This report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 based on our current expectations, assumptions, and estimates about us and our industry. These forward-looking statements involve risks and uncertainties. Words such as "believe," "anticipate," "estimate," "expect," "intend," "plan," "will," "may," and other similar expressions identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. All statements other than statements of historical facts, including, among others, statements regarding our future financial position, business strategy, projected levels of growth, projected costs and projected financing needs, are forward-looking statements. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several important factors including, without limitation, that we may be further impacted by slowdowns, postponements or cancellations in our client's businesses or deterioration in the financial condition of our clients, a history of losses, competitive factors, uncertainties inherent in government contracting, concentration of business with a small number of clients, the ability to service debt, substantial leverage, material weaknesses in our internal controls and our disclosure controls, energy costs, the interest rate environment, failure to successfully implement expansion plans or integrate acquired businesses into our operations, one-time events and other factors more fully described in "Risk Factors" and elsewhere in this report. The forward-looking statements made in this report relate only to events as of the date on which the statements are made. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely upon forward-looking statements as predictions of future events. Except as required by applicable law, including the securities laws of the United States, and the rules and regulations of the Securities and Exchange Commission, we do not plan and assume no obligation to publicly update or revise any forward-looking statements contained herein after the date of this report, whether as a result of any new information, future events or otherwise.

Our Business

We are a global provider of managed IT solutions with data centers in the United States, Europe and Latin America. We provide carrier neutral colocation, managed services and exchange point services to approximately 1,100 customers worldwide across a broad range of sectors, including enterprises, government agencies, systems integrators, Internet content and portal companies and the world's largest network providers. We house and manage our customers' mission-critical IT infrastructure, enabling our customers to reduce capital and operational expenses while improving application performance, availability and security. As a result of our expertise and our full suite of product offerings, customers find it more cost effective and secure to contract us rather than hire dedicated IT staff. Furthermore, as a carrier neutral provider we have more than 160 competing carriers connected to our data centers enabling our customers to realize significant cost savings and easily scale their network requirements to meet their growth. We continue to see an increase in outsourcing as customers face escalating operating and capital expenditures and increased technical demands associated with their IT infrastructure.

We deliver our solutions primarily through three highly specialized data centers, or Network Access Points (NAPs) that were purpose-built and have been strategically located to enable us to become one of the industry leaders in terms of reliability, power availability and connectivity. Our owned NAP of the Americas facility, located in Miami, Florida, is one of the most interconnected data centers in the world and is a primary exchange point for high levels of traffic between the United States, Europe and Latin America; our owned NAP of the Capital Region, or NCR, located outside Washington, D.C., has been designed to address the specific security and connectivity needs of our federal customers; and our leased NAP of the Americas/West, located in Santa Clara, California, is strategically located in Silicon Valley to serve the technology and Internet content provider segments as well as provide access to connectivity to the U.S. west coast, Asia, Pacific Rim and other international locations. Each facility offers our customers access to carrier neutral connectivity as well as technologically advanced security, reliability and redundancy through 100% service level agreements, or SLAs, which means that we agree to provide 100% uptime for all of our customers' IT equipment contained

in our facilities. Our facilities and our IT platform can be expanded on a cost effective basis to meet growing customer demand.

Our primary products and services include colocation, managed services and exchange point services.

• Colocation Services: We provide customers with the space, power and a secure environment to deploy their own computing, network, storage and IT infrastructure.

• Managed Services: We design, deploy, operate, monitor and manage our clients' IT infrastructure at our facilities.

• Exchange Point Services: We enable our customers to exchange Internet and other data traffic through direct connection with each other or through peering connections with multiple parties.

Our business is characterized by long term contracts, which provide for monthly recurring revenue from a diversified customer base. Our customer contracts are generally 3 years in duration and our average quarterly revenue churn rate for the past four quarters has been approximately 2%, which we believe is a reflection of the value of our integrated technology solutions and our ability to deliver the highest quality service. As an illustration of this principle, during the six months ended September 30, 2009, approximately 92% of our overall revenue was recurring and over 78% of our new bookings were derived from existing customers.

