UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





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





For the
quarterly period ended September 30, 2009





OR





 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934





FOR
THE TRANSITION PERIOD FROM _______ TO _________





COMMISSION
FILE NO. 0-25053





THEGLOBE.COM,
INC.


(EXACT
NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




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




110 EAST
BROWARD BOULEVARD, SUITE 1400


FORT LAUDERDALE, FL
33301


(ADDRESS
OF PRINCIPAL EXECUTIVE OFFICES)





(954) 769 -
5900


(Registrant's
telephone number, including area code)




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





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





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





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





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


Yes x No  ̈





The
number of shares outstanding of the Registrant's Common Stock, $.001 par value
(the "Common Stock") as of November 9, 2009 was 441,484,838.








THEGLOBE.COM,
INC.


FORM
10-Q





TABLE OF
CONTENTS





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








PART
I - FINANCIAL INFORMATION





ITEM 1. CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS




THEGLOBE.COM,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS





September
      30,
                      
                      
                      DECEMBER 31,2009
                      
                      
                      2008(UNAUDITED)ASSETSCurrent
      Assets:Cash
      and cash equivalents
                      
                      $
                      1,725
                      
                      
                      $
                      89,754Accounts
      receivable from related parties
                      
                      
                      —
                      
                      
                      
                      75,000Prepaid
      expenses
                      
                      
                      8,705
                      
                      
                      
                      19,576Total
      current assets
                      
                      
                      10,430
                      
                      
                      
                      184,330Other
      assets
                      
                      
                      40,000
                      
                      
                      
                      40,000Total
      assets
                      
                      $
                      50,430
                      
                      
                      $
                      224,330LIABILITIES AND STOCKHOLDERS'
      DEFICITCurrent
      Liabilities:Accounts
      payable to related parties
                      
                      $
                      60,000
                      
                      
                      $
                      40,667Accounts
      payable
                      
                      
                      182,402
                      
                      
                      
                      200,385Accrued
      expenses and other current liabilities
                      
                      
                      459,677
                      
                      
                      
                      567,182Accrued
      interest due to related parties
                      
                      
                      60,630
                      
                      
                      
                      23,233Notes
      payable due to related parties
                      
                      
                      500,000
                      
                      
                      
                      500,000Net
      liabilities of discontinued operations
                      
                      
                      1,872,111
                      
                      
                      
                      1,899,110Total
      current liabilities
                      
                      
                      3,134,820
                      
                      
                      
                      3,230,577Stockholders'
      Deficit:Common
      stock, $0.001 par value; 500,000,000 shares authorized; 441,484,838 shares
       issued and outstanding at September 30, 2009 and December 31,
      2008
                      
                      
                      441,485
                      
                      
                      
                      441,485Additional
      paid-in capital
                      
                      
                      294,301,845
                      
                      
                      
                      294,298,990Accumulated
      deficit
                      
                      
                      (297,827,720
                      )
                      
                      
                      (297,746,722
                      )Total
      stockholders' deficit
                      
                      
                      (3,084,390
                      )
                      
                      
                      (3,006,247
                      )Total
      liabilities and stockholders’ deficit
                      
                      $
                      50,430
                      
                      
                      $
                      224,330





See notes
to unaudited condensed consolidated financial statements.


1





THEGLOBE.COM,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS





Three Months Ended September 30,
                                          
                                          
                                          Nine Months Ended September 30,2009
                                          
                                          
                                          2008
                                          
                                          
                                          2009
                                          
                                          
                                          2008(UNAUDITED)
                                          
                                          
                                          (UNAUDITED)Net
      Revenue
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          2,074,562
                                          
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          3,165,587Operating
      Expenses:Cost
      of revenue
                                          
                                          
                                          —
                                          
                                          
                                          
                                          125,505
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          274,334Sales
      and marketing
                                          
                                          
                                          (23,130
                                          )
                                          
                                          
                                          90,263
                                          
                                          
                                          
                                          (23,130
                                          )
                                          
                                          
                                          386,664General
      and administrative
                                          
                                          
                                          37,505
                                          
                                          
                                          
                                          435,973
                                          
                                          
                                          
                                          85,311
                                          
                                          
                                          
                                          1,626,593Related
      party transactions
                                          
                                          
                                          60,000
                                          
                                          
                                          
                                          105,424
                                          
                                          
                                          
                                          180,000
                                          
                                          
                                          
                                          388,806Depreciation
                                          
                                          
                                          —
                                          
                                          
                                          
                                          8,802
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          30,379Intangible
      asset amortization
                                          
                                          
                                          —
                                          
                                          
                                          
                                          289,753
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          368,777Total
      Operating Expenses
                                          
                                          
                                          74,375
                                          
                                          
                                          
                                          1,055,720
                                          
                                          
                                          
                                          242,181
                                          
                                          
                                          
                                          3,075,553Operating
      Income (Loss) from Continuing Operations
                                          
                                          
                                          (74,375
                                          )
                                          
                                          
                                          1,018,842
                                          
                                          
                                          
                                          (242,181
                                          )
                                          
                                          
                                          90,034Other
      Income (Expense), net:Gain
      on Tralliance Asset Sale
                                          
                                          
                                          —
                                          
                                          
                                          
                                          2,524,711
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          2,524,711Related
      party interest expense
                                          
                                          
                                          (12,602
                                          )
                                          
                                          
                                          (115,576
                                          )
                                          
                                          
                                          (37,397
                                          )
                                          
                                          
                                          (346,151
                                          )Interest
      income (expense), net
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (35
                                          )
                                          
                                          
                                          (140
                                          )
                                          
                                          
                                          3,201Related
      party other income
                                          
                                          
                                          75,000
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          225,000
                                          
                                          
                                          
                                          —Other
      income
                                          
                                          
                                          220
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          264
                                          
                                          
                                          
                                          24762,618
                                          
                                          
                                          
                                          2,409,100
                                          
                                          
                                          
                                          187,727
                                          
                                          
                                          
                                          2,182,008Income
      (Loss) from Continuing Operations Before Income Tax
                                          
                                          
                                          (11,757
                                          )
                                          
                                          
                                          3,427,942
                                          
                                          
                                          
                                          (54,454
                                          )
                                          
                                          
                                          2,272,042Income
      Tax Provision
                                          
                                          
                                          —
                                          
                                          
                                          
                                          44,919
                                          
                                          
                                          
                                          —
                                          
                                          
                                          
                                          44,919Income
      (Loss) from Continuing Operations
                                          
                                          
                                          (11,757
                                          )
                                          
                                          
                                          3,383,023
                                          
                                          
                                          
                                          (54,454
                                          )
                                          
                                          
                                          2,227,123Discontinued
      Operations, net of tax:
                                          
                                          
                                          —
                                          
                                          
                                          
                                          (3,096
                                          )
                                          
                                          
                                          (26,544
                                          )
                                          
                                          
                                          18,864Net
      Income (Loss)
                                          
                                          $
                                          (11,757
                                          )
                                          
                                          $
                                          3,379,927
                                          
                                          
                                          $
                                          (80,998
                                          )
                                          
                                          $
                                          2,245,987Loss
      Per Share:Basic
      and Diluted:Continuing
      Operations
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          0.02
                                          
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          0.01Discontinued
      Operations
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          —Net
      Income (Loss)
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          0.02
                                          
                                          
                                          $
                                          —
                                          
                                          
                                          $
                                          0.01Weighted
      Average Common Shares Outstanding
                                          
                                          
                                          441,484,838
                                          
                                          
                                          
                                          214,974,068
                                          
                                          
                                          
                                          441,484,838
                                          
                                          
                                          
                                          189,670,966




See notes
to consolidated financial statements.


