September 30, 2004

				Historical			Historical			Pro Forma			Pro Forma
				Terremark			TECOTA			adjustments			Terremark
				(Note 1)			(Note 1)			(Note 3)
Revenues
	Data center			$	15,025,915		$	—					$	15,025,915
	Rental				—			5,134,971		$	(3,878,750	)[g]		1,256,221
	Operating expense reimbursements				—			437,589			(259,135	)[g]		178,454
	Management fees				90,922			—			(90,922	)[i]		—
	Construction contracts				996,786			—						996,786
	Other income				—			24,878						24,878
		Operating revenues			16,113,623			5,597,438						17,482,254
Expenses
	Data center operations				12,200,670			—			(4,137,885	)]g]		8,062,785
	Construction contract expenses				948,813			—						948,813
	General and administrative				6,979,446			1,408,576			(90,922	)[i]		8,297,100
	Sales and marketing				2,033,119			77,648						2,110,767
	Depreciation and amortization				2,573,054			938,279			(219,273	)[j]		3,292,060
		Operating expenses			24,735,102			2,424,503						22,711,525
			Income (loss) from operations		(8,621,479	)		3,172,935						(5,229,271	)
Other income (expense)
	Change in estimated fair value of derivatives embedded within convertible debt				13,679,250									13,679,250
	Gain on debt restructuring				3,420,956									3,420,956
	Interest expense				(6,433,148	)		(1,105,346	)		(4,164,467	)[k]		(11,702,961	)
	Interest Income				196,243									196,243
	Other				(4,260	)		—						(4,260	)
		Total other income (expense)			10,859,041			(1,105,346	)					5,589,228
	Income before income taxes			$	2,237,562			2,067,589					$	359,957
Basic and diluted net loss before income taxes per common share				$	0.01								$	0.00
Weighted average common shares outstanding					336,054,804									336,054,804

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations.

3

Terremark Worldwide, Inc

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the year ended March 31, 2004

			Historical			Historical			Pro Forma			Pro Forma
			Terremark			TECOTA			adjustments			Terremark
			(Note 1)			(Note 1)			(Note 3)
Revenues
	Data center		$	17,034,377		$	—					$	17,034,377
	Rental			—			6,808,912		$	(4,304,151	)[g]		2,504,761
	Operating expense reimbursements			—			776,740			(526,767	)[g]		249,973
	Development, commission and construction fees			41,081			—						41,081
	Management fees			197,827			—			(184,133	)[i]		13,694
	Construction contracts			940,454			—						940,454
	Other income			—			81,496						81,496
		Operating revenues		18,213,739			7,667,148						20,865,836
Expenses
	Data center operations			16,413,021			—			(4,830,918	)[g]		11,582,103
	Construction contract expenses			918,022			—						918,022
	General and administrative			13,336,400			2,180,277			(184,133	)[i]		15,332,544
	Sales and marketing			3,424,411			176,001						3,600,412
	Depreciation and amortization			4,698,292			1,882,836			(444,826	) [j]		6,136,302
		Operating expenses		38,790,146			4,239,114						37,569,383
	Income (loss) from operations			(20,576,407	)		3,428,034						(16,703,547	)
Other income (expense)
	Gain on debt restructuring			8,475,000			—						8,475,000
	Interest expense			(14,624,922	)		(2,561,095	)		(7,978,530	)[k]		(25,164,547	)
	Interest Income			131,548			—						131,548
	Other			4,104,204			—						4,104,204
		Total other income (expense)		(1,914,170	)		(2,561,095	)					(12,453,795	)
	Income (loss) before income taxes		$	(22,490,577	)		866,939					$	(29,157,342	)
Basic and diluted loss before income taxes per common share			$	(0.07	)							$	(0.10	)
Weighted average common shares outstanding				305,028,194									305,028,194

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations.

4

Terremark Worldwide, Inc.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

Note 1 — Basis of Presentation

      Historical financial information for TWW has been derived from its historical financial statements for the year ended March 31, 2004 (audited) and for the six months ended September 30, 2004 (unaudited). Historical financial information for TECOTA has been derived from its historical financial statements for the year ended December 31, 2003 (audited) and for the six months ended September 30, 2004 (unaudited). No adjustments have been made to the pro forma financial information to account for the difference between the financial reporting dates used by TECOTA and TWW due to the close proximity of the period-end dates.

