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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>UNITED
      STATES </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>SECURITIES
      AND EXCHANGE COMMISSION </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Washington,
      DC 20549 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
      REPORT </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pursuant
      to Section 13 OR 15(d) of the Securities and Exchange Act of 1934
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      Report (Date of earliest reported): August 4, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="fis_unidentified_table"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>GLOBALNET
      CORPORATION</strong></font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in charter) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nevada</font></div>
            </td>
            <td valign="top" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">000-24962</font></div>
            </td>
            <td valign="top" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">75-2863583</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                or Other Jurisdiction of Incorporation or Organization)</font></div>
            </td>
            <td valign="top" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                File Number)</font></div>
            </td>
            <td valign="top" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                Employer Identification No.)</font></div>
            </td>
          </tr>

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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2616
      South Loop West, Suite 660, Houston, Texas 77054</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
      of principal executive offices) (Zip Code) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registrant's
      telephone number, including area code: (832) 778-9591</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Copies
      to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gregory
      Sichenzia, Esq.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stephen
      M. Fleming, Esq.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sichenzia
      Ross Friedman Ference LLP</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1065
      Avenue of the Americas</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
      York,
      New York 10018</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Phone:
      (212) 930-9700</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fax:
      (212) 930-9725</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below): </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>
      Written communications
      pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>
      Soliciting material
      pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>
      Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b)) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>
      Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))</font></div>
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            <td width="10%"><a name="fis_change_in_accountant"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
              1.01</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 33pt">&#160;</font></a></td>
            <td width="90%"><a name="fis_change_in_accountant"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Entry
              Into a Material Definitive Agreement</strong></font></a></td>
          </tr>
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            <td width="10%"><strong><font size="2">Item 2.03&#160;</font></strong><font id="TAB2" style="COLOR: black; LETTER-SPACING: 33pt">&#160;</font></td>
            <td width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Creation
                of a Direct Financial Obligation or an Obligation Under an Off-Balance
                Sheet </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Arrangement
                of a Registrant</strong></font></div>
            </td>
          </tr>
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            <td width="10%"><strong><font size="2">Item 3.02&#160;</font></strong><font id="TAB2" style="COLOR: black; LETTER-SPACING: 33pt">&#160;</font></td>
            <td width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Unregistered
                Sales of Equity Securities</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="10%"><strong><font size="2">Item 5.02</font></strong><font id="TAB2" style="COLOR: black; LETTER-SPACING: 33pt">&#160;</font></td>
            <td width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Departure
                of Directors or Principal Officers; Election of Directors; Appointment
                of
                Principal Officers.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
            </td>
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          <tr bgcolor="white">
            <td width="10%"><strong><font size="2">Item 8.01</font></strong><font id="TAB2" style="COLOR: black; LETTER-SPACING: 33pt">&#160;</font></td>
            <td width="90%"><strong><font size="2">Other
              Events</font></strong></td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><a name="fis_change_in_accountant"/>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Wood
      Resignation</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      4, 2006, Mark Wood resigned as an executive officer and director of GlobalNet
      Corporation (the &#8220;Company&#8221;). The Company and Mr. Wood intend to enter a
      definitive separation agreement. Further, Mr. Wood may provide consulting
      services for the Company going forward. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>August
      2006 Financing</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      obtain
      funding for working capital, the Company entered into a Securities Purchase
      Agreement (the &#8220;Agreement&#8221;) with New Millennium Capital Partners II, LLC, AJW
      Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (collectively,
      the &#8220;Investors&#8221;) on May 25, 2006 for the sale of (i) $1,200,000 in callable
      secured convertible notes (the &#8220;Notes&#8221;) and (ii) stock purchase warrants (the
&#8220;Warrants&#8221;) to buy 100,000,000 shares of our common stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      May
      25, 2006, the Investors purchased $325,000 in Notes and received Warrants to
      purchase 50,000,000 shares of the Company&#8217;s common stock. On June 28, 2006, the
      Investors purchased $300,000 in Notes. On August 4, 2006, the Investors
      purchased $240,000 in Notes. In addition, provided that all of the conditions
      in
      the Securities Purchase Agreement are satisfied, on the final business day