2





THEGLOBE.COM,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS





Nine Months
                                          Ended September 30,2009
                                        
                                        
                                        2008(UNAUDITED)Cash
      Flows from Operating Activities:Net
      Income (Loss)
                                        
                                        $
                                        (80,998
                                        )
                                        
                                        $
                                        2,245,987Add
      back: (income) loss from discontinued operations
                                        
                                        
                                        26,544
                                        
                                        
                                        
                                        (18,864
                                        )Net
      income (loss) from continuing operations
                                        
                                        
                                        (54,454
                                        )
                                        
                                        
                                        2,227,123Adjustments
      to reconcile net loss from continuing operations:Gain
      on Tralliance Asset Sale
                                        
                                        
                                        —
                                        
                                        
                                        
                                        (2,524,711
                                        )Depreciation
      and amortization
                                        
                                        
                                        —
                                        
                                        
                                        
                                        399,156Employee
      stock compensation
                                        
                                        
                                        2,429
                                        
                                        
                                        
                                        19,429Compensation
      related to non-employee stock options
                                        
                                        
                                        426
                                        
                                        
                                        
                                        1,278Changes
      in operating assets and liabilities:Accounts
      receivable from related parties
                                        
                                        
                                        75,000
                                        
                                        
                                        
                                        404,540Accounts
      receivable
                                        
                                        
                                        —
                                        
                                        
                                        
                                        (116,251
                                        )Prepaid
      and other current assets
                                        
                                        
                                        10,871
                                        
                                        
                                        
                                        52,124Accounts
      payable to related parties
                                        
                                        
                                        19,333
                                        
                                        
                                        
                                        370,539Accounts
      payable
                                        
                                        
                                        (17,983
                                        )
                                        
                                        
                                        (39,838
                                        )Accrued
      expenses and other current liabilities
                                        
                                        
                                        (107,505
                                        )
                                        
                                        
                                        (209,427
                                        )Accrued
      interest due to related parties
                                        
                                        
                                        37,397
                                        
                                        
                                        
                                        346,150Deferred
      revenue
                                        
                                        
                                        —
                                        
                                        
                                        
                                        (1,844,837
                                        )Net
      cash flows used in operating activities of continuing
      operations
                                        
                                        
                                        (34,486
                                        )
                                        
                                        
                                        (914,725
                                        )Net
      cash flows used in operating activities of discontinued
      operations
                                        
                                        
                                        (53,543
                                        )
                                        
                                        
                                        (17,420
                                        )Net
      cash flows used in operating activities
                                        
                                        
                                        (88,029
                                        )
                                        
                                        
                                        (932,145
                                        )Cash
      Flows from Investing Activities:Purchases
      of property and equipment
                                        
                                        
                                        —
                                        
                                        
                                        
                                        (3,301
                                        )Tralliance
      Asset Sale transaction costs
                                        
                                        
                                        —
                                        
                                        
                                        
                                        (64,919
                                        )Proceeds
      from the sale of property and equipment
                                        
                                        
                                        —
                                        
                                        
                                        
                                        7,000Net
      cash flows from investing activities
                                        
                                        
                                        —
                                        
                                        
                                        
                                        (61,220
                                        )Cash
      Flows from Financing Activities:Borrowing
      on Notes Payable
                                        
                                        
                                        —
                                        
                                        
                                        
                                        500,000Share
      Issuance transaction costs
                                        
                                        
                                        —
                                        
                                        
                                        
                                        (92,778
                                        )Net
      cash flows from financing activities
                                        
                                        
                                        —
                                        
                                        
                                        
                                        407,222Net
      Decrease in Cash and Cash Equivalents
                                        
                                        
                                        (88,029
                                        )
                                        
                                        
                                        (586,143
                                        )Cash
      and Cash Equivalents, at beginning of period
                                        
                                        
                                        89,754
                                        
                                        
                                        
                                        631,198Cash
      and Cash Equivalents, at end of period
                                        
                                        $
                                        1,725
                                        
                                        
                                        $
                                        45,055





See notes
to unaudited condensed consolidated financial statements.


3





THEGLOBE.COM,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(continued)





Nine Months
                              Ended September 30,2009
                            
                            
                            2008(UNAUDITED)Supplemental
      Disclosure of Non-Cash Investing and Financing Activities:Conversion
      of debt securities into common stock
                            
                            $
                            —
                            
                            
                            $
                            400,000Cancellation
      of debt and other liabilities related to Purchase
    Transaction
                            
                            $
                            —
                            
                            
                            $
                            6,409,818Issuance
      of common stock related to Purchase Transaction
                            
                            $
                            —
                            
                            
                            $
                            3,771,088





See notes
to unaudited condensed consolidated financial statements.


4





THEGLOBE.COM,
INC. AND SUBSIDIARIES


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





(1)
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





DESCRIPTION
OF THEGLOBE.COM





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





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





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





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





PRINCIPLES
OF CONSOLIDATION





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




UNAUDITED
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION





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




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





USE OF
ESTIMATES





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


5





CASH AND
CASH EQUIVALENTS





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





COMPREHENSIVE
INCOME (LOSS)





The
Company reports comprehensive income (loss) in accordance with Accounting
Standards Codification (“ASC”) Topic 220, "Reporting Comprehensive Income."
Comprehensive income (loss) generally represents all changes in stockholders'
equity during the year except those resulting from investments by, or
distributions to, stockholders. The Company’s comprehensive loss was
approximately $81 thousand for the nine months ended September 30, 2009 and the
Company's comprehensive income was approximately $2.2 million for the nine
months ended September 30, 2008, which amounts approximated the Company's
reported net loss and net income for such periods.





REVENUE
RECOGNITION





The
Company’s revenue from continuing operations for the nine months ended September
30, 2008 consists principally of registration fees for Internet domain
registrations earned prior to the sale of its Tralliance
business.  Such registration fees have been reported net of
transaction fees paid to an unrelated third party which served as the registry
operator for the Company. Payments of registration fees had been deferred when
initially received and recognized as revenue on a straight-line basis over the
registrations’ terms. In connection with the Company’s sale of its Tralliance
business on September 29, 2008, the remaining balance of deferred revenue
related to such registration fees at the date of closing, totaling $1,527,697,
was written off and is included as a component of net revenue for the quarter
ended September 30, 2008.





NET LOSS
PER SHARE





The
Company reports net loss per common share in accordance with ASC Topic 260,
"Computation of Earnings Per Share." In accordance with ASC Topic 260 and the
Securities and Exchange Commission (“SEC’) Staff Accounting Bulletin No. 98,
basic earnings per share is computed using the weighted average number of common
shares outstanding during the period. Common equivalent shares consist of the
incremental common shares issuable upon the exercise of stock options and
warrants (using the treasury stock method). Common equivalent shares are
excluded from the calculation if their effect is anti-dilutive.




