<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

                                       OR

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

      FOR THE TRANSITION PERIOD FROM _______________ TO ___________________

                           COMMISSION FILE NO. 0-25053

                               theglobe.com, inc.


             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



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

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

                                (954) 769 - 5900


               REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes X No

The number of shares  outstanding of the  Registrant's  Common Stock,  $.001 par
value (the "Common Stock"), as of August 6, 2003 was 49,249,793.


<PAGE>



                               theglobe.com, inc.

                                   FORM 10-QSB




                                      INDEX

                          PART I FINANCIAL INFORMATION

                                                                           Page
                                                                           ----

Item 1. Condensed Consolidated Financial Statements

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

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

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

       Notes to Unaudited Condensed Consolidated Financial Statements         4

Item 2. Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                           11

Item 3. Controls and Procedures                                              31


                           PART II. OTHER INFORMATION


Item 1. Legal Proceedings                                                    32

Item 2. Changes  in  Securities  and  Use  of  Proceeds                      32

Item 3. Defaults  Upon  Senior  Securities                                   32

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

Item 5. Other  Information                                                   33

Item 6. Exhibits and Reports on Form 8-K                                     34

        A. Exhibits
        B. Reports on Form 8-K

Signatures                                                                   35


<PAGE>

PART I FINANCIAL INFORMATION

ITEM 1.  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS


                               theglobe.com, inc.

                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                               JUNE 30,          DECEMBER 31,
                                                                                 2003               2002
                                                                            -------------       -------------
                                                                              (UNAUDITED)         (NOTE 1(C))
                                ASSETS
Current assets:
<S>                                                                         <C>                 <C>
     Cash and cash equivalents .......................................      $   2,460,278       $     725,422
     Accounts receivable, net ........................................            931,332           1,247,390
     Inventory, net ..................................................            374,019             363,982
     Prepaid and other current assets ................................            208,956             331,114
                                                                            -------------       -------------
        Total current assets .........................................          3,974,585           2,667,908

     Intangible assets ...............................................            533,710             164,960
     Goodwill ........................................................            554,315                  --
     Property and equipment, net .....................................            481,236             174,117
     Other assets ....................................................             47,000              40,000
                                                                            -------------       -------------

        Total assets .................................................      $   5,590,846       $   3,046,985
                                                                            =============       =============

                   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable ................................................      $   1,206,377       $   1,395,929
     Accrued expenses and other current liabilities ..................            565,504             447,189
     Deferred revenue ................................................            159,361             169,519
     Current portion of long-term debt ...............................          1,589,332             123,583
                                                                            -------------       -------------
        Total current liabilities ....................................          3,520,574           2,136,220

Long-term debt .......................................................            187,852              87,852
Stock subscription deposits ..........................................          1,494,500                  --
                                                                            -------------       -------------

        Total liabilities ............................................          5,202,926           2,224,072
                                                                            -------------       -------------

Stockholders' equity:
     Common stock ....................................................             32,582              31,082
     Preferred stock, at liquidation value ...........................            500,000                  --
     Additional paid-in capital ......................................        221,230,190         218,310,565
     Common stock, 699,281 common shares, held in treasury, at cost ..           (371,458)           (371,458)
     Accumulated deficit .............................................       (221,003,394)       (217,147,276)
                                                                            -------------       -------------
        Total stockholders' equity ...................................            387,920             822,913
                                                                            -------------       -------------
        Total liabilities and stockholders' equity ...................      $   5,590,846       $   3,046,985
                                                                            =============       =============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.



                                       1
<PAGE>


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


<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                                       JUNE 30,                              JUNE 30,
                                                           -------------------------------       -------------------------------
                                                               2003               2002               2003               2002
                                                           ------------       ------------       ------------       ------------
                                                                      UNAUDITED                            UNAUDITED
                                                           -------------------------------       -------------------------------
Net revenue:
<S>                                                        <C>                <C>                <C>                <C>
    Advertising .....................................      $    477,986       $    580,415       $  1,024,855       $  1,248,258
    Electronic commerce and other ...................           780,910          1,833,375          1,892,391          3,695,555
    Telephony services ..............................           196,904                 --            196,904                 --
                                                           ------------       ------------       ------------       ------------
         Total net revenue ..........................         1,455,800          2,413,790          3,114,150          4,943,813

 Cost of revenue ....................................           895,704          1,564,945          1,742,942          3,168,066
                                                           ------------       ------------       ------------       ------------

      Gross profit ..................................           560,096            848,845          1,371,208          1,775,747

Operating expenses:
    Sales and marketing .............................           628,737          1,021,143          1,196,380          2,086,521
    Product development .............................           234,098            192,312            387,809            378,511
    General and administrative ......................           891,346          1,281,224          1,524,530          1,860,404
                                                           ------------       ------------       ------------       ------------
Total operating expenses ............................         1,754,181          2,494,679          3,108,719          4,325,436
                                                           ------------       ------------       ------------       ------------
Loss from operations ................................        (1,194,085)        (1,645,834)        (1,737,511)        (2,549,689)
                                                           ------------       ------------       ------------       ------------
Other income (expense), net:
    Interest income (expense), net ..................        (1,508,327)             1,987         (1,511,648)             5,429
    Other income (expense), net .....................           (54,959)             7,015           (189,959)           404,020
                                                           ------------       ------------       ------------       ------------
Other income (expense), net .........................        (1,563,286)             9,002         (1,701,607)           409,449
                                                           ------------       ------------       ------------       ------------
Loss before income tax benefit ......................        (2,757,371)        (1,636,832)        (3,439,118)        (2,140,240)
Income tax benefit ..................................                --             (3,403)                --               (703)
                                                           ------------       ------------       ------------       ------------
Net loss ............................................      $ (2,757,371)      $ (1,633,429)      $ (3,439,118)      $ (2,139,537)
                                                           ============       ============       ============       ============
Basic and diluted net loss per common share .........      $      (0.09)      $      (0.05)      $      (0.13)      $      (0.07)
                                                           ============       ============       ============       ============
Weighted average basic and diluted shares outstanding        31,721,684         31,081,574         31,403,397         31,081,574
                                                           ============       ============       ============       ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.



                                       2
<PAGE>


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


<TABLE>
<CAPTION>
                                                                                              SIX-MONTHS ENDED JUNE 30,
                                                                                           -----------------------------
                                                                                              2003               2002
                                                                                           -----------       -----------
                                                                                                    (UNAUDITED)
<S>                                                                                        <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss ..........................................................................      $(3,439,118)      $(2,139,537)
    Adjustments to reconcile net loss to net cash used in
       operating activities:
    Depreciation and amortization ...................................................           58,968            43,090
    Non-cash interest expense .......................................................        1,483,708                --
    Reserve against amounts loaned to Internet venture ..............................          255,000                --
    Contributed officer compensation ................................................          100,000                --
    Compensation related to non-employee stock options ..............................           11,750                --
    (Gain) loss on sale of property and equipment ...................................               --            (5,322)
    Gain on sale of Happy Puppy assets ..............................................               --          (134,500)
    Non-cash favorable settlements of liabilities ...................................          (64,207)         (261,927)
    Stock options granted in connection with termination ............................               --            13,500

    Changes in operating assets and liabilities, net of acquisition and dispositions:
    Inventory, net ..................................................................          (10,037)           83,713
    Accounts receivable, net ........................................................          470,496           290,444
    Prepaid and other current assets ................................................          123,200           727,814
    Other assets ....................................................................           40,000                --
    Accounts payable ................................................................         (219,903)          110,300
    Accrued expenses and other current liabilities ..................................          109,383          (258,815)
    Deferred revenue ................................................................          (10,158)          (41,330)
                                                                                           -----------       -----------

Net cash used in operating activities ...............................................       (1,090,918)       (1,572,570)
                                                                                           -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sale of marketable securities .....................................               --               639
    Proceeds from sale of property and equipment ....................................               --            11,500
    Cash acquired in acquisition of business ........................................           60,948                --
    Amounts loaned to Internet venture ..............................................         (295,000)               --
    Purchases of property and equipment .............................................         (164,090)          (29,010)
    Payment of security deposits / escrow ...........................................           (7,000)               --
    Net proceeds from sale of Happy Puppy assets ....................................               --           134,500
                                                                                           -----------       -----------

Net cash provided by (used in) investing activities .................................         (405,142)          117,629
                                                                                           -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowing on notes payable ......................................................        1,750,000                --
    Proceeds from issuance of preferred stock .......................................          500,000                --
    Deposits on stock subscriptions .................................................        1,494,500                --
    Proceeds from exercise of common stock options ..................................            4,375                --
    Payments on long-term debt, notes payable and capital lease obligations .........         (517,959)           (1,530)
                                                                                           -----------       -----------

Net cash provided by (used in) financing activities .................................        3,230,916            (1,530)
                                                                                           -----------       -----------
      Net change in cash and cash equivalents .......................................        1,734,856        (1,456,471)
      Effect of exchange rate changes on cash and cash
        equivalents .................................................................               --             4,017
Cash and cash equivalents at beginning of period ....................................          725,422         2,563,828
                                                                                           -----------       -----------
Cash and cash equivalents at end of period ..........................................      $ 2,460,278       $ 1,111,374
                                                                                           ===========       ===========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.



                                       3
<PAGE>

                               theglobe.com, inc.

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         (1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (a) Description of theglobe.com

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

         Effective June 1, 2002, Chairman Michael S. Egan and Director Edward A.
         Cespedes became Chief  Executive  Officer and President of the Company,
         respectively. As of June 30, 2003, the Company continues to operate its
         Computer Games print magazine and the associated website Computer Games
         Online  (www.cgonline.com),  as well as the games distribution business
         of Chips & Bits,  Inc.  (www.chipsbits.com).  The Company  continues to
         actively explore a number of strategic  alternatives for its online and
         offline  games   properties,   including   continuing  to  operate  the
         properties or selling some or all of the properties.

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

         On May 28, 2003,  the Company  acquired  Direct Partner  Telecom,  Inc.
         ("DPT"), a company engaged in VoIP telephony services  internationally,
         in exchange for 1,375,000  shares of the Company's common stock and the
         issuance of warrants to acquire 500,000 shares of the Company's  common
         stock. (See Note 4).

         On May 22, 2003, E&C Capital Partners together with certain  affiliates
         of Michael S. Egan,  entered into a Note  Purchase  Agreement  with the
         Company  pursuant to which they acquired  convertible  promissory notes
         (the  "Convertible   Notes")  in  the  aggregate  principal  amount  of
         $1,750,000.  The  Convertible  Notes are  convertible at anytime into a
         maximum of  approximately  19,444,000  shares of the  Company's  common
         stock (subject to certain  adjustment  mechanisms) at a blended rate of
         $0.09 per share. In addition, E&C Capital Partners was issued a warrant
         to acquire  3,888,889 shares of the Company's  common stock.  (See Note
         5).

