**UNITED STATES**


**SECURITIES AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-Q/A**





**AMENDMENT
      1**





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





For
      the
      quarterly period ended June 30, 2008





OR





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





**FOR
      THE TRANSITION PERIOD FROM _______ TO _________**





*COMMISSION
      FILE NO. 0-25053*





**THEGLOBE.COM,
      INC.**


(EXACT
      NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




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




110
      EAST
      BROWARD BOULEVARD, SUITE 1400


FORT
      LAUDERDALE, FL 33301


(ADDRESS
      OF PRINCIPAL EXECUTIVE OFFICES)





(954)
      769 - 5900


(Registrant's
      telephone number, including area code)




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





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





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





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


Yes o No x





The
      number of shares outstanding of the Registrant's Common Stock, $.001 par value
      (the "Common Stock") as of August 14, 2008 was 212,484,838.








**EXPLANTORY
      NOTE**




This
      Quarterly Report on Form 10-Q/A constitutes Amendment No. 1 (the “Amendment”) to
      theglobe.com, inc.'s Quarterly Report on Form 10-Q for the quarter ended June
      30, 2008, which was originally filed with the Securities and Exchange Commission
      (“SEC”) on August 11, 2008. This Amendment is being filed solely to include the
      condensed consolidated statement of operations for the three
      months ended June 30, 2008 and 2007 and related results of operations which
      were inadvertently omitted from the original Quarterly Report. Consistent with
      applicable SEC guidance, this Amendment includes the entire Quarterly Report
      for
      the quarter ended June 30, 2008.







**THEGLOBE.COM,
      INC.**


**FORM
      10-Q**





TABLE
      OF
      CONTENTS





PART I:
            FINANCIAL
                INFORMATIONItem 1.
            Financial
                StatementsCondensed
                Consolidated Balance Sheets at June 30, 2008 (unaudited) and December
                31,
                2007
            2Unaudited
                Condensed Consolidated Statements of Operations for the three and
                six
                months ended June 30, 2008 and 2007
            3Unaudited
                Condensed Consolidated Statements of Cash Flows for the six months
                ended
                June 30, 2008 and 2007
            4Notes
                to Unaudited Condensed Consolidated Financial Statements
            5Item 2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            15Item 4T.
            Controls
                and Procedures
            24PART II:
            OTHER
                INFORMATIONItem 1.
            Legal
                Proceedings
            24Item 1A.
            Risk
                Factors
            24Item 2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            30Item 3.
            Defaults
                Upon Senior Securities
            31Item 4.
            Submission
                of Matters to a Vote of Security Holders
            31Item 5.
            Other
                Information
            31Item 6.
            Exhibits
            31SIGNATURES
            32









**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**THEGLOBE.COM,
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**





June
                30,
            
            DECEMBER 31,2008
            
            2007(UNAUDITED)ASSETSCurrent
                Assets:Cash
                and cash equivalents
            
            $
            90,608
            
            $
            631,198Accounts
                receivable from related parties
            
            
            20,404
            
            
            416,566Accounts
                receivable
            
            
            13,834
            
            
            12,213Prepaid
                expenses
            
            
            196,841
            
            
            173,794Other
                current assets
            
            
            3,200
            
            
            4,219Net
                assets of discontinued operations
            
            
            —
            
            
            30,000Total
                current assets
            
            
            324,887
            
            
            1,267,990Property
                and equipment, net
            
            
            14,171
            
            
            35,748Intangible
                assets, net
            
            
            289,753
            
            
            368,777Other
                assets
            
            
            40,000
            
            
            40,000Total
                assets
            
            $
            668,811
            
            $
            1,712,515LIABILITIES
                AND STOCKHOLDERS' DEFICITCurrent
                Liabilities:Accounts
                payable to related parties
            
            $
            762,515
            
            $
            499,631Accounts
                payable
            
            
            277,833
            
            
            263,683Accrued
                expenses and other current liabilities
            
            
            654,539
            
            
            953,826Accrued
                interest due to related parties
            
            
            1,185,370
            
            
            954,795Notes
                payable due to related parties
            
            
            4,450,000
            
            
            4,650,000Deferred
                revenue
            
            
            1,186,628
            
            
            1,443,589Net
                liabilities of discontinued operations
            
            
            1,865,128
            
            
            1,902,344Total
                current liabilities
            
            
            10,382,013
            
            
            10,667,868Deferred
                revenue
            
            
            361,271
            
            
            401,248Total
                liabilities
            
            
            10,743,284
            
            
            11,069,116Stockholders'
                Deficit:Common
                stock, $0.001 par value; 500,000,000 shares authorized; 212,484,838
                and  172,484,838 shares issued at June 30, 2008 and December 31,
                2007, respectively
            
            
            212,485
            
            
            172,485Additional
                paid-in capital
            
            
            290,862,300
            
            
            290,486,232Accumulated
                deficit
            
            
            (301,149,258
            )
            
            (300,015,318
            )Total
                stockholders' deficit
            
            
            (10,074,473
            )
            
            (9,356,601
            )Total
                liabilities and stockholders’ deficit
            
            $
            668,811
            
            $
            1,712,515





See
      notes
      to unaudited condensed consolidated financial statements.


2





**THEGLOBE.COM,
                INC. AND SUBSIDIARIES****CONDENSED
                CONSOLIDATED STATEMENTS OF
                OPERATIONS**


Three Months Ended June 30,
              
              Six Months Ended June 30,2008
              
              2007
              
              2008
              
              2007(UNAUDITED)
              
              (UNAUDITED)Net
                  Revenue
              
              $
              547,092
              
              $
              645,322
              
              $
              1,091,025
              
              $
              1,077,064Operating
                  Expenses:Cost
                  of revenue
              
              
              117,137
              
              
              91,118
              
              
              148,829
              
              
              193,303Sales
                  and marketing
              
              
              86,625
              
              
              590,899
              
              
              296,401
              
              
              1,230,680General
                  and administrative
              
              
              654,508
              
              
              1,094,567
              
              
              1,190,620
              
              
              2,183,031Related
                  party transactions
              
              
              129,918
              
              
              147,490
              
              
              283,382
              
              
              283,792Depreciation
              
              
              10,867
              
              
              23,534
              
              
              21,577
              
              
              43,054Intangible
                  asset amortization
              
              
              39,512
              
              
              39,512
              
              
              79,024
              
              
              79,023Total
                  Operating Expenses
              
              
              1,038,567
              
              
              1,987,120
              
              
              2,019,833
              
              
              4,012,883Operating
                  Loss from Continuing Operations
              
              
              (491,475
              )
              
              (1,341,798
              )
              
              (928,808
              )
              
              (2,935,819
              )Other
                  Income (Expense), net:Related
                  party interest expense
              
              
              (114,643
              )
              
              (587,438
              )
              
              (230,575
              )
              
              (671,274
              )Interest
                  income
              
              
              454
              
              
              6,216
              
              
              3,236
              
              
              56,493Other
                  income
              
              
              75
              
              
              —
              
              
              247
              
              
              —(114,114
              )
              
              (581,222
              )
              
              (227,092
              )
              
              (614,781
              )Loss
                  from Continuing Operations Before Income Tax
              
              
              (605,589
              )
              
              (1,923,020
              )
              
              (1,155,900
              )
              
              (3,550,600
              )Income
                  Tax Provision
              
              
              —
              
              
              —
              
              
              —
              
              
              —Loss
                  from Continuing Operations
              
              
              (605,589
              )
              
              (1,923,020
              )
              
              (1,155,900
              )
              
              (3,550,600
              )Discontinued
                  Operations, net of tax:
              
              
              20,995
              
              
              157,024
              
              
              21,960
              
              
              (1,004,012
              )Net
                  Loss
              
              $
              (584,594
              )
              $
              (1,765,996
              )
              $
              (1,133,940
              )
              $
              (4,554,612
              )Loss
                  Per Share:Basic
                  and Diluted:Continuing
                  Operations
              
              $
              —
              
              $
              (0.01
              )
              $
              (0.01
              )
              $
              (0.02
              )Discontinued
                  Operations
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              (0.01
              )Net
                  Loss
              
              $
              —
              
              $
              (0.01
              )
              $
              (0.01
              )
              $
              (0.03
              )Weighted
                  Average Common Shares Outstanding
              
              
              176,880,438
              
              
              172,485,000
              
              
              176,880,438
              
              
              172,485,000




See
      notes
      to consolidated financial statements.


3




**THEGLOBE.COM,
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**





Six Months
              Ended June
                30,2008
            
            2007(UNAUDITED)Cash
                Flows from Operating Activities:Net
                loss
            
            $
            (1,133,940
            )
            $
            (4,554,612
            )Add
                back: (income) loss from discontinued operations
            
            
            (21,960
            )
            
            1,004,012Net
                loss from continuing operations
            
            
            (1,155,900
            )
            
            (3,550,600
            )Adjustments
                to reconcile net loss from continuing operations to net cash flows
                from
                operating activitiesDepreciation
                and amortization
            
            
            100,601
            
            
            122,077Non-cash
                interest expense related to beneficial conversion features of
                debt
            
            
            —
            
            
            500,000Employee
                stock compensation
            
            
            15,216
            
            
            118,797Compensation
                related to non-employee stock options
            
            
            852
            
            
            4,466Changes
                in operating assets and liabilitiesAccounts
                receivable from related parties
            
            
            396,162
            
            
            6,433Accounts
                receivable
            
            
            (1,621
            )
            
            (51,682
            )Prepaid
                and other current assets
            
            
            (22,028
            )
            
            131,284Accounts
                payable to related parties
            
            
            262,884
            
            
            108,304Accounts
                payable
            
            
            14,150
            
            
            158,229Accrued
                expenses and other current liabilities
            
            
            (299,287
            )
            
            (296,996
            )Accrued
                interest due to related parties
            
            
            230,575
            
            
            171,274Deferred
                revenue
            
            
            (296,938
            )
            
            (381
            )Net
                cash flows from operating activities of continuing
                operations
            
            
            (755,334
            )
            
            (2,578,795
            )Net
                cash flows from operating activities of discontinued
                operations
            
            
            7,744
            
            
            (3,004,434
            )Net
                cash flows from operating activities
            
            
            (747,590
            )
            
            (5,583,229
            )Cash
                Flows from Investing Activities:Purchases
                of property and equipment
            
            
            —
            
            
            (14,194
            )Proceeds
                from the sale of property and equipment of discontinued
                operations
            
            
            7,000
            
            
            91,494Net
                cash flows from investing activities
            
            
            7,000
            
            
            77,300Cash
                Flows from Financing Activities:Borrowing
                on Notes Payable
            
            
            200,000
            
            
            500,000Net
                cash flows from financing activities
            
            
            200,000
            
            
            500,000Net
                Decrease in Cash and Cash Equivalents
            
            
            (540,590
            )
            
            (5,005,929
            )Cash
                and Cash Equivalents, at beginning of period
            
            
            631,198
            
            
            5,316,218Cash
                and Cash Equivalents, at end of period
            
            $
            90,608
            
            $
            310,289





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 ( www.cgonline.com ), as
      well as the e-commerce games distribution business of Chips & Bits, Inc. ( www.chipsbits.com ). 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”). The purchase price consisted of the issuance of 2,000,000 shares of
      theglobe’s Common Stock, warrants to acquire 475,000 shares of theglobe’s Common
      Stock and $40,000 in cash.





As
      more
      fully discussed in Note 5, “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 and terminate
      all
      of the remaining employees of that business.





As
      of
      June 30, 2008, the Company managed a single line of business consisting of
      Tralliance. See Note 3, “Proposed Sale of Tralliance and Share Issuance,”
regarding a proposed transaction whereby the Company would sell its Tralliance
      business and issue approximately 229,000,000 shares of its Common Stock to
      a
      company controlled by Michael S. Egan, the Company’s Chairman and Chief
      Executive Officer.





PRINCIPLES
      OF CONSOLIDATION





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




UNAUDITED
      INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION





The
      unaudited interim condensed consolidated financial statements of the Company
      as
      of June 30, 2008 and for the three and six months ended June 30, 2008 and 2007
      included herein have been prepared in accordance with the instructions for
      Form
      10-Q under the Securities Exchange Act of 1934, as amended, and Article 10
      of
      Regulation S-X under the Securities Act of 1933, as amended. Certain information
      and note disclosures normally included in consolidated financial statements
      prepared in accordance with generally accepted accounting principles have been
      condensed or omitted pursuant to such rules and regulations relating to interim
      condensed consolidated financial statements.




In
      the
      opinion of management, the accompanying unaudited interim condensed consolidated
      financial statements reflect all adjustments, consisting only of normal
      recurring adjustments, necessary to present fairly the financial position of
      the
      Company at June 30, 2008 and the results of its operations and its cash flows
      for the three and six months ended June 30, 2008 and 2007. 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 June 30, 2008 and December 31, 2007, 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 Statement of
      Financial Accounting Standards (“SFAS”) No. 130, "Reporting Comprehensive
      Income." Comprehensive income (loss) generally represents all changes in
      stockholders' equity during the year except those resulting from investments
      by,
      or distributions to, stockholders. The Company's comprehensive loss was
      approximately $1.1 million and $4.6 million for the six months ended June 30,
      2008 and 2007, respectively, which approximated the Company's reported net
      loss.





CONCENTRATION
      OF CREDIT RISK





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




REVENUE
      RECOGNITION





The
      Company’s revenue from continuing operations consists principally of
      registration fees for Internet domain registrations, which generally have terms
      of one year, but may be up to ten years. Such registration fees are reported
      net
      of transaction fees paid to an unrelated third party which serves as the
      registry operator for the Company. Payments of registration fees are deferred
      when initially received and recognized as revenue on a straight-line basis
      over
      the registrations’ terms.





SEGMENT
      REPORTING





Effective
      with the March 2007 decision by management and the Board of Directors of the
      Company to cease all activities related to its computer games and VoIP telephony
      services businesses, the Company is now involved in one operating segment,
      the
      Internet services business.