Our principal executive office is located at 2 South Biscayne Boulevard, Suite 2800, Miami, Florida 33131. Our telephone number is (305) 856-3200.

Recent Events

On June 24, 2009, we completed our offering of $420 million aggregate principal amount of 12.0% Senior Secured Notes due 2017, which are guaranteed by substantially all of our domestic subsidiaries. A portion of the proceeds from this offering were used to repay all of our outstanding secured indebtedness including our $250 million senior credit facilities, the outstanding $4.1 million of our 0.5% Series B Senior Subordinated Convertible Notes, approximately $8.4 million in termination fees incurred in connection with the termination of the interest rate swap agreements we entered into in connection with these senior credit facilities and an additional $2.2 million in prepayment fees with respect to the prepayment of the amounts outstanding under the senior credit facilities. We anticipate using the remaining proceeds for working capital and other general corporate purposes to support the growth of our business, which may include capital investments to build-out our existing facilities and acquisitions of complementary businesses.

On May 29, 2009, VMware Bermuda Limited, a wholly-owned subsidiary of VMware, Inc., a global leader in virtualization solutions from the desktop to the data center, acquired a $20 million equity stake in Terremark. VMware purchased 4 million shares, or a 5% fully-diluted equity interest in the Company, at a premium to our closing share price prior to announcement. In connection with the offer and sale of these shares to VMware, we relied on the exemption from registration provided by Section 4(2) of the securities act and Rule 506 under the securities act. Based upon the representations and warranties set forth in the governing subscription agreement, we believe that VMware is an "accredited investor" as such term is defined in Rule 501(a) under the securities act. In compliance with the terms of registration rights provisions set forth in the governing subscription agreement, on July 1, 2009, we filed with the Commission a registration statement covering the resale of the shares purchased by VMware. The Commission declared this registration statement effective on July 15, 2009. The governing subscription agreement grants to VMware a right of first refusal with respect to certain future equity sales by Terremark that occur within the 18-month period following the closing of the VMware purchase. If such equity sales are proposed to be made to a competitor of VMware or certain affiliates, VMware may elect to purchase such equity in lieu of the competitor. If such equity sales are proposed to be made to a non-competitor of VMware, VMware will not have the ability to prevent such sale but will have the right to elect to purchase an additional amount of equity sufficient to maintain its initial equity percentage interest in Terremark.

Results of Operations

Results of Operations for the Three Months Ended September 30, 2009 as Compared
to the Three Months Ended September 30, 2008.

Revenues. The following charts provide certain information with respect to our
revenues:


                                                 Three
                                             Months Ended
                                             September 30,
                                            2009       2008

                          United States        85 %      86 %
                          International        15 %      14 %

                                              100 %     100 %

                                                 Three Months Ended September 30,
                                              2009                      2008

     Revenues consist of (in thousands):
     Colocation                            $   27,584          40 %   $ 19,743        33 %
     Managed and professional services         36,150          51 %     33,131        55 %
     Exchange point services                    4,605           7 %      3,967         7 %
     Equipment resales                          1,464           2 %      2,740         5 %

                                           $   69,803         100 %   $ 59,581       100 %

The $10.2 million, or 17% increase in revenues is mainly due to both an increase in our deployed customer base and an expansion of services to existing customers. Our deployed customer base increased to 1,089 customers as of September 30, 2009 from 1,016 customers as of September 30, 2008. Revenues consist of:

• colocation services, such as licensing of space and provision of power;

• managed and professional services, such as network management, managed web hosting, outsourced network operating center services, network monitoring, procurement of connectivity, managed router services, secure information services, technical support and consulting;

• exchange point services, such as peering and cross connects; and

• procurement and installation of equipment.

The $7.8 million, or 40% increase in colocation revenue is primarily the result of an increase in our utilization of total net colocation space to 29.8% as of September 30, 2009 from 23.0% as of September 30, 2008. Our utilization of total net colocation space represents space billed to customers as a percentage of total space built-out and available to customers. For comparative purposes, space added during the three months ended September 30, 2009 was assumed to be also available as of September 30, 2008.