         On February  25,  2003,  the Company  entered  into a Loan and Purchase
         Option  Agreement with a development  stage Internet  related  business
         venture  pursuant to which it agreed to fund, in the form of a loan, at
         the  discretion of the Company,  the venture's  operating  expenses and
         obtained the option to acquire all of the outstanding  capital stock of
         the venture in exchange for, when and if exercised, $40,000 in cash and
         the  issuance of an  aggregate  of  2,000,000  unregistered  restricted
         shares of  theglobe.com's  common stock. As of June 30, 2003,  $295,000
         has been advanced to this venture.

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

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





                                       4
<PAGE>

         (b) Principles of Consolidation

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

         (c) Unaudited Interim Condensed Consolidated Financial Information

         The unaudited interim condensed  consolidated  financial  statements of
         the Company as of June 30, 2003 and for the three and six months  ended
         June 30, 2003 and 2002 included herein have been prepared in accordance
         with the instructions for Form 10-QSB under the Securities Exchange Act
         of 1934,  as  amended,  and  Article  10 of  Regulation  S-X  under the
         Securities  Act of  1933,  as  amended.  Certain  information  and note
         disclosures  normally  included in  consolidated  financial  statements
         prepared in accordance with generally  accepted  accounting  principles
         have been condensed or omitted  pursuant to such rules and  regulations
         relating to interim condensed consolidated financial statements.

         In the  opinion  of  management,  the  accompanying  unaudited  interim
         condensed  consolidated  financial  statements reflect all adjustments,
         consisting only of normal recurring  adjustments,  necessary to present
         fairly the  financial  position of the Company at June 30, 2003 and the
         results of its  operations  for the three and six months ended June 30,
         2003 and 2002 and its cash flows for the six months ended June 30, 2003
         and 2002.

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

         (d) Use of Estimates

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities and the disclosure of contingent  assets and liabilities at
         the  date of the  financial  statements  and the  reported  amounts  of
         revenue and expenses during the reporting  period.  These estimates and
         assumptions   relate  to  estimates  of   collectibility   of  accounts
         receivable,  the  valuation of inventory,  accruals and other  factors.
         Actual results could differ from those estimates.

         (e) Cash and Cash Equivalents

         The  Company  considers  all highly  liquid  securities  with  original
         maturities of three months or less to be cash equivalents.  The Company
         had no cash equivalents at June 30, 2003 or December 31, 2002.

         (f) Comprehensive Loss

         The  Company's  comprehensive  loss for the three and six month periods
         ended June 30, 2003 and 2002 was the same as the net loss  reported for
         the same periods on the accompanying  unaudited condensed  consolidated
         statements  of  operations.   The  Company  had  no  accumulated  other
         comprehensive loss as of December 31, 2002.

         (g) Inventory

         Inventories,  consisting of products  available for sale,  are recorded
         using the average cost method and valued at the lower of cost or market
         value.  The Company's  provision for obsolete  inventory as of June 30,
         2003 and December  31, 2002 was  approximately  $103,000 and  $100,000,
         respectively.

         (h) Revenue Recognition

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

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

         Newsstand sales of the games information magazine are recognized at the
         on-sale date of the magazine,  net of provisions for estimated returns.
         Subscriptions are recorded as deferred revenue when initially  received
         and  recognized  as income on a pro



                                       5
<PAGE>

         rata basis over the  subscription  term.  Revenues  from the  Company's
         share  of  the  proceeds  from  its  e-commerce   partners'  sales  are
         recognized upon notification from its partners of sales attributable to
         the Company's sites, and to date, have been immaterial.

         Telephony  services  revenue is  recognized  when all of the  following
         criteria  are  met:  persuasive  evidence  of  an  arrangement  exists,
         delivery  has  occurred or services  have been  rendered,  the seller's
         price  to the  buyer is fixed or  determinable  and  collectibility  is
         reasonably assured.

         (i) 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.  The Company performs
         ongoing credit  evaluations of its customers'  financial  condition and
         establishes  an  allowance  for  doubtful  accounts  based upon factors
         surrounding the credit risk of customers,  historical  trends and other
         information.  Concentration  of  credit  risk  is  limited  due  to the
         Company's large number of customers.

         For the three and six months  ended June 30, 2003 and 2002,  there were
         no customers  that  accounted for over 10% of net revenue  generated by
         the Company.

         (j) Net loss per share

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

<TABLE>
<CAPTION>
                                                              2003            2002
                                                           ----------      ----------
<S>                                                         <C>             <C>
         Options to purchase common stock .............     8,220,000       3,344,000
         Common shares issuable upon conversion of
             Series F Preferred Stock .................    16,667,000              --
         Common shares issuable upon conversion of
             Convertible Notes ........................    19,444,000              --
         Common shares issuable upon conversion of
             Warrants .................................    19,508,000       4,012,000
                                                           ----------      ----------
         Total ........................................    63,839,000       7,356,000
                                                           ==========      ==========
</TABLE>


         Net loss attributable to common stockholders was calculated as follows:


<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                              JUNE 30,                           JUNE 30,
                                                  -----------------------------       -----------------------------
                                                      2003              2002              2003              2002
                                                  -----------       -----------       -----------       -----------
<S>                                               <C>               <C>               <C>               <C>
         Net loss ..........................      $(2,757,371)      $(1,633,429)      $(3,439,118)      $(2,139,537)
         Preferred conversion feature
              Of preferred stock ...........               --                --          (500,000)               --
                                                  -----------       -----------       -----------       -----------
             Net loss attributable to common
               stockholders ................      $(2,757,371)      $(1,633,429)      $(3,939,118)      $(2,139,537)
                                                  ===========       ===========       ===========       ===========
</TABLE>

         (k) Segment Reporting

         The Company applies the provisions of Statement of Financial Accounting
         Standards   ("SFAS")  No.  131,   "Disclosures  About  Segments  of  an
         Enterprise  and  Related  Information",  which  establishes  annual and
         interim reporting  standards for operating segments of a company.  SFAS
         No. 131  requires  disclosures  of selected  segment-related  financial
         information about products,  major customers and geographic areas. With
         the May 2003  acquisition  of DPT, the Company is now  organized in two
         operating  segments  for  purposes of making  operating  decisions  and
         assessing  performance:  computer  games  properties and VoIP telephony
         services.  The chief operating  decision maker  evaluates  performance,
         makes  operating  decisions and allocates  resources based on financial
         data consistent with the  presentation  in the  accompanying  condensed
         consolidated  financial  statements.  Separate segment disclosures have
         not been presented due to their  immateriality.  The Company expects to
         present segment disclosures beginning with the third quarter of 2003.



                                       6
<PAGE>

         The  Company's  historical  revenues  have been earned  primarily  from
         customers in the United States.  DPT's net revenue was  attributable to
         the sale of telephony services outside of the United States.  Telephony
         services  revenue  attributable to services  provided to customers with
         operations in Thailand represented over 10% of consolidated net revenue
         for the three months ended June 30, 2003.  All  significant  operations
         and assets of the Company are based in the United States.

         (l) Recent Accounting Pronouncements

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

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

         (2) STOCK OPTIONS

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

         A total of 2,375,000  stock options were granted  during the six months
         ended  June 30,  2003,  including  grants of 80,000  stock  options  to
         non-employees.  Compensation  expense of $11,750 was recognized  during
         the six months ended June 30, 2003 with respect to  non-employee  stock
         options.  A total of 125,000  stock  options were  exercised  and 1,500
         stock options were cancelled during the six months ended June 30, 2003.

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

         In  accordance  with  SFAS No.  123,  the  Company  applies  Accounting
         Principles  Board  Opinion  No.  25,  "Accounting  for Stock  Issued to
         Employees,"  to account for  stock-based  awards  granted to employees.
         Accordingly,  no  compensation  cost was  recognized for employee stock
         options in the accompanying  unaudited condensed consolidated financial
         statements.  Had the Company determined  compensation cost based on the
         fair  value at the grant date for its  employee  stock  options  issued
         under SFAS No. 123, the Company's net loss for the three and six months
         ended  June 30,  2003  would have  increased  to the pro forma  amounts
         below. No material grants or vesting of employee stock options occurred
         during the three and six month  periods  ended June 30, 2002,  thus pro
         forma information for those periods has been omitted.

<TABLE>
<CAPTION>
         Period ended June 30, 2003,                   Three Months         Six Months
                                                       -------------       -------------
         Net loss:
<S>                                                    <C>                 <C>
            As reported .........................      $  (2,757,371)      $  (3,439,118)
            Pro forma ...........................         (3,805,000)         (4,487,000)

         Basic and diluted loss per common share:
            As reported .........................      $       (0.09)      $       (0.13)
            Pro forma ...........................              (0.12)              (0.16)
</TABLE>



                                       7
<PAGE>

         (3) LITIGATION

         On and  after  August 3,  2001 and as of the date of this  filing,  six
         putative  shareholder  class action  lawsuits  were filled  against the
         Company,  certain of its current and former officers and directors, and
         several  investment  banks that were the  underwriters of the Company's
         November  23,  1998  initial  public  offering  and its  May  19,  1999
         secondary  offering.  The  lawsuits  were  filed in the  United  States
         District  Court for the Southern  District of New York.  The complaints
         against the Company have been  consolidated  into a single action and a
         Consolidated  Amended Complaint,  which is now the operative complaint,
         was filed on April 19, 2002.


         The lawsuit purports to be a class action filed on behalf of purchasers
         of the stock of the Company  during the period from  November  12, 1998
         through  December  6,  2000.  Plaintiffs  allege  that the  underwriter
         defendants  agreed to allocate  stock in the Company's  initial  public
         offering to certain investors in exchange for excessive and undisclosed
         commissions  and  agreements  by  those  investors  to make  additional
         purchases  of  stock  in  the  aftermarket  at  pre-determined  prices.
         Plaintiffs  allege that the Prospectus for the Company's initial public
         offering was false and  misleading  and in violation of the  securities
         laws because it did not disclose these  arrangements.  The action seeks
         damages in an unspecified amount.