NET
      LOSS
      PER SHARE





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




Due
      to
      the Company's net losses from continuing operations, the effect of potentially
      dilutive securities or common stock equivalents that could be issued was
      excluded from the diluted net loss per common share calculation due to the
      anti-dilutive effect. Such potentially dilutive securities and common stock
      equivalents consisted of the following for the periods ended June
      30:





2008
            
            2007Options
                to purchase common stock
            
            
            15,601,000
            
            
            18,776,000Common
                shares issuable upon exercise of warrants
            
            
            16,911,000
            
            
            16,911,000Common
                shares issuable upon conversion of Convertible Notes
            
            
            153,000,000
            
            
            118,000,000Total
            
            
            185,512,000
            
            
            153,687,000





RECENT
      ACCOUNTING PRONOUNCEMENTS





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


6


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





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





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





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
      standard defines fair value, establishes a framework for measuring fair value
      in
      generally accepted accounting principles and expands disclosure about fair
      value
      measurements. SFAS No. 157 applies to other accounting standards that require
      or
      permit fair value measurements. Accordingly, this statement does not require
      any
      new fair value measurement. SFAS No. 157 was effective for the Company on
      January 1, 2008. The Company does not believe that SFAS No. 157 will have a
      material impact on its financial statements.





RECLASSIFICATIONS





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





**(2)
      GOING CONCERN CONSIDERATIONS 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 the operation of its businesses beyond a short period of time. These
      reasons raise significant doubt about the Company’s ability to continue as a
      going concern.





During
      the year ended December 31, 2007 and the six months ended June 30, 2008, the
      Company was able to continue operating as a going concern due principally to
      funding of $1,250,000 received during 2007 from the sale of secured convertible
      demand promissory notes (the “2007 Convertible Notes”) to an entity controlled
      by Michael Egan, its Chairman and Chief Executive Officer and additional funding
      of $380,000 provided from the sale of all of the Company’s rights related to its
      www.search.travel domain name and website to an entity also controlled by Mr.
      Egan in December 2007.





On
      June
      6, 2008, Dancing Bear Investments, Inc. (“Dancing Bear”), an entity which is
      controlled by the Company’s Chairman and Chief Executive Officer, entered into a
      one year Revolving Loan Agreement with the Company pursuant to which the Company
      may, under certain conditions as described below, borrow up to a maximum of
      $500,000 from Dancing Bear (the “Revolving Debt”). During June 2008, the Company
      borrowed an aggregate of $200,000 from Dancing Bear under the Revolving Loan
      Agreement and subsequently in July and August 2008, the Company made additional
      borrowings aggregating $200,000 under the Revolving Loan Agreement. During
      the
      remainder of the one year term of the Revolving Loan Agreement, the Company
      may
      make borrowing requests to Dancing Bear, and if such requests are approved
      by
      Dancing Bear, may borrow additional funds of up to $100,000 under the Revolving
      Loan Agreement. All such funds borrowed may be prepaid in whole or in part,
      without penalty, at any time during the term of the Revolving Loan Agreement.
      The Company currently has no ability to repay this Loan. All unpaid borrowings,
      including accrued interest on borrowed funds at the rate of 10% per annum,
      are
      due and payable by the Company to Dancing Bear in one lump sum on the earlier
      of
      (i) June 6, 2009, or (ii) the occurrence of an event of default as defined
      in
      the Revolving Loan Agreement. All borrowings under the Revolving Loan Agreement
      are secured by a pledge of all of the assets of the Company and its
      subsidiaries, subordinate to existing liens on such assets related to the 2005
      Convertible Notes and the 2007 Convertible Notes (the “Convertible Debt”) (see
      Note 4, “Debt” for further details).


7





At
      June
      30, 2008, the Company had a net working capital deficit of approximately
      $10,100,000, inclusive of a cash and cash equivalents balance of approximately
      $91,000. Such working capital deficit included an aggregate of $4,250,000 in
      Convertible Debt, related accrued interest of approximately $1,184,000, and
      accounts payable totaling approximately $763,000 due to entities controlled
      by
      Mr. Egan (see Note 4, “Debt” and Note 8, “Related Party Transactions” for
      further details). Additionally, such working capital deficit included
      approximately $1,900,000 of net liabilities of discontinued operations, with
      a
      significant portion of such liabilities related to charges which have been
      disputed by the Company, and $200,000 of secured debt recently borrowed under
      the Revolving Loan Agreement.





Notwithstanding
      previous cost reduction actions taken by the Company and its decision to
      shutdown its unprofitable computer games and VoIP telephony services businesses
      in March 2007 (see Note 5, “Discontinued Operations” for further details), the
      Company continues to incur substantial consolidated net losses, although reduced
      in comparison with prior periods, and management believes that the Company
      will
      continue to be unprofitable in the foreseeable future. Based upon the Company’s
      current financial condition, as discussed above, and without further advances
      from Dancing Bear under the aforementioned $500,000 Revolving Loan Agreement
      or
      the infusion of other additional capital, management does not believe that
      the
      Company will be able to fund its operations beyond the end of August 2008.
      Assuming that the remaining $100,000 that may be available under the Revolving
      Loan Agreement is loaned to the Company sometime around the end of August 2008,
      such borrowing would be expected to allow us to fund our operations for only
      a
      few weeks thereafter.





As
      more
      fully discussed in Note 3, “Proposed Sale of Tralliance and Share Issuance,” on
      June 10, 2008, the Company announced that it had entered into a definitive
      agreement to sell substantially all of the business and net assets of its
      Tralliance Corporation subsidiary and to issue approximately 229,000,000 shares
      of its Common Stock to an entity controlled by Mr. Egan (the “Purchase
      Transaction”). Additionally, on June 10, 2008, the Company announced that
      Dancing Bear Investments, Inc., an entity controlled by Michael S. Egan,
      converted a portion of the Convertible Debt totaling $400,000 into 40,000,000
      shares of the Company’s Common Stock. Such conversion increased the ownership in
      the Company’s Common Stock by Mr. Egan and certain family members and related
      parties (the “Egan Family”) to approximately 51.25% and allows the Egan Family
      to control the vote on all corporate actions, including the Purchase Transaction
      (see Note 4, “Debt”), which was approved by written action dated July 9, 2008.
      In the event that the Purchase Transaction is consummated, all of the Company’s
      remaining Convertible Debt, related accrued interest and accounts payable owed
      to entities controlled by Mr. Egan (which was approximately $6,200,000 at June
      30, 2008) will be exchanged or cancelled. Consummation of the Purchase
      Transaction will not eliminate the Company’s obligations related to the
      Revolving Debt.





Additionally,
      the consummation of the Purchase Transaction would also result in significant
      reductions in the Company’s cost structure, based upon the elimination of
      Tralliance’s operating expenses. Although substantially all of Tralliance’s
      revenue would also be eliminated, approximately 10% of Tralliance’s future net
      revenue through May 5, 2015 would be essentially retained through the
      contemplated net revenue earn-out provisions of the Purchase Transaction.
      Additionally, the consummation of the Purchase Transaction would increase Mr.
      Egan’s beneficial ownership in the Company to approximately 77% (assuming
      exercise of all outstanding stock options and warrants) and would significantly
      dilute all other existing shareholders.





**MANAGEMENT’S
      PLANS**





Management
      expects that the consummation of the Purchase Transaction will significantly
      reduce the amount of net losses currently being sustained by the Company.
      However, management does not believe that the consummation of the Purchase
      Transaction will, in itself, allow the Company to become profitable and 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. Accordingly, assuming that the Purchase
      Transaction is consummated, management believes that additional capital
      infusions, including amounts significantly beyond the remaining $100,000
      available under the Revolving Loan Agreement, will continue to be needed in
      order for the Company to continue to operate as a going concern.





Although
      management presently expects that the Purchase Transaction will be consummated,
      there can be no assurance that such closing will occur. In the event that the
      Purchase Transaction is not consummated, management expects that significantly
      more capital will need to be invested in the Company in the near term than
      would
      be required in the event that the Purchase Transaction is consummated. Also,
      inasmuch as substantially all of the assets of the Company and its subsidiaries
      secure the Convertible Debt and the Revolving Debt owed to entities controlled
      by Mr. Egan, in connection with any resulting proceeding to collect this debt,
      such entities could seize and sell the assets of the Company and it
      subsidiaries, any or all of which would have a material adverse effect on the
      financial condition and future operations of the Company, including the
      potential bankruptcy or cessation of business of the Company.





It
      is our
      preference to avoid filing for protection under the U.S. Bankruptcy Code.
      However, in order to continue operating as a going concern for any length of
      time beyond August of 2008, we believe that we must raise additional capital.
      Although there is no commitment to do so, any such funds would most likely
      come
      from Dancing Bear under the existing $500,000 Revolving Loan Agreement, or
      otherwise from Michael Egan or affiliates of Mr. Egan or the Company, as the
      Company currently has no access to credit facilities with traditional third
      parties and has historically relied upon borrowings from related parties to
      meet
      short-term liquidity needs. Any such equity capital raised would not be
      registered under the Securities Act of 1933 and would not be offered or sold
      in
      the United States absent registration requirements. Further, any securities
      issued (or issuable) in connection with any such capital raise will likely
      result in very substantial dilution of the number of outstanding shares of
      the
      Company’s Common Stock.


8





The
      amount of capital required to be raised by the Company will be dependent upon
      a
      number of factors, including (i) whether or not the Purchase Transaction is
      consummated; (ii) whether “.travel” name registration net revenue levels are
      able to be increased; (iii) our ability to control and reduce operating
      expenses; and (iv) our ability to successfully settle disputed and other
      outstanding liabilities related to our discontinued operations. While the
      Company anticipates that the Purchase Transaction will be consummated in mid
      September 2008, there can be no assurance that the Purchase Transaction will
      be
      consummated nor that the Company will be successful in raising a sufficient
      amount of capital, executing any of its current or future business plans or
      in
      continuing to operate as a going concern on a long-term basis. The consolidated
      financial statements do not include any adjustments that may result from the
      outcome of this uncertainty.




**(3)****PROPOSED
      SALE OF TRALLIANCE AND SHARE ISSUANCE**





On
      June
      10, 2008, theglobe entered into a definitive agreement (the “Purchase
      Agreement”) with The Registry Management Company, LLC (“Registry Management”),
      whereby theglobe will (i) sell the business and substantially all of the assets
      of its Tralliance Corporation subsidiary and (ii) issue 229,000,000 shares
      of
      its Common Stock to Registry Management (the “Purchase Transaction”). Registry
      Management is controlled by Michael S. Egan, theglobe’s Chairman and Chief
      Executive Officer and principal stockholder and each of theglobe’s two remaining
      Board members and executive officers, Mr. Edward A. Cespedes and Ms. Robin
      S.
      Lebowitz, have a minority interest in Registry Management.





As
      part
      of the consideration for the Purchase Transaction, Mr. Egan and certain of
      his
      affiliates, will exchange and surrender to theglobe all of their right, title
      and interest to (i) certain secured demand convertible promissory notes (the
      “2005 and 2007 Convertible Notes”) in the aggregate outstanding principal amount
      of $4,250,000, together with all accrued and unpaid interest thereon
      (approximately $1,184,000 at June 30, 2008) and (ii) accrued and unpaid rent
      and
      miscellaneous fees due and outstanding as of the date of closing of the Purchase
      Transaction (approximately $763,000 at June 30, 2008).





As
      additional consideration, Registry Management will pay an earn-out to theglobe
      equal to 10% (subject to certain minimums) of Registry Management’s “net
      revenue” (as defined) derived from “.travel” names registered by Registry
      Management from the date of closing through May 5, 2015. The minimum earn-out
      amount payable by Registry Management will be at least $300,000 in the first
      year, increasing by $25,000 in each subsequent year (pro-rated for the final
      year of the earn-out). The total net present value of the minimum earn-out
      payments is estimated to be approximately $1,300,000, bringing the total
      purchase consideration for the Purchase Transaction to approximately $7,600,000
      (assuming that the Purchase Transaction closes in mid-September
      2008).





Inasmuch
      as theglobe will be a shell company with no significant assets or business
      operations after the sale of Tralliance, as a condition to closing of the
      Purchase Transaction, theglobe will enter into Termination Agreements with
      theglobe’s executive management providing for the termination of their existing
      employment agreements effective upon the closing of the Purchase Transaction.
      Notwithstanding the termination of their employment agreements, each such person
      is expected to remain on the Board of Directors and continue to hold their
      existing respective officer positions with theglobe. Further, effective on
      or
      shortly after the closing date of the Purchase Transaction, it is expected
      that
      theglobe will enter into a management services agreement with an affiliate
      of
      Mr. Egan whereby such affiliate will provide various managerial, financial,
      accounting and administrative services to theglobe for approximately $200,000
      to
      $300,000 per annum. As a result, upon the closing of the Purchase Transaction,
      it is expected that theglobe’s future operating expenses as a public shell
      company will consist primarily of expenses incurred under the Management
      Services Agreement and other customary public company expenses, including legal,
      audit and other miscellaneous public company costs.





On
      June
      12, 2008, Mr. Michael S. Egan, the Chairman and CEO of theglobe, together with
      certain of his affiliates and other related parties, whom collectively are
      the
      record owners of approximately 51.25% of the issued and outstanding shares
      of
      theglobe Common Stock, the sole class of voting securities of theglobe, executed
      a written consent of the stockholders adopting the Purchase Agreement described
      above and approving the transactions contemplated thereby in accordance with
      Section 228 of Delaware Law. On July 9, 2008, the same stockholders further
      ratified their prior action of June 12, 2008 and approved anew the Purchase
      Transaction. The actions by written consent are sufficient to approve the
      Purchase Agreement and the other transaction contemplated by the Purchase
      Agreement without any further action or vote of the stockholders of
      theglobe.com





In
      connection with the Purchase Transaction, on July 25, 2008, theglobe filed
      a
      Definitive Information Statement and related Notice of Internet Availability
      of
      Information Statement (the “Notice”) with the Securities and Exchange
      Commission, and shortly thereafter commenced mailing the Notice to its
      stockholders. The Company presently expects the Purchase Transaction to close
      in
      mid-September 2008.





