<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

         [X]      QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR  15(D)  OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

                                       OR

         [ ]      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. EMPLOYER
 INCORPORATION OR ORGANIZATION)                       IDENTIFICATION NO.)

     110 EAST BROWARD BOULEVARD, SUITE 1400
             FORT LAUDERDALE, FL.                           33301
 --------------------------------------------           --------------
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)               (ZIP CODE)


                                (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.

Yes [X] No [ ]

The number of shares  outstanding of the  Registrant's  Common Stock,  $.001 par
value (the "Common Stock"), as of October 27, 2003 was 49,369,793.


<PAGE>

                                   FORM 10-QSB

                                      INDEX

                          PART I FINANCIAL INFORMATION

                                                                           Page
                                                                           ----

Item 1. Condensed Consolidated Financial Statements

       Condensed Consolidated Balance Sheets at September 30, 2003
       (unaudited) and December 31, 2002                                      1

       Unaudited Condensed Consolidated Statements of Operations
       for the three and nine months ended September 30, 2003 and 2002        2

       Unaudited Condensed Consolidated Statements of Cash Flows
       for the nine months ended September 30, 2003 and 2002                  3

       Notes to Unaudited Condensed Consolidated Financial Statements         4

Item 2. Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                           13

Item 3. Controls and Procedures                                              31


                           PART II. OTHER INFORMATION


Item 1. Legal Proceedings                                                    32

Item 2. Changes  in  Securities  and  Use  of  Proceeds                      32

Item 3. Defaults Upon Senior Securities                                      32

Item 4. Submission  of  Matters  to  a  Vote of Security Holders             32

Item 5. Other  Information                                                   32

Item 6. Exhibits and Reports on Form 8-K                                     33

        A. Exhibits
        B. Reports on Form 8-K

Signatures                                                                   34


<PAGE>

                          PART I FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               theglobe.com, inc.

                      CONDENSED CONSOLIDATED BALANCE SHEETS



<TABLE>
<CAPTION>
                                                                            SEPTEMBER 30,        DECEMBER 31,
                                                                                2003                 2002
                                                                            -------------       -------------
                                                                             (UNAUDITED)          (NOTE 1(C))
                                ASSETS
Current assets:
<S>                                                                         <C>                 <C>
     Cash and cash equivalents .......................................      $   1,277,108       $     725,422
     Marketable securities............................................          4,414,796                  --
     Accounts receivable, net ........................................            924,074           1,247,390
     Inventory, net ..................................................            493,182             363,982
     Prepaid and other current assets ................................          1,409,590             331,114
                                                                            -------------       -------------
        Total current assets .........................................          8,518,750           2,667,908

     Intangible assets ...............................................            508,086             164,960
     Goodwill ........................................................            554,315                  --
     Property and equipment, net .....................................          1,052,819             174,117
     Other assets ....................................................             76,204              40,000
                                                                            -------------       -------------

        Total assets .................................................      $  10,710,174       $   3,046,985
                                                                            =============       =============

                   LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable ................................................      $   1,315,329       $   1,395,929
     Accrued expenses and other current liabilities ..................            521,893             447,189
     Deferred revenue ................................................            174,199             169,519
     Current portion of long-term debt and notes payable..............          1,644,117             123,583
                                                                            -------------       -------------
        Total current liabilities ....................................          3,655,538           2,136,220

Long-term debt .......................................................            187,852              87,852
Other long-term liabilities ..........................................            141,077                  --
                                                                            -------------       -------------

        Total liabilities ............................................          3,984,467           2,224,072
                                                                            -------------       -------------

Stockholders' equity:
     Common stock ....................................................             50,019              31,082
     Preferred stock, at liquidation value ...........................            500,000                  --
     Additional paid-in capital ......................................        237,820,203         218,310,565
     Common stock, 699,281 common shares, held in treasury, at cost ..           (371,458)           (371,458)
     Accumulated other comprehensive loss.............................            (49,049)                 --
     Accumulated deficit .............................................       (231,224,008)       (217,147,276)
                                                                            -------------       -------------
        Total stockholders' equity ...................................          6,725,707             822,913
                                                                            -------------       -------------
        Total liabilities and stockholders' equity ...................      $  10,710,174       $   3,046,985
                                                                            =============       =============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                        1

<PAGE>

                               theglobe.com, inc.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                                      SEPTEMBER 30,                        SEPTEMBER 30,
                                                           -------------------------------       -------------------------------
                                                               2003               2002               2003               2002
                                                           ------------       ------------       ------------       ------------
                                                                      UNAUDITED                            UNAUDITED
                                                           -------------------------------       -------------------------------
<S>                                                          <C>                <C>                <C>                <C>
Net revenue:
    Advertising .........................................    $    660,864       $    807,066       $  1,685,719       $  2,055,324
    Electronic commerce and other .......................         775,782          1,452,197          2,668,173          5,147,752
    Telephony services...................................         280,816                 --            477,720                 --
                                                             ------------       ------------       ------------       ------------
         Total net revenue ..............................       1,717,462          2,259,263          4,831,612          7,203,076

 Operating expenses:
    Cost of products and publications sold...............         815,916          1,184,889          2,364,616          4,352,955
    Data communications, telecom and network operations..         527,327                 --            721,569                 --
    Sales and marketing .................................         775,584            774,850          1,971,964          2,861,371
    Product development .................................         203,520            138,647            591,329            517,158
    General and administrative ..........................       1,637,014            666,685          3,102,576          2,485,978
    Depreciation.........................................          61,012             21,835            113,730             64,924
    Amortization of intangibles..........................          25,624                 --             31,874                 --
                                                             ------------       ------------       ------------       ------------
Total operating expenses ................................       4,045,997          2,786,906          8,897,658         10,282,386
                                                             ------------       ------------       ------------       ------------
Loss from operations ....................................      (2,328,535)          (527,643)        (4,066,046)        (3,079,310)
                                                             ------------       ------------       ------------       ------------
Other income (expense), net:
    Interest income (expense), net ......................        (123,160)            (1,648)        (1,634,808)             3,780
    Other income (expense), net .........................         (65,919)            37,245           (255,878)           441,266
                                                             ------------       ------------       ------------       ------------
Other income (expense), net .............................        (189,079)            35,597         (1,890,686)           445,046
                                                             ------------       ------------       ------------       ------------
Loss before income tax benefit ..........................      (2,517,614)          (492,046)        (5,956,732)        (2,634,264)
Income tax benefit ......................................              --                 --                 --               (703)
                                                             ------------       ------------       ------------       ------------
Net loss ................................................    $ (2,517,614)      $   (492,046)      $ (5,956,732)      $ (2,633,561)
                                                             ============       ============       ============       ============
Basic and diluted net loss per common share .............    $      (0.23)      $      (0.02)      $      (0.39)      $      (0.08)
                                                             ============       ============       ============       ============
Weighted average basic and diluted shares outstanding....      44,496,302         31,081,574         35,815,659         31,081,574
                                                             ============       ============       ============       ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                        2

<PAGE>

                               theglobe.com, inc.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                          NINE MONTHS ENDED SEPTEMBER 30,
                                                                                           -----------------------------
                                                                                              2003               2002
                                                                                           -----------       -----------
                                                                                                    (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                        <C>               <C>
  Net loss ..........................................................................      $(5,956,732)      $(2,633,561)
    Adjustments to reconcile net loss to net cash used in
       operating activities:
    Depreciation and amortization ...................................................          145,604            64,924
    Provisions for excess and obsolete inventory.....................................           49,331                --
    Non-cash interest expense .......................................................        1,620,588                --
    Reserve against amounts loaned to Internet venture ..............................          335,000                --
    Contributed officer compensation ................................................          100,000                --
    Employee stock compensation......................................................          234,500                --
    Compensation related to non-employee stock options ..............................           34,584                --
    (Gain)/loss on sale of property and equipment ...................................               --            (5,321)
    Gain on sale of Happy Puppy assets ..............................................               --          (134,500)
    Non-cash favorable settlements of liabilities ...................................          (64,207)         (297,955)
    Stock options granted in connection with termination ............................               --            13,500

    Changes in operating assets and liabilities, net of acquisition and dispositions:
    Inventory, net ..................................................................         (178,531)           93,044
    Accounts receivable, net ........................................................          477,754           461,382
    Prepaid and other current assets ................................................       (1,077,434)          786,122
    Other assets ....................................................................           40,000                --
    Accounts payable ................................................................           28,678            57,672
    Accrued expenses and other current liabilities ..................................            2,964          (318,486)
    Deferred revenue ................................................................            4,680           (65,821)
                                                                                           -----------       -----------

Net cash used in operating activities ...............................................       (4,203,221)       (1,979,000)
                                                                                           -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Sales(purchases)of marketable securities, net ...................................       (4,463,845)           50,650
    Cash acquired in acquisition of business ........................................           60,948                --
    Amounts loaned to Internet venture ..............................................         (375,000)               --
    Purchases of property and equipment .............................................         (825,889)          (17,510)
    Payment of security deposits / escrow ...........................................           (7,000)               --
    Net proceeds from sale of Happy Puppy assets ....................................               --           134,500
                                                                                           -----------       -----------

Net cash provided by (used in) investing activities .................................       (5,610,786)          167,640
                                                                                           -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowing on notes payable ......................................................        1,750,000                --
    Proceeds from issuance of preferred stock, net...................................        9,140,692                --
    Proceeds from exercise of common stock options ..................................           10,799                --
    Payments on long-term debt, notes payable and capital lease obligations .........         (535,798)           (1,530)
                                                                                           -----------       -----------

Net cash provided by (used in) financing activities .................................       10,365,693            (1,530)
                                                                                           -----------       -----------
      Net change in cash and cash equivalents .......................................          551,686        (1,812,890)
      Effect of exchange rate changes on cash and cash
        equivalents .................................................................               --             4,017
Cash and cash equivalents at beginning of period ....................................          725,422         2,563,828
                                                                                           -----------       -----------
Cash and cash equivalents at end of period ..........................................      $ 1,277,108       $   754,955
                                                                                           ===========       ===========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                        3

<PAGE>


                               theglobe.com, inc.

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Description of theglobe.com

theglobe.com, inc. (the "Company" or "theglobe") was incorporated on May 1, 1995
(inception) and commenced  operations on that date.  theglobe.com  was an online
property with registered members and users in the United States and abroad which
allowed its users to personalize their online experience by publishing their own
content and interacting with others having similar  interests.  However,  due to
the  decline  in  the  advertising  market,  the  Company  was  forced  to  take
cost-reduction  and  restructuring  initiatives,   which  included  closing  its
community  www.theglobe.com effective August 15, 2001. The Company then began to
aggressively  seek  buyers for some or all of its  remaining  online and offline
properties,  which consisted primarily of games-related  properties.  In October
2001,  the  Company  sold all of the assets  used in  connection  with the Games
Domain and Console Domain websites to British Telecommunications plc, and all of
the assets used in  connection  with the Kids Domain  website to Kaboose Inc. In
February  2002,  the Company sold all of the assets used in connection  with the
Happy Puppy website to Internet Game  Distribution,  LLC (see Note 4). Effective
June 1, 2002,  Chairman  Michael S. Egan and Director  Edward A. Cespedes became
Chief Executive Officer and President of the Company, respectively.

The Company  continues  to operate its  Computer  Games print  magazine  and the
associated  website  Computer  Games Online  (www.cgonline.com),  as well as the
games  distribution   business  of  Chips  &  Bits,  Inc.   (www.chipsbits.com).
Management continues to actively explore a number of strategic  alternatives for
the  Company's  online and offline  games  properties,  including  continuing to
operate the properties, acquisition or development of complementary products, or
selling some or all of the properties.

As of September 30, 2003, the Company's  revenue sources were  principally  from
the sale of print advertising in its games magazine; the sale of video games and
related products through its games distribution  business; the sale of its games
magazine through  newsstands and  subscriptions;  and the sale of Voice over the
Internet Protocol ("VoIP")  telephony  services.  The Company's primary business
focus at the present time is the development and  commercialization  of its VoIP
telephony services under the brand name "voiceglo."

During the nine months ended  September  30, 2003,  the Company  issued debt and
equity securities with common stock conversion  features,  for gross proceeds of
$10,930,000.  As further  discussed  in Note 5, the  Company  accounted  for the
issuance of these  securities  in  accordance  with EITF 98-5,  "Accounting  for
Convertible  Securities  with  Beneficial  Conversion  Features or  Contingently
Adjustable  Conversion  Ratios," which  resulted in the  recognition of interest
expense of $1,459,500 and non-cash preferred  dividends  totaling  $8,120,000 at
the respective dates of the securities issuance.

The Company's  December 31, 2002  consolidated  financial  statements  have been
prepared  assuming the Company will continue as a going  concern.  We received a
report from our  independent  accountants  containing an  explanatory  paragraph
stating that we have suffered  recurring  losses from operations since inception
that raise  substantial  doubt about our ability to continue as a going concern.
The consolidated  financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

(b) 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.

(c) Unaudited Interim Condensed Consolidated Financial Information

The unaudited interim condensed consolidated financial statements of the Company
as of September  30, 2003 and for the three and nine months ended  September 30,
2003  and 2002  included  herein  have  been  prepared  in  accordance  with the
instructions  for Form 10-QSB  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 September 30, 2003 and the results of its  operations  for the
three and nine months ended  September  30, 2003 and 2002 and its cash flows for
the nine months ended September 30, 2003 and 2002.



                                       4
<PAGE>

The results of  operations  for such periods are not  necessarily  indicative of
results  expected for the full year or for any future  period.  These  financial
statements should be read in conjunction with the audited  financial  statements
as of December  31, 2002,  and for the three years then ended and related  notes
included  in the  Company's  Form 10-K filed with the  Securities  and  Exchange
Commission.

(d) Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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  collectibility  of accounts
receivable,  the  valuation of  inventory,  accruals and other  factors.  Actual
results could differ from those estimates.

(e) 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.

(f) Marketable Securities

The  Company  accounts  for its  investment  in debt and  equity  securities  in
accordance with Statement of Financial  Accounting  Standards  ("SFAS") No. 115,
"Accounting  for Certain  Investments in Debt and Equity  Securities."  All such
investments  are  classified  as  available-for-sale  as of September  30, 2003.
Available-for-sale  securities  are stated at market value,  which  approximates
fair value,  and unrealized  holding gains and losses are excluded from earnings
and included as a component of stockholders' equity until realized.

The following is a summary of available-for-sale  securities as of September 30,
2003:

<TABLE>
<CAPTION>
                                                            Gross Unrealized
                                             Cost              Gain/(Loss)         Fair Value
                                         ------------       ---------------       ------------
<S>                                      <C>                 <C>                  <C>
Preferred Securities...............      $ 3,375,000         $    (50,000)        $ 3,325,000
U.S. Treasury Bills................          836,977                  951             837,928
Mutual Funds.......................          251,868                   --             251,868
                                         ------------       ---------------       ------------

      Total........................      $ 4,463,845         $    (49,049)        $ 4,414,796
                                         ============       ===============       ============
</TABLE>

During the nine  months  ended  September  30,  2003,  the  Company had no gross
realized gains or losses on sales of  available-for-sale  securities.  The gross
unrealized  loss of $49,049 as of  September  30,  2003,  has been  included  in
stockholders'   equity  as  "Accumulated  Other   Comprehensive   Loss"  in  the
accompanying   condensed   consolidated   balance  sheet.  The  Company  had  no
available-for-sale securities as of December 31, 2002.

(g) Comprehensive Loss

Comprehensive  loss  is  comprised  of  two  components:   net  loss  and  other
comprehensive loss. In accordance with SFAS No. 130, other comprehensive loss in
2003 and 2002 included unrealized gains and losses on marketable securities,  as
well  as  foreign  currency  translation  adjustments  in  2002.  The  Company's
comprehensive loss was approximately $2.6 million and $0.5 million for the three
months ended September 30, 2003 and 2002,  respectively and  approximately  $6.0
million and $2.6 million for the nine months ended  September 30, 2003 and 2002,
respectively.  Accumulated other  comprehensive  loss at September 30, 2003, was
$49,049.  The Company had no accumulated other comprehensive loss as of December
31, 2002.

(h) Inventory

Inventories,  consisting  primarily of products available for sale, are recorded
using the average  cost method and valued at the lower of cost or market  value.
The Company's reserve for excess and obsolete inventory as of September 30, 2003
and December 31, 2002 was approximately $90,000 and $100,000, respectively.



                                       5
<PAGE>

(i) Revenue Recognition

The  Company's  revenues  were  derived  principally  from  the  sale  of  print
advertisements  under  short-term  contracts in our games  information  magazine
Computer Games;  the sale of video games and related  products through our games
distribution  business  Chips & Bits,  Inc.;  the sale of our games  information
magazine  through  newsstands  and  subscriptions;  and  from  the  sale of VoIP
telephony services over the Internet.

Advertising  revenues for the games  information  magazine are recognized at the
on-sale  date of the  magazine.  Sales from the online store are  recognized  as
revenue  when the  product  is shipped to the  customer.  Freight  out costs are
included  in net  sales  and have  not been  significant  to date.  The  Company
provides  an  allowance  for  merchandise  sold  through its online  store.  The
allowance provided to date has not been significant.

Newsstand sales of the games information  magazine are recognized at the on-sale
date of the magazine, net of provisions for estimated returns. Subscriptions are
recorded as deferred revenue when initially received and recognized as income on
a pro rata basis over the subscription  term.  Revenues from the Company's share
of the  proceeds  from  its  e-commerce  partners'  sales  are  recognized  upon
notification from its partners of sales attributable to the Company's sites, and
to date, have been immaterial.

VoIP telephony  services revenue  represents fees charged to customers for voice
services and is recognized based on minutes of customer usage or as services are
provided.  The Company records payments received in advance for prepaid services
as deferred revenue until the related services are provided.

(j) Concentration of Credit Risk

Financial  instruments,  which subject the Company to  concentrations  of credit
risk, consist primarily of cash and cash equivalents,  marketable securities and
trade accounts  receivable.  The Company maintains its cash and cash equivalents
with various financial  institutions and invests its funds among a diverse group
of issuers and instruments.  The Company performs ongoing credit  evaluations of
its  customers'  financial  condition and  establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of customers, historical
trends and other information. Concentration of credit risk is limited due to the
Company's large number of customers.

For the three and nine months ended  September 30, 2003 and 2002,  there were no
customers that accounted for over 10% of consolidated net revenue.

