UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





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





For the
quarterly period ended June 30, 2009





OR





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





FOR
THE TRANSITION PERIOD FROM _______ TO _________





COMMISSION
FILE NO. 0-25053





THEGLOBE.COM,
INC.


(EXACT
NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




STATE
      OF DELAWARE
                
                14-1782422(STATE
      OR OTHER JURISDICTION OF
                
                (I.R.S.
      EMPLOYERINCORPORATION
      OR ORGANIZATION)
                
                IDENTIFICATION
      NO.)




110 EAST
BROWARD BOULEVARD, SUITE 1400


FORT LAUDERDALE, FL
33301


(ADDRESS
OF PRINCIPAL EXECUTIVE OFFICES)





(954) 769 -
5900


(Registrant's
telephone number, including area code)




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. x
Yes o
No





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Date File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).            o Yes o No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “small
reporting company” in Rule 12b-2 of the Exchange Act





Large accelerated filer
            o
            
            Accelerated filer
            oNon-accelerated filer
            o
            (Do not check if a smaller reporting company)
            Smaller reporting company
            x





Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).


Yes x No o





The
number of shares outstanding of the Registrant's Common Stock, $.001 par value
(the "Common Stock") as of July 31, 2009 was 441,484,838.










THEGLOBE.COM,
INC.


FORM
10-Q





TABLE OF
CONTENTS





PART I:
              FINANCIAL
      INFORMATIONItem 1.
              Financial
      StatementsCondensed
      Consolidated Balance Sheets at June 30, 2009 (unaudited) and December 31,
      2008
              1Unaudited
      Condensed Consolidated Statements of Operations for the three and six
      months ended June 30, 2009 and 2008
              2Unaudited
      Condensed Consolidated Statements of Cash Flows for the six months ended
      June 30, 2009 and 2008
              3Notes
      to Unaudited Condensed Consolidated Financial Statements
              4Item 2.
              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
              13Item 4T.
              Controls
      and Procedures
              19PART II:
              OTHER
      INFORMATIONItem 1.
              Legal
      Proceedings
              20Item 1A.
              Risk
      Factors
              20Item 2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              24Item 3.
              Defaults
      Upon Senior Securities
              24Item 4.
              Submission
      of Matters to a Vote of Security Holders
              24Item 5.
              Other
      Information
              24Item 6.
              Exhibits
              24SIGNATURES
              25











PART
I - FINANCIAL INFORMATION





ITEM 1. CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS





THEGLOBE.COM,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





June
      30,
                        
                        
                        DECEMBER 31,2009
                        
                        
                        2008(UNAUDITED)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                        
                        $
                        12,722
                        
                        
                        $
                        89,754Accounts
      receivable from related parties
                        
                        
                        —
                        
                        
                        
                        75,000Prepaid
      expenses
                        
                        
                        9,811
                        
                        
                        
                        19,576Total
      current assets
                        
                        
                        22,533
                        
                        
                        
                        184,330Other
      assets
                        
                        
                        40,000
                        
                        
                        
                        40,000Total
      assets
                        
                        $
                        62,533
                        
                        
                        $
                        224,330LIABILITIES AND STOCKHOLDERS'
      DEFICITCurrent
      Liabilities:Accounts
      payable to related parties
                        
                        $
                        —
                        
                        
                        $
                        40,667Accounts
      payable
                        
                        
                        191,036
                        
                        
                        
                        200,385Accrued
      expenses and other current liabilities
                        
                        
                        508,992
                        
                        
                        
                        567,182Accrued
      interest due to related parties
                        
                        
                        48,027
                        
                        
                        
                        23,233Notes
      payable due to related parties
                        
                        
                        500,000
                        
                        
                        
                        500,000Net
      liabilities of discontinued operations
                        
                        
                        1,887,111
                        
                        
                        
                        1,899,110Total
      current liabilities
                        
                        
                        3,135,166
                        
                        
                        
                        3,230,577Stockholders'
      Deficit:Common
      stock, $0.001 par value; 500,000,000 shares authorized; 441,484,838
      sharesissued
      and outstanding at June 30, 2009 and December 31, 2008
                        
                        
                        441,485
                        
                        
                        
                        441,485Additional
      paid-in capital
                        
                        
                        294,301,845
                        
                        
                        
                        294,298,990Accumulated
      deficit
                        
                        
                        (297,815,963
                        )
                        
                        
                        (297,746,722
                        )Total
      stockholders' deficit
                        
                        
                        (3,072,633
                        )
                        
                        
                        (3,006,247
                        )Total
      liabilities and stockholders’ deficit
                        
                        $
                        62,533
                        
                        
                        $
                        224,330





See notes
to unaudited condensed consolidated financial statements.





1





THEGLOBE.COM,
      INC. AND SUBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF
OPERATIONS





Three Months Ended June 30,
                
                
                Six Months Ended June 30,2009
                
                
                2008
                
                
                2009
                
                
                2008(UNAUDITED)
                
                
                (UNAUDITED)Net
      Revenue
                
                $
                —
                
                
                $
                547,092
                
                
                $
                —
                
                
                $
                1,091,025Operating
      Expenses:Cost
      of revenue
                
                
                —
                
                
                
                117,137
                
                
                
                —
                
                
                
                148,829Sales
      and marketing
                
                
                —
                
                
                
                86,625
                
                
                
                —
                
                
                
                296,401General
      and administrative
                
                
                24,443
                
                
                
                654,508
                
                
                
                47,806
                
                
                
                1,190,620Related
      party transactions
                
                
                60,000
                
                
                
                129,918
                
                
                
                120,000
                
                
                
                283,382Depreciation
                
                
                —
                
                
                
                10,867
                
                
                
                —
                
                
                
                21,577Intangible
      asset amortization
                
                
                —
                
                
                
                39,512
                
                
                
                —
                
                
                
                79,024Total
      Operating Expenses
                
                
                84,443
                
                
                
                1,038,567
                
                
                
                167,806
                
                
                
                2,019,833Operating
      Loss from Continuing Operations
                
                
                (84,443
                )
                
                
                (491,475
                )
                
                
                (167,806
                )
                
                
                (928,808
                )Other
      Income (Expense), net:Related
      party interest expense
                
                
                (12,466
                )
                
                
                (114,643
                )
                
                
                (24,795
                )
                
                
                (230,575
                )Interest
      income (expense)
                
                
                (116
                )
                
                
                454
                
                
                
                (140
                )
                
                
                3,236Related
      party other income
                
                
                75,000
                
                
                
                —
                
                
                
                150,000
                
                
                
                —Other
      income
                
                
                —
                
                
                
                75
                
                
                
                44
                
                
                
                24762,418
                
                
                
                (114,114
                )
                
                
                125,109
                
                
                
                (227,092
                )Loss
      from Continuing Operations Before Income Tax
                
                
                (22,025
                )
                
                
                (605,589
                )
                
                
                (42,697
                )
                
                
                (1,155,900
                )Income
      Tax Provision
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Loss
      from Continuing Operations
                
                
                (22,025
                )
                
                
                (605,589
                )
                
                
                (42,697
                )
                
                
                (1,155,900
                )Discontinued
      Operations, net of tax:
                
                
                (23,547
                )
                
                
                20,995
                
                
                
                (26,544
                )
                
                
                21,960Net
      Loss
                
                $
                (45,572
                )
                
                $
                (584,594
                )
                
                $
                (69,241
                )
                
                $
                (1,133,940
                )Loss
      Per Share:Basic
      and Diluted:Continuing
      Operations
                
                $
                —
                
                
                $
                —
                
                
                $
                —
                
                
                $
                (0.01
                )Discontinued
      Operations
                
                $
                —
                
                
                $
                —
                
                
                $
                —
                
                
                $
                —Net
      Loss
                
                $
                —
                
                
                $
                —
                
                
                $
                —
                
                
                $
                (0.01
                )Weighted
      Average Common Shares Outstanding
                
                
                441,484,838
                
                
                
                181,276,038
                
                
                
                441,484,838
                
                
                
                176,880,438




See notes
to unaudited condensed consolidated financial statements.





2




THEGLOBE.COM,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS





Six Months
                  Ended June 30,2009
                
                
                2008(UNAUDITED)Cash
      Flows from Operating Activities:Net
      loss
                
                $
                (69,241
                )
                
                $
                (1,133,940
                )Add
      back: (income) loss from discontinued operations
                
                
                26,544
                
                
                
                (21,960
                )Net
      loss from continuing operations
                
                
                (42,697
                )
                
                
                (1,155,900
                )Adjustments
      to reconcile net loss from continuing operations to net cash flowsfrom
      operating activities:Depreciation
      and amortization
                
                
                —
                
                
                
                100,601Employee
      stock compensation
                
                
                2,429
                
                
                
                15,216Compensation
      related to non-employee stock options
                
                
                426
                
                
                
                852Changes
      in operating assets and liabilities:Accounts
      receivable from related parties
                
                
                75,000
                
                
                
                396,162Accounts
      receivable
                
                
                —
                
                
                
                (1,621
                )Prepaid
      and other current assets
                
                
                9,765
                
                
                
                (22,028
                )Accounts
      payable to related parties
                
                
                (40,667
                )
                
                
                262,884Accounts
      payable
                
                
                (9,349
                )
                
                
                14,150Accrued
      expenses and other current liabilities
                
                
                (58,190
                )
                
                
                (299,287
                )Accrued
      interest due to related parties
                
                
                24,794
                
                
                
                230,575Deferred
      revenue
                
                
                —
                
                
                
                (296,938
                )Net
      cash flows from operating activities of continuing
    operations
                
                
                (38,489
                )
                
                
                (755,334
                )Net
      cash flows from operating activities of discontinued
      operations
                
                
                (38,543
                )
                
                
                7,744Net
      cash flows from operating activities
                
                
                (77,032
                )
                
                
                (747,590
                )Cash
      Flows from Investing Activities:Proceeds
      from the sale of property and equipment of discontinued
      operations
                
                
                —
                
                
                
                7,000Net
      cash flows from investing activities
                
                
                —
                
                
                
                7,000Cash
      Flows from Financing Activities:Borrowing
      on Notes Payable
                
                
                —
                
                
                
                200,000Net
      cash flows from financing activities
                
                
                —
                
                
                
                200,000Net
      Decrease in Cash and Cash Equivalents
                
                
                (77,032
                )
                
                
                (540,590
                )Cash
      and Cash Equivalents, at beginning of period
                
                
                89,754
                
                
                
                631,198Cash
      and Cash Equivalents, at end of period
                
                $
                12,722
                
                
                $
                90,608





See notes
to unaudited condensed consolidated financial statements.





3





THEGLOBE.COM,
INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





(1)
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





DESCRIPTION
OF THEGLOBE.COM





theglobe.com,
inc. (the “Company” or “theglobe”) was incorporated on May 1, 1995 (inception)
and commenced operations on that date.  Originally, theglobe.com was
an online community with registered members and users in the United States and
abroad.  However, due to the deterioration of the online advertising
market, the Company was forced to restructure and ceased the operations of its
online community on August 15, 2001.  The Company then sold most of
its remaining online and offline properties.  The Company continued to
operate its Computer Games print magazine and the associated CGOnline website,
as well as the e-commerce games distribution business of Chips &
Bits.  On June 1, 2002, Chairman Michael S. Egan and Director Edward
A. Cespedes became Chief Executive Officer and President of the Company,
respectively.  On November 14, 2002, the Company entered into the
Voice over Internet Protocol (“VoIP”) business by acquiring certain VoIP
assets.





On May 9,
2005, the Company exercised an option to acquire all of the outstanding capital
stock of Tralliance Corporation (“Tralliance”), an entity which had been
designated as the registry for the “.travel” top-level domain through an
agreement with the Internet Corporation for Assigned Names and Numbers
(“ICANN”).





As more
fully discussed in Note 4, “Discontinued Operations,” in March 2007, management
and the Board of Directors of the Company made the decision to cease all
activities related to its computer games businesses, including discontinuing the
operations of its magazine publications, games distribution business and related
websites.  In addition, in March 2007, management and the Board of
Directors of the Company decided to discontinue the operating, research and
development activities of its VoIP telephony services business.  All
of the remaining employees of these businesses were terminated.