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





2009
                                                
                                                
                                                2008Options
      to purchase common stock
                                                
                                                
                                                13,597,000
                                                
                                                
                                                
                                                14,964,000Common
      shares issuable upon exercise of warrants
                                                
                                                
                                                12,725,000
                                                
                                                
                                                
                                                13,439,000Total
                                                
                                                
                                                26,322,000
                                                
                                                
                                                
                                                28,403,000





RECENT
ACCOUNTING PRONOUNCEMENTS





In
October 2009, the FASB issued ASU 2009-13 Multiple-Deliverable Arrangementswhich amends FASB ASC Topic 605 Revenue Recognitionto
provide another alternative for determining the selling price of deliverables,
allowing entities to allocate revenue in multiple deliverable arrangements based
on their relative selling prices. This ASU is effective prospectively for
revenue arrangements entered into or materially modified after January 1,
2011. The Company is currently evaluating the impact that this new accounting
guidance will have on its consolidated financial statements.





In the
second quarter of 2009, the Financial Accounting Standards Board (“FASB”)
established the FASB Accounting Standards CodificationTM
(Codification) as the single source of authoritative US GAAP. The Codification
was not intended to modify or alter prior authoritative guidance and only
affected how specific references to US GAAP literature are disclosed in the
notes to the condensed consolidated financial statements.


6


In
      the second quarter of 2009, the Company adopted a new accounting standard
      included in FASB Accounting Standards Codification (“ASC”) Topic 820 Fair Value Measurements and
      Disclosure (“ASC Topic 820”)that provides guidance on how to
      determine the fair value of assets and liabilities in the current economic
      environment and reemphasizes that the objective of a fair value
      measurement remains the determination of an exit price. If the Company
      were to conclude that there has been a significant decrease in the volume
      and level of activity of the asset or liability in relation to normalmarket
      activities, quoted market values may not be representative of fair value
      and we may conclude that a change in valuation technique or the use of
      multiple valuation techniques may be appropriate. The adoption did not
      have a material impact on our condensed consolidated financial
      statements.





In
      August 2009, the FASB issued Accounting Standards Update (“ASU”)
      2009-05 Measuring
      Liabilities at Fair Valueto provide guidance on measuring the fair
      value of liabilities under ASC Topic 820. This ASU clarifies the fair
      value measurements for a liability in an active market and the valuation
      techniques in the absence of a Level 1 measurement. This ASU is effective
      for the interim period beginning October 1, 2009. The adoption of
      this ASU is not anticipated to have a material impact on the Company’s
      consolidated financial statements.





In
      the second quarter of 2009, the Company adopted a new accounting standard
      included in FASB ASC Topic 320 Investments—Debt and Equity
      Securitiesthat modifies the requirements for recognizing
      other-than-temporarily impaired debt securities and revises the existing
      impairment model for such securities by modifying the current intent and abilityindicator in determining whether a debt security is
      other-than-temporarily impaired. The adoption did not have a material
      impact on our condensed consolidated financial
  statements.





In
      the second quarter of 2009, the Company adopted a new accounting standard
      included in FASB ASC Topic 825 Financial Instrumentsthat requires disclosures about the fair value of financial
      instruments in interim financial statements as well as in annual financial
      statements; it also requires those disclosures in all interim financial
      statements. Reporting entities are required to disclose the fair value of
      all financial instruments for which it is practicable to estimate that
      value, the method and significant assumptions used to estimate the fair
      value and a discussion of changes in methods and significant assumptions
      during the period. The adoption did not have a material impact on our
      condensed consolidated financial
statements.





In
      the second quarter of 2009, the Company adopted a new accounting standard
      included in FASB ASC Topic 855 Subsequent Eventsthat
      establishes general standards of accounting for and disclosure of events
      that occur after the balance sheet date but before the financial
      statements are issued or are available to be issued. This new accounting
      standard provides guidance on the period after the balance sheet date
      during which management of a reporting entity should evaluate events or
      transactions that may occur for potential recognition or disclosure in the
      financial statements, the circumstances under which an entity should
      recognize events or transactions occurring after the balance sheet date in
      its financial statements and the disclosures that an entity should make
      about events or transactions that occurred after the balance sheet date.
      The implementation of this standard did not have a material impact on our
      condensed consolidated financial statements. The Company evaluated
      subsequent events through November 9, 2009, the date the accompanying
      financial statements were issued.  Noting no events that require
      adjustment and/or disclosure in the consolidated financial statements for
      the period ended September 30,
2009.





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





During
the first quarter of 2009, the Company adopted ASC 805 “Business Combinations”
(ASC 805) which requires an acquirer to recognize the assets acquired, the
liabilities assumed, and any non-controlling interest in the acquiree at the
acquisition date, measured at their fair values as of that date.  ASC
805 requires, among other things, that in a business combination achieved
through stages (sometimes referred to as a “step acquisition”) that the acquirer
recognize the identifiable assets and liabilities, as well as the
non-controlling interest in the acquiree, at the full amounts of their fair
values (or other amounts determined in accordance with this
guidance).





ASC 805
also requires the acquirer to recognize goodwill as of the acquisition date,
measured as a residual, which in most types of business combinations will result
in measuring goodwill as the excess of the consideration transferred plus the
fair value of any non-controlling interest in the acquiree at the acquisition
date over the fair values of the identifiable net assets
acquired.   ASC 805 will have an impact on the Company’s
accounting for future business combinations, but the effect is dependent upon
acquisitions that may be made in the future.





In the
first quarter of 2009, the Company adopted ASC Topic 810-10-65-1,
“Non-controlling Interests in Consolidated Financial
Statements.”  This guidance changes the way the consolidated income
statement is presented and requires consolidated net income to be reported at
amounts that include the amounts attributable to both the parent and the
non-controlling interest. It also requires disclosure, on the face of the
consolidated statement of income, of the amounts of consolidated net income
attributable to the parent and to the non-controlling interest. Currently, net
income attributable to the non-controlling interest generally is reported as an
expense or other deduction in arriving at consolidated net income. It also is
often presented in combination with other financial statement
amounts.  This guidance results in more transparent reporting of the
net income attributable to the non-controlling interest. The adoption of this
guidance did not have a material impact on its consolidated financial
statements.





RECLASSIFICATIONS





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


7





(2)
GOING CONCERN CONSIDERATIONS AND MANAGEMENT’S PLAN





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





During
its recent past, the Company was able to continue operating as a going concern
due principally to funding of $500,000 received during 2008 under a Revolving
Loan Agreement with an entity controlled by Michael S. Egan, its Chairman and
Chief Executive Officer (See Note 5, “Debt” for further details) and income of
$300,000 received during the first nine months of 2009 under an Earn-out
Agreement with an entity also controlled by Mr. Egan (See Note 3, “Sale of
Tralliance and Share Issuance” for further details).





At
September 30, 2009, the Company had a net working capital deficit of
approximately $3,124,000, inclusive of a cash and cash equivalents balance of
approximately $1,725.  Such working capital deficit included (i) a
total of approximately $561,000 in principal and accrued interest owed under the
aforementioned Revolving Loan Agreement and a total of $60,000 in management
service fees owed under a Master Services Agreement to an entity controlled by
Mr. Egan, and (ii) an aggregate of approximately $2,500,000 in unsecured
accounts payable and accrued expenses owed to vendors and other non-related
third parties (of which approximately $1,700,000 relates to liabilities of our
VoIP telephony service discontinued business, with a significant portion of such
liabilities related to charges which have been disputed by theglobe). theglobe
believes that its ability to continue as a going concern for any significant
length of time in the future will be heavily dependent, among other things, on
its ability to prevail and avoid making any payments with respect to such
disputed vendor charges and/or to negotiate favorable settlements (including
deeply discounted payment and/or payment term concessions) with the
aforementioned creditors.