(k) Net loss per share

Basic and diluted net loss per common  share were  computed by dividing net loss
applicable to common  stockholders  by the weighted  average number of shares of
common stock  outstanding  for each period  presented.  Due to the Company's net
losses,  the  effect  of  potentially   dilutive   securities  or  common  stock
equivalents  that could be issued was  excluded  from the  diluted  net loss per
common share  calculation  due to the  anti-dilutive  effect.  Such  potentially
dilutive securities and common stock equivalents  consisted of the following for
the three and nine month periods ended September 30:



                                                     2003            2002
                                                  ----------      ----------
Options to purchase common stock .............     9,185,000       5,970,000
Common shares issuable upon conversion of
    Series F Preferred Stock .................    16,667,000              --
Common shares issuable upon conversion of
    Convertible Notes ........................    19,444,000              --
Common shares issuable upon conversion of
    Warrants .................................    23,227,000       4,012,000
                                                  ----------      ----------
Total ........................................    68,523,000       9,982,000
                                                  ==========      ==========



                                       6
<PAGE>

Net loss applicable to common stockholders was calculated as follows:


<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                 SEPTEMBER 30,                        SEPTEMBER 30,
                                           -----------------------------       -----------------------------
                                               2003              2002              2003              2002
                                           -----------       -----------       ------------       -----------
<S>                                        <C>               <C>               <C>                <C>
Net loss ...............................   $ (2,517,614)     $  (492,046)      $ (5,956,732)      $(2,633,561)
Beneficial conversion features of
    preferred stock and warrants .......     (7,620,000)               --        (8,120,000)               --
                                           ------------       -----------       ------------       -----------
    Net loss applicable to common
      stockholders .....................   $(10,137,614)     $  (492,046)      $(14,076,732)      $(2,633,561)
                                           ============       ===========       ============       ===========
</TABLE>

Refer to Note 5 for a discussion of the dividends attributable to the beneficial
conversion features of the Series F Preferred Stock of $500,000 and the Series G
Automatically Converting Preferred Stock and associated warrants of $7,620,000.

(l) Recent Accounting Pronouncements

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments Hedging Activities." This statement amends and clarifies
accounting for derivative instruments,  including certain derivative instruments
embedded in other contracts,  and for hedging activities under SFAS No. 133. The
Company  believes  that the adoption of this  standard  will not have a material
impact on the Company's results of operations or financial position.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
affects  the  issuer's  accounting  for three  types of  freestanding  financial
instruments.  One type is  mandatorily  redeemable  shares,  which  the  issuing
company is obligated to buy back in exchange for cash or other assets.  A second
type,  which  includes  put  options and forward  purchase  contracts,  involves
instruments  that do or may require the issuer to buy back some of its shares in
exchange  for cash or other  assets.  The third type of  instrument  consists of
obligations  that can be settled  with shares,  the  monetary  value of which is
fixed,  tied solely or  predominantly  to a variable such as a market index,  or
varies  inversely with the value of the issuers'  shares.  SFAS No. 150 does not
apply to features embedded in a financial instrument that is not a derivative in
its entirety.  SFAS No. 150 also requires  disclosures about alternative ways of
settling the instruments and the capital structure of entities, whose shares are
mandatorily  redeemable.  Most of the guidance in SFAS No. 150 is effective  for
all  financial  instruments  entered into or modified  after May 31,  2003,  and
otherwise  is effective  from the start of the first  interim  period  beginning
after June 15, 2003.  The Company  believes  that the adoption of this  standard
will not have a  material  impact on the  Company's  results  of  operations  or
financial position.

(2) STOCK OPTIONS

On May 31, 2000,  the Company  offered to  substantially  all of its  employees,
excluding  executive  officers  and the Board of  Directors,  the right to amend
certain outstanding stock options and receive new options with an exercise price
equal to the then current fair market value of the stock.  Options to purchase a
total of  approximately  1.1 million  shares,  approximately  20% of outstanding
options on that date,  were amended and  approximately  856,000 new options were
granted at an exercise price of $1.594 per share, which was based on the closing
price of the Company's common stock on May 31, 2000. The new options vest at the
same rate that they would have vested under previous  option plans.  The Company
is accounting for these  re-priced  stock options using  variable  accounting in
accordance  with FIN No. 44. In  addition,  as a result of  options,  which were
granted within six months of the  cancellations,  an additional  244,000 options
also require  variable  accounting in accordance  with FIN No. 44. For the three
and nine months ended September 30, 2003,  approximately $42,000 of compensation
expense was recorded in connection with the re-priced  stock options.  Depending
upon  movements  in  the  market  value  of the  Company's  common  stock,  this
accounting  treatment may result in additional non-cash  compensation charges in
future periods.

A total of 3,417,450  stock  options  were granted  during the nine months ended
September 30, 2003,  including grants of 131,000 stock options to non-employees.
Compensation  expense of  approximately  $35,000 was recognized  during the nine
months ended  September  30, 2003 with respect to  non-employee  stock  options.
Approximately  $193,000 of  compensation  expense  related to an employee option
grant with a  below-market  exercise  price was recorded  during the nine months
ended  September 30, 2003. A total of 202,500  stock options were  exercised and
1,500 stock options were  cancelled  during the nine months ended  September 30,
2003.

The Company  estimates  the fair value of each stock option at the grant date by
using the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2003: no dividend yield; an expected life of five
years; 160% expected volatility and 3.00% risk free interest rate.


                                       7
<PAGE>

In accordance with SFAS No. 123, the Company applies Accounting Principles Board
Opinion  No. 25,  "Accounting  for Stock  Issued to  Employees,"  to account for
stock-based awards granted to employees. Had the Company determined compensation
cost  based on the fair value at the grant  date for all of its  employee  stock
options issued under SFAS No. 123, the Company's net loss for the three and nine
months ended  September 30, 2003 and 2002 would have  increased to the pro forma
amounts below.


                                              Three Months         Nine Months
                                              -------------       -------------
Period ended September 30, 2003, Net loss:
   As reported .........................      $  (2,517,614)      $  (5,956,732)
   Pro forma ...........................         (2,650,000)         (7,137,000)

Basic and diluted loss per common share:
   As reported .........................      $       (0.23)      $       (0.39)
   Pro forma ...........................              (0.23)              (0.43)

Period ended September 30, 2002, Net loss:
   As reported .........................      $    (492,046)      $  (2,633,561)
   Pro forma ...........................           (589,000)         (2,731,000)

Basic and diluted loss per common share:
   As reported .........................      $       (0.02)      $       (0.08)
   Pro forma ...........................              (0.02)              (0.08)


(3) LITIGATION

On and  after  August 3, 2001 and as of the date of this  filing,  six  putative
shareholder class action lawsuits were filed against the Company, certain of its
current and former  officers and directors,  and several  investment  banks that
were the underwriters of the Company's November 23, 1998 initial public offering
and its May 19, 1999 secondary  offering.  The lawsuits were filed in the United
States  District  Court for the Southern  District of New York.  The  complaints
against  the  Company  have  been  consolidated  into  a  single  action  and  a
Consolidated Amended Complaint,  which is now the operative complaint, was filed
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.  Plaintiffs  allege that the underwriter  defendants agreed to allocate
stock in the Company's  initial public 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 Prospectus for the Company's initial public offering
was 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.

The action is being  coordinated with  approximately  300 other nearly identical
actions filed against other  companies.  On July 15, 2002,  the Company moved to
dismiss all claims against it and the Individual Defendants. On October 9, 2002,
the Court dismissed the Individual  Defendants  from the case without  prejudice
based on  stipulations  of dismissal  filed by the plaintiffs and the Individual
Defendants.  On February  19,  2003,  the Court denied the motion to dismiss the
complaint  against  the  Company.  The  Company  has  approved a  Memorandum  of
Understanding  ("MOU")  and  related  agreements  which set forth the terms of a
settlement  between the Company and the plaintiff  class. It is anticipated that
any potential financial obligations of the Company to plaintiffs due pursuant to
the  terms  of the MOU  and  related  agreements  will be  covered  by  existing
insurance.  Therefore,  the  Company  does not expect that the  settlement  will
involve any payment by the Company.  The MOU and related  agreements are subject
to a  number  of  contingencies,  including  the  negotiation  of  a  settlement
agreement  and  approval by the Court.  We cannot  opine as to whether or when a
settlement will occur or be finalized and, consequently, are unable at this time
to determine  whether the outcome of the litigation  will have a material impact
on our results of operations or financial condition in any future period.

On  July  3,  2003,  an  action  was  commenced  against  one of  the  Company's
subsidiaries,  Direct  Partner  Telecom,  Inc.  ("DPT").  Global  Communications
Consulting Corp. v. Michelle Nelson,  Jason White,  VLAN, Inc.,  Geoffrey Amend,
James Magruder,  Direct Partner Telecom,  Inc., et al. was filed in the Superior
Court of New Jersey,  Monmouth County, and removed to the United States District
Court for the  District of New Jersey on September  16,  2003.  Plaintiff is the
former employer of Michelle Nelson, a consultant of DPT.  Plaintiff alleges that
while  Nelson  was its  employee,  she  provided  plaintiff's  confidential  and
proprietary  trade  secret  information,   to  among  others,  DPT  and  certain
employees,  and diverted  corporate  opportunities from plaintiff to DPT and the
other named defendants. Plaintiff asserts claims against Nelson including breach
of fiduciary duty, breach of the duty of loyalty and tortious  interference with
contract.  Plaintiff  also asserts  claims against Nelson and DPT, among others,
for contractual  interference,  tortious  interference with prospective economic
advantage and  misappropriation  of proprietary  information  and trade secrets.
Plaintiff  seeks  injunctive  relief  and  damages  in  an  unspecified  amount,
including punitive damages.




                                       8
<PAGE>

The Answer to the Complaint, with counterclaims, was served on October 20, 2003,
denying  plaintiff's  allegations  of  improper  and  unlawful  conduct in their
entirety. Defendants intend to vigorously defend against these claims. Under the
court  rules,  no  discovery  may be taken  until  after an  initial  scheduling
conference with the court, anticipated to occur in November 2003. As this matter
is in its initial stages,  we are unable to determine whether the outcome of the
litigation will 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 legal  proceedings,  claims,
disputes and litigation  arising in the ordinary  course of business,  including
those noted above. The Company  currently  believes that the ultimate outcome of
these other  proceedings,  individually  and in the  aggregate,  will not have a
material  adverse  affect  on  the  Company's  financial  position,  results  of
operations  or  cash  flows.  However,   because  of  the  nature  and  inherent
uncertainties of litigation, should the outcome of these actions be unfavorable,
the Company's  business,  financial  condition,  results of operations  and cash
flows could be materially and adversely affected.

(4) ACQUISITIONS AND DISPOSITION

Acquisition of Direct Partner Telecom, Inc.

On May 28,  2003,  the  Company  completed  the  acquisition  of Direct  Partner
Telecom, Inc. ("DPT"), a company engaged in VoIP telephony services, in exchange
for 1,375,000  shares of the Company's common stock and the issuance of warrants
to acquire  500,000  shares of the  Company's  common  stock.  The  warrants are
exercisable  any time  before  May 23,  2013 at an  exercise  price of $0.72 per
share. In addition,  the former shareholders of DPT may earn additional warrants
to acquire up to 2,750,000  shares of the Company's  common stock at an exercise
price of $0.72 per share if DPT achieves  certain  revenue and earnings  targets
over approximately the next three years. These warrants will also accelerate and
be deemed  earned  in the event of a "change  in  control"  of the  Company,  as
defined in the acquisition  documents.  In addition, as part of the transaction,
the  Company  agreed to repay loans  totaling  $600,000 to certain of the former
shareholders of DPT,  including  $500,000  immediately  after the closing of the
acquisition.  The Company issued promissory notes for $100,000,  with a two-year
maturity and interest at prime, for the balance.

The total purchase price of DPT was allocated as follows (in thousands):



                     Cash ..............................      $  61
                     Accounts  receivable ..............        155
                     Fixed assets ......................        196
                     Non-compete agreement .............        375
                     Goodwill ..........................        554
                     Assumed debt to former shareholders       (600)
                     Other assumed liabilities ........        (103)
                                                              -----
                     Purchase price ...................       $ 638
                                                              =====

As part of the acquisition  transaction,  the former Chief Executive  Officer of
DPT agreed to an employment  agreement with a one-year term which  automatically
renews  for  an  additional   year.  The  employment   agreement  also  contains
non-compete  provisions  during  the term of the  agreement  and for a period of
three years following termination of the agreement,  as specified.  The $375,000
value  assigned  to  the   non-compete   agreement  is  being   amortized  on  a
straight-line basis over 5 years. Annual amortization expense of the non-compete
agreement is estimated to be $43,750 in 2003;  $75,000 in 2004 through 2007; and
$31,250 in 2008. The related accumulated  amortization as of September 30, 2003,
was $25,000.

The following unaudited pro forma condensed  consolidated  results of operations
for the nine months ended September 30, 2003,  assumes the acquisition  occurred
as of October 1, 2002,  the date which DPT began  operations.  There would be no
change to the  unaudited  condensed  consolidated  results of  operations of the
Company for the three and nine month  periods  ended  September  30,  2002.  The
unaudited pro forma information is not necessarily  indicative of the results of
operations of the combined company had these events occurred at the beginning of
the periods presented, nor is it necessarily indicative of future results.



Period ended September 30, 2003,                              Nine Months
                                                              ------------
Revenue ................................................      $ 5,623,000
Net  Loss ..............................................       (6,038,000)
Basic and diluted loss per common share ................      $     (0.40)





                                       9
<PAGE>

Loan and Purchase Option Agreement

On February 25,  2003,  theglobe.com  entered  into a Loan and  Purchase  Option
Agreement with a development stage Internet related business venture pursuant to
which  it  agreed  to  fund,  in the form of a loan,  at the  discretion  of the
Company, the venture's operating expenses and obtained the option to acquire all
of the  outstanding  capital  stock of the venture in exchange  for, when and if
exercised,  $40,000  in cash  and the  issuance  of an  aggregate  of  2,000,000
unregistered  restricted shares of  theglobe.com's  common stock (the "Option").
The Loan is  secured  by a lien on the  assets of the  venture  and  matures  on
December 12, 2003.  The Option is  exercisable  at anytime on or before ten days
after  theglobe.com's  receipt  of  notice  relating  to the  award of a certain
contract currently being pursued by the venture. In the event of the exercise of
the Option,  (i) the  existing  CEO and CFO of the venture  have agreed to enter
into employment  agreements  whereby each would agree to remain in the employ of
the  venture  for a period of two years  following  the closing of the Option in
exchange for base compensation plus participation in a bonus pool based upon the
pre-tax  income of the venture  and (ii) the  2,000,000  shares of  theglobe.com
Common Stock issued upon such exercise will be entitled to certain  "piggy-back"
registration  rights.  If the Option is not  exercised,  then  theglobe.com  has
agreed,  subject to certain  exceptions,  to forgive repayment of $60,000 of the
amount  loaned.  As of September  30, 2003,  $375,000 has been  advanced to this
venture.  Due to the  uncertainty of  collectibility  of the Loan, as it is to a
development stage business, the Company has set up a reserve for all of the Loan
except the $40,000  attributable to the acquisition  should the Company exercise
the Option. The amount of the reserve, $335,000 was included in other expense in
the accompanying statement of operations for the nine months ended September 30,
2003.

Acquisition of VoIP Assets

On  November  14,  2002,  the  Company  acquired  certain  VoIP  assets  from an
entrepreneur. In exchange for the assets, the Company issued warrants to acquire
1,750,000 shares of its common stock and an additional  425,000 warrants as part
of an earn-out  arrangement upon the attainment of certain performance  targets,
none of which have been attained as of September 30, 2003. In  conjunction  with
the  acquisition,  E&C Capital  Partners,  a privately held  investment  holding
company owned by our Chairman and Chief Executive Officer,  Michael S. Egan, and
our President,  Edward A. Cespedes,  entered into a non-binding letter of intent
with theglobe.com to provide new financing in the amount of $500,000 through the
purchase of a new series of  preferred  securities.  That  investment  closed on
March 28, 2003. (See Note 5).

Disposition

On February 27, 2002 the Company sold to Internet Game Distribution,  LLC all of
the  assets  used  in  connection  with  the  Happy  Puppy  website.  The  total
consideration  received was $135,000.  The Company received $67,500 immediately,
and $67,500 to be held in escrow until the Company  transferred  all assets used
in connection with the Happy Puppy website. On May 6, 2002, $67,500 was released
to the Company.  The Company  recognized a gain on the sale of $134,500,  in the
first quarter of 2002.

(5) OTHER EVENTS

On July 2, 2003,  the Company  completed a private  offering of 17,360 shares of
Series G Automatically  Converting  Preferred Stock ("Series G Preferred Stock")
and warrants to acquire  3,472 shares of Series G Preferred  Stock at a purchase
price of $500 per share for a total of $8,680,000 in gross proceeds.  Each share
of Series G Preferred  Stock was  automatically  converted  into 1,000 shares of
theglobe's Common Stock on July 29, 2003, the effective date of the amendment to
the Company's  certificate of incorporation  increasing its authorized shares of
Common  Stock  from  100,000,000  shares to  200,000,000  shares  (the  "Capital
Amendment").  Similarly,  upon the effective date of the Capital Amendment, each
warrant  to acquire a share of the Series G  Preferred  Stock was  automatically
converted  into a warrant to acquire 1,000 shares of Common Stock.  The warrants
are  exercisable  for a period of 5 years at an initial  exercise price of $1.39
per share. A total of 17,360,000  shares of Common Stock were issued pursuant to
the  Series G  Preferred  Stock  private  offering,  while,  subject  to certain
adjustment  mechanisms,  a total of  3,472,000  shares of Common  Stock  will be
issuable upon exercise of the associated warrants.

At the time of  issuance  of the Series G  Preferred  Stock,  an  allocation  of
proceeds  received  was made  between the  preferred  shares and the  associated
warrants.  The  allocation  was made by  determining  the pro-rata  share of the
proceeds for each by  comparing  the fair value of each  security  issued to the
total fair value.  The fair value of the warrants was determined using the Black
Scholes model.  The fair value of the Series G Preferred Stock was determined by
measuring  the fair value of the common  shares on an as converted  basis.  As a
result, $1,365,000 was allocated to the warrants sold. In addition, the value of
the  preferential  conversion  was calculated by comparing the fair value of the
underlying  common  shares  based on the  closing  price of our common  stock as
reflected  on the OTCBB on the date of  issuance to the  "effective"  conversion
price.  This  resulted  in a  preferential  conversion  discount  related to the
preferred shares and the associated  warrants,  limited to the proceeds from the
sale, of $7,315,000  and  $305,000,  respectively,  which has been recorded as a
dividend to the preferred stockholders in July 2003, as the preferred shares and
associated warrants were immediately convertible into common shares and warrants
to acquire common shares.

On May 22,  2003,  E&C Capital  Partners  together  with certain  affiliates  of
Michael  S.  Egan,  entered  into a Note  Purchase  Agreement  with the  Company
pursuant to which they acquired  convertible  promissory notes (the "Convertible
Notes") in the aggregate  principal amount of $1,750,000.  The Convertible Notes
are convertible at anytime into a maximum of approximately  19,444,000 shares of
the Company's common stock at a blended rate of $0.09 per share. The Convertible
Notes have a one year maturity date,  which may be extended at the option of the
holders of the  Convertible  Notes for periods  aggregating  two years,  and are
secured  by a pledge of  substantially  all of the  assets of the  Company.  The
Convertible  Notes bear  interest at the rate of ten percent per annum,  payable
semi-annually.  Effective  October 3, 2003, the holders of the Convertible Notes
waived the right to receive accrued  interest payable in shares of the Company's
common stock.  Additionally,  each of the holders of the  Convertible  Notes has
agreed to defer receipt of interest until June 1, 2004.