On
September 29, 2008, the Company sold its Tralliance business and issued
229,000,000 shares of its Common Stock to a company controlled by Michael S.
Egan, the Company’s Chairman and Chief Executive Officer (see Note 3, “Sale of
Tralliance and Share Issuance”).  As a result of the sale of its
Tralliance business, the Company became a shell company (as defined in Rule
12b-2 of the Securities and Exchange Act of 1934) with no material operations or
assets.  The Company presently intends to continue as a public company
and make all the requisite filings under the Securities and Exchange Act of
1934.  However, certain matters, as more fully discussed in Note 2,
“Going Concern Considerations,” raise substantial doubt about the Company’s
ability to continue as a going concern.





PRINCIPLES
OF CONSOLIDATION





The
condensed consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries from their respective dates of acquisition.
All significant intercompany balances and transactions have been eliminated in
consolidation.




UNAUDITED
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION





The
unaudited interim condensed consolidated financial statements of the Company as
of June 30, 2009 and for the three and six months ended June 30, 2009 and 2008
included herein have been prepared in accordance with the instructions for Form
10-Q under the Securities Exchange Act of 1934, as amended, and Article 10 of
Regulation S-X under the Securities Act of 1933, as amended. Certain information
and note disclosures normally included in consolidated financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations relating to interim
condensed consolidated financial statements.




In the
opinion of management, the accompanying unaudited interim condensed consolidated
financial statements reflect all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position of the
Company at June 30, 2009 and the results of its operations and its cash flows
for the three and six months ended June 30, 2009 and 2008. The results of
operations and cash flows for such periods are not necessarily indicative of
results expected for the full year or for any future period.





USE OF
ESTIMATES





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. These estimates and assumptions relate to estimates of collectability of
accounts receivable, the impairment of long-lived assets, accounts payable and
accrued expenses and other factors. At June 30, 2009 and December 31, 2008, a
significant portion of our net liabilities of discontinued operations relate to
charges that have been disputed by the Company and for which estimates have been
required. Our estimates, judgments and assumptions are continually evaluated
based upon available information and experience. Because of estimates inherent
in the financial reporting process, actual results could differ from those
estimates.





4





CASH AND
CASH EQUIVALENTS





Cash
equivalents consist of money market funds and highly liquid short-term
investments with qualified financial institutions. The Company considers all
highly liquid securities with original maturities of three months or less to be
cash equivalents.





COMPREHENSIVE
INCOME (LOSS)





The
Company reports comprehensive income (loss) in accordance with Statement of
Financial Accounting Standards (“SFAS”) No. 130, "Reporting Comprehensive
Income." Comprehensive income (loss) generally represents all changes in
stockholders' equity during the year except those resulting from investments by,
or distributions to, stockholders. The Company's comprehensive loss was
approximately $69 thousand and $1.1 million for the six months ended June 30,
2009 and 2008, respectively, which approximated the Company's reported net
loss.





REVENUE
RECOGNITION





The
Company’s revenue from continuing operations for the six months ended June 30,
2008 consists principally of registration fees for Internet domain registrations
earned prior to the sale of its Tralliance business.  Such
registration fees are reported net of transaction fees paid to an unrelated
third party which served as the registry operator for the Company. Payments of
registration fees had been deferred when initially received and recognized as
revenue on a straight-line basis over the registrations’ terms.





NET LOSS
PER SHARE





The
Company reports net loss per common share in accordance with SFAS No. 128,
"Computation of Earnings Per Share." In accordance with SFAS 128 and the
Securities and Exchange Commission (“SEC’) Staff Accounting Bulletin No. 98,
basic earnings per share is computed using the weighted average number of common
shares outstanding during the period. Common equivalent shares consist of the
incremental common shares issuable upon the conversion of convertible notes
(using the if-converted method), if any, and the shares issuable upon the
exercise of stock options and warrants (using the treasury stock method). Common
equivalent shares are excluded from the calculation if their effect is
anti-dilutive or if a loss from continuing operations is reported.




Due to
the anti-dilutive effect of potentially dilutive securities or common stock
equivalents that could be issued, such securities were excluded from the diluted
net loss per common share calculation for all periods presented. Such
potentially dilutive securities and common stock equivalents consisted of the
following for the periods ended June 30:





2009
                    
                    
                    2008Options
      to purchase common stock
                    
                    
                    13,597,000
                    
                    
                    
                    15,601,000Common
      shares issuable upon exercise of warrants
                    
                    
                    12,725,000
                    
                    
                    
                    16,911,000Common
      shares issuable upon conversion of Convertible Notes
                    
                    
                    —
                    
                    
                    
                    153,000,000Total
                    
                    
                    26,322,000
                    
                    
                    
                    185,512,000





RECENT
ACCOUNTING PRONOUNCEMENTS





In May
2009, the FASB issued SFAS No. 165,“Subsequent Events”
(“SFAS 165”). SFAS 165 establishes principles and requirements for subsequent
events. In particular, this Statement sets forth the period after the balance
sheet date during which management of a reporting entity shall evaluate events
or transactions that may occur for potential recognition or disclosure in the
financial statements, the circumstances under which an entity shall recognize
events or transactions occurring after the balance sheet date in its financial
statements, and the disclosures that an entity shall make about events or
transactions that occurred after the balance sheet date. SFAS 165 is effective
for interim or annual financial periods ending after June 15, 2009, and
shall be applied prospectively. The adoption of this SFAS 165 did not have a
material effect on the Company’s financial condition, results of operations or
cash flows; see Note 9 “Subsequent Events”.





APB 14-1
“Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon
Conversion (Including Partial Cash Settlement)” applies to convertible debt
instruments that, by their stated terms, may be settled in cash (or other
assets) upon conversion, including partial cash settlement, unless the embedded
conversion options is required to be separately accounted for as a derivative
under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging
Activities.”  APB 14-1 is effective for fiscal years beginning after
December 15, 2008.  The implementation of this standard did not have a
material impact on the Company’s consolidated financial statements.





5




EITF
07-05, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entity’s Own Stock,” applies to any freestanding financial instrument or
embedded feature that has all the characteristics of a derivative in FAS
Statement 133, for purposes of determining whether that instrument or embedded
feature qualifies for the first part of the scope exception in paragraph 11 (a)
of Statement 133.  This issue also applies to any freestanding
financial instrument that is potentially settled in an entity’s own stock,
regardless of whether the instrument has all the characteristics of a derivative
in paragraphs 6-9 of Statement 133, for purposes of determining whether the
instrument is within the scope of EITF 00-19.  EITF 07-05 is effective
for fiscal years beginning after December 15, 2008.  The
implementation of this standard did not have a material impact on the Company’s
consolidated financial statements.




In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162, “The
Hierarchy of Generally Accepted Accounting Principles,” (“SFAS 162”), which
identifies the sources of accounting principles and the framework for selecting
the principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP
hierarchy).  SFAS No. 162 became effective on November 15,
2008.  The implementation of this standard did not have a material
impact on the Company’s consolidated financial statements.





In April
2008, the FASB issued FSP SFAS No. 142-3, “Determination of the Useful Life of
Intangible Assets.”  142-3 is effective for fiscal years beginning
after December 15, 2008.  The implementation of this standard did not
have a material impact on the Company’s consolidated financial
statements.





In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161,
“Disclosures about Derivative Instruments and Hedging Activities,” (“SFAS
161”).  SFAS 161 has the same scope as Statement 133 and requires
enhanced disclosures about an entity’s derivative and hedging activities and
thereby improves the transparency of financial reporting.  This
Statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged.  This Statement encourages, but does not require,
comparative disclosures for earlier periods at initial adoption.  This
Statement changes the disclosure requirements for derivative instruments and
hedging activities.  Entities are required to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows.  The adoption of SFAS 161 did
not have a material impact on the Company’s consolidated financial
statements.





In
December 2007, the FASB issued SFAS 141R, “Business Combinations” (“SFAS 141R”)
which requires an acquirer to recognize the assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree at the acquisition
date, measured at their fair values as of that date. SFAS 141R requires, among
other things, that in a business combination achieved through stages (sometimes
referred to as a “step acquisition”) that the acquirer recognize the
identifiable assets and liabilities, as well as the non-controlling interest in
the acquiree, at the full amounts of their fair values (or other amounts
determined in accordance with this Statement).





SFAS 141R
also requires the acquirer to recognize goodwill as of the acquisition date,
measured as a residual, which in most types of business combinations will result
in measuring goodwill as the excess of the consideration transferred plus the
fair value of any non-controlling interest in the acquiree at the acquisition
date over the fair values of the identifiable net assets acquired. SFAS 141R
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008.  The adoption of SFAS 141R did not have a
material impact on our financial statements.





In
December 2007, the FASB issued SFAS 160, “Non-controlling Interests in
Consolidated Financial Statements” (“SFAS 160”). This Statement changes the way
the consolidated income statement is presented. SFAS 160 requires consolidated
net income to be reported at amounts that include the amounts attributable to
both the parent and the non-controlling interest. It also requires disclosure,
on the face of the consolidated statement of income, of the amounts of
consolidated net income attributable to the parent and to the non-controlling
interest. Currently, net income attributable to the non-controlling interest
generally is reported as an expense or other deduction in arriving at
consolidated net income. It also is often presented in combination with other
financial statement amounts. SFAS 160 results in more transparent reporting of
the net income attributable to the non-controlling interest. This Statement is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. The adoption of SFAS 160 did not have a
material impact on its financial statements.





In
February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
159, “The Fair Value Option for Financial Assets and Financial Liabilities.”
SFAS No. 159 expands the scope of what entities may carry at fair value by
offering an irrevocable option to record many types of financial assets and
liabilities at fair value. Changes in fair value would be recorded in an
entity’s income statement. This accounting standard also establishes
presentation and disclosure requirements that are intended to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. SFAS No. 159 is effective for the
Company on January 1, 2008. Earlier application is permitted under certain
circumstances.   The adoption of SFAS No. 159 did not have a
material impact on the Company’s financial statements.





6




In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
standard defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosure about fair value
measurements. SFAS No. 157 applies to other accounting standards that require or
permit fair value measurements. Accordingly, this statement does not require any
new fair value measurement. This statement is effective for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal
years.  The adoption of SFAS No. 157 did not have a material impact on
the Company’s financial statements.





RECLASSIFICATIONS





Certain
amounts in the prior year financial statements have been reclassified to conform
to the current year presentation.





(2)
GOING CONCERN CONSIDERATIONS





The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America on
a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Accordingly, the
consolidated financial statements do not include any adjustments relating to the
recoverability of assets and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern. However,
for the reasons described below, Company management does not believe that cash
on hand and cash flow generated internally by the Company will be adequate to
fund its limited overhead and other cash requirements beyond a short period of
time. These reasons raise significant doubt about the Company’s ability to
continue as a going concern.





During
its recent past, the Company was able to continue operating as a going concern
due principally to funding of $500,000 received during 2008 under a Revolving
Loan Agreement with an entity controlled by Michael S. Egan, its Chairman and
Chief Executive Officer (See Note 5, “Debt” for further details) and funding of
$225,000 received during the first half of 2009 under an Earn-out Agreement with
an entity also controlled by Mr. Egan (See Note 3, “Sale of Tralliance and Share
Issuance” for further details).





At June
30, 2009, the Company had a net working capital deficit of approximately
$3,113,000, inclusive of a cash and cash equivalents balance of approximately
$13,000.  Such working capital deficit included (i) a total of
approximately $548,000 in principal and accrued interest owed under the
aforementioned Revolving Loan Agreement to an entity controlled by Mr. Egan, and
(ii) an aggregate of approximately $2,600,000 in unsecured accounts payable and
accrued expenses owed to vendors and other non-related third parties (of which
approximately $1,800,000 relates to liabilities of our VoIP telephony service
discontinued business, with a significant portion of such liabilities related to
charges which have been disputed by theglobe). theglobe believes that its
ability to continue as a going concern for any significant length of time in the
future will be heavily dependent, among other things, on its ability to prevail
and avoid making any payments with respect to such disputed vendor charges
and/or to negotiate favorable settlements (including discounted payment and/or
payment term concessions) with the aforementioned creditors.