The $3.0 million, or 9% increase in managed and professional services revenue is primarily the result of an increase in orders from both existing and new customers as reflected by the growth in our customer base and utilization of space, as discussed above.

The $0.6 million, or 16% increase in exchange point services revenue is mainly due to an increase in cross-connects billed to customers. Cross-connects billed to customers increased to 8,789 as of September 30, 2009 from 7,459 as of September 30, 2008.

Revenues from equipment resales may fluctuate quarter over quarter based on customer demand.

We anticipate an increase in revenue from colocation, exchange point and managed services as we add more customers to our network of NAPs, sell additional services to existing customers and introduce new products and services. We anticipate that the percentage of revenue derived from public sector customers will

fluctuate depending on the timing of exercise of expansion options under existing contracts and the rate at which we sell services to the public sector. We anticipate that public sector revenues will continue to represent a significant portion of our revenues for the foreseeable future.

Cost of Revenues. Costs of revenues, excluding depreciation and amortization, increased $4.7 million, or 13% to $39.8 million for the three months ended September 30, 2009 from $35.1 million for the three months ended September 30, 2008. Cost of revenues, excluding depreciation and amortization, consist primarily of operations personnel, fees to third party service providers, procurement of connectivity and equipment, technical and colocation space rental costs, electricity, chilled water, insurance, property taxes, and security services. The increase is mainly due to increases of $2.1 million in connectivity procurement costs, $1.9 million in colocation space and utility costs and $0.5 million in personnel costs.

The $2.1 million increase in connectivity procurement costs is in line with increase in revenues from managed and exchange point services. The $1.9 million increase in colocation space and utility costs is primarily the result of the opening of our new facility in Colombia and additional new colocation space in Miami, Florida, Culpeper, Virginia and Sao Paulo, Brazil. The $0.5 million increase in personnel costs is mainly due to operations and engineering staffing levels increasing from an average of 525 employees during three months ended September 30, 2008 to an average of 538 employees during three months ended September 30, 2009, which is mainly attributable to the increase in managed services revenue and a 29% increase in the utilization of our colocation space due to expansion of operations in California, Brazil and Colombia.

General and Administrative Expenses. General and administrative expenses decreased $2.5 million, or 23%, to $8.5 million for the three months ended September 30, 2009 from $11.0 million for the three months ended September 30, 2008. General and administrative expenses consist primarily of administrative personnel, professional service fees, rent and other general corporate expenses. The decrease in general and administrative expense is mainly due to a $1.0 million decrease in professional fees and a $0.6 million decrease in administrative personnel costs. The $1.0 million decrease in professional fees is the result of one-time professional fees and other direct costs incurred as a result of an evaluation of strategic alternatives by our Board of Directors in the three months ended September 30, 2008. Personnel costs include payroll and share-based compensation, including share-settled liabilities. The $0.6 million decrease in personnel costs is the result of a decrease in headcount from 166 administrative employees as of September 30, 2008 to 157 administrative employees as of September 30, 2009. We expect general and administrative expenses to remain steady on a quarterly basis for the foreseeable future.

Sales and Marketing Expenses. Sales and marketing expense decreased $0.7 million, or 10% to $6.1 million for the three months ended September 30, 2009 from $6.8 million for the three months ended September 30, 2008. The decrease is the result of a decrease in our provision for doubtful accounts of $0.5 million due to improvements in our accounts receivable aging. We expect sales and marketing expenses to remain steady on a quarterly basis for the foreseeable future.

Depreciation and Amortization Expenses. Depreciation and amortization expense increased $2.0 million, or 29% to $8.9 million for the three months ended September 30, 2009 from $6.9 million for the three months ended September 30, 2008. The increase is the result of capital expenditures mostly related to the expansion of our data center footprint and upgrades to the infrastructure of our current footprint.