                                       10
<PAGE>

In addition,  E&C Capital  Partners was issued a warrant  ("Warrant") to acquire
3,888,889 shares of the Company's common stock at an exercise price of $0.15 per
share.  The Warrant is  exercisable  at any time on or before May 22, 2013.  The
conversion  prices  of the  Convertible  Notes  and the  exercise  price  of the
Warrant,   together  with  the  number  of  shares  for  which  the  Warrant  is
exercisable,  are subject to adjustment  upon the occurrence of certain  events,
including  downward  adjustment  on a  weighted-average  basis in the  event the
Company  should  issue  securities  in the future at a purchase  price below the
respective  conversion  prices and exercise price of the  Convertible  Notes and
Warrant.

An  allocation  of the proceeds  received  from the issuance of the  Convertible
Notes was made between the debt  instruments  and the Warrant by determining the
pro-rata  share of the  proceeds  for each by  comparing  the fair value of each
security  issued to the total  fair  value.  The fair value of the  Warrant  was
determined  using the Black  Scholes  model.  The fair value of the  Convertible
Notes was  determined  by  measuring  the fair value of the common  shares on an
"as-converted"  basis.  As a result,  $290,500 was  allocated to the Warrant and
recorded as a discount on the debt issued and  additional  paid in capital.  The
value  of the  beneficial  conversion  feature  of  the  Convertible  Notes  was
calculated  by comparing the fair value of the  underlying  common shares of the
Convertible  Notes on the date of  issuance  based on the  closing  price of our
common stock as reflected on the OTCBB to the "effective" conversion price. This
resulted  in a  preferential  conversion  discount,  limited  to the  previously
discounted value of the Convertible Notes, of $1,459,500,  which was recorded as
interest expense in the accompanying unaudited condensed consolidated statements
of operations as the Convertible Notes were immediately  convertible into common
shares.

On November 14, 2002, E&C Capital Partners entered into a non-binding  letter of
intent with  theglobe.com to provide  $500,000 of new financing via the purchase
of shares of a new Series F Preferred Stock of theglobe.com.  On March 28, 2003,
the parties  signed a  Preferred  Stock  Purchase  Agreement  and other  related
documentation  pertaining to the investment  and closed on the  investment  (the
"Preferred  Stock  Investment").   Pursuant  to  the  Preferred  Stock  Purchase
Agreement,  E&C Capital  Partners  received 333,333 shares of Series F Preferred
Stock  convertible into shares of the Company's Common Stock at a price of $0.03
per share.  The conversion price is subject to adjustment upon the occurrence of
certain events, including downward adjustment on a weighted-average basis in the
event the Company  should issue  securities at a purchase  price below $0.03 per
share. If fully converted,  and without regard to the  anti-dilutive  adjustment
mechanisms  applicable  to  the  Series  F  Preferred  Stock,  an  aggregate  of
approximately  16,667,000  shares of Common Stock could be issued.  The Series F
Preferred Stock has a liquidation  preference of $1.50 per share (and thereafter
participates with the holders of Common Stock on an "as-converted"  basis), will
pay a dividend at the rate of 8% per annum and entitles the holder to vote on an
"as-converted"  basis with the holders of Common Stock. In addition,  as part of
the $500,000  investment,  E&C Capital  Partners  received  warrants to purchase
approximately 3,333,000 shares of theglobe.com Common Stock at an exercise price
of $0.125 per share.  The warrant is  exercisable at any time on or before March
28, 2013. E&C Capital Partners is entitled to certain demand registration rights
in connection with its investment.

The proceeds  attributable  to the issuance of the Series F Preferred  Stock and
the  related  warrants  were  allocated  to each  security in the same manner as
described  in the  discussion  of the  Series G  Preferred  Stock.  As a result,
$83,000 was  allocated  to the  warrants  sold.  In  addition,  the value of the
preferential  conversion  was  calculated  by  comparing  the fair  value of the
underlying  common shares on the date of issuance  based on the closing price of
our common stock as reflected on the OTCBB to the "effective"  conversion price.
This resulted in a  preferential  conversion  discount,  limited to the proceeds
from the sale, of $417,000.  The sum of the two  discounts,  $500,000,  has been
recorded  as a dividend to the  preferred  stockholders  in March  2003,  as the
preferred shares were immediately convertible into common shares.

As a result of the  issuance  of the  Series F  Preferred  Stock,  the  Series G
Automatically   Converting  Preferred  Stock,  the  Convertible  Notes  and  the
associated warrants at their respective conversion and exercise prices,  certain
anti-dilution  provisions  applicable  to  previously  outstanding  warrants  to
acquire  approximately  4,103,000  shares  of  theglobe.com  common  stock  were
triggered.  Like many  types of  warrants  commonly  issued,  these  outstanding
warrants  to acquire  shares of the  Company's  common  stock  include  weighted
average  anti-dilution  provisions  which  result in a lowering of the  exercise
price,  and an  increase  in the number of  warrants  to  acquire  shares of the
Company's  common stock anytime shares of common stock are issued (or options or
other  securities  exercisable or convertible into common stock) for a price per
share  less than the then  exercise  price of the  warrants.  As a result of the
Preferred Stock  Investment and the issuance of the Series G Preferred Stock and
the Convertible Notes, the exercise price was lowered from  approximately  $1.39
to $0.66 per share on these  warrants  and the  number of shares  issuable  upon
exercise was  proportionally  increased from  approximately  4,103,000 shares to
6,836,000 shares.  As of September 30, 2003,  approximately 95% of such warrants
were beneficially owned by Michael S. Egan.

(6) SEGMENTS AND GEOGRAPHIC INFORMATION

The Company applies the provisions of SFAS No. 131,  "Disclosures About Segments
of an Enterprise and Related Information",  which establishes annual and interim
reporting  standards for operating segments of a company.  SFAS No. 131 requires
disclosures of selected  segment-related  financial  information about products,
major customers and geographic areas. Effective with the May 2003 acquisition of
DPT,  the Company is now  organized  in two  operating  segments for purposes of
making  operating  decisions  and  assessing  performance:  the  computer  games
division and the VoIP telephony services  division.  The computer games division
consists of the  operations of the Company's  Computer  Games print magazine and
the  associated  website  Computer  Games  Online   (www.cgonline.com)  and  the
operations of Chips & Bits,  Inc.,  its games  distribution  business.  The VoIP
telephony   services   division   is   principally   involved  in  the  sale  of
telecommunications   services   over  the  internet  to   consumers   and  other
telecommunications service providers.

The chief  operating  decision  maker  evaluates  performance,  makes  operating
decisions and allocates resources based on financial data of each segment. Where
appropriate,  the Company charges  specific costs to each segment where they can
be  identified.   Certain  items  are  maintained  at  the  Company's  corporate
headquarters  ("Corporate")  and are not  presently  allocated to the  segments.
Corporate  expenses  primarily include personnel costs related to executives and
certain  support  staff and  professional  fees.  Corporate  assets  principally
consist  of cash,  cash



                                       11
<PAGE>

equivalents  and marketable  securities.  There are no intersegment  sales.  The
accounting  policies of the  segments are the same as those for the Company as a
whole.

The  following  table  presents  financial  information  regarding the Company's
different segments:

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                 SEPTEMBER 30,                        SEPTEMBER 30,
                                         -----------------------------       -----------------------------
                                             2003              2002              2003              2002
                                         -----------       -----------       -----------       -----------
REVENUE:
<S>                                      <C>              <C>               <C>               <C>
Computer games and other...........      $ 1,436,646      $  2,259,263      $  4,353,892      $  7,203,076
VoIP telephony services ...........          280,816                --           477,720                --
                                         -----------       -----------       -----------       -----------
                                         $ 1,717,462      $  2,259,263      $  4,831,612      $  7,203,076
                                         ===========       ===========       ===========       ===========

INCOME (LOSS) FROM OPERATIONS:
Computer games and other...........      $   100,407      $     15,974      $     (2,229)      $  (784,136)
VoIP telephony services ...........       (1,167,425)               --        (1,552,838)               --
Corporate expenses.................       (1,261,517)         (543,617)       (2,510,979)       (1,595,341)
Non-recurring charges..............               --                --                --          (699,833)
                                         -----------       -----------       -----------       -----------
   Loss from operations                   (2,328,535)         (527,643)       (4,066,046)       (3,079,310)
   Other income (expense), net              (189,079)           35,597        (1,890,686)          445,046
                                         -----------       -----------       -----------       -----------
   Consolidated loss before income
     tax benefit                         $(2,517,614)     $   (492,046)     $ (5,956,732)      $(2,634,264)
                                         ===========       ===========       ===========       ===========

DEPRECIATION AND AMORTIZATION:
Computer games and other...........      $    10,828      $     21,835      $     55,037      $     63,402
VoIP telephony services ...........           72,412                --            85,930                --
Corporate expenses.................            3,396                --             4,637             1,522
                                         -----------       -----------       -----------       -----------
                                         $    86,636      $     21,835      $    145,604      $     64,924
                                         ===========       ===========       ===========       ===========
</TABLE>


                                         SEPTEMBER 30,     DECEMBER 31,
                                             2003              2002
                                         -----------       -----------
IDENTIFIABLE ASSETS:
Computer games and other...........      $ 1,899,858      $  2,602,831
VoIP telephony services ...........        3,516,211           164,960
Corporate assets...................        5,294,105           279,194
                                         -----------       -----------
                                         $10,710,174      $  3,046,985
                                         ===========       ===========

The Company's  historical  revenues have been earned primarily from customers in
the  United  States.   VoIP   telephony   services  net  revenue  was  primarily
attributable  to the sale of telephony  services  outside of the United  States.
Telephony services revenue derived from Thailand  represented  approximately 15%
and 9% of consolidated net revenue for the three and nine months ended September
30, 2003, respectively.

(7) COMMITMENTS

As of September 30, 2003, the Company had approximately  $781,000 in outstanding
standby letters of credit used to support inventory purchases.

On August 1, 2003,  the Company  entered  into  employment  agreements  with its
Chairman and Chief Executive Officer, President and Chief Financial Officer. The
three agreements,  which are for a period of one year and  automatically  extend
for one day each day until either party notifies the other not to further extend
the employment  period,  provide for annual base salaries  totaling $650,000 and
annual  bonuses based on pre-tax  operating  income,  as defined,  for an annual
minimum of $100,000 in total. The agreements also provide for severance benefits
under certain  circumstances,  as defined, which in the case of the Chairman and
Chief Executive  Officer and the President,  include lump-sum  payments equal to
ten times the sum of the  executive's  base salary and the highest  annual bonus
earned by the executive, and in the case of the Chief Financial Officer, include
lump-sum  payments equal to two times the sum of the executive's base salary and
the highest annual bonus earned by the executive.  In addition,  these severance
benefits also require the Company to maintain insurance benefits for a period of
up to ten years, in the case of the Chairman and Chief Executive Officer and the
President,  and up to two  years,  in the case of the Chief  Financial  Officer,
substantially equivalent to the insurance benefits existing upon termination.


                                       12
<PAGE>

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

                           FORWARD LOOKING STATEMENTS

The following  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations or Plan of Operation contains "forward-looking statements"
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking  statements can be
identified  by  the  use  of   predictive,   future-tense   or   forward-looking
terminology, such as "believes," "anticipates," "expects," "estimates," "plans,"
"may,"  "intends,"  "will," or similar  terms.  Investors are cautioned that any
forward-looking  statements are not guarantees of future performance and involve
significant  risks  and  uncertainties,  and  that  actual  results  may  differ
materially from those projected in the forward-looking statements as a result of
various factors described under "Risk Factors" and elsewhere in this report. 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, 2002.

                          OVERVIEW OR PLAN OF OPERATION

As of  September  30, 2003,  the Company was involved in two business  segments:
computer games properties and Voice over Internet  Protocol  ("VoIP")  telephony
services.  The games division  includes:  our print  publication  Computer Games
Magazine;  our Computer  Games Online website  (www.cgonline.com),  which is the
online  counterpart  to  Computer  Games  Magazine;  and our Chips & Bits,  Inc.
(www.chipsbits.com)  games  distribution  company.  Each of our games properties
specializes in the games business by delivering  games  information  and selling
games in the United States and abroad.  Management  of the Company  continues to
actively  explore a number of strategic  alternatives for its online and offline
games properties, including continuing to operate the properties, acquisition or
development  of  complementary  products,  or  selling  some or all of the games
properties.  Our newly created VoIP telephony  services division includes Direct
Partner Telecom,  Inc.  ("DPT"),  an international  licensed  telecommunications
carrier engaged in the purchase and resale of  telecommunications  services over
the  Internet,  and our new retail  VoIP  service  offering,  voiceglo.  DPT was
acquired on May 28, 2003,  in exchange  for  1,375,000  shares of the  Company's
common  stock and the  issuance  of warrants  to acquire  500,000  shares of the
Company's common stock.

As of September 30, 2003, our revenues were derived principally from the sale of
print  advertisements  under  short-term  contracts  in  our  games  information
magazine  Computer Games;  through the sale of video games and related  products
through our games distribution  business Chips & Bits, Inc.; through the sale of
our games information  magazine through newsstands and  subscriptions;  and from
the sale or resale of VoIP telephony services.

On July 2, 2003,  theglobe.com,  inc.  completed  a private  offering of a newly
created  series  of  preferred  stock  known  as  the  "Series  G  Automatically
Converting  Preferred  Stock"  ("Series G  Preferred  Stock")  for an  aggregate
purchase price of  approximately  $8.7 million.  In accordance with the terms of
such Preferred  Stock, the Series G Preferred shares converted into common stock
at $0.50 per share (or an aggregate of  approximately  17.4 million shares) upon
the filing of an amendment to the  Company's  certificate  of  incorporation  to
increase  its  authorized  shares of Common  Stock  from  100,000,000  shares to
200,000,000 shares. Such an amendment was filed on July 29, 2003. Investors also
received  warrants to acquire  approximately 3.5 million shares of common stock.
The warrants are  exercisable for a period of five years at an exercise price of
$1.39 per common share.  The purpose of the Private  Offering was to raise funds
for use  primarily in the Company's  planned  voiceglo  business,  including the
deployment of networks,  website  development,  marketing,  and limited  capital
infrastructure  expenditures and working  capital.  Proceeds may also be used in
connection  with  theglobe's  other  existing  or  future  business  operations.
Pursuant  to the terms of the  Private  Offering  the  Company is  contractually
obligated,  subject to certain  limitations,  to register  the  securities  upon
demand anytime commencing one year after the sale of the securities.

On May 22, 2003,  E&C Capital  Partners,  a privately  held  investment  holding
company owned by our Chairman and Chief Executive Officer,  Michael S. Egan, and
our President,  Edward A. Cespedes,  together with certain affiliates of Michael
S. Egan,  entered into a Note Purchase  Agreement  with the Company  pursuant to
which they acquired  convertible  promissory notes (the "Convertible  Notes") in
the  aggregate  principal  amount  of  $1,750,000.  The  Convertible  Notes  are
convertible at anytime into a maximum of approximately  19,444,000 shares of the
Company's  common  stock at a blended rate of $0.09 per share.  The  Convertible
Notes  have a one year  maturity,  which may be  extended  at the  option of the
holders of the  Convertible  Notes for periods  aggregating  two years,  and are
secured  by a pledge of  substantially  all of the  assets of the  Company.  The
Convertible  Notes bear  interest at the rate of ten percent per annum,  payable
semi-annually.  Effective  October 3, 2003, the holders of the Convertible Notes
waived the right to receive accrued  interest payable in shares of the Company's
common stock.  Additionally,  each of the holders of the  Convertible  Notes has
agreed to defer receipt of interest until June 1, 2004.

In  addition,  E&C Capital  Partners  was issued a warrant  (the  "Warrant")  to
acquire  3,888,889  shares of the Company's common stock at an exercise price of
$0.15 per share.  The  Warrant is  exercisable  at any time on or before May 22,
2013. The conversion  prices of the Convertible  Notes and the exercise price of
the  Warrant,  together  with the  number of shares  for  which the  Warrant  is
exercisable  is subject to adjustment  upon the  occurrence  of certain  events,
including  downward  adjustment  on a  weighted-average  basis in the  event the
Company  should  issue  securities  in the future at a purchase  price below the
respective  conversion  prices and exercise price of the  Convertible  Notes and
Warrant.



                                       13
<PAGE>

On March 28,  2003,  E&C  Capital  Partners  signed a Preferred  Stock  Purchase
Agreement  to provide  new  financing  in the  amount of  $500,000  through  the
purchase  of  a  new  series  of  preferred  securities  (the  "Preferred  Stock
Investment").  Pursuant to the Preferred Stock Purchase  Agreement,  E&C Capital
Partners  received  333,333 shares of Series F Preferred Stock  convertible into
shares  of the  Company's  Common  Stock  at a price  of $0.03  per  share.  The
conversion price is subject to adjustment upon the occurrence of certain events,
including  downward  adjustment  on a  weighted-average  basis in the  event the
Company should issue  securities at a purchase  price below $0.03 per share.  If
fully converted,  and without regard to the anti-dilutive  adjustment mechanisms
applicable  to the Series F  Preferred  Stock,  an  aggregate  of  approximately
16,667,000 shares of Common Stock could be issued.  The Series F Preferred Stock
has a liquidation preference of $1.50 per share, will pay a dividend at the rate
of 8% per annum and entitles the holder to vote on an "as-converted"  basis with
the holders of Common Stock.  In addition,  as part of the $500,000  investment,
E&C Capital  Partners  received  warrants to  purchase  approximately  3,333,000
shares of  theglobe.com  Common Stock at an exercise  price of $0.125 per share.
The exercise price of the warrants, together with the number of shares for which
the warrants are  exercisable  is subject to adjustment  upon the  occurrence of
certain events.  The warrants are exercisable at any time on or before March 28,
2013. E&C Capital Partners is entitled to certain demand  registration rights in
connection with the Convertible Note and Preferred Stock Investments.

On February  25,  2003,  the Company  entered  into a Loan and  Purchase  Option
Agreement with a development stage Internet related business venture pursuant to
which  it  agreed  to  fund,  in the form of a loan,  at the  discretion  of the
Company, the venture's operating expenses and obtained the option to acquire all
of the  outstanding  capital  stock of the venture in exchange  for, when and if
exercised,  $40,000  in cash  and the  issuance  of an  aggregate  of  2,000,000
unregistered  restricted shares of theglobe.com's  common stock. As of September
30, 2003, $375,000 has been advanced to this venture.  Due to the uncertainty of
collectibility of this investment,  as it is to a development stage business, we
have set up a reserve for all of the investment except the $40,000  attributable
to the acquisition should we exercise our option.

On November 14, 2002, we acquired certain VoIP assets. Our plans regarding these
VoIP assets are described below. We issued 1,750,000  warrants to acquire shares
of our Common Stock in  conjunction  with the closing of this  acquisition.  The
Company also issued  425,000  warrants to acquire shares of Common Stock as part
of an earn-out arrangement. These warrants are held in escrow by the Company and
will only be released upon attainment of certain performance targets.