As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance,” on September
29, 2008, the Company (i) sold the business and substantially all of the assets
of its Tralliance Corporation subsidiary to Tralliance Registry Management, and
(ii) issued 229,000,000 shares of its Common Stock (the “Shares”) to Registry
Management (the “Purchase Transaction”). Tralliance Registry Management and
Registry Management are entities controlled by Michael S. Egan. The closing of
the Purchase Transaction resulted in the cancellation of all of the Company’s
remaining Convertible Debt, related accrued interest and rent and accounts
payable owed to entities controlled by Mr. Egan as of the date of closing
(totaling approximately $6,400,000). However, the Company continues to be
obligated to repay its principal borrowings totaling $500,000, plus accrued
interest at the rate of 10% per annum, due to an entity controlled by Mr. Egan
under the aforementioned Revolving Loan Agreement. All unpaid borrowings under
the Revolving Loan Agreement, as amended on May 7, 2009 (See Note 5, “Debt”),
including accrued interest, are due and payable by the Company in one lump sum
on the earlier of (i) five business days following demand for payment, which
demand can be made at anytime, or (ii) the occurrence of an event of default as
defined in the Revolving Loan Agreement. The Company currently has no ability to
repay this loan should a demand for payment be made by the
noteholder.  All borrowings under the Revolving Loan Agreement are
secured by a pledge of all of the assets of the Company and its subsidiaries.
After giving effect to the closing of the Purchase Transaction and the issuance
of the Shares thereunder, Mr. Egan now beneficially owns approximately 77% of
the Company’s issued and outstanding Common Stock.





As
additional consideration under the Purchase Transaction, Tralliance Registry
Management is obligated to pay an earn-out to theglobe equal to 10% (subject to
certain minimums) of Tralliance Registry Management’s net revenue (as defined)
derived from “.travel” names registered by Tralliance Registry Management from
September 29, 2008 through May 5, 2015 (the “Earn-out”). The minimum Earn-out
payable by Tralliance Registry Management to theglobe will be at least $300,000
in the first year, increasing by $25,000 in each subsequent year (pro-rated for
the final year of the Earn-out).





In
connection with the closing of the Purchase Transaction, the Company also
entered into a Master Services Agreement with an entity controlled by Mr. Egan
whereby for a fee of $20,000 per month ($240,000 per annum) such entity will
provide personnel and services to the Company so as to enable it to continue its
existence as a public company without the necessity of any full-time employees
of its own. Additionally, commensurate with the closing of the Purchase
Transaction, Termination Agreements with each of its current executive officers,
which terminated their previous and then existing employment agreements, were
executed. Notwithstanding the termination of these employment agreements, each
of our current executive officers and directors remain as executive officers and
directors of the Company.





7




Immediately
following the closing of the Purchase Transaction, theglobe became a shell
company with no material operations or assets, and no source of revenue other
than under the Earn-out.  It is expected that theglobe’s future
operating expenses as a public shell company will consist primarily of expenses
incurred under the aforementioned Master Services Agreement and other customary
public company expenses, including legal, audit and other miscellaneous public
company costs.





MANAGEMENT’S
PLANS





As a
shell company, management believes that theglobe will most likely continue to
incur net and cash flow losses for the foreseeable future. However, assuming
that no significant unplanned costs are incurred, management believes that
theglobe’s future losses will be limited. Further, in the event that Registry
Management is successful in substantially increasing net revenue derived from
“.travel” name registrations (and as the result maximizing theglobe’s Earn-out
revenue) in the future, theglobe’s prospects for achieving profitability will be
enhanced.  To date the Company has received only the minimum payments
pursuant to the Earn-out.





It is the
Company’s preference to avoid filing for protection under the U.S. Bankruptcy
Code. However, based upon the Company’s current financial condition as discussed
above, management believes that additional debt or equity capital will need to
be raised in order for theglobe to continue to operate as a going concern on a
long-term basis. Such capital will be needed both to (i) fund its expected
limited future net losses and (ii) repay the $548,000 of secured debt and
related accrued interest due under the Revolving Loan Agreement and a portion of
the $2,600,000 unsecured indebtedness (assuming theglobe is successful in
favorably resolving and settling certain disputed and non-disputed vendor
charges related to such unsecured indebtedness).  Any such capital
would likely come from Mr. Egan, or affiliates of Mr. Egan, as the Company
currently has no access to credit facilities and had traditionally relied upon
borrowings from related parties to meet short-term liquidity
needs.  Any such capital raised would likely result in very
substantial dilution in the number of outstanding shares of the Company’s Common
Stock.





On a
short-term liquidity basis, the Company must be successful in collecting the
quarterly Earn-out payments contractually due from Tralliance Registry
Management on a timely basis, and must receive the continued indulgence of
substantially all of its creditors, in order to continue to operate as a going
concern in the near term.  Given theglobe’s current financial
condition and the state of the current United States capital markets and
economy, it has no current intent to seek to acquire, or start, any other
businesses.




(3)  SALE
OF TRALLIANCE AND SHARE ISSUANCE





On
September 29, 2008, theglobe closed upon a previously announced Purchase
Agreement (the “Purchase Agreement”) dated as of June 10, 2008, by and between
theglobe.com, its subsidiary, Tralliance, Registry Management and Tralliance
Registry Management, a wholly-owned subsidiary of Registry
Management.  In connection with the closing, Registry Management
assigned certain of its rights and obligations with respect to the purchased
assets of Tralliance to Tralliance Registry Management.  Pursuant to
the provisions of the Purchase Agreement, theglobe (i) issued two hundred twenty
nine million (229,000,000) shares of its Common Stock (the “Shares”) (the “Share
Issuance”) and (ii) sold the business and substantially all of the assets of its
subsidiary, Tralliance to Tralliance Registry Management (the “Asset Sale” and,
together with the Share Issuance, the “Sale” or “Purchase Transaction”) for (i)
consideration totaling approximately $6,409,800 and consisting of surrender to
theglobe and satisfaction of secured demand convertible promissory notes issued
by theglobe and held by the Registry Management in the aggregate principal
amount of $4,250,000, together with all accrued and unpaid interest of
approximately $1,290,300 through the date of the closing of the Purchase
Transaction and satisfaction of approximately $869,500 in outstanding rent and
miscellaneous fees due and unpaid to Registry Management through the date of
closing of the Purchase Transaction, and (ii) an earn-out equal to 10% of
Tralliance Registry Management’s “net revenue” (as defined) derived from
“.travel” names registered by Tralliance Registry Management from September 29,
2008 through May 5, 2015 (the “Earn-out”).  Registry Management and
Tralliance Registry Management are directly or indirectly controlled by Michael
S. Egan, our Chairman and Chief Executive Officer and principal stockholder and
each of our two remaining Board members own a minority interest in Registry
Management.  After giving effect to the closing of the Purchase
Transaction, and the issuance of the Shares thereunder, Mr. Egan now
beneficially owns approximately 77% of the Company’s issued and outstanding
Common Stock.





Due to
various factors related to the collectability of Earn-out payments from
Tralliance Registry Management, including the current weak financial condition
of Tralliance Registry Management, the uncertainty of its ability to become
profitable in the future, and the fact that such Earn-out payments are payable
to theglobe over an extended period of time (approximately 6 1⁄2 years), no
portion of the Earn-out was included in the purchase price for the Purchase
Transaction as of the closing of the transaction.  Instead, the
Company intends to recognize income related to the Earn-out on a prospective
basis as and to the extent that future Earn-out payments are
collected.  During January 2009, the Company received its initial
minimum Earn-out installment payment from Tralliance Registry Management in the
amount of $75,000, with such amount recognized as Other Income in the
Consolidated Statement of Operations for the year ended December 31,
2008.  During March 2009 and June 2009, the Company received
additional minimum Earn-out installment payments from Tralliance Registry
Management, both in the amount of $75,000, which were each recorded as credits
to Other Income in the Unaudited Condensed Consolidated Statement of Operations
for the six months ended June 30, 2009.  To date the Company has
received only the minimum payments pursuant to the Earn-out.





8




Commensurate
with the closing of the Purchase Agreement on September 29, 2008, the Company
also entered into several ancillary agreements.  These agreements
included an Earn-out Agreement pursuant to which the aforementioned “net
revenue” Earn-out would be paid (the “Earn-out Agreement”), and Termination
Agreements with each of our executive officers (each a “Termination
Agreement”).  The minimum Earn-out amount payable under the Earn-out
Agreement will be at least $300,000 in the first year of the Earn-out Agreement
increasing by $25,000 in each subsequent year (pro-rated for the final year of
the Earn-out) with incremental Earn-out payments to be determined and paid to
the Company on an annual basis to the extent that 10% of Tralliance Registry
Management’s “net revenue” (as defined) exceeds the minimum Earn-out amount
payable for such year.  Pursuant to the Termination Agreements, the
Company’s employment agreements with each of Michael S. Egan, Edward A. Cespedes
and Robin Segaul Lebowitz, the Company’s Chief Executive Officer, President and
Vice President of Finance, all dated August 1, 2003, respectively, were
terminated.  Notwithstanding the termination of these employment
agreements, each of Messrs. Egan, Cespedes and Ms. Lebowitz remains as an
officer and director of the Company.




In
connection with the closing of the Purchase Agreement, the Company also entered
into a Master Services Agreement (“Services Agreement”) with Dancing Bear
Investments, Inc. (“Dancing Bear”), which is controlled by Mr.
Egan.  Under the terms of the Services Agreement, for a fee of $20,000
per month ($240,000 per annum), Dancing Bear will provide personnel and services
to the Company so as to enable it to continue its existence as a public company
without the necessity of any full-time employees of its own.  The
Services Agreement has an initial term of one year and is subject to renewal or
early termination under certain events.  Services under the Services
Agreement include, without limitation, accounting, assistance with financial
reporting, accounts payable, treasury/financial planning, record retention and
secretarial and investor relations functions. During the six months ended June
30, 2009, a total of $120,000 related to such Services Agreement has been
expensed.





After
giving effect to the closing of the Purchase Transaction, theglobe has no
material operations or assets and no source of revenue other than the
Earn-out.  The Purchase Transaction was not intended to result in
theglobe “going private” and theglobe, subject to its financial wherewithal,
presently intends to continue as a public company and make all requisite filings
under the Securities and Exchange Act of 1934 to remain a public
company.





(4)
DISCONTINUED OPERATIONS





In March
2007, management and the Board of Directors of the Company made the decision to
cease all activities related to its Computer Games businesses, including
discontinuing the operations of its magazine publications, games distribution
business and related websites. The Company’s decision to shutdown its computer
games businesses was based primarily on the historical losses sustained by these
businesses during the recent past and management’s expectations of continued
future losses. As of June 30, 2009, all significant elements of its computer
games business shutdown plan have been completed by the Company, except for the
resolution and payment of remaining outstanding accounts payables.





In
addition, in March 2007, management and the Board of Directors of the Company
decided to discontinue the operating, research and development activities of its
VoIP telephony services business and terminate all of the remaining employees of
the business.  The
Company’s decision to discontinue the operations of its VoIP telephony services
business was based primarily on the historical losses sustained by the business
during the past several years, management’s expectations of continued losses for
the foreseeable future and estimates of the amount of capital required to
attempt to successfully monetize its business. As of June 30, 2009, all
significant elements of its VoIP telephony services business shutdown plan have
been completed by the Company, except for the resolution of certain vendor
disputes and the payment of remaining outstanding vendor payables.





Results
of operations for the Computer Games and VoIP telephony services businesses have
been reported separately as “Discontinued Operations” in the accompanying
consolidated statements of operations for all periods presented. The assets and
liabilities of the computer games and VoIP telephony services businesses have
been included in the captions, “Assets of Discontinued Operations” and
“Liabilities of Discontinued Operations” in the accompanying condensed
consolidated balance sheets.