**(4)
      DEBT**





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


9





June 30, 2008
            
            December 31, 20072008
                Revolving Loan Notes due to affiliates
            
            $
            200,000
            
            $
            —2007
                Convertible Notes due to affiliates; due on demand
            
            
            850,000
            
            
            1,250,0002007
                Convertible Notes due to affiliates; due on demand
            
            
            3,400,000
            
            
            3,400,0004,450,000
            
            
            4,650,000LESS:
                Short-term portion
            
            
            4,450,000
            
            
            4,650,000Long-term
                portion
            
            $
            —
            
            $
            —





On
      June
      6, 2008, Dancing Bear Investments, Inc. (“Dancing Bear”), an entity which is
      controlled by Michael S. Egan, the Company’s Chairman and Chief Executive
      Officer, entered into a one year Revolving Loan Agreement with the Company
      pursuant to which the Company may, under certain conditions as described below,
      borrow up to a maximum of $500,000 from Dancing Bear. Additionally, on June
      6,
      2008, the Company borrowed an initial amount of $100 thousand and then on June
      19, 2008 borrowed an additional $100 thousand, under the Revolving Loan
      Agreement. Subsequently, on July 10, 2008 and on August 6, 2008, the Company
      made additional borrowings of $100 thousand each under the Revolving Loan
      Agreement. During the remainder of the one year term of the Revolving Loan
      Agreement, the Company may make borrowing requests to Dancing Bear, and if
      such
      requests are approved by Dancing Bear, may borrow additional funds up to the
      $500,000 maximum limit under the Revolving Loan Agreement. All such funds
      borrowed may be prepaid in whole or in part, without penalty, at any time during
      the term of the Revolving Loan Agreement. The Company currently has no ability
      to repay this Loan. All unpaid borrowings, including accrued interest on
      borrowed funds at the rate of 10% per annum, are due and payable by the Company
      to Dancing Bear in one lump sum on the earlier of (i) June 6, 2009, or (ii)
      the
      occurrence of an event of default as defined in the Revolving Loan Agreement.
      All borrowings under the Revolving Loan Agreement are secured by a pledge of
      all
      of the assets of the Company and its subsidiaries, subordinate to existing
      liens
      on such assets related to the 2005 Convertible Notes and 2007 Convertible Notes.





Additionally,
      on June 10, 2008, Dancing Bear converted an aggregate of $400,000 of outstanding
      2007 Convertible Notes due to them by the Company into an aggregate of
      40,000,000 shares of the Company’s Common Stock. Such conversion increased the
      ownership in the Company’s Common Stock by Mr. Egan and certain family members
      and related parties (the “Egan Family”) to approximately 51.25% and allows the
      Egan Family to control the vote on all corporate actions (see Note 3 “Proposed
      Sale of Tralliance and Share Issuance”).





**(5)
      DISCONTINUED OPERATIONS**





In
      March
      2007, management and the Board of Directors of the Company made the decision
      to
      cease all activities related to its Computer Games businesses, including
      discontinuing the operations of its magazine publications, games distribution
      business and related websites. The Company’s decision to shutdown its computer
      games businesses was based primarily on the historical losses sustained by
      these
      businesses during the recent past and management’s expectations of continued
      future losses. As of June 30, 2008, 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. On April 2, 2007, theglobe agreed
      to transfer to Michael Egan all of its VoIP intellectual property in
      consideration for his agreement to provide the Security in connection with
      the
      MySpace litigation Settlement Agreement (See Note 7, “Litigation,” for further
      discussion). The Company had previously written off the value of the VoIP
      intellectual property as a result of its evaluation of the VoIP telephony
      services business’ long-lived assets in connection with the preparation of the
      Company’s 2004 year-end consolidated financial statements. As of June 30, 2008,
      all significant elements of its VoIP telephony services business shutdown plan
      have been completed by the Company, except for the resolution of certain vendor
      disputes and the payment of remaining outstanding vendor payables.





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


10


The
      following is a summary of the assets and liabilities of the discontinued
      operations of the computer games and VoIP telephony services businesses as
      included in the accompanying condensed consolidated balance sheets. A
      significant portion of the net liabilities of discontinued operations at June
      30, 2008 relate to charges that have been disputed by the Company and for which
      estimates have been required.




June
                30,
              2008
            
            December
                31,
              2007Assets:Computer
                GamesAccounts
                receivable, net
            
            $
            —
            
            $
            30,000—
            
            
            30,000VoIP
                Telephony Services
            
            
            —
            
            
            —Total
                assets of discontinued operations
            
            $
            —
            
            $
            30,000




June 30,
            
            December 31,2008
            
            2007Liabilities:Computer
                GamesAccounts
                payable
            
            $
            35,584
            
            $
            35,584Subscriber
                liability, net
            
            
            4,989
            
            
            5,39740,573
            
            
            40,981VoIP
                Telephony ServicesAccounts
                payable
            
            
            1,595,845
            
            
            1,632,653Other
                accrued expenses
            
            
            228,710
            
            
            228,7101,824,555
            
            
            1,861,363Total
                liabilities of discontinued operations
            
            $
            1,865,128
            
            $
            1,902,344




11





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





Three
                Months Ended June 30,
            
            Six
                Months Ended June 30,2008
            
            2007
            
            2008
            
            2007Computer
                Games:Net
                revenue
            
            $
            21,695
            
            $
            19,916
            
            $
            21,695
            
            $
            608,415Income
                (Loss) from operations, net of tax
            
            $
            21,695
            
            $
            218,218
            
            $
            17,789
            
            $
            (146,256
            )VoIP
                Telephony ServicesNet
                revenue
            
            $
            —
            
            $
            256
            
            $
            —
            
            $
            630Income
                (Loss) from operations, net of tax
            
            $
            (700
            )
            $
            (61,194
            )
            $
            4,171
            
            $
            (857,756
            )




The
      Company has estimated the costs expected to be incurred in shutting down its
      computer games and VoIP telephony services businesses and has accrued charges
      as
      of June 30, 2008, as follows:




Computer
                Games Division
            
            Contract
              Termination
              Costs
            
            Purchase
                Commitment
            
            Other
              Costs
            
            TotalShut-Down
                costs expected to be incurred
            
            $
            —
            
            $
            —
            
            $
            24,235
            
            $
            24,235Included
                in liabilities:Charged
                to discontinued operations
            
            $
            115,000
            
            $
            106,000
            
            $
            24,235
            
            
            245,235Payment
                of costs
            
            
            —
            
            
            —
            
            
            (24,235
            )
            
            (24,235
            )Settlements
                credited to discontinued operations
            
            
            (115,000
            )
            
            (106,000
            )
            
            —
            
            
            (221,000
            )$
            —
            
            $
            —
            
            $
            —
            
            $
            —




VoIP
                  Telephony Services Division
              
              Contract
                Termination
                CostsShut-Down
                  costs expected to be incurred
              
              $
              416,466Included
                  in liabilities:Charged
                  to discontinued operations
              
              
              428,966Payment
                  of costs
              
              $
              (61,000
              )Settlements
                  credited to discontinued operations
              
              
              (12,500
              )$
              355,466





Net
      current liabilities of discontinued operations at June 30, 2008 include accounts
      payable and accruals totaling $355,466 related to the estimated shut-down costs
      summarized above.


12




**(6)
      STOCK OPTION PLANS**





We
      have
      several stock option plans under which nonqualified stock options may be granted
      to officers, directors, other employees, consultants and advisors of the
      Company. In general, options granted under the Company’s stock option plans
      expire after a ten-year period and generally vest no later than three years
      from
      the date of grant. Incentive options granted to stockholders who own greater
      than 10% of the total combined voting power of all classes of stock of the
      Company must be issued at 110% of the fair market value of the stock on the
      date
      the options are granted. As of June 30, 2008, there were approximately 7,383,000
      shares available for grant under the Company’s stock option plans.





No
      stock
      options were granted by the Company during the six months ended June 30, 2008.
      A
      total of 100,000 stock options were granted during the six months ended June
      30,
      2007, with a weighted-average fair value of $0.07. There were no stock option
      exercises during the six months ended June 30, 2008 and 2007.




Stock
      option activity during the six months ended June 30, 2008 was as
      follows:


Total Options
              
              Weighted
                Average Exercise
                PriceOutstanding at December
                  31, 2007
              
              
              16,340,660
              
              $
              0.40Granted
              
              
              —Exercised
              
              
              —Canceled
              
              
              (739,500
              )
              
              0.39Outstanding
                  at June 30, 2008
              
              
              15,601,160
              
              $
              0.41Options
                  exercisable at June 30, 2008
              
              
              15,357,417
              
              $
              0.41




The
      weighted-average remaining contractual terms of both stock options outstanding
      and stock options exercisable at June 30, 2008 was 5.7 years. The aggregate
      intrinsic value of both options outstanding and stock options exercisable at
      June 30, 2008 was $0.





Stock
      compensation cost is recognized on a straight-line basis over the vesting
      period. Stock compensation expense totaling $16,068 was charged to operations
      during the six months ended June 30, 2008, including $852 of expense resulting
      from the vesting of non-employee stock options. **** During
      the six months ended June 30, 2007, stock compensation expense of $123,263
      charged to operations included $4,466 of expense related to the vesting of
      non-employee stock options and $35,468 from the accelerated vesting of stock
      options issued to terminated employees.





At
      June
      30, 2008, there was approximately $21,000 of unrecognized compensation expense
      related to unvested stock options which is expected to be recognized over a
      weighted-average period of 1.1 years.





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
      June
      1, 2006, MySpace, Inc. (“MySpace”), a Delaware corporation, filed a lawsuit in
      the United States District Court for the Central District of California against
      theglobe.com, inc. (the “Company”). We were served with the lawsuit on June 6,
      2006. MySpace alleged that the Company sent at least 100,000 unsolicited and
      unauthorized commercial email messages to MySpace members using MySpace user
      accounts improperly established by the Company, that the user accounts were
      used
      in a false and misleading fashion and that the Company's alleged activities
      constituted violations of the CAN-SPAM Act, the Lanham Act and California
      Business & Professions Code § 17529.5 (the “California Act”), as well as
      trademark infringement, false advertising, breach of contract, breach of the
      covenant of good faith and fair dealing, and unfair competition. MySpace sought
      monetary penalties, damages and injunctive relief for these alleged violations.
      It asserted entitlement to recover "a minimum of" $62.3 million of damages,
      in
      addition to three times the amount of MySpace's actual damages and/or
      disgorgement of the Company's purported profits from alleged violations of
      the
      Lanham Act, punitive damages and attorneys’ fees. Subsequent discovery in the
      case disclosed that the total number of unsolicited messages was approximately
      400,000.


13





On
      February 28, 2007, the Court entered an order (the “Order”) granting in part
      MySpace’s motion for summary judgment, finding that the Company was liable for
      violation of the CAN-SPAM Act and the California Business & Professions
      Code, and for breach of contract (as embodied in MySpace’s “Terms of Service”
contract). The Order also upheld as valid that portion of MySpace’s Terms of
      Service contract which provides for liquidated damages of $50 per email message
      sent after March 17, 2006 in violation of such Terms. The Company estimated
      that
      approximately 110,000 of the emails in question were sent after such date,
      which
      could have resulted in damages of approximately $5.5 million. In addition,
      the
      CAN-SPAM Act provided for statutory damages of between $100 and $300 per email
      sent in violation of the statute. Total damages under CAN-SPAM could therefore
      have ranged between about $40 million to about $120 million. In addition, under
      the California Act, statutory damages of $1,000,000 “per incident” could have
      been assessed.





On
      March
      15, 2007, the Company entered into a Settlement Agreement with MySpace whereby
      it agreed to pay MySpace $2,550,000 on or before April 5, 2007 in exchange
      for a
      mutual release of all claims against one another, including any claims against
      the Company’s directors and officers. As part of the settlement, Michael Egan,
      the Company’s CEO, who is also an affiliate of the Company, agreed to enter into
      an agreement with MySpace on or before April 5 th pursuant
      to which he would, among other things, provide a letter of credit, cash or
      other
      equivalent security (collectively, “Security”) in form and substance
      satisfactory to MySpace. Such Security was to expire and be released (and in
      fact did expire and was released) on the 100 th day
      following the Company’s payment of the foregoing $2,550,000 so long as no
      bankruptcy petition, assignment for the benefit of creditors or like
      liquidation, reorganization or insolvency proceeding was instituted or filed
      related to the Company during such 100-day period. In accordance with SFAS
      No.
      5, “Accounting for Contingencies,” the $2,550,000 payment required by the
      Settlement Agreement was accrued and has been included in current liabilities
      in
      the consolidated balance sheet as of December 31, 2006 and has been reflected
      as
      an expense of discontinued operations in the consolidated statement of
      operations for the year ended December 31, 2006.





On
      April
      2, 2007, theglobe agreed to transfer to Michael Egan all of its VoIP
      intellectual property in consideration for his agreement to provide the Security
      in connection with the Settlement Agreement. On April 13, 2007, Michael Egan
      and
      an entity wholly-owned by Michael Egan, and MySpace entered into a Security
      Agreement, an Indemnity Agreement and an Escrow Agreement (the “Security
      Agreements”) providing for the Security. On April 18, 2007, theglobe paid
      MySpace $2,550,000 in cash as settlement of the claims. MySpace and theglobe
      filed a consent judgment and stipulated permanent injunction with the Court
      on
      April 19, 2007, which among other things, dismissed all claims alleged in the
      lawsuit with prejudice.