Interest Expense. Interest expense increased $7.3 million, or 111% to $13.9 million for the three months ended September 30, 2009 from $6.6 million for the three months ended September 30, 2008. This increase is due to an increase in the average outstanding debt balance during the period as well as a decrease in the amount of interest being capitalized. On June 24, 2009, we entered into a new secured loan agreement in the aggregate principal amount of $420 million. A portion of the loan proceeds were used to repay the first lien and second lien credit agreements, which had a face value of $150 million and $100 million, respectively. In addition, we repaid the 9% Senior Convertible Debt and Series B notes, which had a face value of $29.1 million and $4.0 million, respectively.

Change in Fair Value of Derivatives. For the three months ended September 30, 2008, we recognized a loss of $1.5 million which was mainly related to our two interest rate swap agreements that became effective February 2008 (first lien) and July 2008 (second lien). The interest rate swap agreements were settled in connection with the repayment of the credit agreements on June 24, 2009. As of September 30, 2009, the only remaining outstanding embedded derivatives were related to the 6.625% Senior Convertible Notes, which amounted in the aggregate to a liability of $0.3 million at September 30, 2009. The resulting loss of $0.1 million was included in the change in the fair value of derivatives for the three months ended September 30, 2009.

Results of Operations for the Six Months Ended September 30, 2009 as Compared to the Six Months Ended September 30, 2008.

Revenues. The following charts provide certain information with respect to our revenues:

                                                  Six
                                             Months Ended
                                             September 30,
                                            2009       2008

                          United States        86 %      86 %
                          International        14 %      14 %

                                              100 %     100 %

                                                  Six Months Ended September 30,
                                              2009                    2008

      Revenues consist of (in thousands):
      Colocation                            $  53,225        39 %   $  38,202        33 %
      Managed and professional services        69,937        52 %      64,565        56 %
      Exchange point services                   9,056         7 %       7,665         7 %
      Equipment resales                         3,346         2 %       5,265         4 %

                                            $ 135,564       100 %   $ 115,697       100 %

The $19.9 million, or 17% increase in revenues is mainly due to both an increase in our deployed customer base and an expansion of services to existing customers. Our deployed customer base increased to 1,089 customers as of September 30, 2009 from 1,016 customers as of September 30, 2008. Revenues consist of:

• colocation services, such as licensing of space and provision of power;

• managed and professional services, such as network management, managed web hosting, outsourced network operating center services, network monitoring, procurement of connectivity, managed router services, secure information services, technical support and consulting;

• exchange point services, such as peering and cross connects; and

• procurement and installation of equipment.

The $15.0 million, or 39% increase in colocation revenue is primarily the result of an increase in our utilization of total net colocation space to 29.8% as of September 30, 2009 from 23.0% as of September 30, 2008. Our utilization of total net colocation space represents space billed to customers as a percentage of total space built-out and available to customers. For comparative purposes, space added during the six months ended September 30, 2009 was assumed to be also available as of September 30, 2008.

The $5.4 million, or 8% increase in managed and professional services revenue is primarily the result of an increase in orders from both existing and new customers as reflected by the growth in our customer base and utilization of space, as discussed above.

The $1.4 million, or 18% increase in exchange point services revenue is mainly due to an increase in cross-connects billed to customers. Cross-connects billed to customers increased to 8,789 as of September 30, 2009 from 7,459 as of September 30, 2008.

Revenues from equipment resales may fluctuate quarter over quarter based on customer demand.

We anticipate an increase in revenue from colocation, exchange point and managed services as we add more customers to our network of NAPs, sell additional services to existing customers and introduce new products and services. We anticipate that the percentage of revenue derived from public sector customers will fluctuate depending on the timing of exercise of expansion options under existing contracts and the rate at which we sell services to the public sector. We anticipate that public sector revenues will continue to represent a significant portion of our revenues for the foreseeable future.