9





The
following is a summary of the assets and liabilities of the discontinued
operations of the computer games and VoIP telephony services businesses as
included in the accompanying condensed consolidated balance sheets. A
significant portion of the net liabilities of discontinued operations at June
30, 2009 relate to charges that have been disputed by the Company and for which
estimates have been required.




June 30,
                      2009
                    
                    
                    December 31,
                      2008Assets:Computer
      Games
                    
                    $
                    ―
                    
                    
                    $
                    ―VoIP
      Telephony Services
                    
                    
                    —
                    
                    
                    
                    —Total
      assets of discontinued operations
                    
                    $
                    —
                    
                    
                    $
                    —




June 30,
                  
                  
                  December 31,2009
                  
                  
                  2008Liabilities:Computer
      GamesAccounts
      payable
                  
                  $
                  35,583
                  
                  
                  $
                  35,584Subscriber
      liability, net
                  
                  
                  4,971
                  
                  
                  
                  4,97140,554
                  
                  
                  
                  40,555VoIP
      Telephony ServicesAccounts
      payable
                  
                  
                  1,530,847
                  
                  
                  
                  1,565,845Other
      accrued expenses
                  
                  
                  228,710
                  
                  
                  
                  228,7101,759,557
                  
                  
                  
                  1,794,555Total
      liabilities of discontinued operations
                  
                  $
                  1,800,111
                  
                  
                  $
                  1,835,110





Total
liabilities of discontinued operations at June 30, 2009 and December 31, 2008
also include liabilities of $87,000 and $64,000, respectively, related to
estimated income taxes and interest due in connection with an ongoing audit of a
former subsidiary company.





Summarized
results of operations financial information for the discontinued operations of
our computer games and VoIP telephony services businesses was as
follows:





Three Months Ended June 30,
                
                
                Six Months Ended June 30,2009
                
                
                2008
                
                
                2009
                
                
                2008Computer
      Games:Net
      revenue
                
                $
                —
                
                
                $
                21,695
                
                
                $
                —
                
                
                $
                21,695Income
      (Loss) from operations, net of tax
                
                $
                (397
                )
                
                $
                21,695
                
                
                $
                (3,095
                )
                
                $
                17,789VoIP
      Telephony ServicesNet
      revenue
                
                $
                —
                
                
                $
                —
                
                
                $
                —
                
                
                $
                —Income
      (Loss) from operations, net of tax
                
                $
                (150
                )
                
                $
                (700
                )
                
                $
                (449
                )
                
                $
                4,171




The
results of the Company’s discontinued operations for both the three and six
months ended June 30, 2009 also includes a charge for $23,000 related to
interest expenses accrued in connection with an ongoing prior year audit of a
former subsidiary company.




10




(5)
DEBT





Debt
consists of note payable due to related parties, as summarized
below:





June 30, 2009
                    
                    
                    December 31, 20082008
      Revolving Loan Note due to affiliates
                    
                    $
                    500,000
                    
                    
                    $
                    500,000LESS:
      Short-term portion
                    
                    
                    500,000
                    
                    
                    
                    500,000Long-term
      portion
                    
                    $
                    —
                    
                    
                    $
                    —





On May 7,
2009, the Company entered into a Note Modification Agreement with Dancing Bear
Investments, Inc. (“Dancing Bear”), which amended the repayment terms of the
Revolving Loan Agreement dated June 6, 2008 by and between the Company and
Dancing Bear (see Note 8, “Related Party Transactions”).  Under the
terms of the Note Modification Agreement, from and after June 6, 2009 (the
original maturity date of the Revolving Loan Agreement), all amounts due under
the Revolving Loan Agreement, including principal and accrued interest, will be
due and payable on the earlier of (i) five (5) business days following any
demand for payment, which demand can be made by Dancing Bear at any time; or
(ii) the occurrence of an event of default, as defined in the Revolving Loan
Agreement.




(6)
STOCK OPTION PLANS





We have
several stock option plans under which nonqualified stock options may be granted
to officers, directors, other employees, consultants and advisors of the
Company. In general, options granted under the Company’s stock option plans
expire after a ten-year period and generally vest no later than three years from
the date of grant. Incentive options granted to stockholders who own greater
than 10% of the total combined voting power of all classes of stock of the
Company must be issued at 110% of the fair market value of the stock on the date
the options are granted. As of June 30, 2009, there were approximately 9,388,000
shares available for grant under the Company’s stock option plans.





There
were no stock option grants or exercises during each of the six months ended
June 30, 2009 and 2008.




Stock
option activity during the six months ended June 30, 2009 was as
follows:





Total Options
                  
                  
                  Weighted
                    Average Exercise
                    PriceOutstanding at December 31, 2008
                  
                  $
                  14,963,660
                  
                  
                  $
                  0.33Granted
                  
                  
                  ―
                  
                  
                  
                  ―Exercised
                  
                  
                  —
                  
                  
                  
                  ―Canceled
                  
                  
                  (1,367,080
                  )
                  
                  
                  1.74Outstanding
      at June 30, 2009
                  
                  
                  13,596,580
                  
                  
                  
                  0.18Options
      exercisable at June 30, 2009
                  
                  $
                  13,596,580
                  
                  
                  $
                  0.18




The
weighted-average remaining contractual term of both stock options outstanding
and stock options exercisable at June 30, 2009 was 5 years. The aggregate
intrinsic value of both options outstanding and stock options exercisable at
June 30, 2009 was $0.





Stock
compensation cost is recognized on a straight-line basis over the vesting
period. Stock compensation expense totaling $2,855 was charged to operations
during the six months ended June 30, 2009, including $426 of expense resulting
from the vesting of non-employee stock options.  During the six months
ended June 30, 2008, stock compensation expense of $16,068 charged to operations
included $852 of expense related to the vesting of non-employee stock
options.





At June
30, 2009, there was no unrecognized compensation expense related to unvested
stock options.





The
Company estimates the fair value of each stock option at the grant date by using
the Black Scholes option-pricing model using the following assumptions: no
dividend yield; a risk free interest rate based on the U.S. Treasury yield in
effect at the time of grant; an expected option life based on historical and
expected exercise behavior; and expected volatility based on the historical
volatility of the Company’s stock price, over a time period that is consistent
with the expected life of the option.





11




(7)
LITIGATION





On and
after August 3, 2001 six putative shareholder class action lawsuits were filed
against the Company, certain of its current and former officers and directors
(the “Individual Defendants”), and several investment banks that were the
underwriters of the Company's initial public offering and secondary offering.
The lawsuits were filed in the United States District Court for the Southern
District of New York. A Consolidated Amended Complaint, which is now the
operative complaint, was filed in the Southern District of New York on April 19,
2002.





The
lawsuit purports to be a class action filed on behalf of purchasers of the stock
of the Company during the period from November 12, 1998 through December 6,
2000. The purported class action alleges violations of Sections 11 and 15 of the
Securities Act of 1933 (the “1933 Act”) and Sections 10(b), Rule 10b-5 and 20(a)
of the Securities Exchange Act of 1934 (the “1934 Act”). Plaintiffs allege that
the underwriter defendants agreed to allocate stock in the Company's initial
public offering and its secondary offering to certain investors in exchange for
excessive and undisclosed commissions and agreements by those investors to make
additional purchases of stock in the aftermarket at pre-determined prices.
Plaintiffs allege that the Prospectuses for the Company's initial public
offering and its secondary offering were false and misleading and in violation
of the securities laws because it did not disclose these arrangements. The
action seeks damages in an unspecified amount. On October 9, 2002, the Court
dismissed the Individual Defendants from the case without prejudice. This
dismissal disposed of the Section 15 and 20(a) control person claims without
prejudice.





At the
Court’s request, plaintiffs selected six “focus” cases, which do not include the
Company.  The Court indicated that its decisions in the six focus
cases are intended to provide strong guidance for the parties in the remaining
cases. On August 14, 2007, the plaintiffs filed amended complaints in the six
focus cases, and on September 27, 2007, the plaintiffs moved to certify a class
in these cases. On November 14, 2007, the defendants in the six focus cases
filed motions to dismiss. On March 26, 2008, the District Court dismissed the
Section 11 claims of those members of the putative classes in the focus cases
who sold their securities for a price in excess of the initial offering price
and those who purchased outside the previously certified class period. With
respect to all other claims, the motions to dismiss were denied. On October 10,
2008, at the request of the plaintiffs, the motion for class certification was
withdrawn, without prejudice.





On April
3, 2009, the plaintiffs submitted to the Court a motion for preliminary approval
of a settlement of the approximately 300 coordinated cases, which includes
theglobe, the underwriter defendants in the Company’s class action lawsuit, and
the plaintiff class in the Company’s class action lawsuit.  The
insurers for the issuer defendants in the coordinated cases will make the
settlement payment on behalf of the issuers, including theglobe.  On
June 11, 2009, the Court issued an order preliminarily approving the proposed
stipulation and agreement of settlement among the parties and certifying
settlement classes. The settlement is subject to termination by the parties
under certain circumstances, and final approval by the Court.  The
hearing on final approval is currently scheduled for September 10, 2009. There
is no assurance that the Court will grant final approval.





Due to
the inherent uncertainties of litigation, the Company cannot accurately predict
the ultimate outcome of the matter. If the settlement is not approved and the
Company is found liable, we are unable to estimate or predict the potential
damages that might be awarded, whether such damages would be greater than the
Company’s insurance coverage, and whether such damages would have a material
impact on our results of operations or financial condition in any future
period.





The
Company is currently a party to certain other claims and disputes arising in the
ordinary course of business, including certain disputes related to vendor
charges incurred primarily as the result of the failure and subsequent shutdown
of its discontinued VoIP telephony services business. The Company believes that
it has recorded adequate accruals on its balance sheet to cover such disputed
charges and is seeking to resolve and settle such disputed charges for amounts
substantially less than recorded amounts. An adverse outcome in any of these
matters, however, could materially and adversely effect our financial position
and prospects, utilizing all or a significant portion of our limited cash
resources, and adversely affect our ability to continue as a going concern (see
Note 4, “Discontinued Operations”).





(8)   RELATED PARTY
TRANSACTIONS





On June
6, 2008, the Company entered into a Revolving Loan Agreement with Dancing Bear
Investments, Inc. (“Dancing Bear”), pursuant to which Dancing Bear may loan up
to $500,000 to the Company on a revolving basis (the “Credit
Line”).   Dancing Bear is an entity controlled by Michael S.
Egan, the Company’s Chairman and Chief Executive Officer.  During 2008
the Company made borrowings totaling the full amount of the $500,000 Credit
Line.  Accrued interest for the three and six periods ended June 30,
2009 was $12,466 and $24,795 respectively.  All borrowings under the
Credit Line, including accrued interest on borrowed funds at the rate of 10% per
annum, were initially due and payable in one lump sum on the first anniversary
of the Credit Line, or June 6, 2009, or sooner upon the occurrence of an event
of default under the loan documentation.  On May 7, 2009 such
repayment terms were amended so as to require the Company to repay any or all
amounts due under the Credit Line in one lump sum on the earlier of (i) five
business days following demand for payment, which demand can be made at any
time, or (ii) the occurrence of an event of default as defined in the Revolving
Credit Agreement.





During
the six months ended June 30, 2009, the Company received minimum Earn-out
installment payments totaling $225,000 from Tralliance Registry Management
Company LLC (“Tralliance Registry Management”) under an Earn-out Agreement
entered into on September 29, 2008 by and between Tralliance Registry Management
and the Company.  Tralliance Registry Management is an entity
controlled by Michael S. Egan, and each of our two remaining executive officers
and Board members, Edward A. Cespedes, our President, and Robin S. Lebowitz, our
Vice President of Finance, own minority interests in The Registry Management
Company, LLC, the parent company of Tralliance Registry
Management.  In accounting for such proceeds, $150,000 was recorded as
Related Party Other Income in the Company’s Unaudited Condensed Consolidated
Statement of Operations for the six months ended June 30, 2009, and $75,000
served to reduce Account Receivables from Related Parties which had been
recorded on the Company’s Consolidated Balance Sheet at December 31,
2008.