      of
      each month, or such other date mutually acceptable to the Company and the
      Investors, the Company will issue to the Investors and the Investors will
      purchase an additional agreed upon amount of Notes and Warrants until the
      remaining $335,000 in Notes are purchased. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Notes
      bear interest at 6%, mature three years from the date of issuance, and are
      convertible into our common stock, at the Investors' option, at a conversion
      price, equal to the lower of (i) $0.03 or (ii) 20% of the average of the three
      lowest intraday trading prices for our common stock during the 20 trading days
      before, but not including, the conversion date (the &#8220;Variable Conversion
      Price&#8221;). As of August 8, 2006, the average of the three lowest intraday trading
      prices for our common stock during the preceding 20 trading days as reported
      on
      the Over-The-Counter Bulletin Board was $.0001 and, therefore, the Variable
      Conversion Price for the secured convertible notes was $.00002. Based on this
      conversion price, the aggregate notes issued to date under the Agreement in
      the
      amount of $865,000 excluding interest, were convertible into 43,250,000,000
      shares of our common stock. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 48pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company's Articles of Incorporation currently allow for issuance of a maximum
      of
      20,000,000,000 shares of common stock. Currently, the Company has approximately
      11,800,000,000 shares outstanding (including conversions of Previous Notes
      during calendar year 2006 of approximately 3,100,000,000 common shares), leaving
      an unissued balance of authorized shares that is not sufficient to service
      the
      maximum requirements of all of its convertible securities. In the event we
      are
      unable to obtain an increase in our authorized common stock, we will be required
      to repay the convertible debenture and we will be subject to penalties
      associated with such failure to deliver shares of common stock upon conversion
      of the debentures as well as prepayment penalties. In addition, the Investors,
      which have a secured lien on all of our assets and intellectual property, would
      be entitled to foreclose on our assets and intellectual property. In the event
      that the foregoing were to occur, significant adverse consequences to the
      Company would be reasonably anticipated. Although no notice of default has
      been
      received from the Investors, all previous notes with the Investors are in
      default under numerous covenants.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      may
      prepay the Notes in the event that no event of default exists, there are a
      sufficient number of shares available for conversion of the callable secured
      convertible notes and the market price is at or below $0.10 per share. The
      full
      principal amount of the Notes is due upon default under the terms of Notes.
      In
      addition, we have granted the Investors a security interest in substantially
      all
      of our assets and intellectual property as well as registration
      rights.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Warrants are exercisable until seven years from the date of issuance at an
      exercise price of $0.0002 per share. In addition, the exercise price of the
      Warrants is adjusted in the event we issue common stock at a price below market.
      </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Investors have contractually agreed to restrict their ability to convert the
      Notes and exercise the Warrants and receive shares of our common stock such
      that
      the number of shares of the Company common stock held by them and their
      affiliates after such conversion or exercise does not exceed 4.99% of the
      Company&#8217;s then issued and outstanding shares of common stock.</font></div>
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      of the
      date hereof, the Company is obligated on $865,000 in face amount of Notes issued
      to the Investors in connection with this offering. &#160;&#160;The Notes are a
      debt obligation arising other than in the ordinary course of business which
      constitute a direct financial obligation of the Company. &#160;&#160; In
      addition, the Company is also obligated on approximately $10,500,000 in face
      amount of callable secured convertible notes issued to the Investors (the
&#8220;Previous Notes&#8221;).</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain
      of the Company's debt instruments originated in periods prior to August 2004;
      accordingly, such debt instruments may be converted to common stock which may
      be
      sold pursuant to Rule 144(k). The Previous Notes are also convertible at the
      Variable Conversion Price.</font></div>
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      Notes
      and Warrants were offered and sold to the Investors in a private placement
      transaction made in reliance upon exemptions from registration pursuant to
      Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated
      thereunder. &#160;&#160;Each of the Investors is an accredited investor as
      defined in Rule 501 of Regulation D promulgated under the Securities Act of
      1933.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 48pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Assuming
      full funding occurs under the Agreement, the Company will nonetheless continue
      to lack a committed long-term defined funding source. Full funding under the
      Agreement will meet only the Company&#8217;s near-term cash needs, and would be
      insufficient to fund operations through the end of the year. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Audit
      and Other Update</u></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      disclosed on the Company&#8217;s Current Report on Form 8-K, dated July 27, 2006, the
      Company reported that certain additional material accounting, disclosure and
      internal control issues had been noted. The Company reported that these
      additional material accounting, disclosure and internal control issues would
      require further research, and additional material accounting adjustments might
      result from conclusion of this review. The Company&#8217;s review of these items is
      ongoing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      discussions with the Company&#8217;s independent public auditor, certain internal
      control deficiencies could, under certain conditions, result in the inability
      to
      complete the audit. These internal control deficiencies include, but are not