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

         In addition,  subsequent  to the quarter ended June 30, 2003, an action
         was  commenced  against  one  of  the  Company's  subsidiaries.  Global
         Communication  Consulting Corp. v. Michelle Nelson,  Jason White, VLAN,
         Inc., Geoffrey Amend, James Magruder,  Direct Partner Telecom, Inc., et
         al. was filed in the Superior Court of New Jersey,  Monmouth County, on
         July 3, 2003.  Plaintiff is the former employer of Michelle  Nelson,  a
         consultant of Direct Partner Telecom, Inc. ("DPT"), a subsidiary of the
         Company.  Plaintiff  alleges  that while Nelson was its  employee,  she
         provided   plaintiff's   confidential  and  proprietary   trade  secret
         information,  to among others, DPT and certain employees,  and diverted
         corporate  opportunities  from  plaintiff  to DPT and the  other  named
         defendants. Plaintiff asserts claims against Nelson including breach of
         fiduciary duty, breach of the duty of loyalty and tortious interference
         with  contract.  Plaintiff  also assets claims  against Nelson and DPT,
         among others, for contractual interference,  tortious interference with
         prospective  economic  advantage and  misappropriation  of  proprietary
         information and trade secrets.  Plaintiff seeks  injunctive  relief and
         damages in an unspecified amount, including punitive damages.

         The Answer to the  Complaint is currently due to be filed on August 27,
         2003. Defendants deny plaintiff's  allegations of improper and unlawful
         conduct in their entirety and intend to vigorously defend against these
         claims.  At the present  time,  we are unable to determine  whether the
         outcome of the litigation will have a material impact on our results of
         operations or financial condition in any future period.

         (4) ACQUISITIONS AND DISPOSITION

         Acquisition of Direct Partner Telecom, Inc.

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

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

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

         As part of the  acquisition  transaction,  the former  Chief  Executive
         Officer of DPT agreed to an employment  agreement  with a one-year term
         which  automatically  renews for an  additional  year.  The  employment
         agreement also contains  non-compete  provisions during the term of the
         agreement and for a period of three years following  termination of the
         agreement, as specified. The $375,000 value assigned to the non-compete
         agreement  is being  amortized on a  straight-line  basis over 5 years.
         Annual amortization  expense of the non-compete  agreement is estimated
         to be $43,750 in 2003;  $75,000 in 2004  through  2007;  and $31,250 in
         2008.  The related  accumulated  amortization  as of June 30, 2003, was
         $6,250.



                                       8
<PAGE>

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

<TABLE>
<CAPTION>
         Period ended June 30, 2003,                                   Three Months      Six Months
                                                                       ------------      -----------
<S>                                                                    <C>               <C>
         Revenue ................................................      $ 1,798,000       $ 3,906,000
         Net  Loss ..............................................       (2,782,000)       (3,526,000)
         Basic and diluted loss per common share ................      $     (0.09)      $     (0.13)
</TABLE>


         Loan and Purchase Option Agreement

         On February  25,  2003,  theglobe.com  entered into a Loan and Purchase
         Option  Agreement with a development  stage Internet  related  business
         venture  pursuant to which it agreed to fund, in the form of a loan, at
         the  discretion of the Company,  the venture's  operating  expenses and
         obtained the option to acquire all of the outstanding  capital stock of
         the venture in exchange for, when and if exercised, $40,000 in cash and
         the  issuance of an  aggregate  of  2,000,000  unregistered  restricted
         shares of  theglobe.com's  common  stock  (the  "Option").  The Loan is
         secured by a lien on the assets of the  venture and matures on December
         12, 2003.  The Option is  exercisable  at anytime on or before ten days
         after  theglobe.com's  receipt  of  notice  relating  to the award of a
         certain contract  currently being pursued by the venture.  In the event
         of the  exercise of the  Option,  (i) the  existing  CEO and CFO of the
         venture have agreed to enter into  employment  agreements  whereby each
         would  agree to remain in the employ of the venture for a period of two
         years  following  the  closing  of the  Option  in  exchange  for  base
         compensation plus  participation in a bonus pool based upon the pre-tax
         income of the venture  and (ii) the  2,000,000  shares of  theglobe.com
         Common  Stock  issued  upon such  exercise  will be entitled to certain
         "piggy-back"  registration rights. If the Option is not exercised, then
         theglobe.com  has  agreed,  subject to certain  exceptions,  to forgive
         repayment  of  $60,000  of the  amount  loaned.  As of June  30,  2003,
         $295,000 has been advanced to this venture.  Due to the  uncertainty of
         collectibility  of the Loan, as it is to a development  stage business,
         the Company has set up a reserve for all of the Loan except the $40,000
         attributable to the acquisition should the Company exercise the Option.
         The amount of the reserve,  $255,000  was included in other  expense in
         the accompanying  statement of operations for the six months ended June
         30, 2003.

         Disposition

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

         (5) OTHER EVENTS

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

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

         An  allocation  of the  proceeds  received  from  the  issuance  of the
         Convertible Notes was made between the debt instruments and the Warrant
         by determining the pro-rata share of the proceeds for each by comparing
         the fair value of each  security  issued to the total fair  value.  The
         fair value of the Warrant was determined using the Black Scholes model.
         The fair value of the Convertible Notes was determined by measuring the
         fair value of the common shares on an as converted  basis. As a result,
         $290,500 was allocated to the Warrant and recorded as a discount on the
         debt issued and additional paid in capital. The value of the beneficial
         conversion feature of the Convertible Notes was calculated by comparing
         the fair value of the underlying common shares of the Convertible Notes
         on the date of  issuance  to the  "effective"  conversion  price.  This
         resulted  in  a



                                       9
<PAGE>

         preferential conversion discount,  limited to the previously discounted
         value of the Convertible  Notes,  of $1,459,500,  which was recorded as
         interest expense in the accompanying  unaudited condensed  consolidated
         statements  of  operations as the  Convertible  Notes were  immediately
         convertible into common shares.

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

         At the time of issuance  of the  preferred  shares,  an  allocation  of
         proceeds received was made between the Series F Preferred Stock and the
         warrants.  The allocation was made by determining the pro-rata share of
         the  proceeds  for each by  comparing  the fair value of each  security
         issued to the total  fair  value.  The fair value of the  warrants  was
         determined  using the Black Scholes model. The fair value of the Series
         F Preferred  Stock was  determined  by measuring  the fair value of the
         common  shares  on an as  converted  basis.  As a result,  $83,000  was
         allocated  to  the  warrants  sold.  In  addition,  the  value  of  the
         preferential  conversion  was calculated by comparing the fair value of
         the underlying  common shares on the date of issuance to the conversion
         price. This resulted in a preferential conversion discount,  limited to
         the proceeds from the sale, of $417,000.  The sum of the two discounts,
         $500,000, has been recorded as a dividend to the preferred stockholders
         in March 2003, as the  preferred  shares were  immediately  convertible
         into common shares.

         As a result  of the  issuance  of the  Series F  Preferred  Stock,  the
         Convertible  Notes  and the  associated  warrants  at their  respective
         conversion  and  exercise  prices,  certain  anti-dilution   provisions
         applicable to previously  outstanding warrants to acquire approximately
         4,103,000 shares of theglobe.com common stock were triggered. Like many
         types of  warrants  commonly  issued,  these  outstanding  warrants  to
         acquire shares of the Company's  common stock include  weighted average
         anti-dilution  provisions  which  result in a lowering of the  exercise
         price,  and an increase in the number of warrants to acquire  shares of
         the Company's  common stock  anytime  shares of common stock are issued
         (or options or other securities  exercisable or convertible into common
         stock) for a price per share less than the then  exercise  price of the
         warrants.  As a  result  of the  Preferred  Stock  Investment  and  the
         issuance of the Convertible  Notes, the exercise price was lowered from
         approximately $1.39 to $0.68 per share on these warrants and the number
         of shares  issuable upon  exercise was  proportionally  increased  from
         approximately 4,103,000 shares to 6,588,000 shares. The total number of
         warrants outstanding as of June 30, 2003, including those issued in the
         Preferred Stock  Investment,  the Convertible  Notes and as a result of
         the acquisition of DPT (including 3,175,000 certain earn-out warrants),
         is  approximately  19,508,000  (this total excludes the warrants issued
         pursuant  to the  Series G  Automatically  Converting  Preferred  Stock
         offering described in Note 6).

         (6) SUBSEQUENT EVENTS

         On July 2, 2003,  the Company  completed  a private  offering of 17,360
         shares of Series G Automatically  Converting Preferred Stock ("Series G
         Preferred  Stock")  and  warrants to acquire  3,472  shares of Series G
         Preferred  Stock at a  purchase  price of $500 per share for a total of
         $8,680,000  in  proceeds.  Each share of Series G  Preferred  Stock was
         automatically converted into 1,000 shares of theglobe's Common Stock on
         July 29, 2003,  the  effective  date of the  amendment to the Company's
         certificate of incorporation increasing its authorized shares of Common
         Stock from  100,000,000  shares to  200,000,000  shares  (the  "Capital
         Amendment").   Similarly,  upon  the  effective  date  of  the  Capital
         Amendment,  each  warrant to acquire a share of the Series G  Preferred
         Stock was  automatically  converted  into a warrant  to  acquire  1,000
         shares of Common Stock.  The warrants are exercisable for a period of 5
         years at an  initial  exercise  price of $1.39  per  share.  A total of
         17,360,000  shares of Common Stock were issued pursuant to the Series G
         Preferred Stock private offering,  while a total of 3,472,000 shares of
         Common Stock will be issuable upon exercise of the associated warrants.
         As of June 30,  2003,  approximately  $1,495,000  was  received  by the
         Company and recorded in the accompanying condensed consolidated balance
         sheet as stock subscription deposits.



                                       10
<PAGE>




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

         FORWARD LOOKING STATEMENTS

         The  following  Management's   Discussion  and  Analysis  of  Financial
         Condition  and  Results of  Operations  or Plan of  Operation  contains
         "forward-looking  statements"  within the meaning of Section 27A of the
         Securities Act of 1933 and Section 21E of the  Securities  Exchange Act
         of 1934. These forward-looking  statements can be identified by the use
         of predictive,  future-tense or  forward-looking  terminology,  such as
         "believes,"  "anticipates,"  "expects,"  "estimates,"  "plans,"  "may,"
         "intends,"  "will," or similar terms.  Investors are cautioned that any
         forward-looking statements are not guarantees of future performance and
         involve  significant risks and  uncertainties,  and that actual results
         may differ  materially  from  those  projected  in the  forward-looking
         statements  as a  result  of  various  factors  described  under  "Risk
         Factors" and elsewhere in this report. The following  discussion should
         be  read  together  in  conjunction  with  the  accompanying  unaudited
         condensed  consolidated  financial statements and related notes thereto
         and the audited  consolidated  financial  statements and notes to those
         statements  contained  in the  Annual  Report on Form 10-K for the year
         ended December 31, 2002.

         OVERVIEW AND PLAN OF OPERATION

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

         As of June 30, 2003,  our revenues  were derived  principally  from the
         sale of print  advertisements  under short-term  contracts in our games
         information  magazine  Computer Games;  through the sale of video games
         and related  products through our games  distribution  business Chips &
         Bits, Inc.; through the sale of our games information  magazine through
         newsstands  and  subscriptions;  and from the  resale of  international
         minutes  of  calling  time  over  the   Internet.