12


During
the six months ended June 30, 2009, the Company paid management services fees
totaling $160,667 to Dancing Bear under a Master Services Agreement entered into
on September 29, 2008 by and between Dancing Bear and the Company.  In
accounting for such payments, $120,000 was recorded as Related Party
Transactions Expense in the Company’s Unaudited Condensed Consolidated Statement
of Operations for the six months ended June 30, 2009 and $40,667 served to
reduce Accounts Payable to Related Parties which had been recorded on the
Company’s Consolidated Balance Sheet at December 31, 2008.





During
2008, an entity owned solely by the sister of the Company’s President, Treasurer
and Chief Financial Officer and Director provided certain administrative
services to the Company.  During the six month period ended June 30
2008, $22,500 of expense related to these services was recorded.





During
2008, several entities controlled by the Company’s Chairman and Chief Executive
Officer provided services to the Company, including the lease of office space
and the outsourcing of customer services, human resources and payroll processing
functions.  During the six month period ended June 30, 2008, $260,882
of expense related to these services was recorded.





(9)   SUBSEQUENT EVENTS





We have
performed an evaluation of subsequent events through the close of business day
on July 31, 2009.  There were none.





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





FORWARD
LOOKING STATEMENTS





This Form
10-Q contains forward-looking statements within the meaning of the federal
securities laws that relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology, such as "may," "will," "should," "could," "expect," "plan,"
"anticipate," "believe," "estimate," "project," "predict," "intend," "potential"
or "continue" or the negative of such terms or other comparable terminology,
although not all forward-looking statements contain such terms. In addition,
these forward-looking statements include, but are not limited to, statements
regarding:




·
            the
      outcome of pending litigation;·
            our
      ability to negotiate favorable settlements with unsecured
      creditors;·
            our
      ability to successfully resolve disputed liabilities;·
            our
      estimates or expectations of continued losses;·
            our
      expectations regarding future income (and in particular, income from an
      earn-out due from an affiliate) and
expenses;





·
            our
      ability to raise sufficient capital; and·
            our
      ability to continue to operate as a going
  concern.





These
statements are only predictions. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements. We
are not required to and do not intend to update any of the forward-looking
statements after the date of this Form 10-Q or to conform these statements to
actual results. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this Form 10-Q might not occur. Actual
results, levels of activity, performance, achievements and events may vary
significantly from those implied by the forward-looking statements. A
description of risks that could cause our results to vary appears under "Risk
Factors" and elsewhere in this Form 10-Q. The following discussion should be
read together in conjunction with the accompanying unaudited condensed
consolidated financial statements and related notes thereto and the audited
consolidated financial statements and notes to those statements contained in the
Annual Report on Form 10-K for the year ended December 31, 2008.





13




OVERVIEW





As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance” in the
accompanying Notes to Unaudited Condensed Consolidated Financial Statements, on
September 29, 2008, theglobe.com, inc. consummated the sale of the business and
substantially all of the assets of its Tralliance Corporation subsidiary to
Tralliance Registry Management Company, LLC, an entity controlled by Michael S.
Egan, the Company’s Chairman and Chief Executive Officer.  As a result
of and on the effective date of the sale of its Tralliance business, which was
theglobe’s remaining operating business, theglobe became a “shell company,” as
that term is defined in Rule 12b-2 of the Exchange Act, with no material
operations or assets.





As part
of the consideration for the sale of its Tralliance business, theglobe received
earn-out rights from Tralliance Registry Management (“Earn-Out”), which
constitutes the only source of revenue for theglobe as a shell
company.  theglobe’s operating expenses as a shell company consist of
customary public company expenses, including accounting, financial reporting,
legal, audit and other related public company costs.





In
connection with the sale of its Tralliance business and Share Issuance, the
Company entered into a Master Services Agreement with Dancing Bear Investments,
Inc., an entity which is controlled by Mr. Egan.  Under the terms of
the Services Agreement, for a fee of $20 thousand per month ($240 thousand per
annum), Dancing Bear provides personnel and services to the Company so as to
enable it to continue its existence as a public company without the necessity of
any full-time employees of its own.  Services under the Services
Agreement include, without limitation, accounting, assistance with financial
reporting, accounts payable, treasury/financial planning, record retention and
secretarial and investor relations functions.





In
March 2007, management and the Board of Directors of the Company made the
decision to cease all activities related to its computer games and VoIP
telephony services businesses. Results of operations for the computer games and
VoIP telephony services businesses have been reported separately as
“Discontinued Operations” in the accompanying condensed consolidated statements
of operations for all periods presented. The assets and liabilities of the
computer games and VoIP telephony services businesses have been included in the
captions, “Assets of Discontinued Operations” and “Liabilities of Discontinued
Operations” in the accompanying condensed consolidated balance
sheets.





BASIS
OF PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





We
received a report from our independent registered public accountants, relating
to our December 31, 2008 audited financial statements, containing an explanatory
paragraph regarding our ability to continue as a going
concern.   As a shell company, management believes that theglobe
will not be able to generate operating cash flows sufficient to fund its
operations and pay its existing current liabilities (including those liabilities
related to its discontinued operations) in the foreseeable
future.  Based upon our current limited cash resources and without the
infusion of additional capital and/or the continued indulgence of its creditors,
management does not believe the Company can operate as a going concern beyond a
short period of time.  See “Future and Critical Need for Capital”
section of this Management’s Discussion and Analysis of Financial Condition and
Results of Operations for further details.





Our
condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America on
a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Accordingly, our
condensed consolidated financial statements do not include any adjustments
relating to the recoverability of assets and classification of liabilities that
might be necessary should we be unable to continue as a going
concern.





Due to
the Sale of our Tralliance business and Share Issuance on September 29, 2008, we
have no continuing business operations.  Accordingly, the results of
our operations for the three and six months ended June 30, 2009 and the three
and six months ended June 30, 2008 are not necessarily comparable.





RESULTS
OF OPERATIONS





THREE
MONTHS ENDED JUNE 30, 2009 COMPARED TO


THE
THREE MONTHS ENDED JUNE 30, 2008





CONTINUING
OPERATIONS





NET
REVENUE. Net revenue totaled $0 thousand for the three months ended June 30,
2009 as compared to $547 thousand for the three months ended June 30,
2008.




COST OF
REVENUE. Cost of revenue was $0 for the three months ended June 30, 2009,
compared to approximately $117 thousand for the three months ended June 30,
2008.




14




SALES AND
MARKETING. Sales and marketing expenses consist primarily of salaries and
related expenses of sales and marketing personnel, commissions, consulting,
advertising and marketing costs, public relations expenses and promotional
activities. Sales and marketing expenses totaled $0 for the three months ended
June 30, 2009 versus approximately $87 thousand for the same period in
2008.





GENERAL
AND ADMINISTRATIVE EXPENSES. Prior to the Sale of Tralliance, general and
administrative expenses consisted primarily of salaries and other personnel
costs related to management, finance and accounting functions, facilities,
outside legal and audit fees, insurance, and general corporate overhead costs.
Subsequent to the sale of Tralliance, general and administrative expenses
include only those customary public company expenses, including outside legal
and audit fees, insurance and other related public company
costs.  Expenses relating to management, finance and accounting
functions that were previously included within the general and administrative
expense caption are now included within the related party transactions expense
caption.  General and administrative expenses totaled approximately
$24 thousand in the second quarter of 2009 as compared to approximately $655
thousand for the same quarter of the prior year.





RELATED
PARTY TRANSACTIONS. Related party transaction expense totaled $60 thousand for
the three months ended June 30, 2009 as compared to approximately $130 thousand
for the same period of 2008, a decrease of approximately $70
thousand.  Subsequent to the Sale of Tralliance, the Company’s related
party expenses consist of management services fees payable to Dancing Bear for
accounting, finance, administrative and managerial support.  During
2008, the Company’s related party expenses consisted of related party charges
for the leasing of office space, and the outsourcing of customer service, human
resources and payroll processing functions.





DEPRECIATION
AND AMORTIZATION. Depreciation and amortization expense was $0 for the three
months ended June 30, 2009 as compared to $50 thousand for the three months
ended June 30, 2008.





RELATED
PARTY INTEREST EXPENSE. Related party interest expense for the second quarter of
2009 was $12 thousand as compared to approximately $115 thousand for the same
quarter of 2008, reflecting the decrease in outstanding related party debt
resulting from the Sale of Tralliance and Share Issuance.





INTEREST
INCOME (EXPENSE). Interest expense of $116 was reported for the second quarter
of 2009 compared to interest income of $454 reported for the second quarter of
the prior year.





RELATED
PARTY OTHER INCOME.  Related party other income consists of the
minimum Earn-Out payable quarterly by Tralliance Registry Management to the
Company as further discussed in Note 3, “Sale of Tralliance and Share Issuance”
in the accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.  Related party other income for the three months ended
June 30, 2009 was $75 thousand.




INCOME
TAXES. No tax benefit was recorded for the losses incurred during the second
quarter of 2009 or the second quarter of 2008 as we recorded a 100% valuation
allowance against our otherwise recognizable deferred tax assets due to the
uncertainty surrounding the timing or ultimate realization of the benefits of
our net operating loss carryforwards in future periods.





DISCONTINUED
OPERATIONS





Discontinued
operations generated a net loss of approximately $24 thousand for the second
quarter of 2009 as compared to a net income of $21 thousand during the second
quarter of 2008.  The 2009 loss was due principally to interest
expenses accrued in connection with an ongoing tax audit of a former subsidiary
company.  The 2008 income was due principally to revenue recognized
upon the collection of old and outstanding accounts receivables related to the
Company’s former Computer Games business.




SIX
MONTHS ENDED JUNE 30, 2009 COMPARED TO


THE
SIX MONTHS ENDED JUNE 30, 2008





CONTINUING
OPERATIONS





NET
REVENUE. Net revenue totaled $0 thousand for the six months ended June 30, 2009
as compared to 1.1 million for the six months ended June 30, 2008.





COST OF
REVENUE. Cost of revenue was $0 for the six months ended June 30, 2009, compared
to approximately $149 thousand for the six months ended June 30, 2008.





SALES AND
MARKETING. Sales and marketing expenses consist primarily of salaries and
related expenses of sales and marketing personnel, commissions, consulting,
advertising and marketing costs, public relations expenses and promotional
activities. Sales and marketing expenses totaled $0 for the six months ended
June 30, 2009 versus approximately $296 thousand for the same period in
2008.





15


GENERAL
AND ADMINISTRATIVE EXPENSES. Prior to the Sale of Tralliance, general and
administrative expenses consisted primarily of salaries and other personnel
costs related to management, finance and accounting functions, facilities,
outside legal and audit fees,  insurance, and general corporate
overhead costs. Subsequent to the sale of Tralliance, general and administrative
expenses include only those customary public company expenses, including outside
legal and audit fees, insurance and other related public company
costs.  Expenses relating to management, finance and accounting
functions that were previously included within the general and administrative
expense caption are now included within the related party transactions expense
caption.  General and administrative expenses totaled approximately
$48 thousand through the second quarter of 2009 as compared to approximately
$1.2 million for the same period of 2008.




RELATED
PARTY TRANSACTIONS. Related party transaction expense totaled $120 thousand for
the six months ended June 30, 2009 as compared to approximately $283 thousand
for the same period of 2008, a decrease of approximately $163
thousand.  Subsequent to the Sale of Tralliance, the Company’s related
party expenses consist of management services fees payable to Dancing Bear for
accounting, finance, administrative and managerial support.  During
2008, the Company’s related party expenses consisted of related party charges
for the leasing of office space, and the outsourcing of customer service, human
resources and payroll processing functions




DEPRECIATION
AND AMORTIZATION. Depreciation and amortization expense was $0 for the six
months ended June 30, 2009 as compared to $101 thousand for the six months ended
June 30, 2008.