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





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





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




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


8





MANAGEMENT’S
PLANS





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





It is the
Company’s preference to avoid filing for protection under the U.S. Bankruptcy
Code. However, based upon the Company’s current financial condition as discussed
above, management believes that additional debt or equity capital will need to
be raised in order for theglobe to continue to operate as a going concern on a
long-term basis. Such capital will be needed both to (i) fund its expected
limited future net losses and (ii) repay the $561,000 of secured debt and
related accrued interest due under the Revolving Loan Agreement and the $60,000
of management services fees due under the Master Services Agreement, and a
portion of the $2,500,000 unsecured indebtedness (assuming theglobe is
successful in favorably resolving and settling certain disputed and non-disputed
vendor charges related to such unsecured indebtedness).  Any such
capital would likely come from Mr. Egan, or affiliates of Mr. Egan, as the
Company currently has no access to credit facilities and had traditionally
relied upon borrowings from related parties to meet short-term liquidity
needs.  Any such capital raised would likely result in very
substantial dilution in the number of outstanding shares of the Company’s Common
Stock.





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





(3)   SALE OF TRALLIANCE AND SHARE
ISSUANCE





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





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





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


9




In
connection with the closing of the Purchase Agreement, the Company also entered
into a Master Services Agreement (“Services Agreement”) with Dancing Bear
Investments, Inc. (“Dancing Bear”), which is controlled by Mr.
Egan.  Under the terms of the Services Agreement, for a fee of $20,000
per month ($240,000 per annum), Dancing Bear will provide personnel and services
to the Company so as to enable it to continue its existence as a public company
without the necessity of any full-time employees of its own.  The
Services Agreement has an initial term of one year and is subject to renewal or
early termination under certain events.  Services under the Services
Agreement include, without limitation, accounting, assistance with financial
reporting, accounts payable, treasury/financial planning, record retention and
secretarial and investor relations functions. During the nine months ended
September 30, 2009, a total of $180,000 related to such Services Agreement has
been expensed, of which $60,000 remains unpaid and accrued at September 30,
2009.





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





(4)
DISCONTINUED OPERATIONS





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





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





In
October 2005, the Company completed the sale of the business and substantially
all of the assets of SendTec, Inc., its former Marketing Services
subsidiary.  In September 2009, the Company settled and agreed to pay
approximately $87,000 in income taxes and interest due in connection with prior
year audits of this subsidiary.  The Company is not currently aware of
any other pending or unsettled Marketing Services business liabilities at this
time.





Results
of operations for the Computer Games, VoIP telephony services and Marketing
Services businesses have been reported separately as “Discontinued Operations”
in the accompanying condensed consolidated statements of operations for all
periods presented. There are no discontinued operations assets included in the
accompanying condensed consolidated balance sheets. The liabilities of the
Computer Games, VoIP telephony services and Marketing Services businesses have
been included in the caption, “Liabilities of Discontinued Operations” in the
accompanying condensed consolidated balance sheets.





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





September 30,
                        
                        December 31,2009
                        
                        2008Net
      liabilities of discontinued operations:Computer
      Games
                        
                        $
                        40,554
                        
                        
                        $
                        40,555VoIP
      Telephony Services
                        
                        
                        1,744,557
                        
                        
                        
                        1,794,555Marketing
      Services
                        
                        
                        87,000
                        
                        
                        
                        64,000Total
      net liabilities of discontinued operations
                        
                        $
                        1,872,111
                        
                        
                        $
                        1,899,110


10





Summarized
results of operations financial information for the discontinued operations of
our Computer Games, VoIP telephony services and Marketing Services businesses
was as follows:




Three Months Ended September 30,
                        
                        Nine Months Ended September 30,2009
                        
                        2008
                        
                        2009
                        
                        2008Income
      (Loss) from discontinuedoperations,
      net of tax:Computer
      Games
                        
                        $
                        —
                        
                        
                        $
                        (979
                        )
                        
                        $
                        (3,095
                        )
                        
                        $
                        16,810VoIP
      Telephony Services
                        
                        
                        —
                        
                        
                        
                        (2,117
                        )
                        
                        
                        (449
                        )
                        
                        
                        2,054Marketing
      Services
                        
                        $
                        —
                        
                        
                        $
                        —
                        
                        
                        $
                        (23,000
                        )
                        
                        $
                        —Total
      Income (Loss) from discontinued operations, net of tax
                        
                        $
                        —
                        
                        
                        $
                        (3,096
                        )
                        
                        $
                        (26,544
                        )
                        
                        $
                        18,864





(5)
DEBT





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





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





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





(6)
STOCK OPTION PLANS





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





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




Stock
option activity during the nine months ended September 30, 2009 was as
follows:





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




11




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





Stock
compensation cost is recognized on a straight-line basis over the vesting
period. Stock compensation expense totaling $2,855 was charged to operations
during the nine months ended September 30, 2009, including $426 of expense
resulting from the vesting of non-employee stock options.  During the nine months
ended September 30, 2008, stock compensation expense of $20,707 charged to
operations included $1,278 of expense related to the vesting of non-employee
stock options.





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





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





(7)
LITIGATION





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





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





At the
Court’s request, plaintiffs selected six “focus” cases, which do not include the
Company.  The Court indicated that its decisions in the six focus
cases are intended to provide strong guidance for the parties in the remaining
cases.  On December 5, 2006, the U.S. Court of Appeals for the Second
Circuit vacated a decision by the District Court granting class certification in
the focus cases. On April 6, 2007, the Second Circuit denied a petition for
rehearing filed by plaintiffs, but noted that plaintiffs could ask the District
Court to certify more narrow classes than those that were rejected.





The
parties in the approximately 300 coordinated cases, including ours, reached a
settlement. The insurers for the issuer defendants in the coordinated cases will
make the settlement payment on behalf of the issuers, including
theglobe.  On October 5, 2009, the Court granted final approval of the
settlement.  The thirty day deadline to appeal the final approval
order will start to run when the judgment is filed.  The judgment has
not yet been filed.  A group of three objectors has filed a petition
to the Second Circuit seeking permission to appeal the District Court’s final
approval order on the basis that the settlement class is broader than the class
previously rejected by the Second Circuit in its December 5, 2006 order vacating
the District Court’s order certifying classes in the focus
cases.  Plaintiffs have filed an opposition to the
petition.  Two notices of appeal to the Second Circuit have also been
filed by different groups of objectors.





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





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


12





(8)   RELATED PARTY
TRANSACTIONS





During
the nine months ended September 30, 2009, the Company received minimum Earn-out
installment payments totaling $300,000 from Tralliance Registry Management
Company LLC (“Tralliance Registry Management”) under an Earn-out Agreement
entered into on September 29, 2008 by and between Tralliance Registry Management
and the Company.  Tralliance Registry Management is an entity
controlled by Michael S. Egan, and each of our two remaining executive officers
and Board members, Edward A. Cespedes, our President, and Robin S. Lebowitz, our
Vice President of Finance, own minority interests in The Registry Management
Company, LLC, the parent company of Tralliance Registry
Management.  In accounting for such proceeds, $225,000 was recorded as
Related Party Other Income in the Company’s Unaudited Condensed Consolidated
Statement of Operations for the nine months ended September 30, 2009, and
$75,000 served to reduce Account Receivables from Related Parties which had been
recorded on the Company’s Consolidated Balance Sheet at December 31,
2008.