         On July 2, 2003,  theglobe.com,  inc. completed a private offering of a
         newly  created  series  of  preferred  stock  known  as the  "Series  G
         Automatically  Converting  Preferred  Stock" for an aggregate  purchase
         price of  approximately  $8.7 million.  In accordance with the terms of
         such  Preferred  Stock,  the Series G Preferred  shares  converted into
         common stock at $0.50 per share (or an aggregate of approximately  17.4
         million  shares) upon the filing of an an  amendment  to the  Company's
         certificate  of  incorporation  to increase  its  authorized  shares of
         Common Stock from  100,000,000  shares to 200,000,000  shares.  Such an
         amendment was filed on July 29, 2003.  Investors also received warrants
         to  acquire  approximately  3.5  million  shares of common  stock.  The
         warrants are  exercisable  for a period of 5 years at an exercise price
         of $1.39 per common share.  The purpose of the Private  Offering was to
         raise  funds  for  use  primarily  in the  Company's  planned  voiceglo
         business,  including the deployment of networks,  website  development,
         marketing, and limited capital infrastructure  expenditures and working
         capital.  Proceeds may also be used in connection with theglobe's other
         existing or future  business  operations.  Pursuant to the terms of the
         Private  Offering the Company is  contractually  obligated,  subject to
         certain  limitations,  to register the  securities  upon demand anytime
         commencing one year after the sale of the securities.

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

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



                                       11
<PAGE>

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

         On February  25,  2003,  the Company  entered  into a Loan and Purchase
         Option  Agreement with a development  stage Internet  related  business
         venture  pursuant to which it agreed to fund, in the form of a loan, at
         the  discretion of the Company,  the venture's  operating  expenses and
         obtained the option to acquire all of the outstanding  capital stock of
         the venture in exchange for, when and if exercised, $40,000 in cash and
         the  issuance of an  aggregate  of  2,000,000  unregistered  restricted
         shares of  theglobe.com's  common stock. As of June 30, 2003,  $295,000
         has  been  advanced  to  this  venture.   Due  to  the  uncertainty  of
         collectibility  of this  investment,  as it is to a  development  stage
         business, we have set up a reserve for all of the investment except the
         $40,000 attributable to the acquisition should we exercise our option.

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

         As a result  of the  issuance  of the  Series F  Preferred  Stock,  the
         Convertible  Notes  and the  associated  warrants  at their  respective
         conversion  and  exercise  prices,  certain  anti-dilution   provisions
         applicable to previously  outstanding warrants to acquire approximately
         4,103,000  shares of  theglobe.com  common stock were  triggered.  As a
         result,   the   exercise   price  of  the  warrants  was  lowered  from
         approximately  $1.39  to $0.68  per  share  and the  number  of  shares
         issuable upon exercise was proportionally  increased from approximately
         4,103,000 shares to 6,588,000 shares.

         Our VoIP Business

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

         Our  voiceglo  service  is  planned  as a  full-featured,  full-service
         alternative to the public switched  telephone  network (PSTN) available
         to homes and enterprises with either broadband or dial-up (56K minimum)
         Internet  access.  Our  plans  call for  subscribers  to be able to use
         voiceglo  service  just like they  would  their  traditional  telephone
         service.  Calls made and received by  subscribers  will be carried over
         their  Internet  connections  and  interconnect  with  the  PSTN  using
         voiceglo's  call  signaling  technology.  The  Company  has applied for
         patent  protection  for this  technology,  however,  we cannot  predict
         whether a patent will be issued for this  technology.  Subscribers will
         be issued traditional phone numbers, or alternatively,  subscribers may
         "port"  or  transfer  their  existing  phone  numbers  to the  voiceglo
         service. Subscribers will be listed, unless they choose to be unlisted,
         in the traditional  PSTN "411" directory and in voiceglo's  proprietary
         directory.  The  Company's  remote  local  number  service  will  allow
         subscribers  to choose phone  numbers  from any area codes  serviced by
         voiceglo,  allowing customers to keep phone numbers "for life," even if
         they move. It will also allow them a local presence in areas where they
         do not reside.

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



                                       12
<PAGE>

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

         Our VoIP products are subject to continuing  development by the Company
         and  management  continues  to evaluate  its  business  plans for these
         proposed  services.   We  expect  to  utilize  substantial  capital  in
         launching and expanding our VoIP operations and the Company may need to
         raise additional  capital to fully exploit its business plans for these
         services.  There are a number of  significant  risks to entry into, and
         the conduct of business in, this market, including current and proposed
         governmental regulation, potential taxation of services and many of the
         risks detailed below under "Risk Factors."

         RESULTS OF OPERATIONS

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

         NET REVENUE. Net revenue totaled $1.5 million for the second quarter of
         2003 as compared to $2.4 million in the same quarter of the prior year.
         The  $1.0   million   decline  in  total  net  revenue  was   primarily
         attributable to decreases in advertising, electronic commerce and other
         net revenue, partially offset by net revenue generated by our telephony
         services business.

         Advertising revenue from the sale of print  advertisements in our games
         magazine was $0.5  million,  or 33%, of total net revenue for the three
         months  ended June 30, 2003 versus $0.6  million,  or 24%, of total net
         revenue for the three months ended June 30,  2002.  Barter  advertising
         revenue  represented  approximately  2% and 1% of total net revenue for
         the second  quarter of 2003 and 2002,  respectively.  The  decrease  in
         advertising  revenue  was  principally  the  result  of  the  continued
         weakness in the advertising market.

         Electronic  commerce and other net revenue is principally  comprised of
         sales of video games and related  products  through Chips & Bits,  Inc.
         and sales of the Company's  Computer Games magazine through  newsstands
         and  subscriptions.  Sales through the online store  accounted for $0.3
         million, or 23%, of total net revenue for the second quarter of 2003 as
         compared  to $0.8  million,  or 35%,  of total net revenue for the same
         period of 2002.  The $0.5 million  decrease was primarily the result of
         recent  advances  and  releases  in  console  and online  games,  which
         traditionally have less sales loyalty to our online store, coupled with
         the continued decline in the number of major PC game releases, on which
         our online  store  relies for the  majority of sales and  profits.  Net
         revenue  attributable to the sale of our games information magazine was
         $0.4  million,  or 31%, of total net revenue for the second  quarter of
         2003 as compared to $1.0 million,  or 41%, of total net revenue for the
         second quarter of 2002. The decline in net revenue from the sale of our
         games  magazine as compared to the second quarter of 2002 was primarily
         the result of a  decrease  in the  volume of  subscriptions  and a $0.2
         million write-down of newsstand receivables.

         Net revenue from telephony  services totaled $0.2 million for the three
         months ended June 30, 2003. As part of the Company's  strategy to enter
         the  VoIP  business,  the  Company  acquired  DPT on May 23,  2003,  an
         international  licensed   telecommunications  carrier  engaged  in  the
         purchase and resale of  telecommunications  services  over the Internet
         internationally.  Telephony services net revenue is derived principally
         from the charges to customers for international  call completion and is
         dependent on the volume of minutes utilized.

         COST OF  REVENUE.  Cost of  revenue  related  to our  games  properties
         consists  primarily of Internet  connection  charges,  personnel costs,
         depreciation and maintenance costs of website equipment, printing costs
         of our games  magazine and the costs of  merchandise  sold and shipping
         fees in connection with our online store.  Cost of revenue of our games
         properties  totaled $0.7 million and $1.6 million in the second quarter
         of 2003 and 2002,  respectively.  Gross margins of the Company's  games
         properties  were 44% and 35% for the three  months  ended June 30, 2003
         and 2002, respectively.  The period-to-period increase in gross margins
         of  the  games  properties  was  primarily  attributable  to  a  higher
         concentration of revenue derived from print advertisements in the games
         magazine during the second quarter of 2003. Cost of revenue  associated
         with 2003 second quarter  telephony  services  totaled $0.2 million and
         consists primarily of termination and circuit costs.

         SALES AND MARKETING.  Sales and marketing expenses consist primarily of
         salaries  and  related  expenses  of  sales  and  marketing  personnel,
         commissions,   advertising  and  marketing   costs,   public  relations
         expenses,   promotional  activities  and  barter  expenses.  Sales  and
         marketing  expenses  were $0.6  million and $1.0  million for the three
         months ended June 30 2003 and 2002, respectively. The decrease in sales
         and  marketing  expense as compared  to the second  quarter of 2002 was
         principally  the result of the 48% decline in net revenue  attributable
         to our games properties, and the corresponding decreases in commissions
         expense  and agency  subscriptiion  expense,  partially  offset by $0.1
         million of expenses incurred in preparation for our launch of voiceglo,
         our VoIP product.

         PRODUCT DEVELOPMENT.  Product development expenses include salaries and
         related  personnel costs;  expenses incurred in connection with website
         development,  testing and upgrades;  editorial and content  costs;  and
         costs  incurred  in the  development  of our  VoIP  product,  voiceglo.
         Product  development  expenses  of  $0.2  million  remained  relatively
         unchanged  from the same  quarter of the prior year as the  decrease in
         product development  expenses  attributable to our games properties was
         more than offset by consulting and website development expenses related
         to our VoIP  telephone  service to be launched in the third  quarter of
         2003.



                                       13
<PAGE>

         GENERAL  AND  ADMINISTRATIVE   EXPENSES.   General  and  administrative
         expenses consist  primarily of salaries and related personnel costs for
         general  corporate  functions  including  finance,  human resources and
         facilities, outside legal and professional fees, directors and officers
         insurance,  bad debt  expenses and general  corporate  overhead  costs.
         General and  administrative  expenses  were $0.9  million for the three
         months  ended June 30,  2003,  as compared to $1.3 million for the same
         quarter of 2002. In the second quarter of 2002,  severance  benefits of
         $0.7  million  were  incurred  by the  Company in  connection  with the
         termination  of our  former  Chief  Executive  Officer,  Charles  Peck.
         Excluding  the  impact  of the 2002  severance  benefits,  general  and
         administrative  expenses  rose $0.3 million in comparison to the second
         quarter of the prior year. An increase in headcount and legal expenses,
         as well as other support costs,  directly attributable to the Company's
         new line of  business,  VoIP  telephony  services,  were the  principal
         factors  contributing  to the  increase in general  and  administrative
         expenses.

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

         OTHER INCOME  (EXPENSE),  NET. Other expense for the three months ended
         June 30,  2003,  includes an  increase  of $0.1  million in the reserve
         against amounts loaned to a development  stage Internet  venture by the
         Company,  partially  offset  by the  favorable  settlement  of  amounts
         previously in dispute with a vendor of Chips and Bits, Inc.