As a result of the  issuance  of the  Series F  Preferred  Stock,  the  Series G
Automatically   Converting  Preferred  Stock,  the  Convertible  Notes  and  the
associated warrants at their respective conversion and exercise prices,  certain
anti-dilution  provisions  applicable  to  previously  outstanding  warrants  to
acquire  approximately  4,103,000  shares  of  theglobe.com  common  stock  were
triggered.  As a result,  the  exercise  price of the  warrants was lowered from
approximately  $1.39 to $0.66 per share and the number of shares  issuable  upon
exercise was  proportionally  increased from  approximately  4,103,000 shares to
6,836,000 shares.  As of September 30, 2003,  approximately 95% of such warrants
were beneficially owned by Michael S. Egan.

                                Our VoIP Business

During the third quarter of 2003,  theglobe.com  entered the  telecommunications
business with the limited launch of its "voiceglo" brand phone system based upon
"Voice  over the  Internet  Protocol"  or  "VoIP."  The  Company's  longer  term
objective is to become a leading provider of feature-rich,  voice communications
products and services delivered over the Internet.  The Company's acquisition of
VoIP assets in November 2002 and its acquisition of DPT in May 2003 have enabled
the Company to establish the  foundation  for its VoIP  telephone  business.  At
present,  the Company offers various  products using the "voiceglo"  brand name.
The  products  are  intended to allow  consumers  and  business  enterprises  to
communicate using VoIP for significantly reduced pricing compared to traditional
telephony  networks.  We  offer  traditional  telephony  features  with our VoIP
services,  such as  voicemail,  caller id, call  forwarding,  and call  waiting.
Unlike   traditional  phone  service  networks,   our  voiceglo  products  allow
subscribers  to use  their  numbers  remotely.  In  addition,  we are  presently
developing other incremental  services which are not currently  supported by the
public switched telephone network (such as voice to email services).

Our voiceglo service is intended to be a full-featured, full-service alternative
to  the  public  switched  telephone  network  (PSTN)  available  to  homes  and
enterprises  with either  broadband or dial-up (56K  minimum)  Internet  access.
Subscribers are able to use voiceglo service similar to how they would use their
traditional  telephone  service.  Calls made and  received  by  subscribers  are
carried over their Internet  connections  and  interconnect  with the PSTN using
voiceglo's  call  signaling  technology.  The  Company  has  applied  for patent
protection for this technology, however, we cannot predict whether a patent will
be issued for this technology. Subscribers are issued traditional phone numbers,
or  alternatively,  subscribers  may "port" or  transfer  their  existing  phone
numbers to the voiceglo  service.  The  Company's  remote  local number  service
allows  subscribers  to choose  phone  numbers  from any area codes  serviced by
voiceglo,  allowing  customers  to keep phone  numbers  "for life," even if they
move.  It will also  allow  them a local  presence  in areas  where  they do not
reside.

The  voiceglo  service  is  designed  to be easy to use and  mobile.  As part of
entering into a monthly service contract, we offer at no-charge to subscribers a
USB  handset (a simple  phone that  plugs into a personal  computer's  USB port)
which can only be operated using the voiceglo service. Additionally, the service
can be used with a personal computer's  microphone and speakers,  with any wi-fi
enabled  device  equipped  with a speaker and  microphone,  or with  traditional
phones with use of an adapter developed by the Company. Our subscribers are able
to log into their  service  from any  Internet  connection  in the world to make
calls to their local area code and receive  calls made to their  voiceglo  phone
numbers.

All  calls  to and  between  voiceglo  subscribers  are  free  because  they are
delivered over the Internet.  Calls placed by voiceglo subscribers to the public
switched  telephone  network  in the  United  States  and Canada are either at a
competitive  low per  minute  rate or are  "free"  depending  upon the  voiceglo
product  offering  selected  by the  subscriber.  International  calling is also
priced at competitive rates.




                                       14
<PAGE>

Our VoIP  products  are  subject to  continuing  development  by the Company and
management continues to evaluate its business plans for these proposed services.
As discussed further in the "Liquidity and Capital  Resources" section below, we
expect to utilize  substantial capital in fully launching and expanding our VoIP
operations and expect we may need to raise  additional  capital to fully exploit
our business plans for these  services and meet ongoing  operational  needs.  In
addition, there are a number of significant risks to entry into, and the conduct
of business  in,  this  market,  including  current  and  proposed  governmental
regulation,  potential taxation of services and many of the risks detailed below
under "Risk Factors."

                              RESULTS OF OPERATIONS

Three  Months  Ended  September  30,  2003  Compared to the Three  Months  Ended
September 30, 2002

NET REVENUE.  Net revenue  totaled $1.7 million for the third quarter of 2003 as
compared to $2.3 million in the same quarter of the prior year. The $0.5 million
decline  in total  net  revenue  was  primarily  attributable  to  decreases  in
advertising,  electronic commerce and other net revenue, partially offset by net
revenue generated by our VoIP telephony services division.

Advertising revenue from the sale of print  advertisements in our games magazine
was $0.7  million,  or 38%,  of total net  revenue  for the three  months  ended
September  30, 2003 versus  $0.8  million,  or 36%, of total net revenue for the
three months ended September 30, 2002. Barter  advertising  revenue  represented
approximately  2% and 1% of total net revenue for the third  quarter of 2003 and
2002, respectively.

Electronic  commerce and other net revenue is principally  comprised of sales of
video games and related  products  through  Chips & Bits,  Inc. and sales of the
Company's Computer Games magazine through  newsstands and  subscriptions.  Sales
through  the online  store  accounted  for $0.3  million,  or 20%,  of total net
revenue for the third  quarter of 2003 as compared to $0.7  million,  or 29%, of
total net revenue for the same period of 2002.  The $0.4  million  decrease  was
primarily  the result of advances in and  releases of console and online  games,
which  traditionally  have less sales loyalty to our online store,  coupled with
the  continued  decline  in the number of major PC game  releases,  on which our
online store relies for the majority of sales.  Net revenue  attributable to the
sale of our games  information  magazine was $0.4 million,  or 25%, of total net
revenue for the third  quarter of 2003 as compared to $0.8  million,  or 35%, of
total net revenue for the third quarter of 2002. The decline in net revenue from
the sale of our games  magazine  as  compared  to the third  quarter of 2002 was
primarily the result of a decrease in the circulation base of our games magazine
and a $0.2 million write-down of newsstand receivables.

Net revenue from  telephony  services  totaled $0.3 million for the three months
ended  September 30, 2003.  As part of the Company's  strategy to enter the VoIP
business,  the Company acquired DPT on May 28, 2003, an  international  licensed
telecommunications   carrier   engaged   in   the   purchase   and   resale   of
telecommunications services over the Internet. Telephony services net revenue is
derived  principally  from the  charges  to  customers  for  international  call
completion  and  is  dependent  on  the  volume  of  minutes  utilized.  Revenue
attributable to the launch of the Company's  voiceglo products  represented less
than 5% of total  telephony  services  net revenue  during the third  quarter of
2003. To date,  the Company has focused its efforts on continuing to develop its
voiceglo product line,  including  features which are available with traditional
phone  service  and   continuing   to  formulate  its  marketing   strategy  and
distribution network for such products.  Thus, the Company has limited its sales
and marketing  efforts in  anticipation  of a "national"  launch of its voiceglo
products in the fourth quarter of 2003.

COST OF PRODUCTS AND PUBLICATIONS  SOLD. Cost of products and publications  sold
related to our games division consists primarily of Internet connection charges,
personnel  costs,  depreciation  and  maintenance  costs of  website  equipment,
printing  costs of our  games  magazine  and the costs of  merchandise  sold and
shipping  fees in  connection  with  our  online  store.  Cost of  products  and
publications sold by our games division totaled $0.7 million and $1.2 million in
the third quarter of 2003 and 2002, respectively.  Gross margin of the Company's
games division  approximated  48% for both the three months ended  September 30,
2003 and 2002.  The remaining $0.1 million of cost of products sold for the 2003
third quarter  consisted  primarily of customer  equipment  costs related to the
sale of the Company's voiceglo service launched during mid-August 2003.

DATA  COMMUNICATIONS,  TELECOM AND NETWORK  OPERATIONS.  This  expense  category
relates to the  Company's  entry  into the VoIP  business  in 2003 and  includes
termination  and circuit  costs  related to the  Company's  wholesale  telephony
services  business  marketed by DPT and the Company's retail telephony  services
business marketed under the voiceglo brand name.  Personnel and consulting costs
incurred in support of the  Company's  Internet  telecommunications  network are
also included in this expense category.

SALES AND MARKETING.  Sales and marketing expenses consist primarily of salaries
and related expenses of sales and marketing personnel, commissions,  advertising
and marketing  costs,  public  relations  expenses,  promotional  activities and
barter  expenses.  Sales and  marketing  expenses  were $0.8 million in both the
third  quarters  of 2003 and 2002,  respectively.  A decline of $0.4  million in
sales and  marketing  expenses  incurred by the  Company's  games  division  was
entirely  offset by $0.4  million of sales and  marketing  expenses  of the VoIP
telephony services division.  Sales and marketing expenses of the games division
represented  approximately 28% and 34% of total net revenue  attributable to the
games   division's   operations   for  the  third  quarter  of  2003  and  2002,
respectively.  Costs incurred in  establishing  an  independent  sales force and
staffing  internally  were  the  principal  components  of sales  and  marketing
expenses of the VoIP telephony  services  operations during the third quarter of
2003.

PRODUCT  DEVELOPMENT.  Product development expenses include salaries and related
personnel  costs;  expenses  incurred in  connection  with website  development,
testing and upgrades;  editorial and content  costs;  and costs  incurred in the
development of our VoIP product,  voiceglo.  Product  development  expenses were
$0.2 million in the third  quarter of 2003  compared to $0.1 million in the same
quarter of the prior year. The increase was  attributable to personnel costs and
consulting  expenses  related to the development of our VoIP telephony  products
and services.



                                       15
<PAGE>

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist
primarily  of  salaries  and  related  personnel  costs  for  general  corporate
functions including finance,  human resources and facilities,  outside legal and
professional  fees,  directors  and officers  insurance,  bad debt  expenses and
general corporate overhead costs. General and administrative  expenses were $1.6
million for the three  months  ended  September  30,  2003,  as compared to $0.7
million for the same quarter of 2002.  Increases in headcount  and the resulting
personnel  expenses,  as well  as  other  general  and  administrative  expenses
directly  attributable  to the  Company's new line of business,  VoIP  telephony
services,  were the principal factors  contributing to the $1.0 million increase
in total general and administrative expenses.

INTEREST INCOME (EXPENSE),  NET. Third quarter 2003 net interest expense of $0.1
million was principally attributable to the amortization of the discount related
to the $1,750,000  Convertible Notes issued in May 2003 and the related interest
accruals.

OTHER INCOME (EXPENSE),  NET. Other expense for the three months ended September
30, 2003, principally represents additional reserves against amounts loaned to a
development stage Internet venture by the Company.

INCOME TAXES.  No tax benefit was recorded for the three months ended  September
30, 2003. Due to the  uncertainty  surrounding  the timing or realization of the
benefits of our net operating  loss  carryforwards  in future  periods,  we have
recorded a 100% valuation allowance against our otherwise  recognizable deferred
tax  assets.   At  December  31,  2002,  the  Company  had  net  operating  loss
carryforwards  available for U.S. and foreign tax purposes of approximately $134
million.  These  carryforwards  expire  through 2022. 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 the
change in our ownership  interests in the third quarter of 1997 and May 1999, as
defined in the Internal Revenue Code of 1986, as amended,  future utilization of
our net operating  loss  carryforwards  prior to the change of ownership will be
subject to certain limitations or annual restrictions.  Additionally, any future
ownership  change  could  further  limit or  eliminate  the ability to use these
carryforwards.

Nine Months Ended September 30, 2003 Compared to the Nine Months Ended September
30, 2002

NET  REVENUE.  Net  revenue  totaled  $4.8  million  for the nine  months  ended
September 30, 2003 compared to $7.2 million for the nine months ended  September
30, 2002.  The $2.4 million  decrease in net revenue in  comparison to the first
nine months of 2002 was  principally  the result of declines of $1.3  million in
sales of games  products by Chips and Bits,  Inc.,  $1.2 million in sales of the
computer  games  magazine  and $0.4 million in print  advertisements,  partially
offset by the $0.5 million in telephony services net revenue.  In mid-2002,  the
Company made a strategic  decision to place less reliance on agency contracts to
obtain  subscribers.  The  result  was a lower  circulation  base for our  games
magazine with a lower cost structure.  As advertising rates are directly related
to the circulation base of the magazine,  this has resulted in lower advertising
revenue. Revenue from barter transactions represented  approximately 2% of total
net revenue in the first nine months of 2003 as compared to  approximately 1% of
total net revenue in the same period of the prior year.

COST OF PRODUCTS AND PUBLICATIONS  SOLD. Cost of products and publications  sold
was $2.4 million and $4.4 million for the nine months ended  September  30, 2003
and 2002,  respectively.  The $2.0  million  decrease  in cost of  products  and
publications  sold  as  compared  to  the  same  period  in  2002  was  directly
attributable  to the lower level of revenue  generated from the sale of computer
games, from the sale of print  advertisements in the computer games magazine and
from  subscription  and newsstand  sales of the computer  games  magazine in the
first nine months of 2003,  partially  offset by $0.1  million in product  costs
attributable  to the  sale of VoIP  telephony  services.  Gross  margins  of the
Company's  games division were 48% and 41% for the first nine months of 2003 and
2002,  respectively.  The  increase  in gross  margins  of the  Company's  games
division was primarily the result of a shift in the mix of net revenues to print
advertising which represented 35% of total net revenue for the first nine months
of 2003 versus 29% for the same period of the prior year.

DATA COMMUNICATIONS, TELECOM AND NETWORK OPERATIONS. As stated in the comparison
of the three months ended  September 30, 2003 compared to the three months ended
September 30, 2002, the $0.7 million in data communications, telecom and network
operations  expenses  include  termination  and  circuit  costs  related  to the
Company's entry into the wholesale  telephony  services  business and the retail
VoIP  telephony  services  business,  marketed under the voiceglo brand name, as
well as personnel  and  consulting  costs  incurred in support of the  Company's
Internet  telecommunications  network.  The Company began its VoIP operations in
2003.

SALES AND MARKETING.  Sales and marketing  expenses totaled $2.0 million for the
first nine  months of 2003,  a decline of $0.9  million,  or 31%,  from the $2.9
million  reported  for the first nine months of 2002.  The 40%  reduction in net
revenue  generated by the Company's  games  division in the first nine months of
2003 as compared to the same  period of the prior  year,  and the  corresponding
decreases  in  commissions  expense and agency  subscription  expense,  were the
principal factors  contributing to the decrease in sales and marketing expenses.
Partially  offsetting the decreases in sales and marketing expenses of the games
division were $0.5 million in costs incurred by the Company's telephony services
operations in staffing an independent sales force and internal support staff.

PRODUCT  DEVELOPMENT.  Product development expenses totaled $0.6 million for the
nine months  ended  September  30, 2003 as compared to $0.5 million for the same
period of the prior year. A $0.1 million decline in website, editorial,  content
and other  development  costs incurred by the Company's  games division was more
than offset by the $0.2 million in consulting and personnel costs related to the
development of our VoIP telephony products and services.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses of $3.1
million for the first nine months of 2003  increased  $0.6 million from the $2.5
million  reported for the same period of 2002.  Increases  in headcount  and the
resulting  personnel  expenses,  as well as  other  general  and  administrative
expenses directly attributable to the Company's VoIP telephony services division
were  principally  responsible  for the  increase  in this  expense  category as
compared to the first nine months of 2002.



                                       16
<PAGE>

INTEREST INCOME  (EXPENSE),  NET.  Non-cash interest expense of $1.5 million was
recorded in the 2003 second quarter related to the beneficial conversion feature
of the  $1,750,000  in  Convertible  Notes issued on May 22,  2003.  The expense
resulted as the Convertible  Notes were  convertible  into our common stock at a
price below the fair market value of our common stock (for accounting purposes),
based on the closing  price of our common stock as reflected on the OTCBB on the
issuance date of the notes. In addition, the warrant to acquire 3,888,889 shares
of our common stock issued to one of the note holders was exercisable at a price
below the fair market value of our common stock (for accounting purposes), based
on the closing  price of our common  stock as reflected on the OTCBB on the date
of issuance. The value assigned to the warrant was recorded as a discount to the
face value of the Convertible  Notes and is being amortized to interest  expense
over the term of the Convertible Notes.  Discount  amortization of approximately
$0.1 million was included in interest expense, net, during the first nine months
of 2003.

OTHER INCOME (EXPENSE), NET. Other expense, net of $0.3 million was reported for
the first nine months of 2003 as compared to other  income,  net of $0.4 million
for the same period of the prior year.  Other expense in 2003 includes  reserves
against  the  amounts  loaned by the  Company to a  development  stage  Internet
related business  venture  totaling $0.3 million.  Other income in 2002 included
$0.3 million in favorable vendor  settlements,  as well as the $0.1 million gain
on the sale of Happy Puppy assets.

INCOME  TAXES.  As was the case in the third quarter of 2003, no tax benefit was
recorded  for the first  nine  months of 2003 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.

                         LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW ITEMS. As of September 30, 2003, we had approximately  $1.3 million in
cash and cash  equivalents  as compared to $0.7 million as of December 31, 2002.
Net cash used in operating activities was $4.2 million and $2.0 million, for the
nine   months   ended   September   30,   2003  and  2002,   respectively.   The
period-to-period  increase  in net cash used in  operating  activities  resulted
primarily from an increase in our net operating losses,  partially offset by the
favorable impact of non-cash  interest expense recorded in the first nine months
of 2003 as a result of the beneficial conversion feature of the $1.75 million in
Convertible  Notes and associated  warrants issued in May 2003, as well as other
non-cash charges and gains recorded in 2003 and 2002.

Net cash of $5.6 million was used in investing  activities during the first nine
months of 2003.  During the third quarter of 2003, the Company invested a net of
$4.5 million in marketable  securities  as a result of the proceeds  received in
connection  with  the  issuance  of  the  Series  G  Preferred  Stock  discussed
previously. The Company incurred $0.8 million in capital expenditures during the
first  nine  months  of  2003,  primarily  within  the VoIP  telephony  services
division.  Additionally,  in  February  2003,  the  Company  committed  to  fund
operating  expenses of a  development  stage  Internet  venture at the Company's
discretion in the form of a loan. As of September 30, 2003,  approximately  $0.4
million has been  advanced to the venture.  Partially  offsetting  these uses of
funds in the first nine months of 2003 was the $0.1 million in net cash acquired
upon the May 2003 acquisition of DPT. The purchase price of DPT consisted of the
issuance of 1,375,000  shares of the Company's  common stock and the issuance of
warrants to acquire 500,000 shares of the Company's  common stock. An additional
2,750,000  warrants may be issued if certain  performance  or other criteria are
satisfied.  Net cash  provided  by  investing  activities  during the first nine
months  of 2002  was $0.2  million  principally  resulting  from the sale of the
assets of the Happy Puppy website.