      limited to: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">inadequate
                retained records for the early periods under audit;
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">fixed
                asset acquisition and disposition recordation and control deficiencies;
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">payroll
                and other tax compliance issues; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">contract
                administration control issues; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">travel
                and entertainment control and documentation
                issues.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of these additional issues, the time and expense associated with the
      Company&#8217;s audit process will be significantly greater than previously
      anticipated. The Company currently believes that its operational cash needs
      will
      approximate $160,000 per month on an ongoing basis, with an additional minimum
      total estimate of $250,000 for all audit and audit related costs. Under certain
      conditions and with lender approval, the Company will consider &#160;sales of
      excess equipment to assist in funding these cash requirements. To the extent
      that operational monthly cash needs have been reduced, the reductions are
      sourced in cost reductions as opposed to revenue or margin
      enhancement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      previously reported, the Company does not have a committed long-term defined
      funding source, and there is no assurance that the Company&#8217;s funding needs will
      be met, or met on terms and conditions acceptable to the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      9.01</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 33pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Financial
      Statements and Exhibits</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 108pt;"><u><font size="2">Exhibit No.</font></u></td>
            <td><u><font size="2">Description</font></u></td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 108pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 108pt;"><font size="2">4.1</font></td>
            <td><font size="2">Securities Purchase Agreement dated May 25, 2006
              by and
              among the Company and New Millennium Capital Partners II, LLC, AJW
              Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
              (1)</font></td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 108pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 108pt;"><font size="2">4.2</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
              of Callable Secured Convertible Note (1)</font></td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 108pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 108pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.3</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Stock Purchase Warrant (1)</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 108pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.4</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Callable Secured Convertible Note dated June 28, 2006
                (2)</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 108pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.5</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Registration Rights Agreement by and among the Company and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners, LLC
                (1)</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 108pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.6</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Callable Secured Convertible Note dated August 4,
                2006</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: -108pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">__________________________________________</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)
      Incorporated by reference to the Form 8-K Current Report filed with the
      Securities Exchange Commission on June 1, 2006. </font></div>
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      Incorporated by reference to the Form 8-K Current Report filed with the
      Securities Exchange Commission on July 6, 2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><a name="fis_financial_statements_and_exhibits"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURES</strong></font></a></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
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      duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: "><strong>GLOBALNET
              CORPORATION</strong></font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Date:
              August 9, 2006</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: "><u>/</u>s/Thomas
              P. Dunn</font></td>
          </tr>
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            <td align="left">
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          </tr>
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            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title:
                Chief Financial Officer</font></div>
            </td>
          </tr>

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{"company-data": {"conformed-name": "GLOBALNET CORP", "cik": "0000810932", "assigned-sic": "4813", "irs-number": "752863583", "state-of-incorporation": "NV", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-24962", "film-number": "061016640"}, "business-address": {"street1": "16990 DALLAS PARKWAY SUITE 106", "street2": "SUITE 106", "city": "DALLAS", "state": "TX", "zip": "75248", "phone": "9728181058"}, "mail-address": {"street1": "16990 DALLAS PARKWAY SUITE 106", "street2": "SUITE 106", "city": "DALLAS", "state": "TX", "zip": "75248"}, "former-company": [{"former-conformed-name": "IDIAL NETWORKS INC", "date-changed": "20000316"}, {"former-conformed-name": "DESERT SPRINGS ACQUISITION CORP", "date-changed": "19960717"}, {"former-conformed-name": "BARTEL FINANCIAL GROUP INC", "date-changed": "19941021"}]}
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      DC 20549
FORM
      8-K
CURRENT
      REPORT
Pursuant
      to Section 13 OR 15(d) of the Securities and Exchange Act of 1934
Date
      of
      Report (Date of earliest reported): August 4, 2006
GLOBALNET
      CORPORATION
(Exact
      name of registrant as specified in charter)
Nevada
000-24962
75-2863583
(State
                or Other Jurisdiction of Incorporation or Organization)
(Commission
                File Number)
(IRS
                Employer Identification No.)
2616
      South Loop West, Suite 660, Houston, Texas 77054
(Address
      of principal executive offices) (Zip Code)
Registrant's
      telephone number, including area code: (832) 778-9591
Copies
      to:
Gregory
      Sichenzia, Esq.