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. On December 5, 2006, the Second Circuit vacated a decision by the
      district court granting class certification in six of the coordinated cases,
      which are intended to serve as test, or “focus,” cases. The plaintiffs selected
      these six cases, which do not include the Company. On April 6, 2007, the Second
      Circuit denied a petition for rehearing filed by the plaintiffs, but noted
      that
      the plaintiffs could ask the district court to certify more narrow classes
      than
      those that were rejected.





On
      August
      14, 2007, the plaintiffs filed amended complaints in the six focus cases. The
      amended complaints include a number of changes, such as changes to the
      definition of the purported class of investors, and the elimination of the
      individual defendants as defendants. On September 27, 2007, the plaintiffs
      moved
      to certify a class in the six focus cases. On November 14, 2007, the issuers
      and
      the underwriters named as defendants in the six focus cases filed motions to
      dismiss the amended complaints against them. On March 26, 2008, the District
      Court dismissed the Section 11 claims of those members of the putative classes
      in the focus cases who sold their securities for a price in excess of the
      initial offering price and those who purchased outside the previously certified
      class period. With respect to all other claims, the motions to dismiss were
      denied. We are awaiting a decision from the Court on the class certification
      motion.





Due
      to
      the inherent uncertainties of litigation, the Company cannot accurately predict
      the ultimate outcome of the matter. We cannot predict whether we will be able
      to
      renegotiate a settlement that complies with the Second Circuit’s mandate.  
If 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,
      utilize a significant portion of our cash resources and adversely affect our
      ability our ability to continue as a going concern (see Note 5, “Discontinued
      Operations”).


14




**(8)**  **RELATED
      PARTY TRANSACTIONS**





As
      more
      fully discussed in Note 3, “Proposed Sale of Tralliance and Share Issuance,” on
      June 10, 2008, theglobe entered into a definitive agreement to (i) sell the
      business and substantially all of the assets of its Tralliance Corporation
      subsidiary and (ii) issue 229,000,000 shares of its Common Stock to Registry
      Management. Registry Management is controlled by Michael S. Egan, theglobe’s
      Chairman and Chief Executive Officer and principal stockholder and each of
      theglobe’s remaining Board members and executive officers, Mr. Edward A.
      Cespedes and Ms. Robin S. Lebowitz, have a minority interest in Registry
      Management.





Additionally,
      as more fully discussed in Note 4, “Debt,” on June 6, 2008 Dancing Bear, an
      entity which is controlled by Mr. Egan, entered into a one year Revolving Loan
      Agreement with the Company pursuant to which the Company may under certain
      conditions borrow up to a maximum of $500,000 from Dancing Bear. During June
      2008, the Company borrowed an aggregate of $200,000 from Dancing bear under
      the
      Revolving Loan Agreement, which remained unpaid at June 30, 2008. Subsequently,
      on July 10, 2008 and on August 6, 2008, the Company made additional borrowings
      of $100,000 each under the Revolving Loan Agreement.





Also,
      as
      more fully described in Note 4, “Debt,” on June 10, 2008 Dancing Bear converted
      an aggregate of $400,000 of outstanding 2007 Convertible Notes due to them
      by
      the Company into an aggregate of 400,000 shares of the Company’s Common
      Stock.





Several
      entities controlled by the Company’s Chairman and Chief Executive Officer have
      provided services to the Company, including: the lease of office space; and
      the
      outsourcing of customer services, human resources and payroll processing
      functions. During the six months ended June 30, 2008 and 2007, $260,882 and
      $255,722 of expense related to these services was recorded, respectively. A
      total of $762,515 incurred during 2007 and 2008 related to these services
      remains unpaid and is included within current liabilities at June 30,
      2008.





Tralliance
      is a party to a Bulk Registration Co-Marketing Agreement (the “Co-Marketing
      Agreement”) entered into in December 2007 with Labigroup Holdings, LLC
      (“Labigroup”), a private entity controlled by the Company’s Chairman and Chief
      Executive Officer. Our remaining directors also own a minority interest in
      Labigroup. During the six months ended June 30, 2008, Labigroup registered
      6,701
“.travel” domain names and was charged $26,804 in fees and costs by Tralliance
      under the Co-Marketing Agreement. A total of $13,852 of such fees and costs
      remain unpaid at June 30, 2008. Additionally, during the six months ended June
      30, 2008, Labigroup paid in full the $412,050 balance of fees and costs owed
      to
      Tralliance as of December 31, 2007.




**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:




·
            executing
                our business plans;·
            our
                ability to increase revenue levels;·
            our
                ability to control and reduce operating expenses;·
            potential
                governmental regulation and taxation;·
            the
                outcome of pending litigation;·
            our
                ability to successfully resolve disputed liabilities;·
            our
                estimates or expectations of continued losses;·
            our
                expectations regarding future revenue and
                expenses;


15





·
            attracting
                and retaining customers and employees;·
            our
                ability to consummate the proposed Purchase
                Transaction;·
            our
                ability to raise sufficient capital; and·
            our
                ability to continue to operate as a going
                concern.





These
      statements are only predictions. Although we believe that the expectations
      reflected in these forward-looking statements are reasonable, we cannot
      guarantee future results, levels of activity, performance or achievements.
      We
      are not required to and do not intend to update any of the forward-looking
      statements after the date of this Form 10-Q or to conform these statements
      to
      actual results. In light of these risks, uncertainties and assumptions, the
      forward-looking events discussed in this Form 10-Q might not occur. Actual
      results, levels of activity, performance, achievements and events may vary
      significantly from those implied by the forward-looking statements. A
      description of risks that could cause our results to vary appears under "Risk
      Factors" and elsewhere in this Form 10-Q. The following discussion should be
      read together in conjunction with the accompanying unaudited condensed
      consolidated financial statements and related notes thereto and the audited
      consolidated financial statements and notes to those statements contained in
      the
      Annual Report on Form 10-K for the year ended December 31, 2007.




**OVERVIEW**





As
      of
      June 30, 2008, theglobe.com, inc. (the "Company" or "theglobe") managed a single
      line of business, Internet services, consisting of Tralliance Corporation
      (“Tralliance”) which is the registry for the “.travel” top-level Internet
      domain. We acquired Tralliance on May 9, 2005. 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.





**PROPOSED
      SALE OF TRALLIANCE AND SHARE ISSUANCE**





On
      June
      10, 2008, theglobe entered into a definitive agreement (the “Purchase
      Agreement”) with The Registry Management Company, LLC (“Registry Management”),
      whereby theglobe will (i) sell the business and substantially all of the assets
      of its Tralliance Corporation subsidiary and (ii) issue 229,000,000 shares
      of
      its Common Stock to Registry Management (the “Purchase Transaction”). Registry
      Management is controlled by Michael S. Egan, theglobe’s Chairman and Chief
      Executive Officer and principal stockholder and each of theglobe’s two remaining
      Board members and executive officers, Mr. Edward A. Cespedes and Ms. Robin
      S.
      Lebowitz, have a minority interest in Registry Management.





As
      part
      of the consideration for the Purchase Transaction, Mr. Egan and certain of
      his
      affiliates, will exchange and surrender to theglobe all of their right, title
      and interest to (i) certain secured demand convertible promissory notes (the
      “2005 and 2007 Convertible Notes”) in the aggregate outstanding principal amount
      of $4,250,000, together with all accrued and unpaid interest thereon
      (approximately $1,184,000 at June 30, 2008) and (ii) accrued and unpaid rent
      and
      miscellaneous fees due and outstanding as of the date of closing of the Purchase
      Transaction (approximately $763,000 at June 30, 2008).





As
      additional consideration, Registry Management will pay an earn-out to theglobe
      equal to 10% (subject to certain minimums) of Registry Management’s “net
      revenue” (as defined) derived from “.travel” names registered by Registry
      Management from the date of closing through May 5, 2015. The minimum earn-out
      amount payable by Registry Management will be at least $300,000 in the first
      year, increasing by $25,000 in each subsequent year (pro-rated for the final
      year of the earn-out). The total net present value of the minimum earn-out
      payments is estimated to be approximately $1,300,000, bringing the total
      purchase consideration for the Purchase Transaction to approximately $7,600,000
      (assuming that the Purchase Transaction closes in mid-September
      2008).





Inasmuch
      as theglobe will be a shell company with no significant assets or business
      operations after the sale of Tralliance, as a condition to closing the Purchased
      Agreement, theglobe will enter into Termination Agreements with theglobe’s
      executive management providing for the termination of their existing employment
      agreements effective upon the closing of the Purchase Transaction.
      Notwithstanding the termination of their employment agreements, each such person
      is expected to remain on the Board of Directors and continue to hold their
      existing respective officer positions with theglobe. Further, effective on
      or
      shortly after the closing date of the Purchase Transaction, it is expected
      that
      theglobe will enter into a management services agreement with an affiliate
      of
      Mr. Egan whereby such affiliate will provide various managerial, financial,
      accounting and administrative services to theglobe for approximately $200,000
      to
      $300,000 per annum. As a result, upon the closing of the Purchase Transaction,
      it is expected that theglobe’s future operating expenses as a public shell
      company will consist primarily of expenses incurred under the Management
      Services Agreement and other customary public company expenses, including legal,
      audit and other miscellaneous public company costs.


16


On
      June
      12, 2008, Mr. Michael S. Egan, the Chairman and CEO of theglobe, together with
      certain of his affiliates and other related parties, whom collectively are
      the
      record owners of approximately 51.25% of the issued and outstanding shares
      of
      theglobe Common Stock, the sole class of voting securities of theglobe, executed
      a written consent of the stockholders adopting the Purchase Agreement described
      above and approving the transactions contemplated thereby in accordance with
      Section 228 of Delaware Law. On July 9, 2008, the same stockholders further
      ratified their prior action of June 12, 2008 and approved anew the Purchase
      Transaction. The actions by written consent are sufficient to approve the
      Purchase Agreement and the other transaction contemplated by the Purchase
      Agreement without any further action or vote of the stockholders of
      theglobe.com





In
      connection with the Purchase Transaction, on July 25, 2008, theglobe filed
      a
      Definitive Information Statement and related Notice of Internet Availability
      of
      Information Statement (the “Notice”) with the Securities and Exchange
      Commission, and shortly thereafter commenced mailing the Notice to its
      stockholders. The Company presently expects the Purchase Transaction to close
      in
      mid-September 2008.





**BASIS
      OF PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**





We
      received a report from our independent accountants, relating to our December
      31,
      2007 audited financial statements, containing a paragraph stating that our
      recurring losses from operations and our accumulated deficit raise substantial
      doubt about our ability to continue as a going concern. The Company continues
      to
      incur substantial consolidated net losses and management believes the Company
      will continue to be unprofitable and use cash in its operations for the
      foreseeable future. Based upon our current cash resources and without the
      infusion of additional capital, management does not believe the Company can
      operate as a going concern beyond the end of August 2008. 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.





**RESULTS
      OF OPERATIONS**





**THREE
      MONTHS ENDED JUNE 30, 2008 COMPARED TO**


**THE
      THREE MONTHS ENDED JUNE 30, 2007**





**CONTINUING
      OPERATIONS**





NET
      REVENUE. Net revenue totaled $547 thousand for the three months ended June
      30,
      2008 as compared to $645 thousand for the three months ended June 30, 2007,
      a
      decrease of approximately $98 thousand, or 15%, from the prior year period.
        Approximately $163 thousand, or 25%, of the 2007 second quarter net
      revenue was attributable to the sale of advertising on our www.search.travel website.
      The www.search.travel website
      was sold to an entity controlled by our Chairman, Michael Egan, in December
      2007. Total .travel domain names registered as of the end of the second quarter
      of 2008 was approximately 200.8 thousand of which 170.6 thousand were registered
      under our bulk purchase program established in December 2007 and approximately
      30.2 thousand names were registered under our standard program. At June 30,
      2007
      there were approximately 27.1 thousand .travel domain names registered under
      our
      then standard program.





COST
      OF
      REVENUE. Cost of revenue totaled $117 thousand for the three months ended June
      30, 2008, a increase of $26 thousand, or approximately 29%, from the $91
      thousand reported for the three months ended June 30, 2007.   Cost of
      revenue consists primarily of fees paid to third party service providers which
      furnish outsourced services, including verification of registration eligibility,
      maintenance of the “.travel” directory of consumer-oriented registrant travel
      data, as well as other services. Fees for some of these services vary based
      on
      transaction levels or transaction types. Fees for outsourced services are
      generally deferred and amortized to cost of revenue over the term of the related
      domain name registration. Cost of revenue as a percent of net revenue was
      approximately 21% for the second quarter of 2008 as compared to 14% for the
      same
      period of 2007. The increase in cost of revenue as compared to the 2007 second
      quarter was due primarily to an increase of $50 thousand in the fees payable
      to
      third parties to “authenticate” a domain name subsequent to its initial year of
      registration. This increase was partially offset by a $17 thousand decrease
      in
      hosting fees for the .travel directory, which hosting function was brought
      in-house in October 2007.





SALES
      AND
      MARKETING. Sales and marketing expenses consist primarily of salaries and
      related expenses of sales and marketing personnel, commissions, consulting,
      advertising and marketing costs, public relations expenses and promotional
      activities. Sales and marketing expenses totaled approximately $87 thousand
      for
      the three months ended June 30, 2007 versus $591 thousand for the same period
      in
      2007, a decrease of $504 thousand or 85%. Beginning in the third quarter of
      2006
      and continuing through 2007, Tralliance engaged several outside parties to
      promote our registry operations and the www.search.travel website
      internationally. These engagements were either terminated or renegotiated by
      the
      end of 2007 resulting in a decrease of approximately $237 thousand in the three
      months ended June 30, 2008 as compared to the same period of 2007. In addition,
      during April 2007, Tralliance sponsored an event in Beijing, China to introduce
      and publicize its various travel services, including a new search tool
      specifically geared towards Chinese tourism. During the second quarter of 2007,
      Tralliance incurred approximately $123 thousand in direct costs related to
      this
      event. Additional decreases in web development and software of $56 thousand
      and
      public relations in the amount of $50 thousand contributed to the overall
      decline in sales and marketing expense in the second quarter of 2008 as compared
      to the second quarter of 2007.