RELATED
PARTY INTEREST EXPENSE. Related party interest expense for the second quarter of
2009 was $25 thousand as compared to approximately $231 thousand for the same
period of 2008, reflecting the decrease in outstanding related party debt
resulting from the Sale of Tralliance and Share Issuance.





INTEREST
INCOME (EXPENSE). Interest expense of $140 was reported for the six months ended
June 30, 2009 compared to interest income of approximately $3 thousand reported
through the second quarter of 2008.





RELATED
PARTY OTHER INCOME.  Related party other income consists of the
minimum Earn-Out payable quarterly by Tralliance Registry Management to the
Company as further discussed in Note 3, “Sale of Tralliance and Share Issuance”
in the accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.  Related party other income for the six months ended June
30, 2009 was $150 thousand.





INCOME
TAXES. No tax benefit was recorded for the losses incurred during the first half
of 2009 or the first half of 2008 as we recorded a 100% valuation allowance
against our otherwise recognizable deferred tax assets due to the uncertainty
surrounding the timing or ultimate realization of the benefits of our net
operating loss carryforwards in future periods..





DISCONTINUED
OPERATIONS





The loss
from discontinued operations, net of income taxes totaled approximately $27
thousand in the first half of 2009 as compared to income of approximately $22
thousand during the first six months of 2008.  The 2009 loss was due
principally to interest expenses accrued in connection with an ongoing tax audit
of a former subsidiary company.  The 2008 income was due principally
to revenue recognized upon the collection of old and outstanding accounts
receivables related to the Company’s former Computer Games
business.





LIQUIDITY
AND CAPITAL RESOURCES





CASH
FLOW ITEMS





As of
June 30, 2009, theglobe had approximately $13 thousand in cash and cash
equivalents as compared to approximately $90 thousand as of December 31, 2008.
Net cash flows used in operating activities of continuing operations totaled
approximately $38 thousand and $755 thousand, for the six months ended June 30,
2009 and 2008, respectively, a decrease of approximately $717 thousand. Such
decrease was attributable primarily to a lower net loss from continuing
operations for the six months ended June 30, 2009 compared to the six months
ended June 30, 2008.





Approximately
$38 thousand in net cash flows were used in the operating activities of
discontinued operations during the first half of 2009 as compared to
approximately $8 thousand of net cash flows provided by the operating activities
of discontinued operations during the same period of the prior
year.





During
the six months ended June 30, 2008, the Company borrowed $200 thousand from
Dancing Bear under the Revolving Loan Agreement.





FUTURE
AND CURRENT CRITICAL NEED FOR CAPITAL





For the
reasons described below, Company management does not believe that cash on hand
and cash flows generated internally by the Company will be adequate to fund the
operation of its business beyond a short period of time. Additionally, we have
received a report from our independent registered public accountants, relating
to our December 31, 2008 audited financial statements, containing an explanatory
paragraph stating that our recurring losses from operations and our accumulated
deficit raise substantial doubts about our ability to continue as a going
concern.





16




During
its recent past, the Company was able to continue operating as a going concern
due principally to funding of $500 thousand received during 2008 under a
Revolving Loan Agreement with an entity controlled by Michael S. Egan, its
Chairman and Chief Executive Officer (See Note 5, “Debt” in the Notes to
Unaudited Condensed Consolidated Financial Statements for further details) and
funding of $225 thousand received during the first half of 2009 under an
Earn-out Agreement with an entity also controlled by Mr. Egan (See Note 3, “Sale
of Tralliance and Share Issuance” in the Notes to Unaudited Condensed
Consolidated Financial Statements for further details).





At June
30, 2009, the Company had a net working capital deficit of approximately $3.1
million, inclusive of a cash and cash equivalents balance of approximately $13
thousand.  Such working capital deficit included (i) a total of
approximately $548 thousand in principal and accrued interest owed under the
aforementioned Revolving Loan Agreement to an entity controlled by Mr. Egan, and
(ii) an aggregate of approximately $2.6 million in unsecured accounts payable
and accrued expenses owed to vendors and other non-related third parties (of
which approximately $1.8 million relates to liabilities of our VoIP telephony
service discontinued business, with a significant portion of such liabilities
related to charges which have been disputed by theglobe). theglobe believes that
its ability to continue as a going concern for any significant length of time in
the future will be heavily dependent, among other things, on its ability to
prevail and avoid making any payments with respect to such disputed vendor
charges and/or to negotiate favorable settlements (including discounted payment
and/or payment term concessions) with the aforementioned creditors.





As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance” on September
29, 2008, the Company (i) sold the business and substantially all of the assets
of its Tralliance Corporation subsidiary to Tralliance Registry Management, and
(ii) issued 229 million shares of its Common Stock (the “Shares”) to Registry
Management (the “Purchase Transaction”). Tralliance Registry Management and
Registry Management are entities controlled by Michael S. Egan. The closing of
the Purchase Transaction resulted in the cancellation of all of the Company’s
remaining Convertible Debt, related accrued interest and rent and accounts
payable owed to entities controlled by Mr. Egan as of the date of closing
(totaling approximately $6.4 million). However, the Company continues to be
obligated to repay its principal borrowings totaling $500 thousand, plus accrued
interest at the rate of 10% per annum, due to an entity controlled by Mr. Egan
under the aforementioned Revolving Loan Agreement. All unpaid borrowings under
the Revolving Loan Agreement, as amended on May 7, 2009, including accrued
interest, are due and payable by the Company in one lump sum on the earlier of
(i) five business days following demand for payment, which demand can be made at
anytime, or (ii) the occurrence of an event of default as defined in the
Revolving Loan Agreement. The Company currently has no ability to repay this
loan should a demand for payment be made by the noteholder.  All
borrowings under the Revolving Loan Agreement are secured by a pledge of all of
the assets of the Company and its subsidiaries. After giving effect to the
closing of the Purchase Transaction and the issuance of the Shares thereunder,
Mr. Egan now beneficially owns approximately 77% of the Company’s issued and
outstanding Common Stock.





As
additional consideration under the Purchase Transaction, Tralliance Registry
Management is obligated to pay an earn-out to theglobe equal to 10% (subject to
certain minimums) of Tralliance Registry Management’s net revenue (as defined)
derived from “.travel” names registered by Tralliance Registry Management from
September 29, 2008 through May 5, 2015 (the “Earn-out”). The minimum Earn-out
payable by Tralliance Registry Management to theglobe will be at least $300
thousand in the first year, increasing by $25 thousand in each subsequent year
(pro-rated for the final year of the Earn-out).





In
connection with the closing of the Purchase Transaction, the Company also
entered into a Master Services Agreement with an entity controlled by Mr. Egan
whereby for a fee of $20 thousand per month ($240 thousand per annum) such
entity provides personnel and services to the Company so as to enable it to
continue its existence as a public company without the necessity of any
full-time employees of its own. Additionally, commensurate with the closing of
the Purchase Transaction, Termination Agreements with each of its current
executive officers, which terminated their previous and then existing employment
agreements, were executed. Notwithstanding the termination of these employment
agreements, each of our current executive officers and directors remain as
executive officers and directors of the Company.





Immediately
following the closing of the Purchase Transaction, theglobe became a shell
company with no material operations or assets, and no source of revenue other
than under the Earn-out.  It is expected that theglobe’s future
operating expenses as a public shell company will consist primarily of expenses
incurred under the aforementioned Master Services Agreement and other customary
public company expenses, including legal, audit and other miscellaneous public
company costs.





As a
shell company, management believes that theglobe will most likely continue to
incur net and cash flow losses for the foreseeable future. However, assuming
that no significant unplanned costs are incurred, management believes that
theglobe’s future losses will be limited. Further, in the event that Registry
Management is successful in substantially increasing net revenue derived from
“.travel” name registrations (and as the result maximizing theglobe’s Earn-out
revenue) in the future, theglobe’s prospects for achieving profitability will be
enhanced.  To date theglobe has received only minimum payments under
the Earn-out.





17




It is the
Company’s preference to avoid filing for protection under the U.S. Bankruptcy
Code. However, based upon the Company’s current financial condition as discussed
above, management believes that additional debt or equity capital will need to
be raised in order for theglobe to continue to operate as a going concern on a
long-term basis. Such capital will be needed both to (i) fund its expected
limited future net losses and (ii) repay the $548 thousand of secured debt and
related accrued interest due under the Revolving Loan Agreement and a portion of
the $2.6 million unsecured indebtedness (assuming theglobe is successful in
favorably resolving and settling certain disputed and non-disputed vendor
charges related to such unsecured indebtedness).  Any such capital
would likely come from Mr. Egan, or affiliates of Mr. Egan, as the Company
currently has no access to credit facilities and had traditionally relied upon
borrowings from related parties to meet short-term liquidity
needs.  Any such capital raised would likely result in very
substantial dilution in the number of outstanding shares of the Company’s Common
Stock.





On a
short-term liquidity basis, the Company must be successful in collecting the
quarterly Earn-out payments contractually due from Tralliance Registry
Management on a timely basis, and must receive the continued indulgence of
substantially all of its creditors, in order to continue to operate as a going
concern during the remainder of fiscal 2009.  Given theglobe’s current
financial condition and the state of the current United States capital markets
and economy, it has no current intent to seek to acquire, or start, any other
businesses.





EFFECTS
OF INFLATION





Management
believes that inflation has not had a significant effect on our results of
operations during 2009 and 2008.





MANAGEMENT'S
DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES





The
preparation of our financial statements in conformity with accounting principles
generally accepted in the United States of America requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. At June 30, 2009 and December 31, 2008, a significant portion of our net
liabilities of discontinued operations relate to charges that have been disputed
by the Company and for which estimates have been required. Our estimates,
judgments and assumptions are continually evaluated based on available
information and experience. Because of the use of estimates inherent in the
financial reporting process, actual results could differ from those
estimates.





Certain
of our accounting policies require higher degrees of judgment than others in
their application. These include revenue recognition, valuation of accounts
receivables and payables and valuation of other long-lived assets.





IMPACT
OF RECENTLY ISSUED ACCOUNTING STANDARDS





In May
2009, the FASB issued SFAS No. 165,“Subsequent Events” (“SFAS
165”). SFAS 165 establishes principles and requirements for subsequent events.
In particular, this Statement sets forth the period after the balance sheet date
during which management of a reporting entity shall evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements, the circumstances under which an entity shall recognize
events or transactions occurring after the balance sheet date in its financial
statements, and the disclosures that an entity shall make about events or
transactions that occurred after the balance sheet date. SFAS 165 is effective
for interim or annual financial periods ending after June 15, 2009, and
shall be applied prospectively. The adoption of this SFAS 165 did not have a
material effect on the Company’s financial condition, results of operations or
cash flows; see Note 9 “Subsequent Events.”





APB 14-1
“Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon
Conversion (Including Partial Cash Settlement)” applies to convertible debt
instruments that, by their stated terms, may be settled in cash (or other
assets) upon conversion, including partial cash settlement, unless the embedded
conversion options is required to be separately accounted for as a derivative
under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging
Activities.”  APB 14-1 is effective for fiscal years beginning after
December 15, 2008.  The implementation of this standard did not have a
material impact on the Company’s consolidated financial statements.





EITF
07-05, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entity’s Own Stock,” applies to any freestanding financial instrument or
embedded feature that has all the characteristics of a derivative in FAS
Statement 133, for purposes of determining whether that instrument or embedded
feature qualifies for the first part of the scope exception in paragraph 11 (a)
of Statement 133.  This issue also applies to any freestanding
financial instrument that is potentially settled in an entity’s own stock,
regardless of whether the instrument has all the characteristics of a derivative
in paragraphs 6-9 of Statement 133, for purposes of determining whether the
instrument is within the scope of EITF 00-19.  EITF 07-05 is effective
for fiscal years beginning after December 15, 2008.  The
implementation of this standard did not have a material impact on the Company’s
consolidated financial statements.