Stephen
      M. Fleming, Esq.
Sichenzia
      Ross Friedman Ference LLP
1065
      Avenue of the Americas
New
      York,
      New York 10018
Phone:
      (212) 930-9700
Fax:
      (212) 930-9725
Check
      the
      appropriate box below if the Form 8-K filing 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))
Item
              1.01
Entry
              Into a Material Definitive Agreement
Item 2.03
Creation
                of a Direct Financial Obligation or an Obligation Under an Off-Balance
                Sheet
Arrangement
                of a Registrant
Item 3.02
Unregistered
                Sales of Equity Securities
Item 5.02
Departure
                of Directors or Principal Officers; Election of Directors; Appointment
                of
                Principal Officers.
Item 8.01
Other
              Events
Wood
      Resignation
On
      August
      4, 2006, Mark Wood resigned as an executive officer and director of GlobalNet
      Corporation (the "Company"). The Company and Mr. Wood intend to enter a
      definitive separation agreement. Further, Mr. Wood may provide consulting
      services for the Company going forward.
August
      2006 Financing
To
      obtain
      funding for working capital, the Company entered into a Securities Purchase
      Agreement (the "Agreement") with New Millennium Capital Partners II, LLC, AJW
      Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (collectively,
      the "Investors") on May 25, 2006 for the sale of (i) $1,200,000 in callable
      secured convertible notes (the "Notes") and (ii) stock purchase warrants (the
"Warrants") to buy 100,000,000 shares of our common stock.
On
      May
      25, 2006, the Investors purchased $325,000 in Notes and received Warrants to
      purchase 50,000,000 shares of the Company's common stock. On June 28, 2006, the
      Investors purchased $300,000 in Notes. On August 4, 2006, the Investors
      purchased $240,000 in Notes. In addition, provided that all of the conditions
      in
      the Securities Purchase Agreement are satisfied, on the final business day
      of
      each month, or such other date mutually acceptable to the Company and the
      Investors, the Company will issue to the Investors and the Investors will
      purchase an additional agreed upon amount of Notes and Warrants until the
      remaining $335,000 in Notes are purchased.
The
      Notes
      bear interest at 6%, mature three years from the date of issuance, and are
      convertible into our common stock, at the Investors' option, at a conversion
      price, equal to the lower of (i) $0.03 or (ii) 20% of the average of the three
      lowest intraday trading prices for our common stock during the 20 trading days
      before, but not including, the conversion date (the "Variable Conversion
      Price"). As of August 8, 2006, the average of the three lowest intraday trading
      prices for our common stock during the preceding 20 trading days as reported
      on
      the Over-The-Counter Bulletin Board was $.0001 and, therefore, the Variable
      Conversion Price for the secured convertible notes was $.00002. Based on this
      conversion price, the aggregate notes issued to date under the Agreement in
      the
      amount of $865,000 excluding interest, were convertible into 43,250,000,000
      shares of our common stock.
The
      Company's Articles of Incorporation currently allow for issuance of a maximum
      of
      20,000,000,000 shares of common stock. Currently, the Company has approximately
      11,800,000,000 shares outstanding (including conversions of Previous Notes
      during calendar year 2006 of approximately 3,100,000,000 common shares), leaving
      an unissued balance of authorized shares that is not sufficient to service
      the
      maximum requirements of all of its convertible securities. In the event we
      are
      unable to obtain an increase in our authorized common stock, we will be required
      to repay the convertible debenture and we will be subject to penalties
      associated with such failure to deliver shares of common stock upon conversion
      of the debentures as well as prepayment penalties. In addition, the Investors,
      which have a secured lien on all of our assets and intellectual property, would
      be entitled to foreclose on our assets and intellectual property. In the event
      that the foregoing were to occur, significant adverse consequences to the
      Company would be reasonably anticipated. Although no notice of default has
      been
      received from the Investors, all previous notes with the Investors are in
      default under numerous covenants.
We
      may
      prepay the Notes in the event that no event of default exists, there are a
      sufficient number of shares available for conversion of the callable secured
      convertible notes and the market price is at or below $0.10 per share. The
      full
      principal amount of the Notes is due upon default under the terms of Notes.
      In
      addition, we have granted the Investors a security interest in substantially
      all
      of our assets and intellectual property as well as registration
      rights.