17





GENERAL
      AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist
      primarily of salaries and other personnel costs related to management, finance
      and accounting functions, facilities, outside legal and professional fees,
      information-technology consulting, directors and officers insurance, and general
      corporate overhead costs. General and administrative expenses totaled
      approximately $655 thousand in the second quarter of 2008 as compared to $1.1
      million for the same quarter of the prior year, a decrease of approximately
      $440
      thousand, or approximately 40%. During the second and third quarter of 2007
      the
      Company restructured and reduced administrative staff resulting in a $290
      thousand decline in personnel costs for the second quarter of 2008 as compared
      to the second quarter of 2007. Also contributing to the overall reduction in
      general and administrative expenses in the three months ended June 30, 2008
      as
      compared to the same period of 2007 were decreases in travel and entertainment
      expenses of approximately $27 thousand, web hosting, $21 thousand and insurance
      expense of approximately $16 thousand.





RELATED
      PARTY TRANSACTIONS. Related party transaction expense consists of rent for
      the
      Company’s office space and the fees associated with outsourcing the customer
      service, human resources and payroll processing functions to entities controlled
      by theglobe’s management. Related party transactions totaled $130 thousand in
      the second quarter of 2008 as compared to approximately $147 thousand in the
      second quarter of 2007. The decline of approximately $17 thousand is primarily
      attributed to a reduction in office space resulting in decreased rent expense
      in
      the three months ended June 30, 2008 versus the same period of
      2007.





DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization expense totaled $50 thousand
      for
      the three months ended June 30, 2008 as compared to $63 thousand for the three
      months ended June 30, 2007, a decrease of $13 thousand.





RELATED
      PARTY INTEREST EXPENSE. Related party interest expense for the second quarter
      of
      2008 was approximately $115 thousand as compared to $587 thousand for the same
      period of 2007, a decrease of approximately $472 thousand. During the second
      quarter of 2007, $500 thousand of non-cash interest expense was recorded related
      to the beneficial conversion features of the $500 thousand in convertible
      promissory notes acquired by an entity controlled by our Chairman and Chief
      Executive Officer. See “Capital Transactions” and Note 4, “Debt,” of the Notes
      to Unaudited Condensed Consolidated Financial Statements for further discussion.
      Additionally, higher outstanding borrowings during the three months ended June
      30, 2008 compared to the three months ended June 30, 2007 resulted in higher
      interest expense of $27 thousand. Net interest income of $529 was reported
      for
      the second quarter of 2008 versus approximately $6 thousand for the second
      quarter of 2007.





OTHER
      INCOME (EXPENSE), NET. As a result of the Company’s net losses incurred during
      2007 and the first half of 2008, the Company had a lower level of funds
      available for investment during the second quarter of 2008 as compared to the
      same quarter of the prior year.




INCOME
      TAXES. No tax benefit was recorded for the losses incurred during the second
      quarter of 2008 or the second quarter of 2007 as we recorded a 100% valuation
      allowance against our otherwise recognizable deferred tax assets due to the
      uncertainty surrounding the timing or ultimate realization of the benefits
      of
      our net operating loss carryforwards in future periods. As of December 31,
      2007,
      we had net operating loss carryforwards which may be potentially available
      for
      U.S. tax purposes of approximately $167 million. These carryforwards expire
      through 2027. 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, we have substantially limited the availability of our net operating
      loss carryforwards. There can be no assurance that we will be able to utilize
      any net operating loss carryforwards in the future.




**DISCONTINUED
      OPERATIONS**





Discontinued
      operations generated net income of approximately $21 thousand for the second
      quarter of 2008 as compared to a net income of $157 thousand during the second
      quarter of 2007 and is summarized as follows:




Computer
              Games
            
            VoIP
              Telephony
              Services
            
            TotalThree
                months ended June 30, 2008:Net
                revenue
            
            $
            21,695
            
            $
            —
            
            $
            21,695Operating
                expenses
            
            
            —
            
            
            (700
            )
            
            (700
            )Other
                income, net
            
            
            —
            
            
            —
            
            
            —$
            21,695
            
            $
            (700
            )
            $
            20,995




18




Computer
              Games
            
            VoIP
              Telephony
              Services
            
            TotalThree
                months ended June 30, 2007:Net
                revenue
            
            $
            19,916
            
            $
            256
            
            $
            20,172Operating
                expenses
            
            
            169,043
            
            
            (103,490
            )
            
            65,553Other
                income, net
            
            
            29,259
            
            
            42,040
            
            
            71,299$
            218,218
            
            $
            (61,194
            )
            $
            157,024





**SIX
      MONTHS ENDED JUNE 30, 2008 COMPARED TO**


**THE
      SIX MONTHS ENDED JUNE 30, 2007**





**CONTINUING
      OPERATIONS**





NET
      REVENUE. Net revenue totaled $1.091 million for the six months ended June 30,
      2008 as compared to $1.077 million for the six months ended June 30, 2007,
      an
      increase of approximately $14 thousand, or 1.3%, from the prior year period.
      Approximately $163 thousand, or 15%, of total net revenue in the first half
      of
      2007 was attributable to the sale of advertising on our www.search.travel website.
      The www.search.travel website,
      introduced in August 2006, was sold in December 2007. Total .travel domain
      names
      registered as of the end of the second quarter of 2008 was approximately 200.8
      thousand of which 170.6 thousand were registered under our bulk purchase program
      established in December 2007 and approximately 30.2 thousand names were
      registered under our standard program. At June 30, 2007 there were approximately
      27.1 thousand .travel domain names registered under our then standard
      program.





COST
      OF
      REVENUE. Cost of revenue totaled $149 thousand for the six months ended June
      30,
      2008, a decline of $44 thousand, or 23%, from the $193 thousand reported for
      the
      six months ended June 30, 2007. Cost of revenue as a percent of net revenue
      was
      approximately 14% for the first half of 2008 as compared to 18% for the same
      period of 2007. Tralliance brought the hosting of the .travel directory in-house
      in October 2007 generating a savings of approximately $53 thousand in the six
      months ended June 30, 2008 as compared to the same period of 2007.





SALES
      AND
      MARKETING. Sales and marketing expenses totaled $296 thousand for the six months
      ended June 30, 2008 versus $1.2 million for the same period in 2007, a decrease
      of approximately $934 thousand. During the first half of 2007 the sales and
      marketing costs related to search.travel were $255 thousand or approximately
      20%
      of total sales and marketing cost for the period. As previously discussed the
      Company sold the www.search.travel website in December 2007. In April 2007
      Tralliance introduced the .travel domain name in China; the one-time cost
      associated with the launch event was approximately $155 thousand. Beginning
      in
      the third quarter of 2006 and continuing through 2007 Tralliance engaged several
      outside parties to promote its registry operations internationally. These
      relationships were either terminated or renegotiated in the fourth quarter
      of
      2007 which resulted in a decrease in sales and marketing costs of approximately
      $324 thousand in the six months ended June 30, 2008 as compared to the same
      period of 2007. Additionally, public relations cost declined $117 thousand
      in
      the first half of 2008 compared to the first half of 2007.





GENERAL
      AND ADMINISTRATIVE EXPENSES. General and administrative expenses totaled
      approximately $1.2 million in the first six months of 2008 as compared to
      approximately $2.2 million for the same period of the prior year, a decrease
      of
      $992 thousand, or 45.5%. During the second and third quarters of 2007 the
      Company restructured and reduced administrative staff resulting in a $674
      thousand decline in personnel cost for the six months ended June 30, 2008
      compared to the same period of 2007. Travel and entertainment expense was
      reduced by approximately $153 thousand in the first six months of 2008 from
      the
      comparable period of 2007. Also contributing to the overall reduction in general
      and administrative expenses in the first half of 2008 as compared to the same
      period of 2007 was an approximate $70 thousand reduction in office expense
      and a
      $33 thousand reduction in insurance expenses.




RELATED
      PARTY TRANSACTIONS. Related party transaction expense consists of rent for
      the
      Company’s office space and the fees associated with outsourcing the customer
      service, human resources and payroll processing functions to entities controlled
      by theglobe’s management. Related party transactions totaled approximately $283
      thousand for the first half of 2008 as compared to approximately $284 thousand
      for the first half of 2007.




DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization expense totaled $101 thousand
      for the six months ended June 30, 2008 as compared to $122 thousand for the
      six
      months ended June 30, 2007, or a decline of $21 thousand.


19





RELATED
      PARTY INTEREST EXPENSE. Related party interest expense for the six months ended
      June 30, 2008 was approximately $231 thousand compared to $671 thousand in
      the
      same period of 2007, a $440 thousand decrease. During the second quarter of
      2007, $500 thousand of non-cash interest expense was recorded related to the
      beneficial conversion features of $500 thousand in convertible promissory notes
      acquired by an entity controlled by its Chairman and Chief Executive Officer.
      Additionally, higher outstanding borrowings during the six months ended June
      30,
      2008 compared to the six months ended June 30, 2007 resulted in higher interest
      expense of approximately $60 thousand in 2008 versus 2007.





OTHER
      INCOME (EXPENSE), NET. Net interest income of approximately $3 thousand was
      reported for the first half of 2008 compared to total net interest income of
      $56
      thousand reported for the same period of the prior year. As a result of the
      Company’s net losses incurred during 2007 and the first half of 2008 the Company
      had a lower level of funds available for investment during the 2008 period
      as
      compared to the same period of the prior year.




INCOME
      TAXES. No tax benefit was recorded for the losses incurred during the first
      half
      of 2008 or the first half of 2007 as we recorded a 100% valuation allowance
      against it’s otherwise recognizable deferred tax assets due to the uncertainty
      surrounding the timing or ultimate realization of the benefits of it’s net
      operating loss carryforwards in future periods. As of December 31, 2007, the
      Company had net operating loss carryforwards which may be potentially available
      for U.S. tax purposes of approximately $167 million. These carryforwards expire
      through 2027. 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
      its
      ownership interests, as defined in the Internal Revenue Code of 1986, as
      amended, theglobe has substantially limited the availability of its net
      operating loss carryforwards. There can be no assurance that the Company will
      be
      able to utilize any net operating loss carryforwards in the future.





**DISCONTINUED
      OPERATIONS**





The
      gain
      from discontinued operations, net of income taxes totaled approximately $22
      thousand in the first half of 2008 as compared to a net loss of approximately
      $1
      million during the first six months of 2007 and is summarized as
      follows:




Computer
              Games
            
            VoIP
              Telephony
              Services
            
            TotalSix
                months ended June 30, 2008:Net
                revenue
            
            $
            21,695
            
            $
            —
            
            $
            21,695Operating
                expenses
            
            
            (4,048
            )
            
            (2,829
            )
            
            (6,877
            )Other
                income, net
            
            
            142
            
            
            7,000
            
            
            7,142$
            17,789
            
            $
            4,171
            
            $
            21,960




Computer
              Games
            
            VoIP
              Telephony
              Services
            
            TotalSix
                months ended June 30, 2007:Net
                revenue
            
            $
            608,415
            
            $
            630
            
            $
            609,045Operating
                expenses
            
            
            (783,930
            )
            
            (934,019
            )
            
            (1,717,949
            )Other
                income (expense), net
            
            
            29,259
            
            
            75,633
            
            
            104,892$
            (146,256
            )
            $
            (857,756
            )
            $
            (1,004,012
            )




**LIQUIDITY
      AND CAPITAL RESOURCES**





**CASH
      FLOW ITEMS**





As
      of
      June 30, 2008, theglobe had approximately $91 thousand in cash and cash
      equivalents as compared to approximately $631 thousand as of December 31, 2007.
      Net cash flows used in operating activities of continuing operations totaled
      approximately $755 thousand and $2.6 million, for the six months ended June
      30,
      2008 and 2007, respectively, or a decrease of approximately $1.8 million. Such
      decrease was attributable primarily to a lower net loss from continuing
      operations for the six months ended June 30, 2008 compared to the six months
      ended June 30, 2007.





Approximately
      $8 thousand in net cash flows were generated in the operating activities of
      discontinued operations during the first half of 2008 as compared to a use
      of
      approximately $3 million of cash in operating activities of discontinued
      operations during the same period of the prior year. Such decrease was
      attributable to the shutdown of the Company’s computer games and VoIP telephony
      services businesses in March 2007.


20


**FUTURE
      AND CRITICAL NEED FOR CAPITAL**





For
      the
      reasons described below, Company management does not believe that cash on hand
      and cash flow generated internally by the Company will be adequate to fund
      the
      operation of its business beyond a short period of time. Additionally, we have
      received a report from our independent registered public accountants, relating
      to our December 31, 2007 audited financial statements, containing an explanatory
      paragraph stating that our recurring losses from operations and our accumulated
      deficit raise substantial doubts about our ability to continue as a going
      concern.





During
      the year ended December 31, 2007 and the six months ended June 30, 2008, the
      Company was able to continue operating as a going concern due principally to
      funding of $1.25 million received during 2007 from the sale of secured
      convertible demand promissory notes (the “2007 Convertible Notes”) to an entity
      controlled by Michael Egan, its Chairman and Chief Executive Officer and
      additional funding of $380 thousand provided from the sale of all of the
      Company’s rights related to its www.search.travel domain name and website to an
      entity also controlled by Mr. Egan in December 2007.