During
the nine months ended September 30, 2009, the Company paid management services
fees totaling $160,667 to Dancing Bear under a Master Services Agreement entered
into on September 29, 2008 by and between Dancing Bear and the
Company.  In this connection, $180,000 was recorded as Related Party
Transactions Expense in the Company’s Unaudited Condensed Consolidated Statement
of Operations for the nine months ended September 30, 2009.  An
accrual for $60,000 related to unpaid management service fees has also been
recorded in the Accounts Payable to Related Parties account on the Company’s
Consolidated Balance Sheet at September 30, 2009.





On June
6, 2008, the Company entered into a Revolving Loan Agreement with Dancing Bear
Investments, Inc. (“Dancing Bear”), pursuant to which Dancing Bear may loan up
to $500,000 to the Company on a revolving basis (the “Credit
Line”).  Dancing Bear is an entity controlled by Michael S. Egan, the
Company’s Chairman and Chief Executive Officer.  During 2008 the
Company made borrowings totaling the full amount of the $500,000 Credit
Line.   During the nine months ended September 30, 2009 and 2008,
the Company recorded interest expense of $37,397 and $10,630, respectively,
related to the Credit Line.  At September 30, 2009, accrued interest
of $60,630 related to the Credit Line has been recorded on the Company’s balance
sheet.   All borrowings under the Credit Line, including accrued
interest on borrowed funds at the rate of 10% per annum, were initially due and
payable in one lump sum on the first anniversary of the Credit Line, or June 6,
2009, or sooner upon the occurrence of an event of default under the loan
documentation.  On May 7, 2009 such repayment terms were amended so as
to require the Company to repay any or all amounts due under the Credit Line in
one lump sum on the earlier of (i) five business days following demand for
payment, which demand can be made at any time, or (ii) the occurrence of an
event of default as defined in the Revolving Credit Agreement.





During
2008, an entity owned solely by the sister of the Company’s President, Treasurer
and Chief Financial Officer and Director provided certain administrative
services to the Company.  During the nine month period ended September
30 2008, $33,750 of expense related to these services was recorded.





During
2008, several entities controlled by the Company’s Chairman and Chief Executive
Officer provided services to the Company, including the lease of office space
and the outsourcing of customer services, human resources and payroll processing
functions.  During the nine month period ended September 30, 2008,
$354,389 of expense related to these services was recorded.





(9)   SUBSEQUENT EVENTS





We have
performed an evaluation of subsequent events through the close of business day
on November 9, 2009, the date these financial statements were
issued.  There were none.





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




FORWARD
LOOKING STATEMENTS




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





·
            the outcome of pending
      litigation;





·
            our ability to negotiate
      favorable settlements with unsecured
  creditors;


13





·
            our ability to successfully
      resolve certain disputed
liabilities;





·
            our estimates or expectations of
      continued losses;





·
            our expectations regarding future
      revenue and expenses;




·
            our ability to raise additional
      and sufficient capital; and





·
            our ability to continue to
      operate as a going concern.





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




OVERVIEW





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





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





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





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





BASIS
OF PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





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





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





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


14





THREE
MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO


THE
THREE MONTHS ENDED SEPTEMBER 30, 2008





CONTINUING
OPERATIONS





NET
REVENUE. Net revenue totaled $0 for the three months ended September 30, 2009 as
compared to approximately $2.1 million for the three months ended September 30,
2008.  Net revenue for the third quarter of 2008 included
approximately $1.5 million related to the write-off of deferred revenue as a
result of the sale of the Company’s Tralliance business on September 29, 2008.
See Note 3, “Sale of Tralliance and Share Issuance” in the accompanying Notes to
Unaudited Condensed Consolidated Financial Statements.





COST OF
REVENUE. Cost of revenue totaled $0 for the three months ended September 30,
2009 as compared to approximately $125 thousand reported for the three months
ended September 30, 2008.   Cost of revenue for the three months ended
September 30, 2008 included approximately $101 thousand related to the write-off
of prepaid registration fees which were deemed to have no future value as a
result of the sale of the Company’s Tralliance business on September 29,
2008.





SALES AND
MARKETING. As the result of the adjustment of estimated accruals, sales and
marketing expenses for the three months ended September 30, 2009 totaled
approximately $(23) thousand compared to expenses of approximately $90 thousand
for the same three month period of 2008.




GENERAL
AND ADMINISTRATIVE EXPENSES. Prior to the Sale of Tralliance, general and
administrative expenses consisted primarily of salaries and other personnel
costs related to management, finance and accounting functions, facilities,
outside legal and audit fees, insurance, and general corporate overhead costs.
Subsequent to the sale of Tralliance, general and administrative expenses
include only those customary public company expenses, including outside legal
and audit fees, insurance and other related public company
costs.  Expenses relating to management, finance and accounting
functions that were previously included within the general and administrative
expense caption are now included within the related party transactions expense
caption.  General and administrative expenses totaled approximately
$37 thousand in the third quarter of 2009 as compared to approximately $436
thousand for the same quarter of the prior year.





RELATED
PARTY TRANSACTIONS. Related party transaction expense totaled $60 thousand for
the three months ended September 30, 2009 as compared to approximately $105
thousand for the same period of 2008, a decrease of approximately $45
thousand.  Subsequent to the Sale of Tralliance, the Company’s related
party expenses consist of management services fees payable to Dancing Bear for
accounting, finance, administrative and managerial support.  During
2008, the Company’s related party expenses consisted of related party charges
for the leasing of office space, and the outsourcing of customer service, human
resources and payroll processing functions.





DEPRECIATION
AND AMORTIZATION. Depreciation and amortization expense was $0 for the three
months ended September 30, 2009 as compared to approximately $299 thousand for
the three months ended September 30, 2008, including approximately $250 thousand
related to the write-off of the remaining net book value of intangible assets
which were deemed to have no future value as the result of the sale of the
Company’s Tralliance business on September 29, 2008.





GAIN ON
TRALLIANCE ASSET SALE. During the three months ended September 30, 2008, the
Company recorded a gain of approximately $2.5 million related to the sale of its
Tralliance business on September 29, 2008.





RELATED
PARTY INTEREST EXPENSE. Related party interest expense for the third quarter of
2009 was approximately $13 thousand as compared to approximately $116 thousand
for the same quarter of 2008, reflecting the decrease in outstanding related
party debt resulting from the Sale of Tralliance and Share
Issuance.





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





INCOME
TAXES. The provision for income taxes for the third quarter of 2009 was $0 as
compared to approximately $45 thousand for the same period the prior year which
included federal alternative minimum taxes resulting from the Sale of Tralliance
and Share Issuance.





DISCONTINUED
OPERATIONS





Discontinued
operations generated a net loss of $0 for the third quarter of 2009 as compared
to a net income of approximately $3 thousand during the third quarter of
2008.


15




NINE
MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO


THE
NINE MONTHS ENDED SEPTEMBER 30, 2008





CONTINUING
OPERATIONS





NET
REVENUE. Net revenue totaled $0 for the nine months ended September 30, 2009 as
compared to approximately $3.2 million for the nine months ended September 30,
2008.  Net revenue for the third quarter of 2008 included
approximately $1.5 million related to the write-off of deferred revenue as a
result of the sale of the Company’s Tralliance business on September 29, 2008.
See Note 3, “Sale of Tralliance and Share Issuance” in the accompanying Notes to
Unaudited Condensed Consolidated Financial Statements.