         INCOME  TAXES.  No tax benefit was  recorded for the three months ended
         June  30,  2003.  Due to the  uncertainty  surrounding  the  timing  or
         realization of the benefits of our net operating loss  carryforwards in
         future periods, we have recorded a 100% valuation allowance against our
         otherwise  recognizable  deferred tax assets. At December 31, 2002, the
         Company had net  operating  loss  carryforwards  available for U.S. and
         foreign tax purposes of approximately $134 million. These carryforwards
         expire  through  2021.  The Tax Reform Act of 1986 imposes  substantial
         restrictions on the utilization of net operating losses and tax credits
         in the event of an  "ownership  change"  of a  corporation.  Due to the
         change in our ownership  interests in the third quarter of 1997 and May
         1999,  as defined in the  Internal  Revenue  Code of 1986,  as amended,
         future utilization of our net operating loss carryforwards prior to the
         change of ownership  will be subject to certain  limitations  or annual
         restrictions.  Additionally,  any future ownership change could further
         limit or eliminate the ability to use these carryforwards.

         Six Months  Ended June 30, 2003  Compared to the Six Months  Ended June
         30, 2002

         NET REVENUE.  Net revenue totaled $3.1 million for the six months ended
         June 30, 2003  compared to $4.9  million for the six months  ended June
         30, 2002. The $1.8 million decrease in net revenue in comparison to the
         first  half of 2002 was  principally  the  result of  declines  of $1.0
         million  in sales of games  products  by Chips  and  Bits,  Inc.,  $0.9
         million in sales of the  computer  games  magazine  and $0.2 million in
         print advertisements, partially offset by the $0.2 million in telephony
         services net revenue generated by DPT. Revenue from barter transactions
         represented  approximately 2% of total net revenue in the first half of
         2003 as compared to  approximately  1% of total net revenue in the same
         period of the prior year.

         COST OF REVENUE.  Cost of revenue was $1.7 million and $3.2 million for
         the six months  ended June 30,  2003 and 2002,  respectively.  The $1.4
         million  decrease  in cost of revenue as  compared to the first half of
         2002 was directly  attributable to the lower level of revenue generated
         from the sale of computer games, from the sale of print  advertisements
         in the computer  games  magazine and from  subscription  and  newsstand
         sales of the computer  games  magazine in the first six months of 2003,
         partially  offset by the $0.2  million  in cost of  revenue  related to
         telephone  services.  Gross margins of the Company's  games  properties
         were  47%  and  36%  for  the  first  six  months  of  2003  and  2002,
         respectively.  The  increase in gross  margins of the  Company's  games
         properties  was  primarily  the  result  of a  shift  in the mix of net
         revenues  to print  advertising  which  represented  33% of  total  net
         revenue  for the first half of 2003  versus 25% for the same  period of
         the prior year.

         SALES AND MARKETING.  Sales and marketing expenses totaled $1.2 million
         for the first six months of 2003,  a decline of $0.9  million,  or 43%,
         from the  $2.1  million  for the  first  six  months  of 2002.  The 41%
         reduction in net revenue generated by the Company's games properties in
         the  first  half of 2003 as  compared  to the same  period of the prior
         year, and the corresponding decreases in commissions expense and agency
         subscription  expense,  were the principal factors  contributing to the
         decrease in sales and marketing expenses.

         PRODUCT DEVELOPMENT.  Product development expenses totaled $0.4 million
         in both the first  half of 2003 and 2002.  A $0.1  million  decline  in
         website, editorial, content and other development costs incurred by the
         Company's games  properties was more than offset by the $0.1 million in
         consulting  and  website  development  expenses  related  to  our  VoIP
         telephone  service  scheduled  to be launched  in the third  quarter of
         2003.

         GENERAL  AND  ADMINISTRATIVE   EXPENSES.   General  and  administrative
         expenses  of $1.5  million  for the first six months of 2003  decreased
         $0.3  million,  or 18%,  from the $1.9  million  for the same period of
         2002.  During the second  quarter of 2002,



                                       14
<PAGE>

         severance  benefits  of $0.7  million  were  incurred by the Company in
         connection with the termination of our former Chief Executive  Officer,
         Charles  Peck.  Excluding  the impact of the 2002  severance  benefits,
         general and administrative expenses increased $0.4 million in the first
         half  of  2003  primarily  due to  increases  in  headcount  and  legal
         expenses,  as well as other support costs, directly attributable to the
         Company's new VoIP telephony services business.

         INTEREST INCOME  (EXPENSE),  NET. As discussed in the comparison of the
         second quarter of 2003 versus 2002,  non-cash  interest expense of $1.5
         million  recorded  in  the  2003  second  quarter  was  related  to the
         beneficial  conversion  feature of the $1,750,000 in Convertible  Notes
         issued on May 22, 2003. The expense  resulted as the Convertible  Notes
         were convertible into our common stock at a price below the fair market
         value of our  common  stock  (for  accounting  purposes),  based on the
         closing  price of our  common  stock as  reflected  on the OTCBB on the
         issuance  date of the  notes.  In  addition,  the  warrant  to  acquire
         3,888,889  shares of our common stock issued to one of the note holders
         was  exercisable  at a price below the fair market  value of our common
         stock (for  accounting  purposes),  based on the  closing  price of our
         common stock as  reflected  on the OTCBB on the date of  issuance.  The
         value  assigned to the  warrant was  recorded as a discount to the face
         value of the  Convertible  Notes  and is being  amortized  to  interest
         expense over the term of the Convertible Notes.

         OTHER INCOME  (EXPENSE),  NET. Other  expense,  net of $0.2 million was
         reported for the first half of 2003 as compared to other income, net of
         $0.4  million for the same period of the prior year.  Other  expense in
         2003 includes  reserves  against the amounts loaned by the Company to a
         development  stage  Internet  related  business  venture  totaling $0.3
         million,   partially   offset  by  $0.1  million  in  favorable  vendor
         settlements.  Other income in 2002  included  $0.3 million in favorable
         vendor  settlements,  as well as the $0.1  million  gain on the sale of
         Happy Puppy assets.

         INCOME  TAXES.  As was the case in the second  quarter of 2003,  no tax
         benefit was  recorded for the first six months of 2003 as we recorded a
         100% valuation  allowance against our otherwise  recognizable  deferred
         tax assets due to the  uncertainty  surrounding  the timing or ultimate
         realization of the benefits of our net operating loss  carryforwards in
         future periods.

         LIQUIDITY AND CAPITAL RESOURCES

         As of June 30, 2003, we had approximately $2.5 million in cash and cash
         equivalents  as compared to $0.7 million as of December  31, 2002.  Net
         cash used in operating  activities  was $1.1 million and $1.6  million,
         for the six months  ended  June 30,  2003 and 2002,  respectively.  The
         period-to-period  decrease  in net cash  used in  operating  activities
         resulted  primarily  from a  decrease  in  our  net  operating  losses,
         exclusive of the non-cash  interest  expense recorded in the first half
         of 2003 as a result of the beneficial  conversion  feature of the $1.75
         million in  Convertible  Notes and  associated  warrants  issued in May
         2003, as well as other non-cash  charges and gains recorded in 2003 and
         2002.

         Net cash of $0.4  million was used in investing  activities  during the
         first six months of 2003. In February  2003,  the Company  committed to
         fund operating  expenses of a development stage Internet venture at the
         Company's  discretion  in the  form of a loan.  As of  June  30,  2003,
         approximately  $0.3  million  has been  advanced  to the  venture.  The
         Company incurred $0.2 million in capital  expenditures during the first
         half of 2003,  largely as a result of the launch of its VoIP  telephone
         service  planned for the third  quarter of 2003.  Partially  offsetting
         these  uses of  funds  in the  first  six  months  of 2003 was the $0.1
         million in net cash acquired upon the May 2003  acquisition of DPT. The
         purchase price of DPT consisted of the issuance of 1,375,000  shares of
         the  Company's  common  stock and the  issuance  of warrants to acquire
         500,000 shares of the Company's  common stock. An additional  2,750,000
         warrants  may be issued if certain  performance  or other  criteria are
         satisfied.  Net cash provided by investing  activities during the first
         six  months  of 2002 was $0.1  million  resulting  from the sale of the
         assets of the Happy Puppy website.

         Net cash  provided by  financing  activities  was $3.2  million for the
         first six months of 2003.  As discussed  in the Notes to the  condensed
         consolidated  financial statements,  the Company issued $0.5 million in
         Series F Convertible Preferred Stock in March 2003 and $1.75 million of
         Convertible  Notes in May  2003.  Prior  to the end of the 2003  second
         quarter the Company  received $1.5 million in cash deposits towards the
         private offering of Series G Automatically  Converting  Preferred Stock
         ("Series G Preferred  Stock")  which  closed on July 2, 2003.  Proceeds
         from the  private  offering  of the  Series G  Preferred  Stock and the
         associated  warrants to acquire additional shares of Series G Preferred
         Stock totaled approximately $8.7 million. Effective July 29, 2003, each
         share of the Series G Preferred Stock was automatically  converted into
         1,000 shares of  theglobe's  Common Stock and each warrant to acquire a
         share of Series G Preferred  Stock was  automatically  converted into a
         warrant to acquire 1,000 shares of Common Stock.  A total of 17,360,000
         shares of Common  Stock were issued  pursuant to the Series G Preferred
         Stock  private  offering,  while a total of 3,472,000  shares of Common
         Stock  will be  issuable  upon  exercise  of the  associated  warrants.
         Immediately  after the May 2003  closing  of the DPT  acquisition,  the
         Company paid $0.5 million in cash to the former  shareholders of DPT in
         repayment of certain loans which they extended to DPT.

         Our capital  requirements depend on numerous factors,  including market
         acceptance  of our  services,  the capital  required  to  maintain  our
         websites and  properties,  the  resources  we devote to  marketing  and
         selling our services,  our entry into and  development  of new business
         lines,  including  our  "voiceglo"  telephony  services,  and our brand
         promotions  and other  factors.  Although we received a report from our
         independent  accountants,  relating to our  December  31, 2002  audited
         financial statements  containing an explanatory  paragraph stating that
         our recurring  losses from  operations  since inception and requirement
         for additional  financing raise  substantial doubt about our ability to
         continue as a going concern, after giving affect



                                       15
<PAGE>

         to the capital  raised  from the sale of the Series F Preferred  Stock,
         Convertible Notes and Series G Preferred Stock (subsequently  converted
         into  shares  of  Common  Stock),   management  believes  that  it  has
         sufficient  capital to continue  its existing  operations  and fund the
         launch and initial expansion of its new VoIP telephony  business for at
         least the next twelve  months.  Management  and the Board of  Directors
         continue  to explore a number of  strategic  alternatives  and are also
         continuing  to identify and implement  internal  actions to improve the
         Company's liquidity and financial  performance.  These alternatives may
         include  selling  assets,  which  in any  such  case  could  result  in
         significant  changes in our business plan, or entering into  additional
         new or  different  lines of  business,  such as our new VoIP  telephone
         business.