On
      June
      6, 2008, Dancing Bear Investments, Inc. (“Dancing Bear”), an entity which is
      controlled by the Company’s Chairman and Chief Executive Officer, entered into a
      one year Revolving Loan Agreement with the Company pursuant to which the Company
      may, under certain conditions as described below, borrow up to a maximum of
      $500
      thousand from Dancing Bear (the “Revolving Debt”). During June 2008, the Company
      borrowed an aggregate of $200 thousand from Dancing Bear under the Revolving
      Loan Agreement and subsequently in July and August 2008, the Company made
      additional borrowings aggregating $200 thousand under the Revolving Loan
      Agreement. During the remainder of the one year term of the Revolving Loan
      Agreement, the Company may make borrowing requests to Dancing Bear, and if
      such
      requests are approved by Dancing Bear, may borrow additional funds of up to
      $100
      thousand under the Revolving Loan Agreement. All such funds borrowed may be
      prepaid in whole or in part, without penalty, at any time during the term of
      the
      Revolving Loan Agreement. The Company currently has no ability to repay this
      Loan. All unpaid borrowings, including accrued interest on borrowed funds at
      the
      rate of 10% per annum, are due and payable by the Company to Dancing Bear in
      one
      lump sum on the earlier of (i) June 6, 2009, or (ii) the occurrence of an event
      of default as defined in the Revolving Loan Agreement. All borrowings under
      the
      Revolving Loan Agreement are secured by a pledge of all of the assets of the
      Company and its subsidiaries, subordinate to existing liens on such assets
      related to the 2005 Convertible Notes and the 2007 Convertible Notes (the
“Convertible Debt”) (see Note 4, “Debt” in the accompanying Notes to Unaudited
      Condensed Consolidated Financial Statements for further details).





At
      June
      30, 2008, the Company had a net working capital deficit of approximately $10.1
      million, inclusive of a cash and cash equivalents balance of approximately
      $91
      thousand. Such working capital deficit included an aggregate of $4.25 million
      in
      Convertible Debt, related accrued interest of approximately $1.2 million, and
      accounts payable totaling approximately $763 thousand due to entities controlled
      by Mr. Egan (see Note 4, “Debt” and Note 8, “Related Party Transactions” in the
      accompanying Notes to Unaudited Condensed Consolidated Financial Statements
      for
      further details). Additionally, such working capital deficit included
      approximately $1.9 million of net liabilities of discontinued operations, with
      a
      significant portion of such liabilities related to charges which have been
      disputed by the Company, and $200 thousand of secured debt recently borrowed
      under the Revolving Loan Agreement.





Notwithstanding
      previous cost reduction actions taken by the Company and its decision to
      shutdown its unprofitable computer games and VoIP telephony services businesses
      in March 2007 (see Note 5, “Discontinued Operations” in the accompanying Notes
      to Unaudited Condensed Consolidated Financial Statements for further details),
      the Company continues to incur substantial consolidated net losses, although
      reduced in comparison with prior periods, and management believes that the
      Company will continue to be unprofitable in the foreseeable future. Based upon
      the Company’s current financial condition, as discussed above, and without
      further advances from Dancing Bear under the aforementioned $500 thousand
      Revolving Loan Agreement or the infusion of other additional capital, management
      does not believe that the Company will be able to fund its operations beyond
      the
      end of August 2008. Assuming that the remaining $100 thousand that may be
      available under the Revolving Loan Agreement is loaned to the Company sometime
      around the end of August 2008, such borrowing would be expected to allow us
      to
      fund our operations for only a few weeks thereafter.





As
      more
      fully discussed in Note 3, “Proposed Sale of Tralliance and Share Issuance” in
      the accompanying Notes to Unaudited Condensed Consolidated Financial Statements,
      on June 10, 2008, the Company announced that it had entered into a definitive
      agreement to sell substantially all of the business and net assets of its
      Tralliance Corporation subsidiary and to issue approximately 229 million shares
      of its Common Stock to an entity controlled by Mr. Egan (the “Purchase
      Transaction”). Additionally, on June 10, 2008, the Company announced that
      Dancing Bear Investments, Inc., an entity controlled by Michael S. Egan,
      converted a portion of the Convertible Debt totaling $400 thousand into 40
      million shares of the Company’s Common Stock. Such conversion increased the
      ownership in the Company’s Common Stock by Mr. Egan and certain family members
      and related parties (the “Egan Family”) to approximately 51.25% and allows the
      Egan Family to control the vote on all corporate actions, including the Purchase
      Transaction (see Note 4, “Debt”, in the accompanying Notes to Unaudited
      Condensed Consolidated Financial Statements), which was approved by written
      action dated July 9, 2008. In the event that the Purchase Transaction is
      consummated, all of the Company’s remaining Convertible Debt, related accrued
      interest and accounts payable owed to entities controlled by Mr. Egan (which
      was
      approximately $6.2 million at June 30, 2008) will be exchanged or cancelled.
      Consummation of the Purchase Transaction will not eliminate the Company’s
      obligations related to the Revolving Debt.


21





Additionally,
      the consummation of the Purchase Transaction would also result in significant
      reductions in the Company’s cost structure, based upon the elimination of
      Tralliance’s operating expenses. Although substantially all of Tralliance’s
      revenue would also be eliminated, approximately 10% of Tralliance’s future net
      revenue through May 5, 2015 would be essentially retained through the
      contemplated net revenue earn-out provisions of the Purchase Transaction.
      Additionally, the consummation of the Purchase Transaction would increase Mr.
      Egan’s beneficial ownership in the Company to approximately 77% (assuming
      exercise of all outstanding stock options and warrants) and would significantly
      dilute all other existing shareholders.





Management
      expects that the consummation of the Purchase Transaction will significantly
      reduce the amount of net losses currently being sustained by the Company.
      However, management does not believe that the consummation of the Purchase
      Transaction will, in itself, allow the Company to become profitable and 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. Accordingly, assuming that the Purchase
      Transaction is consummated, management believes that additional capital
      infusions, including amounts significantly beyond the remaining $100 thousand
      available under the Revolving Loan Agreement, will continue to be needed in
      order for the Company to continue to operate as a going concern.





Although
      management presently expects that the Purchase Transaction will be consummated,
      there can be no assurance that such closing will occur. In the event that the
      Purchase Transaction is not consummated, management expects that significantly
      more capital will need to be invested in the Company in the near term than
      would
      be required in the event that the Purchase Transaction is consummated. Also,
      inasmuch as substantially all of the assets of the Company and its subsidiaries
      secure the Convertible Debt and the Revolving Debt owed to entities controlled
      by Mr. Egan, in connection with any resulting proceeding to collect this debt,
      such entities could seize and sell the assets of the Company and it
      subsidiaries, any or all of which would have a material adverse effect on the
      financial condition and future operations of the Company, including the
      potential bankruptcy or cessation of business of the Company.





It
      is our
      preference to avoid filing for protection under the U.S. Bankruptcy Code.
      However, in order to continue operating as a going concern for any length of
      time beyond August of 2008, we believe that we must raise additional capital.
      Although there is no commitment to do so, any such funds would most likely
      come
      from Dancing Bear under the existing $500 thousand Revolving Loan Agreement,
      or
      otherwise from Michael Egan or affiliates of Mr. Egan or the Company, as the
      Company currently has no access to credit facilities with traditional third
      parties and has historically relied upon borrowings from related parties to
      meet
      short-term liquidity needs. Any such equity capital raised would not be
      registered under the Securities Act of 1933 and would not be offered or sold
      in
      the United States absent registration requirements. Further, any securities
      issued (or issuable) in connection with any such capital raise will likely
      result in very substantial dilution of the number of outstanding shares of
      the
      Company’s Common Stock.





The
      amount of capital required to be raised by the Company will be dependent upon
      a
      number of factors, including (i) whether or not the Purchase Transaction is
      consummated; (ii) whether “.travel” name registration net revenue levels are
      able to be increased; (iii) our ability to control and reduce operating
      expenses; and (iv) our ability to successfully settle disputed and other
      outstanding liabilities related to our discontinued operations. While the
      Company anticipates that the Purchase Transaction will be consummated in mid
      September 2008, there can be no assurance that the Purchase Transaction will
      be
      consummated nor that the Company will be successful in raising a sufficient
      amount of capital, executing any of its current or future business plans or
      in
      continuing to operate as a going concern on a long-term basis. The consolidated
      financial statements do not include any adjustments that may result from the
      outcome of this uncertainty.





**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 June 30, 2008 and December 31, 2007, a significant portion of our
      net
      liabilities of discontinued operations relate to charges that have been disputed
      by the Company and for which estimates have been required. Our estimates,
      judgments and assumptions are continually evaluated based on available
      information and experience. Because of the use of estimates inherent in the
      financial reporting process, actual results could differ from those
      estimates.





Certain
      of our accounting policies require higher degrees of judgment than others in
      their application. These include revenue recognition, valuation of receivables,
      valuation of goodwill, 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.


22





**REVENUE
      RECOGNITION**




The
      Company’s revenue from continuing operations consists principally of
      registration fees for Internet domain registrations, which generally have terms
      of one year, but may be up to ten years. Such registration fees are reported
      net
      of transaction fees paid to an unrelated third party which serves as the
      registry operator for the Company. Net registration fee revenue is recognized
      on
      a straight line basis over the registrations' terms.





**VALUATION
      OF ACCOUNTS RECEIVABLE**





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





**LONG-LIVED
      ASSETS**





The
      Company's long-lived assets primarily consist of property and equipment,
      capitalized costs of internal-use software, and values attributable to covenants
      not to compete.





Long-lived
      assets held and used by the Company and intangible assets with determinable
      lives are reviewed for impairment whenever events or circumstances indicate
      that
      the carrying amount of assets may not be recoverable in accordance with SFAS
      No.
      144, "Accounting for the Impairment or Disposal of Long-Lived Assets." We
      evaluate recoverability of assets to be held and used by comparing the carrying
      amount of the assets, or the appropriate grouping of assets, to an estimate
      of
      undiscounted future cash flows to be generated by the assets, or asset group.
      If
      such assets are considered to be impaired, the impairment to be recognized
      is
      measured as the amount by which the carrying amount of the assets exceeds the
      fair value of the assets. Fair values are based on quoted market values, if
      available. If quoted market prices are not available, the estimate of fair
      value
      may be based on the discounted value of the estimated future cash flows
      attributable to the assets, or other valuation techniques deemed reasonable
      in
      the circumstances.





**CAPITALIZATION
      OF COMPUTER SOFTWARE COSTS**





The
      Company capitalizes the cost of internal-use software which has a useful life
      in
      excess of one year in accordance with Statement of Position No. 98-1,
      "Accounting for the Costs of Computer Software Developed or Obtained for
      Internal Use." Subsequent additions, modifications, or upgrades to internal-use
      software are capitalized only to the extent that they allow the software to
      perform a task it previously did not perform. Software maintenance and training
      costs are expensed in the period in which they are incurred. Capitalized
      computer software costs are amortized using the straight-line method over the
      expected useful life, or three years.





**IMPACT
      OF RECENTLY ISSUED ACCOUNTING STANDARDS**





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





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





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





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


23


In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
      standard defines fair value, establishes a framework for measuring fair value
      in
      generally accepted accounting principles and expands disclosure about fair
      value
      measurements. SFAS No. 157 applies to other accounting standards that require
      or
      permit fair value measurements. Accordingly, this statement does not require
      any
      new fair value measurement. SFAS No. 157 was effective for the Company on
      January 1, 2008. The Company does not believe that SFAS No. 157 will have a
      material impact on its 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 June 30, 2008. Based on that
      evaluation, our Chief Executive Officer and our Chief Financial Officer have
      concluded that our disclosure controls and procedures are effective in alerting
      them in a timely manner to material information regarding us (including our
      consolidated subsidiaries) that is required to be included in our periodic
      reports to the SEC.





Our
      management, with the participation of our Chief Executive Officer and our Chief
      Financial Officer, have evaluated any change in our internal control over
      financial reporting that occurred during the quarter ended June 30, 2008 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, 2007, the
      following factors should be carefully considered in evaluating our business
      and
      prospects.





**RISKS
      RELATING TO OUR BUSINESS GENERALLY**





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





For
      the
      reasons described below, Company management does not believe that cash on hand
      and cash flow generated internally by the Company will be adequate to fund
      the
      operation of its business beyond a short period of time. Additionally, we have
      received a report from our independent registered public accountants, relating
      to our December 31, 2007 audited financial statements, containing an explanatory
      paragraph stating that our recurring losses from operations and our accumulated
      deficit raise substantial doubts about our ability to continue as a going
      concern.





During
      the year ended December 31, 2007 and the six months ended June 30, 2008, the
      Company was able to continue operating as a going concern due principally to
      funding of $1.25 million received during 2007 from the sale of secured
      convertible demand promissory notes (the “2007 Convertible Notes”) to an entity
      controlled by Michael Egan, its Chairman and Chief Executive Officer and
      additional funding of $380 thousand provided from the sale of all of the
      Company’s rights related to its www.search.travel domain name and website to an
      entity also controlled by Mr. Egan in December 2007.





On
      June
      6, 2008, Dancing Bear Investments, Inc. (“Dancing Bear”), an entity which is
      controlled by the Company’s Chairman and Chief Executive Officer, entered into a
      one year Revolving Loan Agreement with the Company pursuant to which the Company
      may, under certain conditions as described below, borrow up to a maximum of
      $500
      thousand from Dancing Bear (the “Revolving Debt”). During June 2008, the Company
      borrowed an aggregate of $200 thousand from Dancing Bear under the Revolving
      Loan Agreement and subsequently in July and August 2008, the Company made
      additional borrowings aggregating $200 thousand under the Revolving Loan
      Agreement. During the remainder of the one year term of the Revolving Loan
      Agreement, the Company may make borrowing requests to Dancing Bear, and if
      such
      requests are approved by Dancing Bear, may borrow additional funds of up to
      $100
      thousand under the Revolving Loan Agreement. All such funds borrowed may be
      prepaid in whole or in part, without penalty, at any time during the term of
      the
      Revolving Loan Agreement. The Company currently has no ability to repay this
      Loan. All unpaid borrowings, including accrued interest on borrowed funds at
      the
      rate of 10% per annum, are due and payable by the Company to Dancing Bear in
      one
      lump sum on the earlier of (i) June 6, 2009, or (ii) the occurrence of an event
      of default as defined in the Revolving Loan Agreement. All borrowings under
      the
      Revolving Loan Agreement are secured by a pledge of all of the assets of the
      Company and its subsidiaries, subordinate to existing liens on such assets
      related to the 2005 Convertible Notes and the 2007 Convertible Notes (the
“Convertible Debt”) (see Note 4, “Debt” in the accompanying Notes to Unaudited
      Condensed Consolidated Financial Statements for further details).