COST OF
REVENUE. Cost of revenue totaled $0 for the nine months ended September 30, 2009
compared to $274 thousand reported for the nine months ended September 30, 2008.
Cost of revenue for the nine months ended September 30, 2008 included
approximately $101 thousand related to the write-off of prepaid registration
fees which were deemed to have no future value as a result of the sale of the
Company’s Tralliance business on September 29, 2008.





SALES AND
MARKETING. As the result of the adjustment of estimated accruals, sales and
marketing expenses for the nine months ended September 30, 2009 totaled
approximately $(23) thousand compared to expenses of approximately $387 thousand
for the same nine month period of 2008.





GENERAL
AND ADMINISTRATIVE EXPENSES. Prior to the Sale of Tralliance, general and
administrative expenses consisted primarily of salaries and other personnel
costs related to management, finance and accounting functions, facilities,
outside legal and audit fees, insurance, and general corporate overhead costs.
Subsequent to the sale of Tralliance, general and administrative expenses
include only those customary public company expenses, including outside legal
and audit fees, insurance and other related public company
costs.  Expenses relating to management, finance and accounting
functions that were previously included within the general and administrative
expense caption are now included within the related party transactions expense
caption.  General and administrative expenses totaled approximately
$85 thousand in the nine months ended September 30, 2009 as compared to
approximately $1.6 million for the same period of 2008.





RELATED
PARTY TRANSACTIONS. Related party transaction expense totaled $180 thousand for
the nine months ended September 30, 2009 as compared to approximately $389
thousand for the same period of 2008, a decrease of approximately $209
thousand.  Subsequent to the Sale of Tralliance, the Company’s related
party expenses consist of management services fees payable to Dancing Bear for
accounting, finance, administrative and managerial support.  During
2008, the Company’s related party expenses consisted of related party charges
for the leasing of office space, and the outsourcing of customer service, human
resources and payroll processing functions.




DEPRECIATION
AND AMORTIZATION. Depreciation and amortization expense was $0 for the nine
months ended September 30, 2009 as compared to approximately $399 thousand for
the nine months ended September 30, 2008, including approximately $250 thousand
related to the write-off of the remaining net book value of intangible assets
which were deemed to have no future value as the result of the sale of the
Company’s Tralliance business on September 29, 2008.





GAIN ON
TRALLIANCE ASSET SALE. During the nine months ended September 30, 2008, the
Company recorded a gain of approximately $2.5 million related to the sale of its
Tralliance business on September 29, 2008.





RELATED
PARTY INTEREST EXPENSE. Related party interest expense for the nine months ended
September 30, 2009 was approximately $37 thousand as compared to approximately
$346 thousand for the same period of 2008, reflecting the decrease in
outstanding related party debt resulting from the Sale of Tralliance and Share
Issuance.





INTEREST
INCOME (EXPENSE), NET. Net interest expense of $140 was reported for the first
nine months of 2009 compared to total net interest income of approximately $3
thousand reported for the same period of the prior year.





RELATED
PARTY OTHER INCOME.  Related party other income consists of the
minimum Earn-Out payable quarterly by Tralliance Registry Management to the
Company as further discussed in Note 3, “Sale of Tralliance and Share Issuance”
in the accompanying Notes to Unaudited Condensed Consolidated Financial
Statements.  Related party other income for the nine months ended
September 30, 2009 was $225 thousand.




INCOME
TAXES. The provision for income taxes for the  nine month ended
September 30, 2009 was $0 as compared to approximately $45 thousand for the same
period the prior year which included federal alternative minimum taxes resulting
from the Sale of Tralliance and Share Issuance.


16





DISCONTINUED
OPERATIONS





The net
loss from discontinued operations totaled approximately $27 thousand in the
first nine months of 2009 as compared to a net income of approximately $19
thousand during the first nine months of 2008.  The 2009 loss was due
primarily to interest accruals related to a prior year SendTec, Inc. income tax
assessment.  The 2008 income was due primarily to the recording of
Computer Games revenue based upon the collection of delinquent accounts
receivables.





LIQUIDITY
AND CAPITAL RESOURCES





CASH
FLOW ITEMS





As of
September 30, 2009, theglobe had approximately $2 thousand in cash and cash
equivalents as compared to approximately $90 thousand as of December 31, 2008.
Net cash flows used in operating activities of continuing operations totaled
approximately $34 thousand and $915 thousand, for the nine months ended
September 30, 2009 and 2008, respectively, or a decrease of approximately $881
thousand. Such decrease was attributable primarily to a lower net loss from
continuing operations (after adjustments for the non-cash impacts attributable
to the Tralliance Asset Sale in the current period and the non-cash impact
related to beneficial conversion features of debt in the prior year) for the
nine months ended September 30, 2009 compared to the nine months ended September
30, 2008.





Approximately
$54 thousand in net cash flows were used in the operating activities of
discontinued operations during the nine months ended September 30, 2009 as
compared to a net cash flow usage of approximately $17 thousand during the same
period of the prior year.





Net cash
flows from investing activities and net cash flows from financing activities for
the nine months ended September 30, 2008, included allocations of $65 thousand
and $93 thousand, respectively, related to transaction costs incurred in
connection with the Purchase Transaction that was consummated on September 29,
2008. Net cash flows from financing activities for the nine months ended
September 30, 2008 also included proceeds of $500 thousand borrowed under a
Revolving Loan Agreement with Dancing Bear Investments, Inc., an entity
controlled by the Company Chairman and Chief Executive Officer.




FUTURE
AND CRITICAL NEED FOR CAPITAL





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





During
its recent past, the Company was able to continue operating as a going concern
due principally to funding of $500 thousand received during 2008 under a
Revolving Loan Agreement with an entity controlled by Michael S. Egan, its
Chairman and Chief Executive Officer (See Note 5, “Debt”  to the
unaudited condensed consolidated financial statements for further details) and
income of $300 thousand received during the first nine months of 2009 under an
Earn-out Agreement with an entity also controlled by Mr. Egan (See Note 3, “Sale
of Tralliance and Share Issuance” to the unaudited condensed consolidated
financial statements for further details).





At
September 30, 2009, the Company had a net working capital deficit of
approximately $3.1 million, inclusive of a cash and cash equivalents balance of
approximately $2 thousand.  Such working capital deficit included (i)
a total of approximately $561 thousand in principal and accrued interest owed
under the aforementioned Revolving Loan Agreement and a total of $60 thousand in
management service fees owed under a Master Services Agreement to an entity
controlled by Mr. Egan, and (ii) an aggregate of approximately $2.5 million in
unsecured accounts payable and accrued expenses owed to vendors and other
non-related third parties (of which approximately $1.7 million relates to
liabilities of our VoIP telephony service discontinued business, with a
significant portion of such liabilities related to charges which have been
disputed by theglobe). theglobe believes that its ability to continue as a going
concern for any significant length of time in the future will be heavily
dependent, among other things, on its ability to prevail and avoid making any
payments with respect to such disputed vendor charges and/or to negotiate
favorable settlements (including deeply discounted payment and/or payment term
concessions) with the aforementioned creditors.