Note 2 — Acquisition of TECOTA

      From February 23, 2001 until December 31, 2004, the Company owned a 0.84% interest in Technology Center of the Americas, LLC (“TECOTA”), the entity that owns the building in which the NAP of the Americas is housed (“TECOTA building”). In July 2004, the Company entered into an agreement under which it assumed the obligation to purchase the other outstanding equity interests in TECOTA. On December 31, 2004, the Company completed the purchase of those other outstanding equity interests such that TECOTA became a wholly-owned subsidiary. In connection with this purchase, the Company paid approximately $40.0 million for the equity interests and repaid an approximately $35.0 million mortgage to which the TECOTA building was subject.

Note 3 — Pro Forma Adjustments

      Following are brief descriptions of the pro forma adjustments to reflect the acquisition of TECOTA:

(a)  Records TWW new borrowings to purchase other equity interest in TECOTA and pay off of existing mortgage. This adjustment is calculated as follows:

New borrowings	$	79,000,000	)
Pay off of existing mortgage		(35,401,567	)
Adjustment		43,598,433
Tenant improvement cash reserve		(4,000,000	)
Cash paid to sellers	$	(39,598,433	)

(b)	Records purchase accounting adjustment for the elimination of deferred financing costs and deferred leasing commissions included in other assets of TECOTA. Further, records the elimination of deferred rent balances with tenants other than TWW. See (d) below.
(c)	Records purchase accounting adjustment for the allocation of the fair value of identifiable net current assets acquired over the TECOTA purchase price.
(d)	Records the elimination of deferred rent balances between TWW and TECOTA as of the balance sheet date.
(e)	Records the elimination of TWW’s ownership interest in TECOTA as of September 30, 2004.
(f)	Records the elimination of TECOTA equity accounts acquired in the purchase.
(g)	Records the elimination of transactions between TWW and TECOTA resulting from TECOTA leasing space to TWW.
(h)	Records the estimated debt issuance costs of $12,282,933, of which $8,782,933 is estimated to be paid in TWW stock warrants.
(i)	Records the elimination of transactions between TWW and TECOTA resulting from TWW management fees charged to TECOTA pursuant to a property management agreement.
(j)	Records the elimination of historical depreciation and amortization expense related to TECOTA and the depreciation resulting from the allocation of the purchase price to the building using the straight-line method over a 39 year period.

	Six Months Ended			Year Ended
	September 30, 2004			March 31, 2004
Elimination of historical amounts of TECOTA	$	(938,279	)	$	(1,882,836	)
Depreciation of the cost of acquired building (estimated to be $56,000,000) using a 39 year life		719,006			1,438,010
	$	(219,273	)	$	(444,826	)

(k)  Records the interest on new borrowings for the acquisition of TECOTA and the elimination of interest on existing debt to be repaid. Adjustment also records amortization of debt issuance costs. The adjustment is calculated as follows:

	Six Months Ended			Year Ended
	September 30, 2004			March 31, 2004
Elimination of historical amounts of TECOTA	$	(1,105,346	)	$	(2,561,095	)
Interest expense on $79 million of new borrowings at a variable rate of 9.5%		3,794,771			7,589,541
Amortization of debt issuance costs of new borrowings using a four year term		1,475,042			2,950,084
	$	4,164,467		$	7,978,530

	The effect of a .0125% variance on interest expense is $46,875 and $93,750 for the six months ended September 30, 2004 and the year ended March 31, 2004, respectively.
(l)	Records the return to the company of a deposit totalling $2.4 million at September 30, 2004, for the acquisition of TECOTA.
(m)	Records anticipated issuance of stock for cash as part of the TECOTA acquisition.

5 -----END PRIVACY-ENHANCED MESSAGE-----

EX-99.2

Technology Center of the Americas, LLC Historical

EX-99.3

Terremark Worldwide, Inc. Pro Forma Financial Info