24


At
      June
      30, 2008, the Company had a net working capital deficit of approximately $10.1
      million, inclusive of a cash and cash equivalents balance of approximately
      $91
      thousand. Such working capital deficit included an aggregate of $4.25 million
      in
      Convertible Debt, related accrued interest of approximately $1.2 million, and
      accounts payable totaling approximately $763 thousand due to entities controlled
      by Mr. Egan (see Note 4, “Debt” and Note 8, “Related Party Transactions” in the
      accompanying Notes to Unaudited Condensed Consolidated Financial Statements
      for
      further details). Additionally, such working capital deficit included
      approximately $1.9 million of net liabilities of discontinued operations, with
      a
      significant portion of such liabilities related to charges which have been
      disputed by the Company, and $200 thousand of secured debt recently borrowed
      under the Revolving Loan Agreement.





Notwithstanding
      previous cost reduction actions taken by the Company and its decision to
      shutdown its unprofitable computer games and VoIP telephony services businesses
      in March 2007 (see Note 5, “Discontinued Operations” in the accompanying Notes
      to Unaudited Condensed Consolidated Financial Statements for further details),
      the Company continues to incur substantial consolidated net losses, although
      reduced in comparison with prior periods, and management believes that the
      Company will continue to be unprofitable in the foreseeable future. Based upon
      the Company’s current financial condition, as discussed above, and without
      further advances from Dancing Bear under the aforementioned $500 thousand
      Revolving Loan Agreement or the infusion of other additional capital, management
      does not believe that the Company will be able to fund its operations beyond
      the
      end of August 2008. Assuming that the remaining $100 thousand that may be
      available under the Revolving Loan Agreement is loaned to the Company sometime
      around the end of August 2008, such borrowing would be expected to allow us
      to
      fund our operations for only a few weeks thereafter.





As
      more
      fully discussed in Note 3, “Proposed Sale of Tralliance and Share Issuance” in
      the accompanying Notes to Unaudited Condensed Consolidated Financial Statements,
      on June 10, 2008, the Company announced that it had entered into a definitive
      agreement to sell substantially all of the business and net assets of its
      Tralliance Corporation subsidiary and to issue approximately 229 million shares
      of its Common Stock to an entity controlled by Mr. Egan (the “Purchase
      Transaction”). Additionally, on June 10, 2008, the Company announced that
      Dancing Bear Investments, Inc., an entity controlled by Michael S. Egan,
      converted a portion of the Convertible Debt totaling $400 thousand into 40
      million shares of the Company’s Common Stock. Such conversion increased the
      ownership in the Company’s Common Stock by Mr. Egan and certain family members
      and related parties (the “Egan Family”) to approximately 51.25% and allows the
      Egan Family to control the vote on all corporate actions, including the Purchase
      Transaction (see Note 4, “Debt”, in the accompanying Notes to Unaudited
      Condensed Consolidated Financial Statements), which was approved by written
      action dated July 9, 2008. In the event that the Purchase Transaction is
      consummated, all of the Company’s remaining Convertible Debt, related accrued
      interest and accounts payable owed to entities controlled by Mr. Egan (which
      was
      approximately $6.2 million at June 30, 2008) will be exchanged or cancelled.
      Consummation of the Purchase Transaction will not eliminate the Company’s
      obligations related to the Revolving Debt.





Additionally,
      the consummation of the Purchase Transaction would also result in significant
      reductions in the Company’s cost structure, based upon the elimination of
      Tralliance’s operating expenses. Although substantially all of Tralliance’s
      revenue would also be eliminated, approximately 10% of Tralliance’s future net
      revenue through May 5, 2015 would be essentially retained through the
      contemplated net revenue earn-out provisions of the Purchase Transaction.
      Additionally, the consummation of the Purchase Transaction would increase Mr.
      Egan’s beneficial ownership in the Company to approximately 77% (assuming
      exercise of all outstanding stock options and warrants) and would significantly
      dilute all other existing shareholders.





Management
      expects that the consummation of the Purchase Transaction will significantly
      reduce the amount of net losses currently being sustained by the Company.
      However, management does not believe that the consummation of the Purchase
      Transaction will, in itself, allow the Company to become profitable and 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. Accordingly, assuming that the Purchase
      Transaction is consummated, management believes that additional capital
      infusions, including amounts significantly beyond the remaining $100 thousand
      available under the Revolving Loan Agreement, will continue to be needed in
      order for the Company to continue to operate as a going concern.





Although
      management presently expects that the Purchase Transaction will be consummated,
      there can be no assurance that such closing will occur. In the event that the
      Purchase Transaction is not consummated, management expects that significantly
      more capital will need to be invested in the Company in the near term than
      would
      be required in the event that the Purchase Transaction is consummated. Also,
      inasmuch as substantially all of the assets of the Company and its subsidiaries
      secure the Convertible Debt and the Revolving Debt owed to entities controlled
      by Mr. Egan, in connection with any resulting proceeding to collect this debt,
      such entities could seize and sell the assets of the Company and it
      subsidiaries, any or all of which would have a material adverse effect on the
      financial condition and future operations of the Company, including the
      potential bankruptcy or cessation of business of the Company.


25


It
      is our
      preference to avoid filing for protection under the U.S. Bankruptcy Code.
      However, in order to continue operating as a going concern for any length of
      time beyond August of 2008, we believe that we must raise additional capital.
      Although there is no commitment to do so, any such funds would most likely
      come
      from Dancing Bear under the existing $500 thousand Revolving Loan Agreement,
      or
      otherwise from Michael Egan or affiliates of Mr. Egan or the Company, as the
      Company currently has no access to credit facilities with traditional third
      parties and has historically relied upon borrowings from related parties to
      meet
      short-term liquidity needs. Any such equity capital raised would not be
      registered under the Securities Act of 1933 and would not be offered or sold
      in
      the United States absent registration requirements. Further, any securities
      issued (or issuable) in connection with any such capital raise will likely
      result in very substantial dilution of the number of outstanding shares of
      the
      Company’s Common Stock.





The
      amount of capital required to be raised by the Company will be dependent upon
      a
      number of factors, including (i) whether or not the Purchase Transaction is
      consummated; (ii) whether “.travel” name registration net revenue levels are
      able to be increased; (iii) our ability to control and reduce operating
      expenses; and (iv) our ability to successfully settle disputed and other
      outstanding liabilities related to our discontinued operations. While the
      Company anticipates that the Purchase Transaction will be consummated in mid
      September 2008, there can be no assurance that the Purchase Transaction will
      be
      consummated nor that the Company will be successful in raising a sufficient
      amount of capital, executing any of its current or future business plans or
      in
      continuing to operate as a going concern on a long-term basis. The consolidated
      financial statements do not include any adjustments that may result from the
      outcome of this uncertainty.





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





Since
      our
      inception, we have incurred net losses each year and we expect that we will
      continue to incur net losses for the foreseeable future. We had net losses
      of
      approximately $1.1 million, $6.2 million and $17.0 million for the six months
      ended June 30, 2008 and the years ended December 31, 2007 and 2006,
      respectively. The principal causes of our losses are likely to continue to
      be:





·
            costs
                resulting from the operation of our
                business;





·
            failure
                to generate sufficient revenue; and




·
            selling,
                general and administrative
                expenses.





Although
      we have restructured our businesses, including the discontinuance of the
      operations of our computer games and VoIP telephony services businesses, we
      still expect to continue to incur losses as we attempt to improve the
      performance and operating results of our Internet services business.





**WE
      MAY NOT BE SUCCESSFUL IN SETTLING DISPUTED VENDOR CHARGES.**





Our
      balance sheet at June 30, 2008 includes certain 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. The
      legal and administrative costs of resolving these disputed charges may be
      expensive and divert management’s attention from day-to-day operations. 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. 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 adversely affect our ability
      to
      continue to operate as a going concern. See Note 5, “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, 2007, we had net operating loss carryforwards which may be
      potentially available for U.S. tax purposes of approximately **$** 167
      million. These carryforwards expire through 2027. 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, we have substantially limited the
      availability of our net operating loss carryforwards. There can be no assurance
      that we will be able to utilize any net operating loss carryforwards in the
      future. These net operating carryforwards may be further adversely impacted
      if
      the Purchase Transaction is consummated.





**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.**


26


Because
      our Chairman and Chief Executive Officer, Mr. Michael Egan, is an officer or
      director of other companies, we have to compete for his time. Mr. Egan became
      our Chief Executive Officer effective June 1, 2002. Mr. Egan is also the
      controlling investor of Dancing Bear Investments, Inc., E&C Capital Partners
      LLLP, and E&C Capital Partners II, LLC which are our largest stockholders
      and are the holders of our secured Convertible Notes. Mr. Egan is also the
      controlling investor of Certified Vacation Group, Inc. and Labigroup Holdings,
      LLC, entities that have various ongoing business relationships with the Company.
      Additionally, Mr. Egan is the controlling investor of The Registry Management
      Company, LLC, an entity that has contracted to purchase our Tralliance business
      and shares of our Common Stock (see Note 3, “Proposed Sale of Tralliance and
      Share Issuance” in the Notes to Unaudited Condensed Consolidated Financial
      Statements for further details). Mr. Egan has not committed to devote any
      specific percentage of his business time with us. Accordingly, we compete with
      Mr. Egan's aforementioned other related entities for his time.





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, and
      Labigroup Holdings 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 Certified Vacations Group, Inc. She is also
      an
      officer, director or shareholder of other companies or entities controlled
      by
      Mr. Egan and Mr. Cespedes.





Due
      to
      the relationships with his related entities, Mr. Egan will have an inherent
      conflict of interest in making any decision related to transactions between
      the
      related entities and us, including the Purchase Transaction. Furthermore, the
      Company's Board of Directors presently is comprised entirely of individuals
      which are employees of theglobe, and therefore are not "independent." We intend
      to review related party transactions in the future on a case-by-case
      basis.





**OUR
      INTERNAL CONTROL OVER FINANCIAL REPORTING WAS NOT EFFECTIVE AS OF DECEMBER
      31,
      2007.**





Based
      upon an evaluation and assessment completed by Company management, we have
      concluded that our internal control over financial reporting was not effective
      as of December 31, 2007.  Our conclusion was based upon the existence of
      certain “material weaknesses” related to the reporting of “.travel” name
      registration data as of December 31, 2007. Because we are a smaller company,
      we
      are not yet required to have our internal control over financial reporting
      audited by our independent public accountants. At the present time, this audit
      will be first required in connection with our annual report as of December
      31,
      2009.





We
      cannot
      assure you that we will be able to adequately remediate the material weaknesses
      that we have identified as of December 31, 2007. Additionally, we cannot assure
      you that other material weaknesses will not be identified by either management
      or independent public accountants in the future. Our failure to remediate our
      existing material weaknesses, or to adequately protect against the occurrence
      of
      additional material weaknesses, could result in material misstatements of our
      financial statement, subject the Company to regulatory scrutiny and/or cause
      investors to lose confidence in our reported financial information. Such failure
      could also adversely affect the Company’s operating results or cause the Company
      to fail to meet its reporting obligations.





**RISKS
      RELATING TO OUR COMMON STOCK**





**THE
      VOLUME OF SHARES AVAILABLE FOR FUTURE SALE IN THE OPEN MARKET COULD DRIVE DOWN
      THE PRICE OF OUR STOCK OR KEEP OUR STOCK PRICE FROM IMPROVING, EVEN IF OUR
      FINANCIAL PERFORMANCE IMPROVES.**





As
      of
      June 30, 2008, we had issued and outstanding approximately 212.5 million shares,
      of which approximately 89.4 million shares were freely tradable over the public
      markets. There is limited trading volume in our shares and we are now traded
      only in the over-the-counter market. Most of our outstanding restricted shares
      of Common Stock were issued more than one year ago and are therefore eligible
      to
      be resold over the public markets pursuant to Rule 144 promulgated under the
      Securities Act of 1933, as amended.





Sales
      of
      significant amounts of Common Stock in the public market in the future, the
      perception that sales will occur or the registration of additional shares
      pursuant to existing contractual obligations could materially and adversely
      drive down the price of our stock. In addition, such factors could adversely
      affect the ability of the market price of the Common Stock to increase even
      if
      our business prospects were to improve. Substantially all of our stockholders
      holding restricted securities, including shares issuable upon the exercise
      of
      warrants or the conversion of convertible notes to acquire our Common Stock
      (which are convertible into 153 million shares), have registration rights under
      various conditions and are or will become available for resale in the
      future.





In
      addition, as of June 30, 2008, there were outstanding options to purchase
      approximately 15.6 million shares of our Common Stock, which become eligible
      for
      sale in the public market from time to time depending on vesting and the
      expiration of lock-up agreements. The shares issuable upon exercise of these
      options are registered under the Securities Act and consequently, subject to
      certain volume restrictions as to shares issuable to executive officers, will
      be
      freely tradable.




27


Also
      as
      of June 30, 2008, we had issued and outstanding warrants to acquire
      approximately 16.9 million shares of our Common Stock. **** Many of
      the outstanding instruments representing the warrants contain anti-dilution
      provisions pursuant to which the exercise prices and number of shares issuable
      upon exercise may be adjusted.