In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162, “The
Hierarchy of Generally Accepted Accounting Principles,” (“SFAS 162”), which
identifies the sources of accounting principles and the framework for selecting
the principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP
hierarchy).  SFAS No. 162 became effective on November 15,
2008.  The implementation of this standard did not have a material
impact on the Company’s consolidated financial statements.





18




In April
2008, the FASB issued FSP SFAS No. 142-3, “Determination of the Useful Life of
Intangible Assets.”  142-3 is effective for fiscal years beginning
after December 15, 2008.  The implementation of this standard did not
have a material impact on the Company’s consolidated financial
statements.





In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161,
“Disclosures about Derivative Instruments and Hedging Activities,” (“SFAS
161”).  SFAS 161 has the same scope as Statement 133 and requires
enhanced disclosures about an entity’s derivative and hedging activities and
thereby improves the transparency of financial reporting.  This
Statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged.  This Statement encourages, but does not require,
comparative disclosures for earlier periods at initial adoption.  This
Statement changes the disclosure requirements for derivative instruments and
hedging activities.  Entities are required to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows.  The adoption of SFAS 161 did
not have a material impact on the Company’s consolidated financial
statements.





In
December 2007, the FASB issued SFAS 141R, “Business Combinations” (“SFAS 141R”)
which requires an acquirer to recognize the assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree at the acquisition
date, measured at their fair values as of that date. SFAS 141R requires, among
other things, that in a business combination achieved through stages (sometimes
referred to as a “step acquisition”) that the acquirer recognize the
identifiable assets and liabilities, as well as the non-controlling interest in
the acquiree, at the full amounts of their fair values (or other amounts
determined in accordance with this Statement).





SFAS 141R
also requires the acquirer to recognize goodwill as of the acquisition date,
measured as a residual, which in most types of business combinations will result
in measuring goodwill as the excess of the consideration transferred plus the
fair value of any non-controlling interest in the acquiree at the acquisition
date over the fair values of the identifiable net assets acquired. SFAS 141R
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008.  The adoption of SFAS 141R did not have a
material impact on our financial statements.





In
December 2007, the FASB issued SFAS 160, “Non-controlling Interests in
Consolidated Financial Statements” (“SFAS 160”). This Statement changes the way
the consolidated income statement is presented. SFAS 160 requires consolidated
net income to be reported at amounts that include the amounts attributable to
both the parent and the non-controlling interest. It also requires disclosure,
on the face of the consolidated statement of income, of the amounts of
consolidated net income attributable to the parent and to the non-controlling
interest. Currently, net income attributable to the non-controlling interest
generally is reported as an expense or other deduction in arriving at
consolidated net income. It also is often presented in combination with other
financial statement amounts. SFAS 160 results in more transparent reporting of
the net income attributable to the non-controlling interest. This Statement is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. The adoption of SFAS 160 did not have a
material impact on its financial statements.





In
February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
159, “The Fair Value Option for Financial Assets and Financial Liabilities.”
SFAS No. 159 expands the scope of what entities may carry at fair value by
offering an irrevocable option to record many types of financial assets and
liabilities at fair value. Changes in fair value would be recorded in an
entity’s income statement. This accounting standard also establishes
presentation and disclosure requirements that are intended to facilitate
comparisons between entities that choose different measurement attributes for
similar types of assets and liabilities. SFAS No. 159 is effective for the
Company on January 1, 2008. Earlier application is permitted under certain
circumstances.   The adoption of SFAS No. 159 did not have a
material impact on the Company’s financial statements.





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
standard defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosure about fair value
measurements. SFAS No. 157 applies to other accounting standards that require or
permit fair value measurements. Accordingly, this statement does not require any
new fair value measurement. This statement is effective for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal
years.  The adoption of SFAS No. 157 did not have a material impact on
the Company’s financial statements.





ITEM
4T. CONTROLS AND PROCEDURES





We
maintain disclosure controls and procedures that are designed to ensure (1) that
information required to be disclosed by us in the reports we file or submit
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's ("SEC") rules and forms, and (2)
that this information is accumulated and communicated to management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost benefit relationship of possible controls and procedures.





19




Our Chief
Executive Officer and Chief Financial Officer have evaluated the effectiveness
of our disclosure controls and procedures as of June 30, 2009. Based on that
evaluation, our Chief Executive Officer and our Chief Financial Officer have
concluded that our disclosure controls and procedures are effective in alerting
them in a timely manner to material information regarding us (including our
consolidated subsidiaries) that is required to be included in our periodic
reports to the SEC.





Our
management, with the participation of our Chief Executive Officer and our Chief
Financial Officer, have evaluated any change in our internal control over
financial reporting that occurred during the quarter ended June 30, 2009 that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting, and have determined there to be no
reportable changes.





PART II - OTHER
INFORMATION


ITEM
1. LEGAL PROCEEDINGS





See Note
7, "Litigation," of the Financial Statements included in this
Report.




ITEM
1A. RISK FACTORS





In
addition to the other information in this report and the risk factors set forth
in our Annual Report on Form 10-K for the year ended December 31, 2008, the
following factors should be carefully considered in evaluating our business and
prospects.





RISKS
RELATING TO OUR BUSINESS GENERALLY





WE
MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN.





For the
reasons described below, Company management does not believe that cash on hand
and cash flow generated internally by the Company will be adequate to fund the
operation of its business beyond a short period of time. Additionally, we have
received a report from our independent registered public accountants, relating
to our December 31, 2008 audited financial statements, containing an explanatory
paragraph stating that our recurring losses from operations and our accumulated
deficit raise substantial doubts about our ability to continue as a going
concern.





During
its recent past, the Company was able to continue operating as a going concern
due principally to funding of $500 thousand received during 2008 under a
Revolving Loan Agreement with an entity controlled by Michael S. Egan, its
Chairman and Chief Executive Officer (See Note 5, “Debt” in the Notes to
Unaudited Condensed Consolidated Financial Statements for further details) and
funding of $225 thousand received during the first half of 2009 under an
Earn-out Agreement with an entity also controlled by Mr. Egan (See Note 3, “Sale
of Tralliance and Share Issuance” in the Notes to Unaudited Condensed
Consolidated Financial Statements for further details).





At June
30, 2009, the Company had a net working capital deficit of approximately $3.1
million, inclusive of a cash and cash equivalents balance of approximately $13
thousand.  Such working capital deficit included (i) a total of
approximately $548 thousand in principal and accrued interest owed under the
aforementioned Revolving Loan Agreement to an entity controlled by Mr. Egan, and
(ii) an aggregate of approximately $2.6 million in unsecured accounts payable
and accrued expenses owed to vendors and other non-related third parties (of
which approximately $1.8 million relates to liabilities of our VoIP telephony
service discontinued business, with a significant portion of such liabilities
related to charges which have been disputed by theglobe). theglobe believes that
its ability to continue as a going concern for any significant length of time in
the future will be heavily dependent, among other things, on its ability to
prevail and avoid making any payments with respect to such disputed vendor
charges and/or to negotiate favorable settlements (including discounted payment
and/or payment term concessions) with the aforementioned creditors.





As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance” on September
29, 2008, the Company (i) sold the business and substantially all of the assets
of its Tralliance Corporation subsidiary to Tralliance Registry Management, and
(ii) issued 229 million shares of its Common Stock (the “Shares”) to Registry
Management (the “Purchase Transaction”). Tralliance Registry Management and
Registry Management are entities controlled by Michael S. Egan. The closing of
the Purchase Transaction resulted in the cancellation of all of the Company’s
remaining Convertible Debt, related accrued interest and rent and accounts
payable owed to entities controlled by Mr. Egan as of the date of closing
(totaling approximately $6.4 million). However, the Company continues to be
obligated to repay its principal borrowings totaling $500 thousand, plus accrued
interest at the rate of 10% per annum, due to an entity controlled by Mr. Egan
under the aforementioned Revolving Loan Agreement. All unpaid borrowings under
the Revolving Loan Agreement, as amended on May 7, 2009, including accrued
interest, are due and payable by the Company in one lump sum on the earlier of
(i) five business days following demand for payment, which demand can be made at
anytime, or (ii) the occurrence of an event of default as defined in the
Revolving Loan Agreement. The Company currently has no ability to repay this
loan should a demand for payment be made by the noteholder.  All
borrowings under the Revolving Loan Agreement are secured by a pledge of all of
the assets of the Company and its subsidiaries. After giving effect to the
closing of the Purchase Transaction and the issuance of the Shares thereunder,
Mr. Egan now beneficially owns approximately 77% of the Company’s issued and
outstanding Common Stock.





20




As
additional consideration under the Purchase Transaction, Tralliance Registry
Management is obligated to pay an earn-out to theglobe equal to 10% (subject to
certain minimums) of Tralliance Registry Management’s net revenue (as defined)
derived from “.travel” names registered by Tralliance Registry Management from
September 29, 2008 through May 5, 2015 (the “Earn-out”). The minimum Earn-out
payable by Tralliance Registry Management to theglobe will be at least $300
thousand in the first year, increasing by $25 thousand in each subsequent year
(pro-rated for the final year of the Earn-out).





In
connection with the closing of the Purchase Transaction, the Company also
entered into a Master Services Agreement with an entity controlled by Mr. Egan
whereby for a fee of $20 thousand per month ($240 thousand per annum) such
entity will provide personnel and services to the Company so as to enable it to
continue its existence as a public company without the necessity of any
full-time employees of its own. Additionally, commensurate with the closing of
the Purchase Transaction, Termination Agreements with each of its current
executive officers, which terminated their previous and then existing employment
agreements, were executed. Notwithstanding the termination of these employment
agreements, each of our current executive officers and directors remain as
executive officers and directors of the Company.





Immediately
following the closing of the Purchase Transaction, theglobe became a shell
company with no material operations or assets, and no source of revenue other
than under the Earn-out.  It is expected that theglobe’s future
operating expenses as a public shell company will consist primarily of expenses
incurred under the aforementioned Master Services Agreement and other customary
public company expenses, including legal, audit and other miscellaneous public
company costs.





As a
shell company, management believes that theglobe will most likely continue to
incur net and cash flow losses for the foreseeable future. However, assuming
that no significant unplanned costs are incurred, management believes that
theglobe’s future losses will be limited. Further, in the event that Registry
Management is successful in substantially increasing net revenue derived from
“.travel” name registrations (and as the result maximizing theglobe’s Earn-out
revenue) in the future, theglobe’s prospects for achieving profitability will be
enhanced.  To date the Company has received only the minimum payments
pursuant to the Earn-out.





It is the
Company’s preference to avoid filing for protection under the U.S. Bankruptcy
Code. However, based upon the Company’s current financial condition as discussed
above, management believes that additional debt or equity capital will need to
be raised in order for theglobe to continue to operate as a going concern on a
long-term basis. Such capital will be needed both to (i) fund its expected
limited future net losses and (ii) repay the $548 thousand of secured debt and
related accrued interest due under the Revolving Loan Agreement and a portion of
the $2.6 million unsecured indebtedness (assuming theglobe is successful in
favorably resolving and settling certain disputed and non-disputed vendor
charges related to such unsecured indebtedness).  Any such capital
would likely come from Mr. Egan, or affiliates of Mr. Egan, as the Company
currently has no access to credit facilities and had traditionally relied upon
borrowings from related parties to meet short-term liquidity
needs.  Any such capital raised would likely result in very
substantial dilution in the number of outstanding shares of the Company’s Common
Stock.





On a
short-term liquidity basis, the Company must be successful in collecting the
quarterly Earn-out payments contractually due from Tralliance Registry
Management on a timely basis, and must receive the continued indulgence of
substantially all of its creditors, in order to continue to operate as a going
concern in the near term.  Given theglobe’s current financial
condition and the state of the current United States capital markets and
economy, it has no current intent to seek to acquire, or start, any other
businesses.





WE
MAY NOT BE SUCCESSFUL IN SETTLING DISPUTED VENDOR CHARGES.