17


As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance” to the
unaudited condensed consolidated financial statements, on September 29, 2008,
the Company (i) sold the business and substantially all of the assets of its
Tralliance Corporation subsidiary to Tralliance Registry Management, and (ii)
issued 229 million shares of its Common Stock (the “Shares”) to Registry
Management (the “Purchase Transaction”). Tralliance Registry Management and
Registry Management are entities controlled by Michael S. Egan. The closing of
the Purchase Transaction resulted in the cancellation of all of the Company’s
remaining Convertible Debt, related accrued interest and rent and accounts
payable owed to entities controlled by Mr. Egan as of the date of closing
(totaling approximately $6.4 million). However, the Company continues to be
obligated to repay its principal borrowings totaling $500 thousand, plus accrued
interest at the rate of 10% per annum, due to an entity controlled by Mr. Egan
under the aforementioned Revolving Loan Agreement. All unpaid borrowings under
the Revolving Loan Agreement, as amended on May 7, 2009 (See Note 5, “Debt” to
the unaudited condensed consolidated financial statements), including accrued
interest, are due and payable by the Company in one lump sum on the earlier of
(i) five business days following demand for payment, which demand can be made at
anytime, or (ii) the occurrence of an event of default as defined in the
Revolving Loan Agreement. The Company currently has no ability to repay this
loan should a demand for payment be made by the noteholder.  All
borrowings under the Revolving Loan Agreement are secured by a pledge of all of
the assets of the Company and its subsidiaries. After giving effect to the
closing of the Purchase Transaction and the issuance of the Shares thereunder,
Mr. Egan now beneficially owns approximately 77% of the Company’s issued and
outstanding Common Stock.





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





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




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





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





It is the
Company’s preference to avoid filing for protection under the U.S. Bankruptcy
Code. However, based upon the Company’s current financial condition as discussed
above, management believes that additional debt or equity capital will need to
be raised in order for theglobe to continue to operate as a going concern on a
long-term basis. Such capital will be needed both to (i) fund its expected
limited future net losses and (ii) repay the $561 thousand of secured debt and
related accrued interest due under the Revolving Loan Agreement and the $60
thousand of management services fees due under the Master Services Agreement,
and a portion of the $2.5 million unsecured indebtedness (assuming theglobe is
successful in favorably resolving and settling certain disputed and non-disputed
vendor charges related to such unsecured indebtedness).  Any such
capital would likely come from Mr. Egan, or affiliates of Mr. Egan, as the
Company currently has no access to credit facilities and had traditionally
relied upon borrowings from related parties to meet short-term liquidity
needs.  Any such capital raised would likely result in very
substantial dilution in the number of outstanding shares of the Company’s Common
Stock.





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





EFFECTS
OF INFLATION





Management
believes that 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 revenue and expenses during the reporting
period. At September 30, 2009 and December 31, 2008, a significant portion of
our net liabilities of discontinued operations relate to charges that have been
disputed by the Company and for which estimates have been required. Our
estimates, judgments and assumptions are continually evaluated based on
available information and experience. Because of the use of estimates inherent
in the financial reporting process, actual results could differ from those
estimates.


18





Certain
of our accounting policies have required higher degrees of judgment than others
in their application. These include revenue recognition, valuation of
receivables, valuation of intangible assets and other long-lived assets and
capitalization of computer software costs. Our accounting policies and
procedures related to these areas are summarized below.





IMPACT
OF RECENTLY ISSUED ACCOUNTING STANDARDS





In
October 2009, the FASB issued ASU 2009-13 Multiple-Deliverable Arrangementswhich amends FASB ASC Topic 605 Revenue Recognitionto
provide another alternative for determining the selling price of deliverables,
allowing entities to allocate revenue in multiple deliverable arrangements based
on their relative selling prices. This ASU is effective prospectively for
revenue arrangements entered into or materially modified after January 1,
2011. The Company is currently evaluating the impact that this new accounting
guidance will have on its consolidated financial statements.





In the
second quarter of 2009, the Financial Accounting Standards Board (“FASB”)
established the FASB Accounting Standards CodificationTM
(Codification) as the single source of authoritative US GAAP. The Codification
was not intended to modify or alter prior authoritative guidance and only
affected how specific references to US GAAP literature are disclosed in the
notes to the condensed consolidated financial statements.





In
      the second quarter of 2009, the Company adopted a new accounting standard
      included in FASB Accounting Standards Codification (“ASC”) Topic 820 Fair Value Measurements and
      Disclosure (“ASC Topic 820”)that provides guidance on how to
      determine the fair value of assets and liabilities in the current economic
      environment and reemphasizes that the objective of a fair value
      measurement remains the determination of an exit price. If the Company
      were to conclude that there has been a significant decrease in the volume
      and level of activity of the asset or liability in relation to normalmarket
      activities, quoted market values may not be representative of fair value
      and we may conclude that a change in valuation technique or the use of
      multiple valuation techniques may be appropriate. The adoption did not
      have a material impact on our condensed consolidated financial
      statements.





In
      August 2009, the FASB issued Accounting Standards Update (“ASU”)
      2009-05 Measuring
      Liabilities at Fair Valueto provide guidance on measuring the fair
      value of liabilities under ASC Topic 820. This ASU clarifies the fair
      value measurements for a liability in an active market and the valuation
      techniques in the absence of a Level 1 measurement. This ASU is effective
      for the interim period beginning October 1, 2009. The adoption of
      this ASU is not anticipated to have a material impact on the Company’s
      consolidated financial statements.





In
      the second quarter of 2009, the Company adopted a new accounting standard
      included in FASB ASC Topic 320 Investments—Debt and Equity
      Securitiesthat modifies the requirements for recognizing
      other-than-temporarily impaired debt securities and revises the existing
      impairment model for such securities by modifying the current intent and abilityindicator in determining whether a debt security is
      other-than-temporarily impaired. The adoption did not have a material
      impact on our condensed consolidated financial
  statements.





In
      the second quarter of 2009, the Company adopted a new accounting standard
      included in FASB ASC Topic 825 Financial Instrumentsthat requires disclosures about the fair value of financial
      instruments in interim financial statements as well as in annual financial
      statements; it also requires those disclosures in all interim financial
      statements. Reporting entities are required to disclose the fair value of
      all financial instruments for which it is practicable to estimate that
      value, the method and significant assumptions used to estimate the fair
      value and a discussion of changes in methods and significant assumptions
      during the period. The adoption did not have a material impact on our
      condensed consolidated financial
statements.





In
      the second quarter of 2009, the Company adopted a new accounting standard
      included in FASB ASC Topic 855 Subsequent Eventsthat
      establishes general standards of accounting for and disclosure of events
      that occur after the balance sheet date but before the financial
      statements are issued or are available to be issued. This new accounting
      standard provides guidance on the period after the balance sheet date
      during which management of a reporting entity should evaluate events or
      transactions that may occur for potential recognition or disclosure in the
      financial statements, the circumstances under which an entity should
      recognize events or transactions occurring after the balance sheet date in
      its financial statements and the disclosures that an entity should make
      about events or transactions that occurred after the balance sheet date.
      The implementation of this standard did not have a material impact on our
      condensed consolidated financial statements. The Company evaluated
      subsequent events through November 9, 2009, the date the accompanying
      financial statements were issued.  Noting no events that require
      adjustment and/or disclosure in the consolidated financial statements for
      the period ended September 30,
2009.





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





During
the first quarter of 2009, the Company adopted ASC 805 “Business Combinations”
(ASC 805) which requires an acquirer to recognize the assets acquired, the
liabilities assumed, and any non-controlling interest in the acquiree at the
acquisition date, measured at their fair values as of that date.  ASC
805 requires, among other things, that in a business combination achieved
through stages (sometimes referred to as a “step acquisition”) that the acquirer
recognize the identifiable assets and liabilities, as well as the
non-controlling interest in the acquiree, at the full amounts of their fair
values (or other amounts determined in accordance with this
guidance).