Net cash provided by financing  activities  was $10.4 million for the first nine
months  of  2003.  As  discussed  below  and  in  the  Notes  to  the  condensed
consolidated  financial statements,  the Company issued $0.5 million in Series F
Convertible Preferred Stock in March 2003 and $1.75 million of Convertible Notes
in May 2003, and approximately $8.6 million,  net of offering costs, of Series G
Preferred Stock and associated warrants in July 2003.  Immediately after the May
2003  closing of the DPT  acquisition,  the Company paid $0.5 million in cash to
the former shareholders of DPT in repayment of certain loans which they extended
to DPT.

CAPITAL TRANSACTIONS.  On July 2, 2003,  theglobe.com,  inc. completed a private
offering  of  Series  G  Preferred  Stock  for an  aggregate  purchase  price of
approximately  $8.7  million.  In  accordance  with the terms of such  Preferred
stock,  the Series G Preferred  shares  converted  into common stock at $.50 per
share (or an aggregate of approximately  17.4 million shares) upon the filing of
an amendment  to the  Company's  certificate  of  incorporation  to increase its
authorized shares of Common Stock from 100,000,000 shares to 200,000,000 shares.
Such an amendment was filed on July 29, 2003.  Investors also received  warrants
to acquire  approximately  3.5 million shares of common stock.  The warrants are
exercisable  for a period of five years at an exercise price of $1.39 per common
share. The exercise price of the warrants,  together with the number of warrants
issuable upon exercise, are subject to adjustment upon the occurrence of certain
events.  The purpose of the Series G Preferred Stock offering was to raise funds
for use primarily in the Company's VoIP telephony services  business,  including
the deployment of networks, website development,  marketing, and limited capital
infrastructure  expenditures and working  capital.  Proceeds may also be used in
connection  with  theglobe's  other  existing  or  future  business  operations.
Pursuant  to the terms of the Series G  Offering  the  Company is  contractually
obligated,  subject to certain  limitations,  to register  the  securities  upon
demand anytime commencing one year after the sale of the securities.

On May 22,  2003,  E&C Capital  Partners  together  with certain  affiliates  of
Michael  S.  Egan,  entered  into a Note  Purchase  Agreement  with the  Company
pursuant to which they acquired $1,750,000 of Convertible Notes. The Convertible
Notes are  convertible  at anytime  into a maximum of  approximately  19,444,000
shares of the Company's  common stock at a blended rate of $0.09 per share.  The
Convertible Notes have a one year maturity,  which may be extended at the option
of the holders of the Convertible  Notes for periods  aggregating two years, and


                                       17
<PAGE>

are secured by a pledge of substantially  all of the assets of the Company.  The
Convertible  Notes bear  interest at the rate of ten percent per annum,  payable
semi-annually.  Effective  October 3, 2003, the holders of the Convertible Notes
waived  the  option  of  receiving  accrued  interest  payable  in shares of the
Company's  common stock.  Additionally,  each of the holders of the  Convertible
Notes has agreed to defer receipt of interest until June 1, 2004.

In  addition,  E&C Capital  Partners  was issued a Warrant to acquire  3,888,889
shares of the  Company's  common stock at an exercise  price of $0.15 per share.
The Warrant is exercisable at any time on or before May 22, 2013. The conversion
prices of the Convertible Notes and the exercise price of the Warrant,  together
with the number of shares for which the  Warrant  is  exercisable  is subject to
adjustment upon the occurrence of certain events,  including downward adjustment
on a weighted-average  basis in the event the Company should issue securities in
the  future at a  purchase  price  below the  respective  conversion  prices and
exercise price of the Convertible Notes and Warrant.

On March 28,  2003,  E&C  Capital  Partners  signed a Preferred  Stock  Purchase
Agreement and other related  documentation  pertaining to a $500,000  investment
via the purchase of shares of a new Series F Preferred Stock of theglobe.com and
closed on the investment.  Pursuant to the Preferred  Stock Purchase  Agreement,
E&C  Capital  Partners  received  333,333  shares  of Series F  Preferred  Stock
convertible  into shares of the  Company's  Common Stock at a price of $0.03 per
share.  The  conversion  price is subject to adjustment  upon the  occurrence of
certain events, including downward adjustment on a weighted-average basis in the
event the Company  should issue  securities at a purchase  price below $0.03 per
share. If fully converted,  and without regard to the  anti-dilutive  adjustment
mechanisms  applicable  to  the  Series  F  Preferred  Stock,  an  aggregate  of
approximately  16.7 million shares of Common Stock could be issued. The Series F
Preferred  Stock has a  liquidation  preference  of $1.50 per share,  will pay a
dividend  at the rate of 8% per  annum  and  entitles  the  holder to vote on an
"as-converted"  basis with the holders of Common Stock. In addition,  as part of
the $500,000  investment,  E&C Capital  Partners  received  warrants to purchase
approximately  3.3 million  shares of  theglobe.com  Common Stock at an exercise
price of $0.125 per share. The warrants are exercisable at any time on or before
March 28, 2013 and both the warrants'  exercise  price and number are subject to
adjustment.  E&C Capital  Partners is  entitled to certain  demand  registration
rights in connection with its investment in the Convertible Notes and the Series
F Preferred Stock.

As a result of the  preferential  conversion  features of the Series G Preferred
Stock and the  Series F  Preferred  Stock,  a total of  $8,120,000  in  non-cash
dividends to preferred shareholders were recognized during the nine months ended
September 30, 2003.

FUTURE  CAPITAL  NEEDS.  As of  September  30,  2003,  our sources of  liquidity
consisted  of $1.3  million  of cash and cash  equivalents  and $4.4  million of
marketable securities.  The Company has limited operating capital and no current
access to credit  facilities.  We have  incurred  substantial  losses  since our
inception  and we  expect  that we will  continue  to incur net  losses  for the
foreseeable  future. In order to meet our projected ongoing  operational  needs,
including fully launching and expanding our VoIP operations,  we believe we will
require additional working capital.  Our working capital  requirements depend on
numerous  factors,  including  market  acceptance of our  services,  the capital
required to maintain  our websites and  properties,  the  resources we devote to
marketing  and  selling  our  services,  our entry into and  development  of new
business  lines,  including our  "voiceglo"  telephony  services,  and our brand
promotions and other factors.

We expect that we may need to raise additional  capital in order to successfully
implement our planned  business  model. We will seek to raise  additional  funds
through  asset  sales,  bank  borrowings,  equity or debt  financing,  strategic
relationships  or other  arrangements.  Our ability to raise capital is limited,
particularly with respect to bank borrowings or other traditional  institutional
lenders, and any financing that could be obtained would probably dilute existing
shareholders  significantly.  We cannot assure you that any  financing  obtained
will be available on  reasonable  terms,  or at all,  when and if required.  Our
failure to raise  additional  capital when needed would have a material  adverse
effect on our business, results of operations and financial condition.

In addition, we received a report from our independent accountants,  relating to
our December 31, 2002 audited  financial  statements  containing an  explanatory
paragraph  stating that our recurring losses from operations since inception and
requirement for additional  financing raise  substantial doubt about our ability
to continue as a going concern.  Management and the Board of Directors  continue
to  explore  a number  of  strategic  alternatives  and are also  continuing  to
identify and implement  internal actions to improve the Company's  liquidity and
financial  performance.  These alternatives may include selling assets, which in
any such case could  result in  significant  changes in our  business  plan,  or
entering into  additional  new or different  lines of business,  such as our new
VoIP telephony business.

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. The trading volume of our
shares has dramatically  declined since the delisting.  In addition,  we are now
subject to a Rule promulgated by the Securities and Exchange Commission that, if
we fail to meet criteria set forth in such Rule,  various practice  requirements
are  imposed  on  broker-dealers  who sell  securities  governed  by the Rule to
persons other than  established  customers and accredited  investors.  For these
types  of  transactions,  the  broker-dealer  must  make a  special  suitability
determination  for the  purchaser  and have  received  the  purchaser's  written
consent to the  transactions  prior to sale.  Consequently,  the Rule may have a
materially  adverse  effect  on  the  ability  of  broker-dealers  to  sell  the
securities,  which may materially affect the ability of shareholders to sell the
securities  in the  secondary  market.  Consequently,  it has also  made it more
difficult for us to raise additional capital,  although the Company has had some
success in offering its  securities  as  consideration  for the  acquisition  of
various business  opportunities  or assets.  We will also incur additional costs
under state blue sky laws if we sell equity due to our delisting.


                                       18
<PAGE>

                              EFFECTS OF INFLATION

Due to  relatively  low levels of inflation in 2003 and 2002,  inflation has not
had a significant effect on our results of operations since inception.

      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 revenues  and expenses
during the  reporting  period.  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
customer receivables,  impairment of intangible assets,  restructuring  reserves
and  income tax  recognition  of  deferred  tax  items.  Our policy and  related
procedures  for  revenue  recognition,  valuation  of customer  receivables  and
goodwill and other intangible assets are summarized below.

                               REVENUE RECOGNITION

The  Company's  revenues  were  derived  principally  from  the  sale  of  print
advertisements  under  short-term  contracts in our games  information  magazine
Computer  Games,  through  the sale of our games  information  magazine  through
newsstands and subscriptions;  from the sale of video games and related products
through  our  online  store  Chips & Bits;  and from the sale of VoIP  telephony
services.  There is no certainty  that events  beyond  anyone's  control such as
economic  downturns or significant  decreases in the demand for our services and
products will not occur and accordingly, cause significant decreases in revenue.

The  Company's  games  division  participates  in  barter  transactions.  Barter
revenues and expenses are recorded at the fair market value of services provided
or  received,  whichever  is more  readily  determinable  in the  circumstances.
Revenue from barter  transactions is recognized as income when advertisements or
other products are delivered by the Company.  Barter expense is recognized  when
the Company's  advertisements  are run on other companies' web sites or in their
magazines,  which  typically  occurs within one to six months from the period in
which the related barter revenue is recognized.

Advertising.  Advertising  revenues  for  the  games  information  magazine  are
recognized at the on-sale date of the magazine.

Electronic  Commerce and Other.  Sales from the online store are  recognized  as
revenue  when the  product  is shipped to the  customer.  Freight  out costs are
included  in net  sales  and have  not been  significant  to date.  The  Company
provides  an  allowance  for  merchandise  sold  through its online  store.  The
allowance provided to date has not been significant.

Newsstand sales of the games information  magazine are recognized at the on-sale
date of the magazine, net of provisions for estimated returns. Subscriptions are
recorded as deferred  revenue when  initially  received and recognized as income
pro ratably over the subscription term. Revenues from the Company's share of the
proceeds from its e-commerce  partners' sales are recognized  upon  notification
from its partners of sales attributable to the Company's sites.

VoIP Telephony Services. VoIP telephony services revenue represents fees charged
to customers for voice  services and is recognized  based on minutes of customer
usage or as services are  provided.  The Company  records  payments  received in
advance for prepaid  services as deferred revenue until the related services are
provided.

                        VALUATION OF CUSTOMER RECEIVABLES

Provisions for allowance for doubtful accounts are made based on historical loss
experience  adjusted  for  specific  credit  risks.  Measurement  of such losses
requires  consideration of the company's  historical loss experience,  judgments
about  customer  credit  risk,  and the  need to  adjust  for  current  economic
conditions.

                      GOODWILL AND OTHER INTANGIBLE ASSETS

In June 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
141,  "Business  Combinations" and SFAS No. 142,  "Goodwill and Other Intangible
Assets."  SFAS No. 141 requires  that certain  acquired  intangible  assets in a
business  combination be recognized as assets  separate from goodwill.  SFAS No.
142 requires that goodwill and other intangibles with indefinite lives should no
longer be amortized,  but rather tested for impairment annually or on an interim
basis if events or  circumstances  indicate that the fair value of the asset has
decreased below its carrying value.

We assess the impairment of goodwill and other identifiable intangibles whenever
events or changes in  circumstances  indicate that the carrying value may not be
recoverable.   Some  factors  we  consider  important  which  could  trigger  an
impairment review include the following:



                                       19
<PAGE>

         o        Significant under-performance relative to historical, expected
                  or projected future operating results;

         o        Significant  changes in the manner of our use of the  acquired
                  assets or the strategy for our overall business; and

         o        Significant negative industry or economic trends.

When we  determine  that the  carrying  value of goodwill  and other  identified
intangibles  may not be  recoverable,  we  measure  any  impairment  based  on a
projected  discounted  cash flow method using a discount rate  determined by our
management to be  commensurate  with the risk  inherent in our current  business
model.

                 IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments Hedging Activities." This statement amends and clarifies
accounting for derivative instruments,  including certain derivative instruments
embedded in other contracts,  and for hedging activities under SFAS No. 133. The
Company  believes  that the adoption of this  standard  will not have a material
impact on the Company's results of operations or financial position.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
affects  the  issuer's  accounting  for three  types of  freestanding  financial
instruments.  One type is  mandatorily  redeemable  shares,  which  the  issuing
company is obligated to buy back in exchange for cash or other assets.  A second
type,  which  includes  put  options and forward  purchase  contracts,  involves
instruments  that do or may require the issuer to buy back some of its shares in
exchange  for cash or other  assets.  The third type of  instrument  consists of
obligations  that can be settled  with shares,  the  monetary  value of which is
fixed,  tied solely or  predominantly  to a variable such as a market index,  or
varies  inversely with the value of the issuers'  shares.  SFAS No. 150 does not
apply to features embedded in a financial instrument that is not a derivative in
its entirety.  SFAS No. 150 also requires  disclosures about alternative ways of
settling the instruments and the capital structure of entities, whose shares are
mandatorily  redeemable.  Most of the guidance in SFAS No. 150 is effective  for
all  financial  instruments  entered into or modified  after May 31,  2003,  and
otherwise  is effective  from the start of the first  interim  period  beginning
after June 15, 2003.  The Company  believes  that the adoption of this  standard
will not have a  material  impact on the  Company's  results  of  operations  or
financial position.

                                  RISK FACTORS

In addition to the other  information  in this  report,  the  following  factors
should be carefully considered in evaluating our business and prospects.

FUTURE  ACQUISITIONS,  JOINT VENTURES OR STRATEGIC  TRANSACTIONS ENTAIL NUMEROUS
RISKS AND UNCERTAINTIES. WE INTEND TO ENTER NEW LINES OF BUSINESS.

We have begun to explore  entering  new  business  lines,  including  Voice over
Internet Protocol  ("VoIP")  telephony  services.  In November 2002, we acquired
certain  VoIP assets from an  entrepreneur  in exchange for a total of 2,175,000
warrants to purchase  our common  stock.  On May 28,  2003,  we acquired  Direct
Partner Telecom,  Inc.  ("DPT"),  an international  licensed  telecommunications
carrier  engaged in the purchase and resale of  telecommunication  services over
the Internet.  The purchase price consisted of 1,375,000  shares of theglobe.com
common  stock and  500,000  warrants  to  purchase  theglobe.com  common  stock,
together with the ability to earn an additional 2,750,000 warrants.  We may also
enter into new or different  lines of business,  as determined by management and
our Board of Directors.  The acquisitions of VoIP assets and DPT, as well as any
future  acquisitions or joint ventures could result,  and in some instances have
resulted, in numerous risks and uncertainties, including:

         o        potentially dilutive issuances of equity securities, which may
                  be issued at the time of the  transaction  or in the future if
                  certain  performance  or other criteria are met or not met, as
                  the case may be. These  securities  may be freely  tradable in
                  the  public  market or subject to  registration  rights  which
                  could require us to publicly register a large amount of Common
                  Stock, which could have a material adverse effect on our stock
                  price;

         o        large and immediate write-offs;

         o        significant  write-offs  if we  determine  that  the  business
                  acquisition does not fit or perform up to expectations;

         o        the   incurrence  of  debt  and   contingent   liabilities  or
                  amortization expenses related to goodwill and other intangible
                  assets;

         o        difficulties  in the  assimilation  of operations,  personnel,
                  technologies, products and information systems of the acquired
                  companies;

         o        the risks of entering a new or different line of business;

         o        regulatory  and tax  risks  relating  to the  new or  acquired
                  business;

         o        the risks of entering geographic and business markets in which
                  we have no or limited prior experience; and

         o        the risk  that the  acquired  business  will  not  perform  as
                  expected.



                                       20
<PAGE>

WE HAVE A HISTORY OF OPERATING LOSSES AND EXPECT TO CONTINUE TO INCUR LOSSES.

Since our  inception,  we have incurred net losses in each  quarter,  except the
fourth  quarter of 2002 where we had net income of  $11,000.  We expect  that we
will continue to incur net losses for the foreseeable  future. We had net losses
of approximately $2.6 million,  $40.6 million,  and $103.9 million for the years
ended December 31, 2002, 2001 and 2000,  respectively.  The principal  causes of
our losses are likely to continue to be:

         o        costs resulting from the operation of our businesses;

         o        costs relating to entering new business lines;

         o        failure to generate sufficient revenue; and

         o        general and administrative expenses.

Although we have  restructured  our  businesses,  we still expect to continue to
incur losses while we explore a number of strategic  alternatives for our online
and offline games  properties,  including  continuing to operate the properties,
acquisition or development of complementary products, selling some or all of the
properties or other changes to our business.

WE DEPEND ON THE  CONTINUED  GROWTH IN THE USE AND  COMMERCIAL  VIABILITY OF THE
INTERNET.

Our VoIP telephony  services  business and games  properties  are  substantially
dependent upon the continued growth in the general use of the Internet. The VoIP
business  is  also  dependent  on the  growth  in the  use of the  Internet  for
telephones,  personal  computers  and other  devices.  Internet  and  electronic
commerce growth may be inhibited for a number of reasons, including:

         o        inadequate network infrastructure;

         o        security and authentication concerns;

         o        ease of access;

         o        inconsistent quality of service;

         o        availability  of  cost-effective,  high-speed  service;  and

         o        bandwidth availability.

If web usage grows, the Internet  infrastructure  may not be able to support the
demands  placed on it by this  growth or its  performance  and  reliability  may
decline.  Web sites have experienced  interruptions in their service as a result
of  outages  and  other  delays   occurring   throughout  the  Internet  network
infrastructure.  If these outages or delays frequently occur in the future,  web
usage,  as well as usage of our  services,  could grow more  slowly or  decline.
Also, the Internet's commercial viability may be significantly hampered due to:

         o        delays in the  development  or adoption of new  operating  and
                  technical standards and performance  improvements  required to
                  handle  increased levels of activity;

         o        increased  government  regulation;

         o        potential  governmental  taxation  of  such  services;  and

         o        insufficient availability of telecommunications services which
                  could result in slower  response  times and  adversely  affect
                  usage of the Internet.

THE VOIP  MARKET IS  SUBJECT TO RAPID  TECHNOLOGICAL  CHANGE AND WE WILL NEED TO
DEPEND  ON NEW  PRODUCT  INTRODUCTION  AND  INNOVATIONS  IN ORDER TO  ESTABLISH,
MAINTAIN AND GROW OUR BUSINESS.