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

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

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

         In connection with his termination, our former Chief Executive Officer,
         Charles Peck,  was paid $625,000 on May 31, 2002 , reflecting the terms
         of his severance package.

         On July 2, 2003,  theglobe.com,  inc. completed a private offering of a
         newly  created  series  of  preferred  stock  known  as the  "Series  G
         Automatically  Converting  Preferred  Stock" for an aggregate  purchase
         price of  approximately  $8.7 million.  In accordance with the terms of
         such  Preferred  stock,  the Series G Preferred  shares  converted into
         common stock at $.50 per share (or an aggregate of  approximately  17.4
         million  shares) upon the filing of an an  amendment  to the  Company's
         certificate  of  incorporation  to increase  its  authorized  shares of
         Common Stock from  100,000,000  shares to 200,000,000  shares.  Such an
         amendment was filed on July 29, 2003.  Investors also received warrants
         to  acquire  approximately  3.5  million  shares of common  stock.  The
         warrants are  exercisable  for a period of 5 years at an exercise price
         of $1.39 per common share.  The purpose of the Series G Preferred Stock
         offering was to raise funds for use primarily in the Company's  planned
         voiceglo  business,  including  the  deployment  of  networks,  website
         development, marketing, and limited capital infrastructure expenditures
         and  working  capital.  Proceeds  may also be used in  connection  with
         theglobe's  other existing or future business  operations.  Pursuant to
         the  terms  of  the  Private  Offering  the  Company  is  contractually
         obligated,  subject to certain limitations,  to register the securities
         upon  demand  anytime  commencing  one  year  after  the  sale  of  the
         securities.

         The shares of our Common Stock were delisted  from the NASDAQ  national
         market in April 2001 and are now traded in the over-the-counter  market
         on what is commonly  referred to as the  electronic  bulletin  board or
         OTCBB. The trading volume of our shares has dramatically declined since
         the delisting. In addition, we are now subject to a Rule promulgated by
         the  Securities  and  Exchange  Commission  that,  if we  fail  to meet
         criteria  set forth in such Rule,  various  practice  requirements  are
         imposed on broker-dealers  who sell securities  governed by the Rule to
         persons other than established customers and accredited investors.  For
         these  types of  transactions,  the  broker-dealer  must make a special
         suitability  determination  for the  purchaser  and have  received  the
         purchaser's   written  consent  to  the  transactions  prior  to  sale.
         Consequently,  the Rule may have a  materially  adverse  effect  on the
         ability of broker-dealers to sell the securities,  which may materially
         affect  the  ability  of  shareholders  to sell the  securities  in the
         secondary market. Consequently,  it has also made it more difficult for
         us to raise  additional  capital,  although



                                       16
<PAGE>

         the  Company  has had  some  success  in  offering  its  securities  as
         consideration for the acquisition of various business  opportunities or
         assets.  We will also incur  additional costs under state blue sky laws
         if we sell equity due to our delisting.

         As of June 30,  2003,  our sole source of  liquidity  consisted of $2.5
         million of cash and cash  equivalents.  With the  exception of the $8.7
         million in  proceeds  from the  private  offering of Series G Preferred
         Stock, $1.5 million of which was received prior to June 30, 2003, which
         was  completed on July 2, 2003,  we currently do not have access to any
         other  sources  of  funding,   including  debt  and  equity   financing
         facilities.  The Company has limited  operating  capital and no current
         access to credit  facilities.  Though we  believe  that we have  enough
         capital to last throughout the remainder of 2003, there is no guarantee
         that we will have enough  capital.  If we are unable to keep  operating
         costs down, grow revenue, and maintain terms with our creditors, we may
         have to try and  raise  additional  funds  through  asset  sales,  bank
         borrowings, or equity or debt financing. Obtaining any financing at all
         is very  unlikely  and any  financing  that  could  be  obtained  would
         probably dilute existing shareholders significantly.

         EFFECTS OF INFLATION

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




                                       17
<PAGE>

         MANAGEMENT'S DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The  preparation  of  our  financial   statements  in  conformity  with
         accounting  principles  generally  accepted  in the  United  States  of
         America  requires us to make estimates and assumptions  that affect the
         reported amounts of assets and liabilities and disclosure of contingent
         assets and liabilities at the date of the financial  statements and the
         reported amounts of revenues and expenses during the reporting  period.
         Our estimates,  judgments and  assumptions  are  continually  evaluated
         based on available  information and  experience.  Because of the use of
         estimates inherent in the financial  reporting process,  actual results
         could differ from those estimates.

         Certain of our accounting  policies  require higher degrees of judgment
         than others in their  application.  These include revenue  recognition,
         valuation of customer  receivables,  impairment of  intangible  assets,
         restructuring  reserves  and income tax  recognition  of  deferred  tax
         items.  Our policy and  related  procedures  for  revenue  recognition,
         valuation of customer  receivables  and  goodwill and other  intangible
         assets are summarized below.

         REVENUE RECOGNITION

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

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

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

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

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

         Telephony  Services.  Telephony services revenue is recognized when all
         of  the  following  criteria  are  met:   persuasive   evidence  of  an
         arrangement exists, delivery has occurred or service has been rendered,
         the  seller's  price  to  the  buyer  is  fixed  or  determinable   and
         collectibility is reasonably assured.

         VALUATION OF CUSTOMER RECEIVABLES

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

         GOODWILL AND OTHER INTANGIBLE ASSETS

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

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

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

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



                                       18
<PAGE>

         o        Significant negative industry or economic trends.

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

         IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

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

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

         RISK FACTORS

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

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

         We have begun to explore  entering new business lines,  including Voice
         Over Internet Protocol ("VoIP") telephony  services.  In November 2002,
         we acquired  certain VoIP assets from an entrepreneur in exchange for a
         total of 2,175,000  warrants to purchase our common  stock.  On May 23,
         2003,  we  acquired   Direct  Partner   Telecom,   Inc.   ("DPT"),   an
         international  licensed   telecommunications  carrier  engaged  in  the
         purchase and resale of  telecommunication  services  over the Internet.
         The purchase price consisted of 1,375,000 shares of theglobe.com common
         stock and  500,000  warrants  to purchase  theglobe.com  common  stock,
         together with the ability to earn and additional 2,750,000 warrants. We
         may also enter into new or different  lines of business,  as determined
         by management  and our Board of  Directors.  The  acquisitions  of VoIP
         assets and DPT, as well as any future  acquisitions  or joint  ventures
         could result,  and in some instances  have resulted,  in numerous risks
         and uncertainties, including:

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

         o        large and immediate write-offs;

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

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

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

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

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

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

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

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



                                       19
<PAGE>

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


         o        costs resulting from the operation of our businesses;

         o        costs relating to entering new business lines;

         o        failure to generate sufficient revenue; and

         o        general and administrative expenses.

         Although  we have  restructured  our  businesses,  we still  expect  to
         continue to incur  losses  while we explore  the sale of the  remaining
         assets of our games properties or other changes to our business.

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

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

         o        inadequate network infrastructure;

         o        security and authentication concerns;

         o        ease of access;

         o        inconsistent quality of service;

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

         o        bandwidth availability.

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

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

         o        increased government regulation;

         o        potential governmental taxation of such services; and

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

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

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

         o        the identification of market demand for new products;

         o        access to  sufficient  capital  to  complete  our  development
                  efforts;

         o        product and feature selection;

         o        timely implementation of product design and development;

         o        product performance;

         o        cost-effectiveness of products under development;

         o        effective manufacturing processes; and

         o        success of promotional efforts.

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


                                       20
<PAGE>

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


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


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


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


         WE RELY ON INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS.

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

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

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

         o        be time-consuming;
         o        result in costly litigation;
         o        subject us to significant liability for damages;
         o        result in invalidation of our proprietary rights;


                                       21
<PAGE>

         o        divert management's attention;
         o        cause product release delays; or
         o        require us to  redesign  our  products  or require us to enter
                  into royalty or licensing agreements that may not be available
                  on terms acceptable to us, or at all.

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

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

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

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

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

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

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

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

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

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



                                       22
<PAGE>

         WE MAY FACE INCREASED GOVERNMENT  REGULATION AND LEGAL UNCERTAINTIES IN
         OUR INDUSTRY.

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

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

         Chips & Bits depends on major  releases in the Personal  Computer  (PC)
         market for the majority of sales and profits. The game industry's focus
         on X-Box,  Playstation and GameCube has dramatically reduced the number
         of major  PC  releases,  which  resulted  in  significant  declines  in
         revenues and gross  margins for Chips & Bits,  Inc.  Gross  margins for
         Chips & Bits,  Inc.  were 29% and 24% for the  quarters  ended June 30,
         2003 and 2002,  respectively.  Because of the large  installed  base of
         personal  computers,  these  revenue and gross margin  percentages  may
         fluctuate with changes in the PC game market.  However,  the Company is
         unable to predict when,  if ever,  there will be a turnaround in the PC
         game market.

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

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

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

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

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

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

         The  development  of  the  Internet   advertising   market  has  slowed
         dramatically  during  the last two  years and if it  continues  to slow
         down,  our  business   performance  would  continue  to  be  materially
         adversely affected. Moreover,  measurements of site visitors may not be
         accurate  or  trusted  by  our  advertising  customers.  There  are  no
         uniformly  accepted  standards for the measurement of



                                       23
<PAGE>

         visitors to a web site, and there exists no single accurate measurement
         for any  given  Internet  visitor  metric.  Indeed,  different  website
         traffic  measurement firms will tend to arrive at different numbers for
         the same metric. For any of the foregoing reasons, we cannot assure you
         that  advertisers  will  continue  to  purchase  advertisements  on our
         websites.

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

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

         o        our  ability to obtain new  customers  at a  reasonable  cost,
                  retain existing customers and encourage repeat purchases;
         o        the likelihood that both online and retail  purchasing  trends
                  may rapidly change;
         o        the level of product returns;
         o        merchandise shipping costs and delivery times;
         o        our ability to manage inventory levels;
         o        our ability to secure and maintain relationships with vendors;
         o        the  possibility  that our  vendors  may sell  their  products
                  through other sites; and
         o        intense   competition   for  electronic   commerce   revenues,
                  resulting in downward pressure on gross margins.

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

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

         INTERNET ADVERTISING HAS NOT PROVEN AS EFFECTIVE AS TRADITIONAL MEDIA.