Cost of Revenues. Costs of revenues, excluding depreciation and amortization, increased $9.3 million, or 14% to $76.5 million for the six months ended September 30, 2009 from $67.2 million for the six months ended September 30, 2008. Cost of revenues, excluding depreciation and amortization, consist primarily of operations personnel, fees to third party service providers, procurement of connectivity and equipment, technical and colocation space rental costs, electricity, chilled water, insurance, property taxes, and security services. The increase is mainly due to increases of $4.8 million in connectivity procurement costs, $2.9 million in colocation space and utility costs, and $1.5 million in personnel costs.

The $4.8 million increase in connectivity procurement costs is in line with increase in revenues from managed and exchange point services. The $2.9 million increase in colocation space and utility costs is primarily the result of the opening of our new facility in Colombia and additional new colocation space in Miami, Culpeper, Virginia and Brazil. The $1.5 million increase in personnel costs is mainly due to operations and engineering staffing levels increasing from an average of 505 employees during six months ended September 30, 2008 to an average of 532 employees during six months ended September 30, 2009, which is attributable to the increase in managed services revenues and a 29% increase in the utilization of our colocation space due to expansion of operations in California, Brazil and Colombia.

General and Administrative Expenses. General and administrative expenses decreased $3.2 million, or 16%, to $16.7 million for the six months ended September 30, 2009 from $19.9 million for the six months ended September 30, 2008. General and administrative expenses consist primarily of administrative personnel, professional service fees, rent and other general corporate expenses. The decrease in general and administrative expense is mainly due to one-time professional fees and other direct costs of $1.7 million incurred as a result of an evaluation of strategic alternatives by our Board of Directors in the six months ended September 30, 2008. We expect general and administrative expenses to remain steady on a quarterly basis for the foreseeable future.

Depreciation and Amortization Expenses. Depreciation and amortization expense increased $5.3 million, or 42% to $17.8 million for the six months ended September 30, 2009 from $12.5 million for the six months ended September 30, 2008. The increase is the result of capital expenditures mostly related to the expansion of our data center footprint and upgrades to the infrastructure of our current footprint.

Interest Expense. Interest expense increased $9.4 million, or 69% to $23.0 million for the six months ended September 30, 2009 from $13.6 million for the six months ended September 30, 2008. This increase is due to an increase in the average outstanding debt balance during the period as well as a decrease in the amount of interest being capitalized. On June 24, 2009, we entered into a new secured loan agreement in the aggregate principal amount of $420 million. A portion of the loan proceeds were used to repay the first lien and second lien credit agreements, which had a face value of $150 million and $100 million, respectively. In addition, we repaid the 9% Senior Convertible Notes and the Series B Notes, which had a face value of $29.1 million and $4.0 million, respectively.

Loss on Early Extinguishment of Debt. For the six months ended September 30, 2009, we incurred a non-cash loss on the early extinguishment of our first lien and second lien credit agreements of $10.3 million.

Change in Fair Value of Derivatives. For the six months ended September 30, 2009, we recognized a loss of $1.4 million, as compared to a gain of $4.2 million due to the changes in the fair values of our derivatives which was mainly related to our two interest rate swap agreements that became effective February 2008 (first lien) and July 2008 (second lien). The interest rate swap agreements were settled in connection with the repayment of the credit agreements on June 24, 2009 for $8.4 million payable to the holders. The Company recorded a $1.3 million charge for the change in the fair value of derivatives for the six months ended September 30, 2009.

Interest Income. Interest income decreased $0.6 million, or 75% to $0.2 million for the six months ended September 30, 2009 from $0.8 million for the six months ended September 30, 2008. This decrease is the result of lower interest rates on our cash and cash equivalents account balances for the period.

Other. For the six months ended September 30, 2009, we recorded $0.8 million of other income, which was primarily attributable to foreign currency gains during the period.

Liquidity and Capital Resources

As of September 30, 2009, our principal source of liquidity was our $130.7 million in unrestricted cash and cash equivalents and our $37.7 million in accounts receivable. We anticipate that we will generate sufficient cash flows from operations to fund our capital expenditures and debt service in connection with our currently identified business objectives.

. . .