VoIP is an emerging  market that is  characterized  by rapid changes in customer
requirements,   frequent   introductions  of  new  and  enhanced  products,  and
continuing and rapid technological  advances.  To enter and compete successfully
in this emerging market, we must continually design, develop,  manufacture,  and
sell new and  enhanced  VoIP  products and  services  that provide  increasingly
higher  levels of  performance  and  reliability  at lower costs.  These new and
enhanced products must take advantage of technological advancements and changes,
and respond to new customer requirements. Our success in designing,  developing,
manufacturing,  and selling such  products and services will depend on a variety
of factors, including:

         o        the identification of market demand for new products;

         o        access to  sufficient  capital  to  complete  our  development
                  efforts;

         o        product and feature selection;

         o        timely implementation of product design and development;

         o        product performance;

         o        cost-effectiveness of products under development;

         o        effective manufacturing processes; and

         o        success of promotional efforts.

Additionally,  we may also be  required  to  collaborate  with third  parties to
develop our products and may not be able to do so on a timely and cost-effective
basis, if at all. If we are unable, due to resource constraints or technological
or other reasons,  to develop and introduce new or enhanced products in a timely
manner,  if such new or  enhanced  products  do not  achieve  sufficient  market
acceptance, our operating results will suffer and our business will not grow.



                                       21
<PAGE>

THE INTERNET  TELEPHONY  BUSINESS IS HIGHLY  COMPETITIVE  AND ALSO COMPETES WITH
TRADITIONAL TELEPHONY PROVIDERS.

The long distance  telephony market and the Internet telephony market are highly
competitive.  There are several  large and numerous  small  competitors,  and we
expect to face continuing  competition based on price and service offerings from
existing  competitors  and new market  entrants  in the  future.  The  principal
competitive factors in our market include price, quality of service,  breadth of
geographic presence, customer service,  reliability,  network size and capacity,
and the availability of enhanced  communications  services. Our competitors will
include major and emerging  telecommunications  carriers in the U.S. and foreign
telecommunications carriers. Financial difficulties in the past several years of
many telecommunications  providers are rapidly altering the number, identity and
competitiveness of the marketplace.  Many of the competitors for our current and
planned  voiceglo  service  offerings  and of  our  subsidiary,  Direct  Partner
Telecom,   have  substantially   greater  financial,   technical  and  marketing
resources,  larger  customer bases,  longer  operating  histories,  greater name
recognition and more established  relationships in the industry than we have. As
a result,  certain of these  competitors  may be able to adopt  more  aggressive
pricing policies which could hinder our ability to market our voice services.

During the past several years, a number of companies  have  introduced  services
that make Internet  telephony or voice  services over the Internet  available to
businesses  and consumers.  All major  telecommunications  companies,  including
entities  like AT&T,  Sprint and MCI,  as well as ITXC,  iBasis,  Net2Phone  and
deltathree.com  either  presently or potentially  route traffic to  destinations
worldwide and compete or can compete directly with us. Other Internet  telephony
service  providers focus on a retail customer base and may in the future compete
with us.  These  companies  may offer the kinds of voice  services we  currently
offer or intend to offer in the future.  In  addition,  companies  currently  in
related markets have begun to provide voice over the Internet  services or adapt
their  products  to enable  voice  over the  Internet  services.  These  related
companies may potentially  migrate into the Internet  telephony market as direct
competitors.

A  large  number  of  telecommunications  companies,  including  AT&T,  Deutsche
Telekom, Cable & Wireless, MCI, Sprint and BT, currently provide wholesale voice
telecommunications  service which  compete with the business of our  subsidiary,
Direct  Partner  Telecom,  and which will compete with our retail VoIP telephony
business.  A number of cable  operators  have also begun to offer VoIP telephony
services via cable modems which provide access to the Internet. These companies,
which tend to be large entities with substantial resources, generally have large
budgets  available  for  research and  development,  and  therefore  may further
enhance  the  quality  and  acceptance  of the  transmission  of voice  over the
Internet.

WE MAY FACE INCREASED GOVERNMENT REGULATION, TAXATION AND LEGAL UNCERTAINTIES IN
OUR INDUSTRY, WHICH COULD HARM OUR BUSINESS.

There are an  increasing  number of federal,  state,  local and foreign laws and
regulations  pertaining to the Internet and  telecommunications.  In addition, a
number of federal, state, local and foreign legislative and regulatory proposals
are under consideration.  Laws or regulations may be adopted with respect to the
Internet  relating to, among other things,  fees and taxation of VoIP  telephony
services,  liability for  information  retrieved  from or  transmitted  over the
Internet,  online content  regulation,  user privacy and quality of products and
services.  Changes in tax laws relating to electronic  commerce could materially
affect  our  business,   prospects  and  financial  condition.   Moreover,   the
applicability  to the  Internet  of  existing  laws  governing  issues  such  as
intellectual property ownership and infringement,  copyright,  trademark,  trade
secret,  obscenity,  libel,  employment  and personal  privacy is uncertain  and
developing.   Any  new   legislation  or  regulation,   or  the  application  or
interpretation  of existing laws or regulations,  may decrease the growth in the
use of the Internet or VoIP telephony services, may impose additional burdens on
electronic  commerce or may alter how we do  business.  This could  decrease the
demand  for our  existing  or  proposed  services,  increase  our  cost of doing
business,  increase the costs of products sold through the Internet or otherwise
have a material  adverse effect on our business,  plans,  prospects,  results of
operations and financial condition.

Our ability and plans to provide telecommunication  services at attractive rates
arise in large part from the fact VoIP services are not currently subject to the
same  regulation  as  traditional  telephony.  Because  their  services  are not
currently regulated to the same extent as traditional telephony,  VoIP providers
can currently  avoid paying charges that  traditional  telephone  companies must
pay.   Many   traditional   telephone   operators   are   lobbying  the  Federal
Communications  Commission  (FCC) and the states to regulate VoIP on the same or
similar basis as traditional telephone services.  The FCC and several states are
examining this issue.  The FCC has recently  announced that it will hold a forum
on VoIP issues on December 1, 2003, which will include regulatory classification
issues.  The FCC Chairman has also announced  that shortly after the forum,  the
FCC will initiate a Notice of Public Rule Making ("NPRM") on VoIP services,  and
thereafter,  over the course of the next year,  after full  public  comment  and
consideration,  follow up on the NPRM with a Report and Order on the VoIP issues
raised in the proceeding.  If the FCC or any state  determines to regulate VoIP,
they may impose  surcharges,  taxes or additional  regulations upon providers of
Internet  telephony.  These  surcharges  could include access charges payable to
local exchange  carriers to carry and terminate  traffic,  contributions  to the
universal service fund or other charges.  Regulations  requiring compliance with
the Communications  Assistance for Law Enforcement Act, or provision of enhanced
911  services  could  also  place a  significant  financial  burden  on us.  The
imposition of any such additional fees,  charges,  taxes and regulations on VoIP
services  could  materially  increase our costs and may reduce or eliminate  the
competitive pricing advantage we seek to enjoy.

A number  of state  regulators  have  recently  taken  the  position  that  VoIP
providers  are  telecommunications  providers  and must  register as such within
their states.  VoIP  operators have resisted such  registration  on the position
that VoIP is not, and should not be, subject to such regulations because VoIP is
an information  service,  not a  telecommunication  service.  In a federal court
decision last month, the Minnesota  Public Utilities  Commission was enjoined in
their attempt to enforce  traditional phone  regulations  against Vonage, a VoIP
provider.  However,  other states are not bound by that  decision and may reject
the VoIP  operator's  position  and may seek to  subject  us to  regulation  and
require us to pay associated charges and taxes. If states are successful in such
regulatory efforts, our business,  financial condition and results of operations
could be materially and adversely affected.

Our ability to offer  services  outside  the U.S.  is also  subject to the local
regulatory environment, which may be complicated and often uncertain. Regulatory
treatment of Internet telephony outside the United States varies from country to
country.

PRICING  PRESSURES  AND  INCREASING  USE  OF  VoIP  TECHNOLOGY  MAY  LESSEN  OUR
COMPETITIVE PRICING ADVANTAGE.

One of the main  competitive  advantages of our current and planned VoIP service
offerings is the ability to provide discounted local and long distance telephony
services by taking  advantage of cost savings achieved by carrying voice traffic
employing  VoIP  technology,  as  compared to  carrying  calls over  traditional
networks.  In recent years, the price of telephone service has fallen. The price
of telephone  service may continue to fall for various  reasons,  including  the
adoption of VoIP technology by other communications carriers. Many carriers have
adopted  pricing  plans  such that the rates  that they  charge  are not  always
substantially  higher  than the rates that VoIP  providers  charge  for  similar
service.  In addition,  other  providers of long distance  services are offering
unlimited or nearly  unlimited  use of some of their  services for  increasingly
lower monthly rates.

WE RELY ON INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS.

We regard substantial  elements of our web sites and underlying  technology,  as
well as certain assets relating to our VoIP business and other  opportunities we
are  investigating,  as  proprietary  and attempt to protect  them by relying on
intellectual  property laws and  restrictions  on disclosure.  We also generally
enter into  confidentiality  agreements with our employees and  consultants.  In
connection with our license agreements with third parties,  we generally seek to
control  access to and  distribution  of our  technology  and other  proprietary
information.  Despite these precautions, it may be possible for a third party to
copy  or  otherwise   obtain  and  use  our  proprietary   information   without
authorization or to develop similar  technology  independently.  Thus, we cannot
assure  you  that  the  steps  taken  by us  will  prevent  misappropriation  or
infringement of our proprietary information,  which could have an adverse effect
on our business. In addition,  our competitors may independently develop similar
technology,  duplicate our products,  or design around our intellectual property
rights.

We  pursue  the  registration  of  our  trademarks  in  the  United  States  and
internationally.  We are also seeking patent  protection for certain VoIP assets
which we acquired.  However,  effective intellectual property protection may not
be available in every  country in which our  services  are  distributed  or made
available  through the Internet.  Policing  unauthorized  use of our proprietary
information   is   difficult.   Legal   standards   relating  to  the  validity,
enforceability and scope of protection of proprietary rights in Internet-related
businesses are also uncertain and still evolving. We cannot assure you about the
future viability or value of any of our proprietary rights.

Litigation may be necessary in the future to enforce our  intellectual  property
rights or to  determine  the  validity  and scope of the  proprietary  rights of
others.  However,  we may not have  sufficient  funds or personnel to adequately
litigate or otherwise protect our rights. Furthermore, we cannot assure you that
our business activities will not infringe upon the proprietary rights of others,
or that other parties will not assert  infringement claims against us, including
claims related to providing hyperlinks to web sites operated by third parties or
providing  advertising  on a keyword  basis that links a  specific  search  term
entered by a user to the  appearance  of a particular  advertisement.  Moreover,
from time to time, third parties may assert claims of alleged  infringement,  by
us or our members, of their intellectual  property rights. Any litigation claims
or counterclaims could impair our business because they could:

         o        be time-consuming;

         o        result in significant costs;

         o        subject us to significant liability for damages;

         o        result in invalidation of our proprietary rights;

         o        divert management's attention;

         o        cause product release delays; or

         o        require us to  redesign  our  products  or require us to enter
                  into royalty or licensing agreements that may not be available
                  on terms acceptable to us, or at all.


                                       22
<PAGE>

We license from third parties various technologies  incorporated into our sites.
We cannot assure you that these third-party technology licenses will continue to
be available to us on commercially  reasonable  terms.  Additionally,  we cannot
assure you that the third parties from which we license our  technology  will be
able  to  defend  our  proprietary   rights   successfully   against  claims  of
infringement.  As a result,  our  inability  to obtain  any of these  technology
licenses  could  result in  delays  or  reductions  in the  introduction  of new
services or could  adversely  affect the  performance  of our existing  services
until equivalent technology can be identified, licensed and integrated.

The regulation of domain names in the United States and in foreign countries may
change.  Regulatory bodies could establish additional top-level domains, appoint
additional  domain name registrars or modify the requirements for holding domain
names,  any or all of which may dilute  the  strength  of our names.  We may not
acquire or maintain  our domain  names in all of the  countries in which our web
sites may be accessed,  or for any or all of the top-level domain names that may
be introduced.  The relationship between regulations  governing domain names and
laws protecting proprietary rights is unclear.  Therefore, we may not be able to
prevent  third  parties from  acquiring  domain names that infringe or otherwise
decrease the value of our trademarks and other proprietary rights.

IF WE DO NOT DEVELOP AND MAINTAIN SUCCESSFUL  PARTNERSHIPS FOR VOIP PRODUCTS, WE
MAY NOT BE ABLE TO SUCCESSFULLY  MARKET ANY OF OUR VOIP PRODUCTS CURRENTLY UNDER
DEVELOPMENT.

We are  seeking  to enter  into new  market  areas  and our  success  is  partly
dependent on our ability to forge new  marketing and  engineering  partnerships.
VoIP communication systems are extremely complex and no single company possesses
all the technology components needed to build a complete end to end solution. We
will likely need to enter into partnerships to augment our development  programs
and to assist us in marketing complete solutions to our targeted  customers.  We
may not be able to  develop  such  partnerships  in the  course  of our  product
development.  Even if we do establish the necessary partnerships,  we may not be
able to adequately capitalize on these partnerships to aid in the success of our
business.

THE FAILURE OF VOIP  NETWORKS  TO MEET THE  RELIABILITY  AND  QUALITY  STANDARDS
REQUIRED FOR VOICE COMMUNICATIONS COULD RENDER OUR PRODUCTS OBSOLETE.

Circuit-switched  telephony  networks  feature  very  high  reliability,  with a
guaranteed  quality of service.  In addition,  such networks have  imperceptible
delay and  consistently  satisfactory  audio quality.  Emerging VoIP networks or
emerging last mile  technologies  such as cable,  digital  subscriber lines, and
wireless local loop,  will not be a viable  alternative  to traditional  circuit
switched telephony unless such networks and technologies can provide reliability
and quality consistent with these standards.


WE MAY BE UNSUCCESSFUL IN ESTABLISHING AND MAINTAINING  BRAND  AWARENESS;  BRAND
IDENTITY IS CRITICAL TO OUR COMPANY.

Our  success in the  Internet  telephony  market  will  depend on our ability to
create and maintain brand awareness for our product offerings.  This may require
a significant amount of capital to allow us to market our products and establish
brand recognition and customer loyalty.  Many of our competitors in the Internet
telephony  services  market are larger  than us and have  substantially  greater
financial resources.  Additionally, many of the companies offering VoIP services
have already  established  their brand identity within the  marketplace.  We can
offer no assurances that we will be successful in establishing  awareness of our
brand allowing us to compete in the VoIP market.

We believe  that  maintaining  awareness  of the brand names of all of our games
properties ("Chips & Bits",  "Strategy Plus" and  "CGonline.com") is critical to
attracting  potential  buyers for these  properties  and to expanding our member
base, the traffic on our web sites and our advertising  and electronic  commerce
relationships. The closure of the community web site at "www.theglobe.com",  the
Company's flagship web site,  adversely affected the public's  perception of the
Company and its then existing  businesses.  If Internet  users,  advertisers and
customers do not perceive our games properties to be of high quality,  the value
of the games properties brand names could be materially diluted.

If we fail to promote and maintain our various  brands or our games  properties'
brand  values  are  diluted,  our  businesses,   operating  results,   financial
condition,  and our ability to attract buyers for the games  properties could be
materially adversely affected. The importance of brand recognition will continue
to increase  because low barriers of entry to the industries in which we operate
may result in an increased number of direct competitors.  To promote our brands,
we may be required to continue to increase our financial  commitment to creating
and maintaining brand awareness. We may not generate a corresponding increase in
revenues to justify these costs.


                                       23
<PAGE>

THE MARKET SITUATION  CONTINUES TO BE A CHALLENGE FOR CHIPS & BITS DUE TO RECENT
ADVANCES IN CONSOLE AND ONLINE GAMES, WHICH HAVE LOWER MARGINS AND TRADITIONALLY
LESS SALES LOYALTY TO CHIPS & BITS.

Chips & Bits depends on major releases in the Personal  Computer (PC) market for
the  majority  of sales  and  profits.  The  game  industry's  focus  on  X-Box,
Playstation  and  GameCube  has  dramatically  reduced  the  number  of major PC
releases,  which resulted in significant  declines in revenues and gross margins
for Chips & Bits, Inc. Gross margins for Chips & Bits, Inc. were 29% and 26% for
the quarters  ended  September 30, 2003 and 2002,  respectively.  Because of the
large  installed  base of personal  computers,  these  revenue and gross  margin
percentages  may  fluctuate  with  changes in the PC game market.  However,  the
Company is unable to predict when, if ever, there will be a turnaround in the PC
game market.

Competition  among  games-focused  websites  is  also  growing  rapidly,  as new
companies  continue to enter the market and existing companies continue to layer
games applications onto their websites.  We expect that the market will continue
to  evolve  rapidly,  and  the  rate of  product  innovations  and  new  product
introductions  will  remain  high.  We  face  competitive  pressures  from  many
companies, both in the United States and abroad. With the abundance of companies
operating in the games market,  consumers and advertisers  have a wide selection
of services to choose from. Our games information websites compete for users and
advertisers with:

         o        Games  information  sites  such  as  Snowball's  IGN,  ZDnet's
                  Gamespot, and CNET's GameCenter; and

         o        Online  games  centers,  where  users can play  games  such as
                  Uproar, Pogo and Terra Lycos' Gamesville.

In  addition,  many  companies  involved in the games market may be acquired by,
receive  investments from, or enter into commercial  relationships  with larger,
well-established  and  well-financed  companies.  As a  result  of  this  highly
fragmented and competitive  market,  consolidations  and strategic  ventures may
continue in the future.

WE HAVE  HISTORICALLY  RELIED  SUBSTANTIALLY  ON ONLINE  AND  PRINT  ADVERTISING
REVENUES. THE ONLINE AND PRINT ADVERTISING MARKETS HAVE SIGNIFICANTLY  DECLINED.
IN ADDITION, WE HAVE DRAMATICALLY REDUCED OUR ADVERTISING SALES FORCE.

We historically  derived a substantial  portion of our revenues from the sale of
advertisements on our web sites and in our magazine Computer Games Magazine. Our
business  model and revenues  were highly  dependent on the amount of traffic on
our web sites, our ability to properly monetize website traffic and on the print
circulation of our Computer Games magazine.  Due to our  restructuring in August
2001 (the "August 3, 2001 restructuring"), we now have only two (2) sales people
and  will  have  tremendous  difficulty  maintaining  advertising  revenues  and
monetizing traffic to our games properties.  In addition,  the editorial content
on certain of the game properties is only being updated periodically, if at all,
which may lead to a further  decrease  in the number of viewers  and which could
adversely affect our efforts to sell these  properties.  The level of traffic on
our sites determines the amount of online advertising  inventory we can sell and
the price for which we can sell our games  business.  Our  ability  to  generate
online  advertising  revenues  depends,  in part,  on our  ability to create new
advertising  programs  without  diluting  the  perceived  value of our  existing
programs.  Due to the  reduction  in  headcount,  we are  unable to  create  new
advertising   programs  going  forward.   Print  and  online   advertising  have
dramatically  decreased  since the middle of 2000,  and may continue to decline,
which could continue to have a material effect on the Company.  Many advertisers
have been experiencing  financial difficulties which could materially impact our
revenues  and our  ability to collect our  receivables.  For these  reasons,  we
cannot  assure  you that our  current  advertisers  will  continue  to  purchase
advertisements from our games properties.