The
      Warrants are exercisable until seven years from the date of issuance at an
      exercise price of $0.0002 per share. In addition, the exercise price of the
      Warrants is adjusted in the event we issue common stock at a price below market.
The
      Investors have contractually agreed to restrict their ability to convert the
      Notes and exercise the Warrants and receive shares of our common stock such
      that
      the number of shares of the Company common stock held by them and their
      affiliates after such conversion or exercise does not exceed 4.99% of the
      Company's then issued and outstanding shares of common stock.
As
      of the
      date hereof, the Company is obligated on $865,000 in face amount of Notes issued
      to the Investors in connection with this offering.   The Notes are a
      debt obligation arising other than in the ordinary course of business which
      constitute a direct financial obligation of the Company.    In
      addition, the Company is also obligated on approximately $10,500,000 in face
      amount of callable secured convertible notes issued to the Investors (the
"Previous Notes").
Certain
      of the Company's debt instruments originated in periods prior to August 2004;
      accordingly, such debt instruments may be converted to common stock which may
      be
      sold pursuant to Rule 144(k). The Previous Notes are also convertible at the
      Variable Conversion Price.
The
      Notes
      and Warrants were offered and sold to the Investors in a private placement
      transaction made in reliance upon exemptions from registration pursuant to
      Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated
      thereunder.   Each of the Investors is an accredited investor as
      defined in Rule 501 of Regulation D promulgated under the Securities Act of
      1933.
Assuming
      full funding occurs under the Agreement, the Company will nonetheless continue
      to lack a committed long-term defined funding source. Full funding under the
      Agreement will meet only the Company's near-term cash needs, and would be
      insufficient to fund operations through the end of the year.
Audit
      and Other Update
As
      disclosed on the Company's Current Report on Form 8-K, dated July 27, 2006, the
      Company reported that certain additional material accounting, disclosure and
      internal control issues had been noted. The Company reported that these
      additional material accounting, disclosure and internal control issues would
      require further research, and additional material accounting adjustments might
      result from conclusion of this review. The Company's review of these items is
      ongoing.
In
      discussions with the Company's independent public auditor, certain internal
      control deficiencies could, under certain conditions, result in the inability
      to
      complete the audit. These internal control deficiencies include, but are not
      limited to:
·
inadequate
                retained records for the early periods under audit;
·
fixed
                asset acquisition and disposition recordation and control deficiencies;
·
payroll
                and other tax compliance issues;
·
contract
                administration control issues; and
·
travel
                and entertainment control and documentation
                issues.
As
      a
      result of these additional issues, the time and expense associated with the
      Company's audit process will be significantly greater than previously
      anticipated. The Company currently believes that its operational cash needs
      will
      approximate $160,000 per month on an ongoing basis, with an additional minimum
      total estimate of $250,000 for all audit and audit related costs. Under certain
      conditions and with lender approval, the Company will consider  sales of
      excess equipment to assist in funding these cash requirements. To the extent
      that operational monthly cash needs have been reduced, the reductions are
      sourced in cost reductions as opposed to revenue or margin
      enhancement.
As
      previously reported, the Company does not have a committed long-term defined
      funding source, and there is no assurance that the Company's funding needs will
      be met, or met on terms and conditions acceptable to the Company.
Item
      9.01
Financial
      Statements and Exhibits
Exhibit No.
Description
4.1
Securities Purchase Agreement dated May 25, 2006
              by and
              among the Company and New Millennium Capital Partners II, LLC, AJW
              Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
              (1)
4.2
Form
              of Callable Secured Convertible Note (1)
4.3
Form
                of Stock Purchase Warrant (1)
4.4
Form
                of Callable Secured Convertible Note dated June 28, 2006
                (2)
4.5
Form
                of Registration Rights Agreement by and among the Company and New
                Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                AJW
                Offshore, Ltd. and AJW Partners, LLC
                (1)
4.6
Form
                of Callable Secured Convertible Note dated August 4,
                2006
__________________________________________
(1)
      Incorporated by reference to the Form 8-K Current Report filed with the
      Securities Exchange Commission on June 1, 2006.
(2)
      Incorporated by reference to the Form 8-K Current Report filed with the
      Securities Exchange Commission on July 6, 2006.
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.
GLOBALNET
              CORPORATION
Date:
              August 9, 2006
By:
/
s/Thomas
              P. Dunn
Name:
              Thomas P. Dunn
Title:
                Chief Financial Officer