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

         No standards have been widely accepted to measure the  effectiveness of
         Internet  advertising or to measure the  demographics of our user base.
         Additionally,  no  standards  have been widely  accepted to measure the
         number of members, unique users, page views or impressions related to a
         particular  site. We cannot  assure you that any standards  will become
         available in the future,  that  standards will  accurately  measure our
         users  or the  full  range  of  user  activity  on our  sites  or  that
         measurement  services will accurately report our user activity based on
         their  standards.  If  standards do not  develop,  advertisers  may not
         advertise on the Internet.  In addition,  we depend on third parties to
         provide these measurement services.  These measurements are often based
         on sampling  techniques or other imprecise  measures and may materially
         differ  from each other and from our  estimates.  We cannot  assure you
         that  advertisers will accept our or other parties'  measurements.  The
         rejection by  advertisers of these  measurements  could have a material
         adverse effect on our business and financial condition.

         The sale of Internet advertising is subject to intense competition that
         has  resulted  in a wide  variety of pricing  models,  rate  quotes and
         advertising  services.  For example,  advertising rates may be based on
         the number of user requests for additional information made by clicking
         on the advertisement, known as "click throughs," on the number of times
         an advertisement is displayed to a user, known as  "impressions," or on
         the number of times a user completes an action at an  advertiser's  web
         site after clicking through,  known as "cost per action." Our contracts
         with advertisers typically guarantee the advertiser a minimum



                                       24
<PAGE>

         number of impressions. To the extent that minimum impression levels are
         not  achieved  for any  reason,  including  the  failure  to obtain the
         expected  traffic,  our contracts  with  advertisers  may require us to
         provide  additional  impressions  after the  contract  term,  which may
         adversely  affect the  availability  of our advertising  inventory.  In
         addition,  certain long-term contracts with advertisers may be canceled
         if  response  rates or  sales  generated  from  our site are less  than
         advertisers' expectations. This could have a material adverse effect on
         us. Online advertisers are increasingly  demanding "cost per click" and
         "cost per action" advertising  campaigns,  which require many more page
         views  to  achieve  equal  revenue,  which  significantly  affects  our
         revenues.  If online  advertisers  continue  to demand  those "cost per
         action" deals, it could negatively impact our business.

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

         REVENUE IN PRIOR PERIODS IS NOT INDICATIVE OF FUTURE REVENUE.

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

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

         OUR QUARTERLY OPERATING RESULTS FLUCTUATE AND VARY BY SEASON.

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

         o        acquisitions of new businesses or sales of our assets;
         o        declines in the number of sales or technical employees;
         o        the level of traffic on our web sites;
         o        the overall demand for Internet telephony  services,  Internet
                  advertising and electronic commerce;
         o        the  addition or loss of VoIP  customers,  advertisers  on our
                  games properties and electronic  commerce  partners on our web
                  sites;
         o        overall usage and acceptance of the Internet;
         o        seasonal trends in advertising  and electronic  commerce sales
                  and member usage;
         o        other costs relating to the maintenance of our operations;
         o        the restructuring of our business;
         o        failure to generate  significant  revenues and profit  margins
                  from new products and services;
         o        financial   performance  of  other   Internet   companies  who
                  advertise on our site; and
         o        competition from others providing services similar to those of
                  ours.

         OUR LIMITED OPERATING HISTORY MAKES FINANCIAL FORECASTING DIFFICULT.

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

         o        maintain levels of user traffic on our e-commerce web sites;
         o        maintain  or  increase   the   percentage   of  our   off-line
                  advertising inventory sold;
         o        maintain or increase both CPM levels and sponsorship  revenues
                  for our games magazine;
         o        adapt  to  meet   changes  in  our  markets  and   competitive
                  developments;
         o        develop or acquire content for our services; and


                                       25
<PAGE>


         o        identify, attract, retain and motivate qualified personnel.

         Moreover,  we acquired DPT on May 23, 2003, as a result of our decision
         to enter  the VoIP  services  business.  DPT began  its  operations  in
         October  2002,  and  its  limited  operating  history,  as  well as our
         inexperience  in the Internet  telephony  business will make  financial
         forecasting even more difficult.

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

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

         o        our key employees will be able to work together effectively as
                  a team;
         o        we will  be  able  to  retain  the  remaining  members  of our
                  management team;
         o        we will be able to hire, train and manage our employee base;
         o        our  systems,  procedures  or  controls  will be  adequate  to
                  support our operations; and
         o        our  management  will be able to achieve  the rapid  execution
                  necessary  to fully  exploit  the market  opportunity  for our
                  products and services.

         WE DEPEND ON HIGHLY QUALIFIED TECHNICAL AND MANAGERIAL PERSONNEL.

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

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

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

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

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

         Due to the relationships with his related entities,  Mr. Egan will have
         an inherent  conflict of  interest  in making any  decision  related to
         transactions  between the related  entities and us. We intend to review
         related party transactions in the future on a case-by-case basis.

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

         Our  principal  servers are located in New York and New Jersey at third
         party  outsourced  hosting  facilities.  Our  operations  depend on the
         ability to protect our systems against damage from  unexpected  events,
         including fire, power loss, water damage,  telecommunications  failures
         and  vandalism.  Any  disruption  in  our  Internet  access  due to the
         transition or otherwise could have



                                       26
<PAGE>

         a  material  adverse  effect  on us.  In  addition,  computer  viruses,
         electronic  break-ins or other similar  disruptive  problems could also
         materially   adversely   affect   our   businesses.   Our   reputation,
         theglobe.com  brand and the brands of our VoIP  services  business  and
         game  properties  could be  materially  and  adversely  affected by any
         problems  experienced  by our  sites.  We may  not  have  insurance  to
         adequately  compensate  us for any  losses  that may  occur  due to any
         failures or interruptions in our systems.  We do not presently have any
         secondary off-site systems or a formal disaster recovery plan.

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

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

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

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

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

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

         Competition  among  games print  magazines  is high and  increasing  as
         online and pc-based games continue to gain mainstream  popularity,  and
         new,  cutting-edge  games and console  systems  continue to come to the
         consumer   market.   The   magazine   publishing   industry  is  highly
         competitive.  We  compete  for  advertising  and  circulation  revenues
         principally  with  publishers of other  technology and games  magazines
         with similar editorial content as our magazine. The technology magazine
         industry has  traditionally  been  dominated by a small number of large
         publishers.  We believe that we compete with other technology and games
         publications  based  on  the  nature  and  quality  of  our  magazines'
         editorial content and the attractive  demographics of our readers.  Due
         to our limited resources,  we may not be able to compete effectively in
         any of the  preceding  categories  in the future.  In addition to other
         technology  and  games  magazines,   our  magazine  also  competes  for
         advertising revenues with general-interest magazines and other forms of
         media,  including  broadcast and cable  television,  radio,  newspaper,
         direct   marketing   and   electronic    media.   In   competing   with
         general-interest  magazines  and other  forms of media,  we rely on our
         ability  to  reach  a  targeted   segment  of  the   population   in  a
         cost-effective manner.

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



                                       27
<PAGE>

         users.  Competitor web sites include other games  information  networks
         and various  other types of web sites.  We believe  that the  principal
         competitive factors in attracting users to a site are:

         o        functionality of the web site;

         o        brand recognition;

         o        affinity and loyalty;

         o        broad demographic focus;

         o        open access for visitors;

         o        critical mass of users;

         o        attractiveness of content and services to users; and

         o        pricing and customer service for electronic commerce sales.

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

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

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

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

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

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

         o        larger customer bases;

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

         o        not seeking to sell their businesses.

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

         Web  browsers  offered by  Netscape  and  Microsoft  also  increasingly
         incorporate  prominent  search  buttons that direct traffic to services
         that compete with ours. These features could make it more difficult for
         Internet  users  to find  and use our  products  and  services.  In the
         future,  Netscape,  Microsoft and other browser suppliers may also more
         tightly  integrate  products  and  services  similar to ours into their
         browsers or their browsers' pre-set home page.  Additionally,  entities
         that  sponsor or  maintain  high-traffic  web sites or that  provide an
         initial point of entry for Internet viewers,  such as the Regional Bell
         Operating  Companies,  cable companies or Internet  service  providers,
         such as  Microsoft  and  America  Online,  offer and can be expected to
         consider  further  development,  acquisition  or  licensing of Internet
         search and navigation functions that compete with us. These competitors
         could also take actions that make it more difficult for viewers to find
         and use our products and services.

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

         WE ARE INVOLVED IN SECURITIES CLASS ACTION LITIGATION.

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

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

         Including all warrants,  preferred  stock,  convertible  notes,  vested
         options,  and all  options  vesting  within 60 days of August 6,  2003,
         Michael S. Egan, our Chairman and Chief Executive Officer, beneficially
         owns or  controls,  directly or  indirectly,  approximately  61,968,711
         shares  of  our  Common  Stock,  which  in  the  aggregate   represents
         approximately  60.2% of the  outstanding  shares  of our  Common  Stock
         (treating  as  outstanding  for this purpose the shares of Common Stock
         issuable upon exercise or conversion of the preferred  stock,  warrants
         and options owned by Mr. Egan or his affiliates). Accordingly, Mr. Egan
         would likely be able to exercise  significant  influence  over,  if not
         control, any stockholder vote.




                                       28
<PAGE>




         OUR STOCK PRICE IS VOLATILE.

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

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

         o        quarterly variations in our operating results;

         o        competitive announcements;

         o        sales of any of our remaining games properties;

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

         o        news relating to trends in our markets.

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

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

         The shares of our Common Stock were delisted  from the NASDAQ  national
         market in April 2001 and are now traded in the over-the-counter  market
         on what is commonly  referred to as the  electronic  bulletin  board or
         "OTCBB". As a result, an investor may find it more difficult to dispose
         of or  obtain  accurate  quotations  as to  the  market  value  of  the
         securities.  The trading volume of our shares has dramatically declined
         since  the  delisting.  In  addition,  we  are  now  subject  to a Rule
         promulgated by the Securities and Exchange  Commission that, if we fail
         to meet criteria set forth in such Rule, various practice  requirements
         are imposed on broker-dealers who sell securities  governed by the Rule
         to persons other than established  customers and accredited  investors.
         For these types of transactions,  the broker-dealer must make a special
         suitability  determination  for the  purchaser  and have  received  the
         purchaser's   written  consent  to  the  transactions  prior  to  sale.
         Consequently,  the Rule may have a  materially  adverse  effect  on the
         ability of broker-dealers to sell the securities,  which may materially
         affect  the  ability  of  shareholders  to sell the  securities  in the
         secondary market.