The  development  of the  Internet  advertising  market has slowed  dramatically
during  the last two  years  and if it  continues  to slow  down,  our  business
performance would continue to be materially adversely affected.


WE MAY BE MATERIALLY ADVERSELY AFFECTED IF ELECTRONIC COMMERCE DOES NOT BECOME A
VIABLE SOURCE OF SIGNIFICANT  REVENUES OR PROFITS FOR THE COMPANY.  IN ADDITION,
OUR  ELECTRONIC  COMMERCE  BUSINESS MAY RESULT IN SIGNIFICANT  LIABILITY  CLAIMS
AGAINST US.

In February  2000, we acquired  Chips & Bits,  Inc., a direct  marketer of video
games  and  related  products  over  the  Internet.  However,  we  have  limited
experience in the sale of products online as compared to many of our competitors
and the development of relationships  with  manufacturers and suppliers of these
products. In addition,  the closing of our community site and our small business
web-hosting site may adversely affect our electronic commerce due to the loss of
traffic  referred by those sites to the Chips & Bits web site. We also face many
uncertainties,  which may affect our  ability to  generate  electronic  commerce
revenues and profits, including:

         o        our  ability to obtain new  customers  at a  reasonable  cost,
                  retain existing customers and encourage repeat purchases;

         o        the likelihood that both online and retail  purchasing  trends
                  may rapidly change;

         o        the level of product returns;

         o        merchandise shipping costs and delivery times;

         o        our ability to manage inventory levels;



                                       24
<PAGE>

         o        our ability to secure and maintain relationships with vendors;

         o        the  possibility  that our  vendors  may sell  their  products
                  through other sites; and

         o        intense   competition   for  electronic   commerce   revenues,
                  resulting in downward pressure on gross margins.

In April 2000,  we elected to shut down our  e-commerce  operations  in Seattle,
Washington  in order to focus  our  e-commerce  operations  on video  games  and
related  products.  Accordingly,  we cannot assure you that electronic  commerce
transactions  will provide a significant  or  sustainable  source of revenues or
profits.  Additionally, due to the ability of consumers to easily compare prices
of similar products or services on competing web sites and consumers'  potential
preference for competing web site's user interface, gross margins for electronic
commerce  transactions  which are narrower than for  advertising  businesses may
further  narrow in the future and,  accordingly,  our  revenues and profits from
electronic commerce  arrangements may be materially and adversely  affected.  If
use of the  Internet for  electronic  commerce  does not  continue to grow,  our
business and financial condition would be materially and adversely affected.

Additionally,  consumers  may sue us if any of the  products  that  we sell  are
defective,  fail to perform  properly or injure the user. Some of our agreements
with  manufacturers  contain  provisions  intended  to  limit  our  exposure  to
liability  claims.  However,  these  limitations  may not prevent all  potential
claims. Liability claims could require us to spend significant time and money in
litigation or to pay significant  damages.  As a result, any claims,  whether or
not successful, could seriously damage our reputation and our business.

INTERNET ADVERTISING HAS NOT PROVEN AS EFFECTIVE AS TRADITIONAL MEDIA.

The Internet  advertising  market is relatively new and continues to evolve.  We
cannot yet gauge its effectiveness as compared to traditional advertising media.
Many of our  current  or  potential  advertising  partners  have  limited  or no
experience  using the Internet for advertising  purposes and they have allocated
only a limited portion of their advertising budgets to Internet advertising. The
adoption of  Internet  advertising,  particularly  by those  entities  that have
historically relied upon traditional media, requires the acceptance of a new way
of conducting  business,  exchanging  information and  advertising  products and
services.  Advertisers  that have  traditionally  relied upon other  advertising
media may be reluctant to advertise on the Internet or find it less effective.

The sale of  Internet  advertising  is subject to intense  competition  that has
resulted  in a wide  variety  of pricing  models,  rate  quotes and  advertising
services.  For  example,  advertising  rates may be based on the  number of user
requests for additional information made by clicking on the advertisement, known
as "click  throughs," on the number of times an  advertisement is displayed to a
user,  known as  "impressions,"  or on the number of times a user  completes  an
action at an advertiser's  web site after clicking  through,  known as "cost per
action." Our contracts  with  advertisers  typically  guarantee the advertiser a
minimum number of impressions.  To the extent that minimum impression levels are
not  achieved  for any  reason,  including  the  failure to obtain the  expected
traffic,  our contracts with  advertisers  may require us to provide  additional
impressions after the contract term, which may adversely affect the availability
of our advertising  inventory.  In addition,  certain  long-term  contracts with
advertisers  may be canceled if response rates or sales  generated from our site
are less than  advertisers'  expectations.  This could  have a material  adverse
effect on us. Online advertisers are increasingly demanding "cost per click" and
"cost per action" advertising  campaigns,  which require many more page views to
achieve equal  revenue,  which  significantly  affects our  revenues.  If online
advertisers  continue  to  demand  those  "cost  per  action"  deals,  it  could
negatively impact our business.

Our  revenues  and the  value of the  assets  we are  seeking  to sell  could be
materially  adversely affected if we are unable to adapt to other pricing models
for Internet  advertising if they are adopted. It is difficult to predict which,
if any,  pricing  models for  Internet  advertising  will emerge as the industry
standard.  This makes it difficult to project our future  advertising  rates and
revenues.  Online advertising  pricing has been declining.  Additionally,  it is
possible  that Internet  access  providers  may, in the future,  act to block or
limit various types of advertising or direct solicitations, whether at their own
behest or at the request of users.  Moreover,  "filter"  software  programs that
limit or prevent advertising from being delivered to an Internet user's computer
are available.  Widespread  adoption of this software could adversely affect the
commercial viability of Internet  advertising.  In addition,  concerns regarding
the privacy of user data on the Web may reduce the amount of user data collected
in the future,  thus  reducing our ability to provide  targeted  advertisements.
This may,  in turn,  put  downward  pressure  on cost per  thousand  impressions
("CPM").

REVENUE IN PRIOR PERIODS IS NOT INDICATIVE OF FUTURE REVENUE.

Although we achieved  significant total revenue growth during 1999 and 2000, our
revenue  substantially  decreased in 2001,  2002,  and again in 2003, due to the
softness  in  the  advertising  market,  which  is  expected  to  continue;  our
cost-reduction and restructuring initiatives,  which have resulted in a dramatic
reduction  in  our  advertising   sales  force;   increased   competition  among
games-focused websites; the closing of our community website and our web-hosting
property; and the sale of many of our games properties.

In  addition,  we have  chosen to enter  into a new line of  business,  the VoIP
telephony  services market.  The Internet  telephony services industry is highly
competitive  and our  senior  management  has no  experience  operating  in this
industry.  We cannot accurately  predict whether our VoIP business model will be
successful  or  when  VoIP  revenues  will be  significant  in  relation  to our
consolidated operating results.

OUR QUARTERLY OPERATING RESULTS FLUCTUATE AND VARY BY SEASON.

Due to our significant change in operations, including the entry into a new line
of business,  our historical  quarterly  operating results are not reflective of
future  results.  As a consequence,  the trading price of our Common Stock would
almost  certainly be materially  and adversely  affected.  The factors that will
cause our quarterly operating results to fluctuate in the future include:



                                       25
<PAGE>

         o        acquisitions of new businesses or sales of our assets;

         o        declines in the number of sales or technical employees;

         o        the level of traffic on our web sites;

         o        the overall demand for Internet telephony  services,  Internet
                  advertising and electronic commerce;

         o        the  addition or loss of VoIP  customers,  advertisers  on our
                  games properties and electronic  commerce  partners on our web
                  sites;

         o        overall usage and acceptance of the Internet;

         o        seasonal trends in advertising  and electronic  commerce sales
                  and member usage;

         o        other costs relating to the maintenance of our  operations;

         o        the restructuring of our business;

         o        failure to generate  significant  revenues and profit  margins
                  from new products and services;

         o        financial   performance  of  other   Internet   companies  who
                  advertise on our site; and

         o        competition from others providing services similar to those of
                  ours.

OUR LIMITED OPERATING HISTORY MAKES FINANCIAL FORECASTING DIFFICULT.

We have a limited  operating  history for you to use in evaluating our prospects
and us. Our prospects should be considered in light of the risks  encountered by
companies  operating in new and rapidly  evolving  markets like ours. We may not
successfully address these risks. For example, we may not be able to:

         o        maintain levels of user traffic on our e-commerce web sites;

         o        maintain  or  increase   the   percentage   of  our   off-line
                  advertising inventory sold;

         o        maintain or increase both CPM levels and sponsorship  revenues
                  for our games magazine;

         o        adapt  to  meet   changes  in  our  markets  and   competitive
                  developments;

         o        develop or acquire content for our services; and

         o        identify, attract, retain and motivate qualified personnel.

Moreover,  we acquired DPT on May 28, 2003, as a result of our decision to enter
the VoIP services  business.  DPT began its  operations in October 2002, and its
limited operating history, as well as our inexperience in the Internet telephony
business will make financial forecasting even more difficult.

OUR MANAGEMENT TEAM IS  INEXPERIENCED  IN THE MANAGEMENT OF A PUBLIC COMPANY AND
IS SMALL FOR AN OPERATING COMPANY.

Our senior  management  team is few in number,  and other than our  Chairman and
President,  have not had any previous experience managing a public company. Only
our Chairman has had experience managing a large operating company. Accordingly,
we cannot assure you that:

         o        our key employees will be able to work together effectively as
                  a team;

         o        we will  be  able  to  retain  the  remaining  members  of our
                  management team;

         o        we will be able to hire, train and manage our employee base;

         o        our  systems,  procedures  or  controls  will be  adequate  to
                  support our operations; and

         o        our  management  will be able to achieve  the rapid  execution
                  necessary  to fully  exploit  the market  opportunity  for our
                  products and services.

WE DEPEND ON HIGHLY QUALIFIED TECHNICAL AND MANAGERIAL PERSONNEL.

Our future success also depends on our continuing ability to attract, retain and
motivate highly qualified technical expertise and managerial personnel necessary
to operate  our  businesses.  We may need to give  retention  bonuses  and stock
incentives  to  certain  employees  to keep  them,  which  can be  costly to the
Company.  We may be unable to attract,  assimilate  or retain  highly  qualified
technical  and  managerial  personnel in the future.  Wages for  managerial  and
technical  employees are  increasing and are expected to continue to increase in
the  future.  We have  from  time to time in the  past  experienced,  and  could
continue  to  experience  in the  future  if we  need  to  hire  any  additional
personnel,  difficulty in hiring and retaining  highly  skilled  employees  with
appropriate  qualifications.  In  addition,  we may have  difficulty  attracting
qualified employees due to the Company's  restructuring,  financial position and
scaling down of operations.  Also, we may have difficulty  attracting  qualified
employees to work in the  geographically  remote  location in Vermont of Chips &
Bits,  Inc. and Strategy Plus,  Inc. If we were unable to attract and retain the
technical and managerial personnel necessary to support and grow our businesses,
our businesses would likely be materially and adversely affected.

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

Because our  Chairman and Chief  Executive  Officer,  Mr.  Michael  Egan,  is an
officer or director  of other  companies,  we have to compete for his time.  Mr.
Egan became our Chief Executive Officer effective June 1, 2002. Mr. Egan is also
the controlling investor of Dancing Bear Investments, Inc., an entity controlled
by Mr. Egan,  which is our largest  stockholder.  Mr. Egan has not  committed to
devote any specific  percentage  of his business time with us.  Accordingly,  we
compete with  Dancing  Bear  Investments,  Inc.  and Mr.  Egan's  other  related
entities for his time.



                                       26
<PAGE>

Our  President  and  Director,  Mr.  Edward A.  Cespedes,  is also an officer or
director of other  companies.  Accordingly,  we must  compete for his time.  Mr.
Cespedes is an officer or director of various  privately  held  entities  and is
also affiliated with Dancing Bear Investments.

Our Chief Financial Officer, Treasurer, Secretary and Director, Ms. Robin Segaul
Lebowitz  is also  affiliated  with  Dancing  Bear  Investments.  She is also an
officer or director of other  companies or entities  controlled  by Mr. Egan and
Mr. Cespedes.

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.  We  intend  to  review  related  party
transactions in the future on a case-by-case basis.


WE RELY ON A THIRD  PARTY  OUTSOURCED  HOSTING  FACILITIES  OVER  WHICH  WE HAVE
LIMITED CONTROL.

Our  principal  servers  are  located  in  Florida  and New York at third  party
outsourced hosting  facilities.  Our operations depend on the ability to protect
our systems against damage from unexpected  events,  including fire, power loss,
water damage,  telecommunications  failures and vandalism. Any disruption in our
Internet access due to the transition or otherwise could have a material adverse
effect on us. In  addition,  computer  viruses,  electronic  break-ins  or other
similar  disruptive   problems  could  also  materially   adversely  affect  our
businesses.  Our  reputation,  theglobe.com  brand  and the  brands  of our VoIP
services business and game properties could be materially and adversely affected
by any  problems  experienced  by  our  sites.  We may  not  have  insurance  to
adequately  compensate  us for any losses that may occur due to any  failures or
interruptions  in our systems.  We do not presently have any secondary  off-site
systems or a formal disaster recovery plan.

HACKERS MAY ATTEMPT TO PENETRATE OUR SECURITY SYSTEM;  ONLINE SECURITY  BREACHES
COULD HARM OUR BUSINESS.

Consumer  and  supplier  confidence  in our  businesses  depends on  maintaining
relevant  security  features.  Substantial or ongoing  security  breaches on our
systems or other  Internet-based  systems could significantly harm our business.
We  incur  substantial   expenses  protecting  against  and  remedying  security
breaches.  Security breaches also could damage our reputation and expose us to a
risk  of  loss  or  litigation.   Experienced   programmers  or  "hackers"  have
successfully  penetrated  our  systems and we expect  that these  attempts  will
continue to occur from time to time.  Because a hacker who is able to  penetrate
our network  security  could  misappropriate  proprietary  information  or cause
interruptions  in our products and services,  we may have to expend  significant
capital and  resources  to protect  against or to alleviate  problems  caused by
these  hackers.  Additionally,  we may not have a timely remedy against a hacker
who is able to penetrate  our network  security.  Such security  breaches  could
materially  adversely  affect our company.  In  addition,  the  transmission  of
computer  viruses  resulting  from  hackers  or  otherwise  could  expose  us to
significant  liability.  Our  insurance  may not be adequate to reimburse us for
losses caused by security breaches.  We also face risks associated with security
breaches affecting third parties with whom we have relationships.

WE MAY BE EXPOSED TO LIABILITY FOR  INFORMATION  RETRIEVED  FROM OR  TRANSMITTED
OVER THE INTERNET OR FOR PRODUCTS SOLD OVER THE INTERNET.

Users may access  content on our web sites or the web sites of our  distribution
partners or other third parties through web site links or other means,  and they
may download content and  subsequently  transmit this content to others over the
Internet. This could result in claims against us based on a variety of theories,
including defamation,  obscenity, negligence, copyright infringement,  trademark
infringement  or the wrongful  actions of third  parties.  Other theories may be
brought  based on the nature,  publication  and  distribution  of our content or
based on errors or false or  misleading  information  provided on our web sites.
Claims  have  been  brought  against  online  services  in the  past and we have
received inquiries from third parties regarding these matters.  The claims could
be material in the future. We could also be exposed to liability for third party
content posted by users in our chat rooms or on our bulletin boards.

We also enter into agreements with commerce  partners and sponsors under whom we
are  entitled to receive a share of any revenue  from the  purchase of goods and
services  through  direct  links from our sites.  We sell  products  directly to
consumers which may expose us to additional  legal risks,  regulations by local,
state, federal and foreign authorities and potential liabilities to consumers of
these products and services,  even if we do not ourselves provide these products
or services.  We cannot assure you that any indemnification that may be provided
to us in some of these  agreements with these parties will be adequate.  Even if
these claims do not result in our liability, we could incur significant costs in
investigating  and defending  against these claims.  The imposition of potential
liability for information  carried on or disseminated  through our systems could
require us to  implement  measures to reduce our  exposure to  liability.  Those
measures may require the  expenditure  of  substantial  resources  and limit the
attractiveness  of our services.  Additionally,  our insurance  policies may not
cover all potential liabilities to which we are exposed.

COMPETITION FOR USERS AND ADVERTISERS,  AS WELL AS COMPETITION IN THE ELECTRONIC
COMMERCE MARKET, IS INTENSE AND IS EXPECTED TO INCREASE SIGNIFICANTLY.

Competition  among games print  magazines is high and  increasing  as online and
pc-based games continue to gain  mainstream  popularity,  and new,  cutting-edge
games and console systems continue to come to the consumer market.  The magazine
publishing  industry  is highly  competitive.  We compete  for  advertising  and
circulation  revenues  principally with publishers of other technology and games
magazines  with



                                       27
<PAGE>

similar editorial content as our magazine.  The technology magazine industry has
traditionally  been dominated by a small number of large publishers.  We believe
that we compete with other technology and games publications based on the nature
and quality of our magazines' editorial content and the attractive  demographics
of our  readers.  Due to our  limited  resources,  we may not be able to compete
effectively  in any of the preceding  categories  in the future.  In addition to
other technology and games magazines, our magazine also competes for advertising
revenues with  general-interest  magazines  and other forms of media,  including
broadcast  and  cable  television,   radio,  newspaper,   direct  marketing  and
electronic media. In competing with  general-interest  magazines and other forms
of media,  we rely on our ability to reach a targeted  segment of the population
in a cost-effective manner.

The  market  for  users and  Internet  advertising  among  web sites is  rapidly
evolving.  Competition for users and advertisers,  as well as competition in the
electronic   commerce   market,   is  intense   and  is   expected  to  increase
significantly.  Barriers to entry are relatively insubstantial and we believe we
will face  competitive  pressures  from many  additional  companies  both in the
United States and abroad.  Accordingly,  pricing  pressure on advertising  rates
will  continue to increase  in the future,  which could have a material  adverse
effect on us to the extent that any remaining  businesses  rely on  advertising.
All types of web sites  compete for users.  Competitor  web sites  include other
games information networks and various other types of web sites. We believe that
the principal competitive factors in attracting users to a site are:

         o        functionality of the web site;

         o        brand recognition;

         o        affinity and loyalty;

         o        broad demographic focus;

         o        open access for visitors;

         o        critical mass of users;

         o        attractiveness of content and services to users; and

         o        pricing and customer service for electronic commerce sales.

We compete for users,  advertisers  and electronic  commerce  marketers with the
following types of companies:

         o        publishers and  distributors  of television,  radio and print,
                  such as CBS, NBC and Time Warner;

         o        electronic commerce web sites, such as Amazon.com; and

         o        other web  sites  serving  game  enthusiasts,  including  Ziff
                  Davis' Gamespot and CNET's Gamecenter.