19





ASC 805
also requires the acquirer to recognize goodwill as of the acquisition date,
measured as a residual, which in most types of business combinations will result
in measuring goodwill as the excess of the consideration transferred plus the
fair value of any non-controlling interest in the acquiree at the acquisition
date over the fair values of the identifiable net assets
acquired.   ASC 805 will have an impact on the Company’s
accounting for future business combinations, but the effect is dependent upon
acquisitions that may be made in the future.





In the
first quarter of 2009, the Company adopted ASC Topic 810-10-65-1,
“Non-controlling Interests in Consolidated Financial
Statements.”  This guidance changes the way the consolidated income
statement is presented and requires consolidated net income to be reported at
amounts that include the amounts attributable to both the parent and the
non-controlling interest. It also requires disclosure, on the face of the
consolidated statement of income, of the amounts of consolidated net income
attributable to the parent and to the non-controlling interest. Currently, net
income attributable to the non-controlling interest generally is reported as an
expense or other deduction in arriving at consolidated net income. It also is
often presented in combination with other financial statement
amounts.  This guidance results in more transparent reporting of the
net income attributable to the non-controlling interest.  The adoption
of this guidance did not have a material impact on its consolidated financial
statements.





ITEM
4T. CONTROLS AND PROCEDURES





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





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





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




PART II - OTHER INFORMATION





ITEM
1. LEGAL PROCEEDINGS





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





ITEM
1A. RISK FACTORS





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





RISKS
RELATING TO OUR BUSINESS GENERALLY





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





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


20





During
its recent past, the Company was able to continue operating as a going concern
due principally to funding of $500 thousand received during 2008 under a
Revolving Loan Agreement with an entity controlled by Michael S. Egan, its
Chairman and Chief Executive Officer (See Note 5, “Debt” for further details)
and income of $300 thousand received during the first nine months of 2009 under
an Earn-out Agreement with an entity also controlled by Mr. Egan (See Note 3,
“Sale of Tralliance and Share Issuance” for further details).





At
September 30, 2009, the Company had a net working capital deficit of
approximately $3.1 million, inclusive of a cash and cash equivalents balance of
approximately $1,725.  Such working capital deficit included (i) a
total of approximately $561 thousand in principal and accrued interest owed
under the aforementioned Revolving Loan Agreement and a total of $60 thousand in
management service fees owed under a Master Services Agreement to an entity
controlled by Mr. Egan, and (ii) an aggregate of approximately $2.5 million in
unsecured accounts payable and accrued expenses owed to vendors and other
non-related third parties (of which approximately $1.7 million relates to
liabilities of our VoIP telephony service discontinued business, with a
significant portion of such liabilities related to charges which have been
disputed by theglobe). theglobe believes that its ability to continue as a going
concern for any significant length of time in the future will be heavily
dependent, among other things, on its ability to prevail and avoid making any
payments with respect to such disputed vendor charges and/or to negotiate
favorable settlements (including deeply discounted payment and/or payment term
concessions) with the aforementioned creditors.





As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance,” on September
29, 2008, the Company (i) sold the business and substantially all of the assets
of its Tralliance Corporation subsidiary to Tralliance Registry Management, and
(ii) issued 229 million shares of its Common Stock (the “Shares”) to Registry
Management (the “Purchase Transaction”). Tralliance Registry Management and
Registry Management are entities controlled by Michael S. Egan. The closing of
the Purchase Transaction resulted in the cancellation of all of the Company’s
remaining Convertible Debt, related accrued interest and rent and accounts
payable owed to entities controlled by Mr. Egan as of the date of closing
(totaling approximately $6.4 million). However, the Company continues to be
obligated to repay its principal borrowings totaling $500 thousand, plus accrued
interest at the rate of 10% per annum, due to an entity controlled by Mr. Egan
under the aforementioned Revolving Loan Agreement. All unpaid borrowings under
the Revolving Loan Agreement, as amended on May 7, 2009 (See Note 5, “Debt”),
including accrued interest, are due and payable by the Company in one lump sum
on the earlier of (i) five business days following demand for payment, which
demand can be made at anytime, or (ii) the occurrence of an event of default as
defined in the Revolving Loan Agreement. The Company currently has no ability to
repay this loan should a demand for payment be made by the
noteholder.  All borrowings under the Revolving Loan Agreement are
secured by a pledge of all of the assets of the Company and its subsidiaries.
After giving effect to the closing of the Purchase Transaction and the issuance
of the Shares thereunder, Mr. Egan now beneficially owns approximately 77% of
the Company’s issued and outstanding Common Stock.





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





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




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





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





It is the
Company’s preference to avoid filing for protection under the U.S. Bankruptcy
Code. However, based upon the Company’s current financial condition as discussed
above, management believes that additional debt or equity capital will need to
be raised in order for theglobe to continue to operate as a going concern on a
long-term basis. Such capital will be needed both to (i) fund its expected
limited future net losses and (ii) repay the $561 thousand of secured debt and
related accrued interest due under the Revolving Loan Agreement and the $60
thousand of management services fees due under the Master Services Agreement,
and a portion of the $2.5 million unsecured indebtedness (assuming theglobe is
successful in favorably resolving and settling certain disputed and non-disputed
vendor charges related to such unsecured indebtedness).  Any such
capital would likely come from Mr. Egan, or affiliates of Mr. Egan, as the
Company currently has no access to credit facilities and had traditionally
relied upon borrowings from related parties to meet short-term liquidity
needs.  Any such capital raised would likely result in very
substantial dilution in the number of outstanding shares of the Company’s Common
Stock.


21





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





WE
MAY NOT BE SUCCESSFUL IN SETTLING DISPUTED VENDOR CHARGES.





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





OUR
NET OPERATING LOSS CARRYFORWARDS MAY BE SUBSTANTIALLY LIMITED.





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





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





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





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





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





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





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





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


22





RISKS
RELATING TO OUR COMMON STOCK





WE
ARE CONTROLLED BY OUR CHAIRMAN.





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





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





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




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





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




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





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





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





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





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


23





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





ITEM
1B. UNRESOLVED STAFF COMMENTS





Not
applicable.




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





(a)
Unregistered Sales of Equity Securities.





None.





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





Not
applicable.




ITEM
3. DEFAULTS UPON SENIOR SECURITIES





None.





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





None.





ITEM
5. OTHER INFORMATION





None.




ITEM
6. EXHIBITS





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





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





31.2
            Certification of the Chief
      Financial Officer pursuant to Rule 13a-14(a) and Rule
      15d-14(a).








32.1
            Certification of the Chief
      Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant
      to Section 906 of The Sarbanes-Oxley Act of
  2002.





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




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


24





SIGNATURES





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





theglobe.com,
      inc.Dated :  November 9,
      2009
                By:
                /s/ 
      Michael S.
      EganMichael
      S. Egan
                  Chief
      Executive Officer
                  (Principal
      Executive Officer)




By:
                /s/ 
      Edward A.
      CespedesEdward
      A. Cespedes
                  President
      and Chief Financial Officer
                  (Principal
      Financial Officer)


25





EXHIBIT
INDEX




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





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





31.2
            Certification of the Chief
      Financial Officer pursuant to Rule 13a-14(a) and Rule
      15d-14(a).




32.1
            Certification of the Chief
      Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant
      to Section 906 of The Sarbanes-Oxley Act of
  2002.





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





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


26