**WE
      ARE CONTROLLED BY OUR CHAIRMAN.**





On
      June
      10, 2008, Dancing Bear Investments, Inc., an entity controlled by Michael S.
      Egan, our Chairman and Chief Executive Officer, converted an aggregate of
      $400,000 of outstanding convertible secured promissory notes due to them by
      the
      Company into 40 million shares of the Company’s Common Stock. Such conversion
      increased the ownership in the Company’s Common Stock by Mr. Egan and certain
      family members (the “Egan Family”) to approximately 51% and would allow the Egan
      Family to control the vote on all corporate actions, including the Purchase
      Transaction. If the Purchase Transaction, including the issuance of 229 million
      shares of the Company’s Common Stock to an entity controlled by Mr. Egan is
      consummated, Mr. Egan’s beneficial ownership percentage (assuming exercise of
      all stock options and warrants) would then be increased to approximately
      77%.





**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.




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





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





·
            have
                the effect of delaying, deferring or preventing a change in control
                of our
                Company;





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





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





Certain
      Delaware laws could have the effect of delaying, deterring or preventing a
      change in control of our Company. One of these laws prohibits us from engaging
      in a business combination with any interested stockholder for a period of three
      years from the date the person became an interested stockholder, unless various
      conditions are met. In addition, provisions of our charter and by-laws, and
      the
      significant amount of Common Stock held by our current executive officers,
      directors and affiliates could together have the effect of discouraging
      potential takeover attempts or making it more difficult for stockholders to
      change management. In addition, the employment contracts of our Chairman and
      CEO, President and Vice President of Finance provide for substantial lump sum
      payments ranging from 2 (for the Vice President) to 10 times (for each of the
      Chairman and President) of their respective average combined salaries and
      bonuses (together with the continuation of various benefits for extended
      periods) in the event of their termination without cause or a termination by
      the
      executive for “good reason,” which is conclusively presumed in the event of a
“change-in-control” (as such terms are defined in such agreements).




**OUR
      STOCK PRICE IS VOLATILE AND MAY DECLINE.**





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





·
            the
                performance and public acceptance of our product
                lines;




28





·
            quarterly
                variations in our operating
                results;





·
            competitive
                announcements;





·
            sales
                of any of our businesses and/or components of their
                assets;





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





·
            news
                relating to trends in our markets.





The
      market price of our Common Stock could also decline as a result of unforeseen
      factors. The stock market has experienced significant price and volume
      fluctuations, and the market prices of technology companies, particularly
      Internet related companies, have been highly volatile. Our stock is also more
      volatile due to the limited trading volume and the high number of shares
      eligible for trading in the market.





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





**THE
      PURCHASE TRANSACTION IS NOT THE RESULT OF ARMS-LENGTH NEGOTIATION AS EACH MEMBER
      OF OUR BOARD HAS A CONFLICT OF INTEREST.**





Registry
      Management is controlled by Michael S. Egan, our Chairman and Chief Executive
      Officer and principal stockholder. The remaining two members of our Board,
      Edward A. Cespedes and Robin S. Lebowitz, also have a non-controlling minority
      ownership interest in Registry Management. Each of Messrs Egan and Cespedes
      and
      Ms. Lebowitz are anticipated to serve as employees and/or management of Registry
      Management. Consequently, each of our Board members has a conflict of interests
      in reviewing, negotiating and approving the Purchase Transaction.





Due
      to
      the affiliated nature of the Purchase Transaction, the Board considered the
      formation of a special committee to negotiate and evaluate the Purchase
      Transaction. Ultimately, the Board did not believe it would be feasible to
      establish a special committee of independent members of the Board of Directors
      to evaluate and approve the Purchase Transaction. Since all of the Board members
      are affiliated to Registry Management, the Board concluded that it would be
      extremely difficult to find a qualified, independent person who would be willing
      to join and serve on the Company’s Board for the sole purpose of considering the
      fairness of the proposed Purchase Transaction, and that even if such a person
      could be found, the Company would likely be required to pay significant
      compensation for his or her services, which the Board did not consider
      financially feasible given its precarious financial condition. In lieu of a
      special committee, the Board determined to seek a fairness opinion as a
      condition precedent to theglobe’s obligation to close on the Purchase
      Transaction.





**THE
      PURCHASE TRANSACTION IS SUBJECT TO SATISFACTION OF A NUMBER OF CLOSING
      CONDITIONS, SOME OF WHICH MAY BE BEYOND OUR ABILITY TO
      CONTROL.**





The
      consummation of the Purchase Transaction involves risks, including conditions
      to
      the obligation of Registry Management to complete the Purchase Transaction,
      all
      of which must either be satisfied or waived prior to the completion of the
      Purchase Transaction. We do not control all of these conditions to
      closing.





If
      all
      closing conditions are not satisfied on a timely basis, the Purchase Transaction
      could be delayed. If certain closing conditions are not satisfied at all, the
      Purchase Transaction may never be closed. If the Purchase Transaction breaks
      up
      and never closes, the Company may not be able to find an alternative buyer
      for
      its Tralliance business or otherwise raise sufficient capital needed to operate
      its businesses. In any of such events, the Company’s liquidity and
      cash **** resources
      would likely decrease, resulting in an adverse impact to its business operations
      and financial condition.





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





Although
      the Company will be relieved of over $6.0 million of obligations under existing
      convertible secured demand promissory notes and certain unsecured accounts
      payable, and will receive an guaranteed Earn-out, its remaining obligations
      and
      liabilities are expected to continue to exceed its assets and the amount
      received from the Earn-out. Accordingly, although the losses and liabilities
      of
      the Company are anticipated to be greatly reduced, the Company is expected
      to
      continue to incur operating and cash flow losses for the foreseeable future,
      and
      be dependent upon on its ability to raise or borrow capital in order to remain
      in business. Although Dancing Bear Investments, Inc., an entity controlled
      by
      the Company’s Chairman and Chief Executive Officer, has provided a temporary
      revolving loan facility (see Note 4 “Debt” in the accompanying Notes to
      Unaudited Condensed Consolidated Financial Statements) there can be no assurance
      that the Company will be successful in borrowing additional funds under this
      facility or otherwise raising or borrowing additional funds from other sources
      in the future. After the sale, we will not have any active business operations
      and will be a shell company. As such, we will not have any ability to generate
      future revenue or profits, except through the Earn-out.


29


**AFTER
      THE CLOSING OF THE PURCHASE AGREEMENT, WE WILL BE A SHELL COMPANY AND WILL
      BE
      SUBJECT TO MORE STRINGENT REPORTING REQUIREMENTS AND CERTAIN RULE 144
      RESTRICTIONS.**





Following
      consummation of the Purchase Transaction, we will have no or nominal operations.
      Pursuant to Rule 405 and Exchange Act Rule 12b-2, a shell company is defined
      as
      a registrant that has no or nominal operations, *and* either
      (a) no or nominal assets; (b) assets consisting solely of cash and cash
      equivalents; or (c) assets consisting of any amount of cash and cash equivalents
      and nominal other assets. Our pro forma condensed balance sheet, prepared in
      connection with a Definitive Information Statement filed with the Securities
      and
      Exchange Commission on July 25, 2008, reflects that after closing our assets
      will consist primarily of cash and receivables related to the Earn-Out Agreement
      with Registry Management. However, since amounts related to and equal to such
      earn-out receivables are also included as deferred revenue within the
      liabilities section of such balance sheet, the net amount of such receivables
      is
      zero. Accordingly, we believe that after consummation of the Purchase
      Transaction, we will be 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 the 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 will also be 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 purchase using
      the exemptions from registration afforded by Rule 144 may make it more difficult
      for us to sell equity securities in the future. ****





**THE
      MARKET PRICE OF THEGLOBE.COM’S COMMON STOCK MAY DECLINE AS A RESULT OF THE
      PURCHASE TRANSACTION.**





The
      market price of our Common Stock may decline as a result of the Purchase
      Transaction if:





·
            the
                sale of the Tralliance business, theglobe’s only remaining business, is
                perceived negatively by investors;
                or




·
                investors
                    remain skeptical that theglobe can continue as a going concern
                    or identify
                    and fund any future business operations or net losses sustained
                    by
                    theglobe, including existing and future liabilities related to
                    secured
                    debt and unsecured accounts
                    payable.





The
      market price of theglobe.com’s Common Stock could also decline as a result of
      unforeseen factors related to the Purchase Transaction.





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





(a)
      Unregistered Sales of Equity Securities.





On
      June
      10, 2008, the Company announced that Dancing Bear Investments, Inc. (“Dancing
      Bear”), an entity controlled by Michael S. Egan, the Company’s Chairman and
      Chief Executive Officer, converted a portion of outstanding 2007 Convertible
      Notes totaling $400,000 into 40,000,000 shares of the Company’s Common Stock.
      Such conversion increased the ownership in the Company’s Common Stock by Mr.
      Egan and certain family members and related parties (the “Egan Family”) to
      approximately 51.25% and allows the Egan Family to control the vote on all
      corporate actions, including the Purchase Transaction (see Note 3, “Proposed
      Sale of Tralliance and Share Issuance” and Note 4, “Debt” in the Notes to
      Unaudited Condensed Consolidated Financial Statements included within this
      Report), which was approved by written action dated July 9, 2008.





The
      $400,000 of 2007 Convertible Notes were originally acquired in connection with
      the sale of such Notes as previously reported on Form 8-K. As previously
      reported on May 29, 2007, Dancing Bear entered into a Note Purchase Agreement
      with the Company pursuant to which it ultimately acquired convertible promissory
      notes (the “2007 Convertible Notes”) in the aggregate principal amount of
      $1,250,000. The 2007 Convertible Notes are convertible at anytime prior to
      payment into shares of the Company’s common stock at the rate of $.01 per share.
      The 2007 Convertible Notes are due 5 days after demand from the holder, and
      are
      secured by a pledge of all assets of the Company and its subsidiaries,
      subordinate to existing liens on such assets. The 2007 Convertible Notes bear
      interest at the rate of ten (10%) percent per annum. Dancing Bear is entitled
      to
      certain demand and piggy-back registration rights in connection with its
      investment. Neither the 2007 Convertible Notes nor the 40,000,000 shares of
      common stock issued to Dancing Bear upon conversion of the foregoing $400,000
      in
      2007 Convertible Notes were registered under applicable securities laws and
      were
      sold in reliance on an exemption from such registration. Dancing Bear is an
      “accredited investor” and the Company believes that the issuance and sale of the
      2007 Convertible Notes and the underlying shares of common stock qualified
      for
      exemption from registration pursuant to Section 4(2) of the Securities Act
      of
      1933.


30





(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**





On
      June
      12, 2008, Mr. Michael S. Egan, the Chairman and CEO of theglobe, together with
      certain of his affiliates and other related parties, whom collectively are
      the
      record owners of approximately 51.25% of the issued and outstanding shares
      of
      theglobe Common Stock, the sole class of voting securities of theglobe, executed
      a written consent of the stockholders adopting the Purchase Agreement described
      in Note 3, “Proposed Sale of Tralliance and Share Issuance” of the Notes to
      Unaudited Condensed Consolidated Financial Statements included earlier in this
      Report, and approving the transactions contemplated thereby in accordance with
      Section 228 of Delaware Law. On July 9, 2008, the same stockholders further
      ratified their prior action of June 12, 2008 and approved anew the Purchase
      Transaction. The actions by written consent are sufficient to approve the
      Purchase Agreement and the other transaction contemplated by the Purchase
      Agreement without any further action or vote of the stockholders of
      theglobe.com.





In
      connection with the Purchase Transaction, on July 25, 2008, theglobe filed
      a
      Definitive Information Statement and related Notice of Internet Availability
      of
      Information Statement (the “Notice”) with the Securities and Exchange
      Commission, and shortly thereafter commenced mailing of the Notice to its
      stockholders.





**ITEM
      5. OTHER INFORMATION**





None.




**ITEM
      6. EXHIBITS**




10.1
            Letter
                of Intent Agreement dated as of February 1, 2008 by and between The
                Registry Management Company, LLC, Tralliance Corporation and theglobe.com,
                inc. (1).





10.2
            Revolving
                Loan Agreement dated as of June 6, 2008 by and between theglobe.com,
                inc.
                and Dancing Bear Investments, Inc.
                (2).





10.3
            $500,000
                Promissory Note dated June 6, 2008
                (2).





10.4
            Unconditional
                Guaranty Agreement dated June 6, 2008
                (2).





10.5
            Security
                Agreement dated June 6, 2008 (2).





10.6
            Purchase
                Agreement dated as of June 10, 2008 by and between theglobe.com,
                inc.,
                Tralliance Corporation and The Registry Management Company, LLC
                (3).





10.7
            Form
                of Earn-Out Agreement (3).





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 8-K filed on February 7,
      2008.





(2)
      Incorporated by reference from our Form 8-K filed on June 11, 2008.





(3)
      Incorporated by reference from our Form 8-K filed on June 13, 2008.




31




**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*
                :  *August 14, 2008*
            By:
            /s/ 
                *Michael S. Egan**Michael
                S. Egan*
              *Chief
                Executive Officer*
              *(Principal
                Executive Officer)*




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




32


**EXHIBIT
      INDEX**





10.1
            Letter
                of Intent Agreement dated as of February 1, 2008 by and between The
                Registry Management Company, LLC, Tralliance Corporation and theglobe.com,
                inc. (1).10.2
            Revolving
                Loan Agreement dated as of June 6, 2008 by and between theglobe.com,
                inc.
                and Dancing Bear Investments, Inc. (2).10.3
            $500,000
                Promissory Note dated June 6, 2008 (2).10.4
            Unconditional
                Guaranty Agreement dated June 6, 2008 (2).10.5
            Security
                Agreement dated June 6, 2008 (2).10.6
            Purchase
                Agreement dated as of June 10, 2008 by and between theglobe.com,
                inc.,
                Tralliance Corporation and The Registry Management Company, LLC
                (3).10.7
            Form
                of Earn-Out Agreement (3).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 8-K filed on February 7,
      2008.





(2)
      Incorporated by reference from our Form 8-K filed on June 11, 2008.





(3)
      Incorporated by reference from our Form 8-K filed on June 13, 2008.




33