Many of our existing and potential  competitors and traditional media companies,
have the following advantages:

         o        longer  operating  histories in the Internet market, - greater
                  name recognition;

         o        larger customer bases;

         o        significantly  greater  financial,   technical  and  marketing
                  resources; and,

         o        not seeking to sell their businesses.

In addition,  there has been  significant  consolidation  in the industry.  This
consolidation may continue in the future. We could face increased competition in
the  future  from  traditional  media  companies,  including  cable,  newspaper,
magazine,  television and radio companies.  A number of these large  traditional
media companies have been active in Internet  related  activities  including the
games space. Those competitors may be able to undertake more extensive marketing
campaigns  for their  brands and  services,  adopt more  aggressive  advertising
pricing  policies  and make  more  attractive  offers  to  potential  employees,
distribution partners, electronic commerce companies,  advertisers,  third-party
content  providers  and  acquisition  targets.  Furthermore,  our  existing  and
potential  competitors  may develop  sites that are equal or superior in quality
to, or that achieve greater market  acceptance than, our sites. We cannot assure
you that advertisers may not perceive our  competitors'  sites as more desirable
than ours.

Additionally,  the electronic commerce market is rapidly evolving, and we expect
competition  among  electronic   commerce  merchants  to  continue  to  increase
significantly. Because the Internet allows consumers to easily compare prices of
similar  products or services on competing  web sites and there are low barriers
to entry for  potential  competitors,  gross  margins  for  electronic  commerce
transactions may continue to be narrow in the future.  Many of the products that
we sell on our web sites may be sold by the maker of the product directly, or by
other web sites.  Competition among Internet retailers,  our electronic commerce
partners and product makers may have a material adverse effect on our ability to
generate  revenues  through  electronic  commerce  transactions  or  from  these
electronic commerce partners.

WE ARE INVOLVED IN SECURITIES CLASS ACTION LITIGATION.

We are a party to the securities class action litigation  described in Note 3 to
the Condensed Consolidated  Financial Statements - "Litigation".  The defense of
the litigation may increase our expenses and will occupy management's  attention
and  resources,  and an adverse  outcome  in this  litigation  could  materially
adversely affect us.

VARIOUS STOCKHOLDERS, INDIVIDUALLY OR IN THE AGGREGATE, CONTROL US.

Including all warrants,  preferred stock, convertible notes, vested options, and
all options  vesting within 60 days of September 30, 2003,  Michael S. Egan, our
Chairman and Chief Executive Officer, beneficially owns or controls, directly or
indirectly,  approximately  62 million shares of our Common Stock,  which in the
aggregate  represents  approximately 60% of the outstanding shares of our Common
Stock  (treating



                                       28
<PAGE>

as  outstanding  for this  purpose  the  shares of Common  Stock  issuable  upon
exercise or conversion of the preferred stock, warrants and options owned by Mr.
Egan or his affiliates).  Accordingly, Mr. Egan would likely be able to exercise
significant influence over, if not control, any stockholder vote.

OUR STOCK PRICE IS VOLATILE.

The trading  price of our Common Stock has been  volatile and may continue to be
volatile in response to various factors, including:

         o        entrance into new lines of business, including acquisitions of
                  businesses;

         o        quarterly variations in our operating results;

         o        competitive announcements;

         o        sales of any of our remaining games properties;

         o        the operating and stock price  performance of other  companies
                  that investors may deem comparable to us; and

         o        news relating to trends in our markets.

The stock market has experienced significant price and volume fluctuations,  and
the  market  prices  of  technology  companies,   particularly  Internet-related
companies, have been highly volatile. Our stock is also more volatile due to the
limited trading volume.

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 trading volume of our shares has
dramatically declined since the delisting.  In addition, we are now subject to a
Rule  promulgated by the Securities and Exchange  Commission that, if we fail to
meet criteria set forth in such Rule, various practice  requirements are imposed
on broker-dealers who sell securities governed by the Rule to persons other than
established customers and accredited investors. For these types of transactions,
the  broker-dealer  must  make  a  special  suitability  determination  for  the
purchaser and have received the purchaser's  written consent to the transactions
prior to sale.  Consequently,  the Rule may have a materially  adverse effect on
the  ability of  broker-dealers  to sell the  securities,  which may  materially
affect the  ability of  shareholders  to sell the  securities  in the  secondary
market.

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.

THE SALE OF SHARES  ELIGIBLE  FOR FUTURE SALE IN THE OPEN MARKET  COULD KEEP OUR
STOCK PRICE FROM IMPROVING.

Sales of significant amounts of Common Stock in the public market in the future,
the perception  that sales will occur or the  registration  of such shares could
materially  and  adversely  affect the ability of the market price of the Common
Stock to increase even if our business  prospects were to improve.  Also, we may
issue additional  shares of our common stock or other equity  instruments  which
may be  convertible  into common stock at some future date,  which could further
adversely affect our stock price.

As  of  September  30,  2003,  there  were   outstanding   options  to  purchase
approximately  9,185,000 shares of Common Stock,  which become eligible for sale
in the public market from time to time  depending on vesting and the  expiration
of lock-up agreements.  The issuance of these securities is registered under the
Securities Act and  consequently,  subject to certain volume  restrictions as to
options owned by executive officers, will be freely tradable. In addition, as of
September  30,  2003,  there  were  outstanding   warrants  to  purchase  up  to
approximately 20,052,000 shares of our Common Stock upon exercise, together with
an additional  3,175,000  shares  issuable upon exercise of warrants  subject to
earnout  arrangements.  Additionally,  as of September 30, 2003, the outstanding
shares of our Series F Preferred Stock and the $1,750,000  Convertible Notes are
convertible into  approximately  16,667,000  shares and 19,444,000 shares of our
Common  Stock,  respectively.  Substantially  all  of our  stockholders  holding
restricted  securities,  including shares issuable upon the exercise of warrants
to purchase our Common Stock, are entitled to registration  rights under various
conditions.

ANTI-TAKEOVER  PROVISIONS  AFFECTING  US COULD  PREVENT  OR  DELAY A  CHANGE  OF
CONTROL.

Provisions of our charter, by-laws and stockholder rights plan and provisions of
applicable Delaware law may:

         o        have the effect of delaying,  deferring or preventing a change
                  in control of our company;

         o        discourage  bids of our  Common  Stock at a  premium  over the
                  market price; or

         o        adversely affect the market price of, and the voting and other
                  rights of the holders of, our Common Stock.

Certain Delaware laws could have the effect of delaying, deterring or preventing
a change in control of our company. One of these laws prohibits us from engaging
in a business combination with any interested  stockholder for a period of three
years from the date the person became an interested stockholder,  unless various
conditions are met. In addition,  provisions of our charter and by-laws, and the
significant



                                       29
<PAGE>

amount of Common  Stock  held by our  current  and  former  executive  officers,
directors  and  affiliates,  could  together  have the  effect  of  discouraging
potential  takeover  attempts or making it more  difficult for  stockholders  to
change management.

WE MAY HAVE TO TAKE ACTIONS TO AVOID  REGISTRATION  UNDER THE INVESTMENT COMPANY
ACT.

Under the Investment Company Act of 1940 (the "1940 Act"), a company meeting the
definition  of an  "investment  company" is subject to various  stringent  legal
requirements on its operations. A company can become subject to the 1940 Act if,
among other reasons,  it owns  investment  securities  with a value exceeding 40
percent of the value of its total assets  (excluding  government  securities and
cash items) on an unconsolidated  basis,  unless a particular  exemption of safe
harbor applies.  Although we are not currently  subject to the 1940 Act, at some
point in the future due to the ongoing sale of our assets, the percentage of the
Company's assets which consist of investment securities may exceed 40 percent of
the value of its total assets on an unconsolidated  basis. Rule 3a-2 of the 1940
Act provides a temporary  exemption from registration under the 1940 Act, for up
to one year,  for companies  that have a bona fide intent to engage,  as soon as
reasonably  possible,  in business other than  investing,  reinvesting,  owning,
holding or trading in securities ("transient investment companies").  If, due to
future  sales of our assets or changes in the value of our existing  assets,  we
become  subject to the 1940 Act, we intend to take all actions  that would allow
reliance  on  the  one-year  exemption  for  "transient  investment  companies",
including a resolution by the Board of Directors  that the Company has bona fide
intent to  engage,  as soon as  reasonably  possible,  in  business  other  than
investing,  reinvesting,  owning,  holding or trading in  securities.  After the
one-year  period,  we would be  required  to comply with the 1940 Act unless our
operations  and  assets  result  in us  no  longer  meeting  the  definition  of
Investment Company.

WE CHANGED OUR INDEPENDENT AUDITORS.

On August 8, 2002, we dismissed our independent accountants,  KPMG LLP ("KPMG"),
and engaged  Rachlin Cohen & Holtz LLP ("Rachlin  Cohen") as our new independent
accountants.

WE HAVE CLOSED OUR COMMUNITY SITE, OUR SMALL BUSINESS  WEB-HOSTING  PROPERTY AND
HAVE SOLD  CERTAIN OF OUR GAMES  PROPERTIES  AND MAY SELL THE  REMAINDER  OF OUR
GAMES  PROPERTIES.  WE MAY  NOT  BE  ABLE  TO  SELL  THESE  PROPERTIES  FOR  ANY
SIGNIFICANT VALUE.

Due to the significant and prolonged decline in the Internet advertising sector,
the Company  elected to close its community web site at  "www.theglobe.com"  and
its small business web-hosting property at "www.webjump.com" in August 2001. The
Company  has  already  sold  substantially  all the  assets of (i)  Kaleidoscope
Networks Limited,  the English subsidiary of Attitude Network Ltd. that operated
GamesDomain.com and GamesDomain.co.uk, (ii) KidsDomain.com and KidsDomain.co.uk,
and (iii) HappyPuppy.com and HappyPuppy.co.uk. In addition, the Company sold the
URL of  webjump.com.  The  Company is seeking  buyers  for its  remaining  games
properties,  Chips & Bits,  Inc., an electronic  commerce  retailer that focuses
primarily on game  enthusiasts'  and Strategy Plus,  Inc., a media property that
publishes a monthly games  magazine and a game  enthusiast web site. The Company
may be unable to sell its remaining games properties  quickly,  if at all, which
would  result  in  continued  depletion  of its cash  position  since  the games
business  currently  operates at a cash loss. The games properties may also lose
some of their value  while we try to sell them as we do not have full  corporate
staff to  support  these  businesses.  In  addition,  the  "theglobe.com"  brand
continues to lose  significant  value since the website  "www.theglobe.com"  was
taken offline  August 15, 2001.  The closing of our community site and our small
business  web-hosting site has also adversely  affected our electronic  commerce
due to the  inability of those web sites after their closure to refer traffic to
the Chips & Bits web site. We cannot assure you that we will be able to sell all
or any of the remaining games business quickly, if at all, or at any significant
price, or that there will be any return to our equity holders. In addition,  the
Company  currently has a significant  net operating  loss carry forward that may
help to offset  Federal income taxes in the future,  should the Company  achieve
profitability.  The rules  governing use of the net operating loss carry forward
asset are complex and depend on a variety of factors, including maintaining some
continuity of existing  business  lines.  There is no guarantee  that we will be
able to maintain  use of the net  operating  loss carry  forward if we choose to
sell our games properties or enter different business lines in the future.

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

As of December 31, 2002, our sole source of liquidity  consisted of $0.7 million
of cash  and cash  equivalents.  We  received  a  report  from  our  independent
accountants,  relating to our December 31, 2002  audited  financial  statements,
containing  an  explanatory  paragraph  stating that our  recurring  losses from
operations  since  inception and  requirement  for  additional  financing  raise
substantial doubt about our ability to continue as a going concern.

On July 2, 2003, we completed a private  offering of a newly  created  series of
preferred stock known as the "Series G Automatically Converting Preferred Stock"
for an aggregate purchase price of approximately $8.7 million. The proceeds from
the private  placement are being used primarily for our VoIP telephony  services
business,  including the deployment of networks, website development,  marketing
and limited capital  infrastructure  expenditures.  Proceeds may also be used in
connection  with working  capital  requirements  of the Company's other existing
businesses or for future  acquisitions  or businesses.  Cash flow generated from
our new and  existing  operations  may be  insufficient  to cover our  operating
expenses, working capital and capital expenditure requirements. We cannot assure
you that additional financing will be available on terms acceptable to us, if at
all.  Additionally,  any financing that could be obtained would probably further
dilute existing shareholders significantly.



                                       30
<PAGE>


ITEM 3. 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 judgement in evaluating the
cost benefit relationship of possible controls and procedures.

Our Chief  Executive  Officer and Chief  Financial  Officer have  evaluated  the
effectiveness of our disclosure  controls and procedures  pursuant to Securities
Exchange  Act Rule 13a-14 as of October 27, 2003, a date within 90 days prior to
the filing date of this quarterly  report.  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.

In addition,  there have been no significant changes in our internal controls or
in other factors that could  significantly  affect those controls  subsequent to
the date of our most recent evaluation.  We cannot assure you, however, that our
system of  disclosure  controls and  procedures  will always  achieve its stated
goals under all future conditions, no matter how remote.



                                       31
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See note 3 - "Litigation" of the Financial Statements included in this Report.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

(a) Sales of Unregistered Securities

On July 2, 2003,  theglobe.com,  inc.  completed  a private  offering of a newly
created  series  of  preferred  stock  known  as  the  "Series  G  Automatically
Converting  Preferred  Stock" for an aggregate  purchase price of  approximately
$8.7 million. In accordance with the terms of such Preferred stock, the Series G
Preferred  shares converted into common stock at $.50 per share (or an aggregate
of  approximately  17.4  million  shares) upon the filing of an amendment to the
Company's  certificate of  incorporation  to increase its  authorized  shares of
Common Stock from 100,000,000  shares to 200,000,000  shares.  Such an amendment
was  filed on July  29,  2003.  Investors  also  received  warrants  to  acquire
approximately  3.5 million shares of common stock.  The warrants are exercisable
for a period of 5 years at an  exercise  price of $1.39 per  common  share.  The
purpose of the  private  offering  was to raise funds for use  primarily  in the
Company's  planned  voiceglo  business,  including  the  deployment of networks,
website development,  marketing, and limited capital infrastructure expenditures
and working  capital.  Proceeds may also be used in connection  with  theglobe's
other  existing  or future  business  operations.  Pursuant  to the terms of the
private  offering  the Company is  contractually  obligated,  subject to certain
limitations,  to register the securities upon demand anytime commencing one year
after the sale of the  securities.  The private  offering was directed solely to
accredited  (within the meaning of Rule 501 of the  Securities  Act of 1933,  as
amended (the "Securities Act")) and sophisticated  investors without any form of
general  solicitation.  The Company believes that the issuance of the securities
in the private offering was exempt from the registration requirements of Section
5 of the  Securities  Act  pursuant  to  Section  4(2) of such  Act and Rule 506
promulgated thereunder.


(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.



                                       32
<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

4.1 Certificate Relating to the Designation,  Preferences and Rights of Series G
Preferred Stock. (1)

4.2 Form of Warrant dated July 2, 2003 to acquire  securities  of  theglobe.com,
inc. (1)

4.3  Form of  Subscription  Agreement  relating  to the  purchase  of  Units  of
securities of theglobe.com, inc. (1)

10.1 Employment  Agreement dated August 1, 2003 between  theglobe.com,  inc. and
Michael S. Egan.

10.2 Employment  Agreement dated August 1, 2003 between  theglobe.com,  inc. and
Edward A. Cespedes.

10.3 Employment  Agreement dated August 1, 2003 between  theglobe.com,  inc. and
Robin Segaul-Lebowitz.

10.4 Amended & Restated  Non-qualified  Stock Option  Agreement  effective as of
August 12, 2002 between theglobe.com, inc. and Michael S. Egan.

10.5 Amended & Restated  Non-qualified  Stock Option  Agreement  effective as of
August 12, 2002 between theglobe.com, inc. and Edward A. Cespedes.

10.6 Amended & Restated  Non-qualified  Stock Option  Agreement  effective as of
August 12, 2002 between theglobe.com, inc. and Robin Segaul-Lebowitz.

10.7  Non-Qualified  Stock  Option  Agreement  dated as of July 17, 2003 between
theglobe.com, inc. and Kellie L. Smythe.

10.8  2003 Sales Representatives Stock Option Plan.

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002.

31.2 Certification of the Chief Financial Officer pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002.

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 to our Form 8-K filed on July 7, 2003, relating to
an Item 5 event dated July 2, 2003.

(b) Reports on Form 8-K.

Form  8-K  related  to an  event  dated  July  2,  2003,  relating  to an Item 5
disclosure of the completion of a private  offering of preferred  stock known as
the  "Series  G  Automatically  Converting  Preferred  Stock"  for an  aggregate
purchase price of approximately $8.7 million.

Form 8-K dated August 8, 2003,  which amended a previously  filed Form 8-K dated
May 22, 2003,  relating to an Item 7 disclosure of the  financial  statements of
the acquired business of Direct Partner Telecom,  Inc. and the related pro forma
financial information.



                                       33
<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant has duly caused this report on Form 10-QSB to be signed on its behalf
by the undersigned thereto duly authorized.

                        theglobe.com, inc.



                        /s/ Michael S. Egan
                        -----------------------------------------
                        Michael S. Egan
                        Chief Executive Officer
                        (Principal Executive Officer)


November 14, 2003


                                       34
<PAGE>

                                  EXHIBIT INDEX

4.1 Certificate Relating to the Designation,  Preferences and Rights of Series G
Preferred Stock. (1)

4.2 Form of Warrant dated July 2, 2003 to acquire  securities  of  theglobe.com,
inc. (1)

4.3  Form  of  Subscription  Agreement  related  to the  purchase  of  Units  of
securities of theglobe.com, inc. (1)

10.1 Employment  Agreement dated August 1, 2003 between  theglobe.com,  inc. and
Michael S. Egan.

10.2 Employment  Agreement dated August 1, 2003 between  theglobe.com,  inc. and
Edward A. Cespedes.

10.3 Employment  Agreement dated August 1, 2003 between  theglobe.com,  inc. and
Robin Segaul-Lebowitz.

10.4 Amended & Restated  Non-qualified  Stock Option  Agreement  effective as of
August 12, 2002 between theglobe.com, inc. and Michael S. Egan.

10.5 Amended & Restated  Non-qualified  Stock Option  Agreement  effective as of
August 12, 2002 between theglobe.com, inc. and Edward A. Cespedes

10.6 Amended & Restated  Non-qualified  Stock Option  Agreement  effective as of
August 12, 2002 between theglobe.com, inc. and Robin Segaul-Lebowitz.

10.7  Non-Qualified  Stock  Option  Agreement  dated as of July 17, 2003 between
theglobe.com, inc. and Kellie L. Smythe.

10.8 2003 Sales Representatives Stock Option Plan.

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002.

31.2 Certification of the Chief Financial Officer pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002.

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 to our Form 8-K filed on July 7, 2003, relating to
an Item 5 event dated July 2, 2003.



                                       35