Our
balance sheet at June 30, 2009 includes certain material estimated liabilities
related to disputed vendor charges incurred primarily as the result of the
failure and subsequent shutdown of our discontinued VoIP telephony services
business. Although we are seeking to resolve and settle these disputed charges
for amounts substantially less than recorded amounts, there can be no assurances
that we will be successful in this regard. Additionally, the legal and
administrative costs of resolving these disputed charges may be expensive. An
adverse outcome in any of these matters could materially and adversely affect
our financial position, utilize a significant portion of our cash resources
and/or require additional capital to be infused into the Company and adversely
affect our ability to continue to operate as a going concern. See Note 4,
“Discontinued Operations” in the Notes to Unaudited Condensed Consolidated
Financial Statements for future details.





OUR
NET OPERATING LOSS CARRYFORWARDS MAY BE SUBSTANTIALLY LIMITED.





As of
December 31, 2008, we had net operating loss carryforwards which may be
potentially available for U.S. tax purposes of approximately $166 million. These
carryforwards expire through 2028. The Tax Reform Act of 1986 imposes
substantial restrictions on the utilization of net operating losses and tax
credits in the event of an "ownership change" of a corporation. Due to various
significant changes in our ownership interests, as defined in the Internal
Revenue Code of 1986, as amended, that occurred prior to December 31, 2008, we
have substantially limited the availability of our net operating loss
carryforwards. We believe that we have sufficient net operating loss
carryforwards available to offset taxable income generated during the year ended
December, 2008 (except for approximately $15 thousand in federal alternative
minimum taxes that we paid in March 2009).





21




OUR
OFFICERS, INCLUDING OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER AND PRESIDENT HAVE
OTHER INTERESTS AND TIME COMMITMENTS; WE HAVE CONFLICTS OF INTEREST WITH OUR
DIRECTORS; ALL OF OUR DIRECTORS ARE EMPLOYEES OR STOCKHOLDERS OF THE COMPANY OR
AFFILIATES OF OUR LARGEST STOCKHOLDER.





Our
Chairman and Chief Executive Officer, Mr. Michael Egan, is an officer or
director of other companies. Mr. Egan became our Chief Executive Officer
effective June 1, 2002. Mr. Egan is also the controlling investor of The
Registry Management Company, LLC, Dancing Bear Investments, Inc., E&C
Capital Partners LLLP, and E&C Capital Partners II, LLC, which are our
largest stockholders. Mr. Egan is also the controlling investor of Certified
Vacations Group, Inc. and Labigroup Holdings, LLC, entities which have had
various ongoing business relationships with the Company. Additionally, Mr. Egan
is the controlling investor of Tralliance Registry Management Company, LLC, an
entity which has recently acquired our Tralliance business (see Note 3, “Sale of
Tralliance and Share Issuance” in the Notes to Consolidated Financial Statements
for further details).





Our
President, Treasurer and Chief Financial Officer and Director, Mr. Edward A.
Cespedes, is also an officer, director or shareholder of other companies,
including E&C Capital Partners LLLP, E&C Capital Partners II, LLC,
Labigroup Holdings LLC and The Registry Management Company, LLC. Accordingly, we
must compete for his time.





Our Vice
President of Finance and Director, Ms. Robin Lebowitz is also an officer of
Dancing Bear Investments, Inc. and director of Certified Vacations Group, Inc.
She is also an officer, director or shareholder of other companies or entities
controlled by Mr. Egan and Mr. Cespedes, including The Registry Management
Company, LLC.





Due to
the relationships with his related entities, Mr. Egan will have an inherent
conflict of interest in making any decision related to transactions between the
related entities and us. Furthermore, the Company's Board of Directors presently
is comprised entirely of individuals which are executive officers of theglobe,
and therefore are not "independent."





WE
CURRENTLY HAVE NO BUSINESS OPERATIONS AND ARE A SHELL COMPANY.





Immediately
following the closing of the Purchase Transaction, theglobe became a shell
company with no material operations or assets, and no source of revenue other
than under the “net revenue” earn-out arrangement with Tralliance Registry
Management. It is expected that theglobe’s future operating expenses as a public
shell company will consist primarily of expenses incurred under the
aforementioned Master Services Agreement and other customary public company
expenses, including legal, audit and other miscellaneous public company costs.
Given theglobe’s current financial condition and the state of the current United
States capital markets and economy, the Company has no current intent to seek to
acquire, or start, any other business.





RISKS
RELATING TO OUR COMMON STOCK





WE
ARE CONTROLLED BY OUR CHAIRMAN.





On
September 29, 2008, in connection with the closing of the Purchase Transaction
more fully described in Note 3, “Sale of Tralliance and Share Issuance,” in the
accompanying Notes to Unaudited Condensed Consolidated Financial Statements, the
Company issued 229 million shares of its Common Stock to Registry Management, an
entity controlled by Michael S. Egan, its Chairman and Chief Executive Officer.
Previously on June 10, 2008, Dancing Bear Investments, Inc., also an entity
controlled by Mr. Egan, converted an aggregate of $400 thousand of outstanding
convertible secured promissory notes due to them by the Company into 40 million
shares of our Common Stock. As a result of the issuance of the 269 million
shares under the transactions described above, Mr. Egan’s beneficial ownership
has been increased to approximately 77% of the Company’s issued and outstanding
Common Stock. Accordingly, Mr. Egan is now in a position to control the vote on
all corporate actions in the future.





DELISTING
OF OUR COMMON STOCK MAKES IT MORE DIFFICULT FOR INVESTORS TO SELL SHARES. THIS
MAY POTENTIALLY LEAD TO FUTURE MARKET DECLINES.





The
shares of our Common Stock were delisted from the NASDAQ national market in
April 2001 and are now traded in the over-the-counter market on what is commonly
referred to as the electronic bulletin board or "OTCBB." As a result, an
investor may find it more difficult to dispose of or obtain accurate quotations
as to the market value of the securities. The delisting has made trading our
shares more difficult for investors, potentially leading to further declines in
share price and making it less likely our stock price will increase. It has also
made it more difficult for us to raise additional capital. We may also incur
additional costs under state blue-sky laws if we sell equity due to our
delisting.





22




OUR
COMMON STOCK IS SUBJECT TO CERTAIN "PENNY STOCK" RULES WHICH MAY MAKE IT A LESS
ATTRACTIVE INVESTMENT.





Since the
trading price of our Common Stock is less than $5.00 per share and our net
tangible assets are less than $2.0 million, trading in our Common Stock is
subject to the requirements of Rule 15g-9 of the Exchange Act. Under Rule 15g-9,
brokers who recommend penny stocks to persons who are not established customers
and accredited investors, as defined in the Exchange Act, must satisfy special
sales practice requirements, including requirements that they make an
individualized written suitability determination for the purchaser; and receive
the purchaser's written consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional
disclosures in connection with any trades involving a penny stock, including the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated with that market.
Such requirements may severely limit the market liquidity of our Common Stock
and the ability of purchasers of our equity securities to sell their securities
in the secondary market. For all of these reasons, an investment in our equity
securities may not be attractive to our potential investors.




AS
A RESULT OF THE CLOSING OF THE PURCHASE AGREEMENT, WE ARE A SHELL COMPANY AND
ARE SUBJECT TO MORE STRINGENT REPORTING REQUIREMENTS AND CERTAIN RULE 144
RESTRICTIONS.





As a
result of the consummation of the Purchase Transaction, we have no or nominal
operations and assets, and pursuant to Rule 405 and Exchange Act Rule 12b-2, we
are a shell company. Applicable securities rules prohibit shell companies from
using a Form S-8 to register securities pursuant to employee compensation plans.
However, the rules do not prevent us from registering securities pursuant to
certain other registration statements. Additionally, Form 8-K requires shell
companies to provide more detailed disclosure upon completion of a transaction
that causes it to cease being a shell company. To the extent we acquire a
business in the future, we must file a current report on Form 8-K containing the
information required in a registration statement on Form 10, within four
business days following completion of the transaction together with financial
information of the private operating company. In order to assist the SEC in the
identification of shell companies, we are also required to check a box on Form
10-Q and Form 10-K indicating that we are a shell company. To the extent that we
are required to comply with additional disclosure because we are a shell
company, we may be delayed in executing any mergers or acquiring other assets
that would cause us to cease being a shell company. In addition, the SEC adopted
amendments to Rule 144 effective February 15, 2008, which do not allow a holder
of restricted securities of a “shell company” to resell their securities
pursuant to Rule 144. Preclusion from any prospective purchaser using the
exemptions from registration afforded by Rule 144 may make it more difficult for
us to sell equity securities in the future.





RISK
FACTORS RELATING TO THE PURCHASE TRANSACTION AND THE DISPOSITION OF THE
TRALLIANCE BUSINESS





THE
ANTICIPATED BENEFITS OF THE PURCHASE TRANSACTION MAY NOT BE REALIZED; WE WILL
CONTINUE TO HAVE A NEED FOR CAPITAL.





As a
result of the closing of the Purchase Transaction, the Company has been relieved
of over $6.4 million of obligations under convertible secured demand promissory
notes and unsecured accounts payables. Additionally, the Company received
Earn-out rights equal to 10% (subject to certain minimums) of Tralliance
Registry Management’s “net revenue” (as defined) derived from “.travel” names
registeted by Tralliance Registry Management from September 29, 2008 through May
5, 2015. The minimum Earn-out payable by Tralliance Registry Management to
theglobe will be at least $300 thousand in the first year, increasing by $25
thousand in each subsequent year (pro-rated for the final year of the
Earn-out).





However,
notwithstanding the fact that the Company’s total liabilities have been
significantly reduced as a result of the consummation of the Purchase
Transaction, the Company’s remaining liabilities and obligations are expected to
significantly exceed its assets for the foreseeable future. Additionally,
although the consummation of the Purchase Transaction is expected to
significantly reduce our future losses, we expect to continue to incur operating
and cash flow losses for the foreseeable future, and be dependent upon our
ability to raise equity or borrow funds in order to remain in business. There
can be no assurance that the Company will be successful in raising equity or
borrowing funds in order to continue as a going concern. Further, as a result of
the sale of its Tralliance business, the Company no longer has any active
business operations and is a shell company with no present ability to generate
future revenue or profits other than through the Earn-out arrangement with
Tralliance Registry Management.





ITEM
1B. UNRESOLVED STAFF COMMENTS





Not
applicable.





23





ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





(a)
Unregistered Sales of Equity Securities.





None.





(b) Use
of Proceeds From Sales of Registered Securities.





Not
applicable.




ITEM
3. DEFAULTS UPON SENIOR SECURITIES





None.





ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.





ITEM
5. OTHER INFORMATION





None.





ITEM
6. EXHIBITS




10.1
            Note
      Modification Agreement dated as of May 7, 2009 by and between Dancing Bear
      Investments, Inc. and theglobe.com
(1).





31.1
            Certification
      of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
      15d-14(a).





31.2
            Certification
      of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
      15d-14(a).32.1
            Certification
      of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 906 of The Sarbanes-Oxley Act of
      2002.





32.2
            Certification
      of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 906 of The Sarbanes-Oxley Act of
      2002.




(1)
Incorporated by reference from our Form 10-Q filed on May 8, 2009.





24




SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.


theglobe.com,
      inc.Dated :  July 31,
      2009
                  By:
                  /s/ 
      Michael S.
      EganMichael
      S. Egan
                    Chief
      Executive Officer
                    (Principal
      Executive
Officer)




Dated :  July 31,
      2009
                  By:
                  /s/ 
      Edward A.
      CespedesEdward
      A. Cespedes
                    President
      and Chief Financial Officer
                    (Principal
      Financial
Officer)




25




EXHIBIT
INDEX





10.1
            Note
      Modification Agreement dated as of May 7, 2009 by and between Dancing Bear
      Investments, Inc. and theglobe.com
(1).





31.1
            Certification
      of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
      15d-14(a).





31.2
            Certification
      of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
      15d-14(a).32.1
            Certification
      of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 906 of The Sarbanes-Oxley Act of
      2002.





32.2
            Certification
      of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 906 of The Sarbanes-Oxley Act of
      2002.




(1)
Incorporated by reference from our Form 10-Q filed on May 8, 2009.




26