         The delisting has made trading our shares more difficult for investors,
         potentially  leading to further  declines  in share price and making it
         less  likely our stock  price will  increase.  It has also made it more
         difficult  for  us to  raise  additional  capital.  We may  also  incur
         additional costs under state blue-sky laws if we sell equity due to our
         delisting.

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

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

         As of June  30,  2003,  there  were  outstanding  options  to  purchase
         approximately  8,220,000 shares of Common Stock,  which become eligible
         for sale in the public  market from time to time  depending  on vesting
         and the  expiration  of  lock-up  agreements.  The  issuance  of  these
         securities is registered under the Securities Act and consequently will
         be freely  tradeable.  In  addition,  as of August 6,  2003,  there are
         outstanding warrants to purchase up to approximately  19,800,000 shares
         of  our  Common  Stock  upon  exercise,  together  with  an  additional
         3,175,000  shares issuable upon exercise of warrants subject to earnout
         arrangements.  Additionally,  as of August  6,  2003,  the  outstanding
         shares of our Series F Preferred  Stock and the $1,750,000  Convertible
         Notes  are  convertible  into   approximately   16,667,000  shares  and
         19,444,000 shares of our Common Stock, respectively.  Substantially all
         of our stockholders  holding  restricted  securities,  including shares
         issuable  upon the exercise of warrants to purchase  our Common  Stock,
         are entitled to registration rights under various conditions.

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

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

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

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

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

         Certain  Delaware laws could have the effect of delaying,  deterring or
         preventing  a change  in  control  of our  company.  One of these  laws
         prohibits  us  from  engaging  in  a  business   combination  with  any
         interested  stockholder  for a period of three  years



                                       29
<PAGE>

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

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

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

         WE CHANGED OUR INDEPENDENT AUDITORS.

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

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

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

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

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

         On July 2, 2003,  we  completed a private  offering of a newly  created
         series  of  preferred  stock  known  as  the  "Series  G  Automatically
         Converting   Preferred  Stock"  for  an  aggregate  purchase  price  of
         approximately  $8.7 million.  The proceeds  from the private  placement
         will be used  primarily  for our planned VoIP  business,  including the
         deployment  of networks,  website  development,  marketing  and limited
         capital  infrastructure  expenditures.  Proceeds  may  also  be used in
         connection  with working  capital  requirements  of the Company's other
         existing businesses or for future acquisitions or businesses. Cash flow
         generated



                                       30
<PAGE>

         from our new and existing  operations may be  insufficient to cover our
         operating   expenses,   working   capital   and   capital   expenditure
         requirements.  We cannot assure you that additional  financing from any
         unaffiliated  third party will be available on terms  acceptable to us,
         if at all.  Additionally,  any financing  that could be obtained  would
         probably dilute existing shareholders significantly.

         ITEM 3. CONTROLS AND PROCEDURES.

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

         Our Chief Executive  Officer and Chief Financial Officer have evaluated
         the effectiveness of our disclosure controls and procedures pursuant to
         Securities  Exchange Act Rule 13a-14 as of June 27, 2003, a date within
         90 days prior to the filing  date of this  quarterly  report.  Based on
         that  evaluation,  our Chief Executive  Officer and our Chief Financial
         Officer have concluded that our disclosure  controls and procedures are
         effective in alerting them in a timely  manner to material  information
         regarding us (including our consolidated subsidiaries) that is required
         to be included in our periodic reports to the SEC.

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




                                       31
<PAGE>


                             PART II - OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS

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

         ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

         (a) Sales of Unregistered Securities

         On May 28, 2003,  theglobe.com  ("theglobe" or the "Company")  acquired
         Direct Partner Telecom, Inc., a Florida corporation,  a company engaged
         in  Voice   over  the   Internet   (or   "VoIP")   telephony   services
         internationally.   The  Company  acquired  Direct  Partner  Telecom  in
         exchange for 1.375 million shares of Common Stock of  theglobe.com  and
         the issuance of warrants to acquire 500,000 shares of theglobe's Common
         Stock  at  a  strike  price  of  $0.72  per  share.  The  warrants  are
         exerciseable  any time before May 23,  2013.  In  addition,  the former
         shareholders of Direct Partner Telecom may earn additional  warrants to
         acquire  up to 2.75  million  shares of  theglobe's  Common  Stock at a
         strike  price of $0.72  if  Direct  Partner  Telecom  achieves  certain
         revenue and earnings  targets over  approximately  a three year period.
         These  warrants will also  accelerate and be deemed earned in the event
         of a "change of control" (as defined in the  acquisition  documents) of
         the Company. The five former shareholders of Direct Partner Telecom are
         entitled to one demand  registration right in connection with the 1.375
         million  shares of common  stock  issued at  closing  and the shares of
         common stock  issuable upon  exercise of the warrants.  The issuance of
         the  foregoing  securities  was  exempt  from  registration  under  the
         Securities  Act of 1933,  as amended,  pursuant to Section 4(2) of such
         Act.

         On May 22, 2003, E&C Capital Partners, LLLP ("E&C Partners"), a company
         which is owned by Michael S. Egan,  our  Chairman  and Chief  Executive
         Officer,  and in which Edward  Cespedes,  our President owns a minority
         interest,  together  with  certain  trusts,  of which  Mr.  Egan is the
         trustee (the "Trusts"), entered into a Note Purchase Agreement with the
         Company  pursuant to which they acquired  convertible  promissory notes
         (the  "Convertible   Notes")  in  the  aggregate  principal  amount  of
         $1,750,000.  The  Convertible  Notes are  convertible  at anytime  into
         shares of the  Company's  common  stock at a  blended  rate of $.09 per
         share  (the  Convertible   Note  held  by  E&C  Partners   converts  at
         approximately  $.0794 per share and the  Convertible  Notes held by the
         Trusts  convert at $.10 per share).  Assuming the  conversion of all of
         the   Convertible   Notes,   and  without   regard  to  the   potential
         anti-dilutive  adjustments  described below,  approximately  19,445,000
         shares of common stock would be issued.  The  Convertible  Notes have a
         one year  maturity  date,  which may be  extended  at the option of the
         holder of the Note for periods  aggregating two years,  and are secured
         by a pledge of  substantially  all of the assets of the Company and its
         subsidiaries.  The  Convertible  Notes bear interest at the rate of ten
         (10) percent per annum, payable  semi-annually.  At the election of the
         holder of the Convertible  Notes,  interest may be payable in shares of
         the Company's common stock.

         In addition,  E&C  Partners  was issued a warrant to acquire  3,888,889
         shares of  theglobe.com  common stock at an exercise  price of $.15 per
         share (the  "Warrant"  and together  with the  Convertible  Notes,  the
         "Convertible Note Investment").  The Warrant is exercisable at any time
         on or before May 22, 2013.  E&C Partners and the Trusts are entitled to
         certain demand and piggy-back  registration  rights in connection  with
         their investment.  The conversion price of the Convertible Note and the
         exercise  price of the Warrant  (together with the number of shares for
         which such Warrant is  exerciseable)  is subject to adjustment upon the
         occurrence  of  certain  events,  including  downward  adjustment  on a
         weighted-average basis in the event the Company should issue securities
         in the future at a purchase price below the respective conversion price
         and exercise price of the Convertible Notes and Warrants. This issuance
         was exempt  from  registration  under the  Securities  Act of 1933,  as
         amended, pursuant to Section 4(2) of such Act.

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

         None

         ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

         None.

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

         None.



                                       32
<PAGE>


        ITEM 5.   OTHER INFORMATION.

        The Company  held its 2003 Annual  Meeting of  Shareholders  on July 24,
        2003. At the Annual  Meeting,  Edward A.  Cespedes,  Michael S. Egan and
        Robin Segaul-Lebowitz,  were reelected as Directors. All directors serve
        for a term of one year or until their  successors  are duly  elected and
        qualified.  Shareholders  also  voted to  approve  an  amendment  to the
        certificate  of  incorporation  of the  Company  to  increase  the total
        authorized shares of common stock from 100,000,000 shares to 200,000,000
        shares.

        The tabulation of the vote for the foregoing matters is set forth below:

        A.        Election of Directors

<TABLE>
<CAPTION>
                                                  FOR                   AGAINST                 WITHHELD*
                                                  ---                   -------                 ---------
<S>                                               <C>                                           <C>
         1.       Edward A. Cespedes........      40,537,221            --                      240,198

         2.       Michael S. Egan...........      40,536,221            --                      241,198

         3.       Robin Segaul-Lebowitz.....      40,537,221            --                      240,198

         B. Proposal to Increase Authorized Shares

                                                  FOR                   AGAINST                 WITHHELD*

                                                  40,328,405            421,717                 27,297
</TABLE>


-----------------
        * includes broker non-votes and abstentions


        On July 2, 2003,  theglobe.com,  inc.  completed a private offering of a
        newly  created  series  of  preferred  stock  known  as  the  "Series  G
        Automatically  Converting  Preferred  Stock" for an  aggregate  purchase
        price of  approximately  $8.7 million.  In accordance  with the terms of
        such  Preferred  stock,  the Series G Preferred  shares  converted  into
        common stock at $.50 per share (or an aggregate  of  approximately  17.4
        million  shares)  upon  the  filing  of an  amendment  to the  Company's
        certificate of incorporation to increase its authorized shares of Common
        Stock from 100,000,000 shares to 200,000,000  shares.  Such an amendment
        was filed on July 29, 2003.  Investors also received warrants to acquire
        approximately  3.5 million  shares of common  stock.  The  warrants  are
        exercisable  for a period of 5 years at an  exercise  price of $1.39 per
        common share. The purpose of the Private Offering was to raise funds for
        use primarily in the Company's planned voiceglo business,  including the
        deployment  of networks,  website  development,  marketing,  and limited
        capital  infrastructure  expenditures and working capital.  Proceeds may
        also be used in  connection  with  theglobe's  other  existing or future
        business  operations.  Pursuant to the terms of the Private Offering the
        Company is contractually obligated,  subject to certain limitations,  to
        register the securities  upon demand  anytime  commencing one year after
        the sale of the securities.




                                       33
<PAGE>





         ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits


                  4.1      Form of  Warrant  dated May 22,  2003 to  acquire  an
                           aggregate of 3,888,889 shares of theglobe.com  Common
                           Stock. (1)

                  4.2      Form of Convertible Promissory Note (1)

                  4.3      Form of  Warrant  dated May 28,  2003 to  acquire  an
                           aggregate of 500,000  shares of  theglobe.com  Common
                           Stock. (1)

                  4.4      Certificate Relating to the Designation,  Preferences
                           and Rights of Series G Preferred Stock. (2)

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

                  10.1     Note  Purchase  Agreement  dated May 22, 2003 between
                           thegloble.com,  inc. and E&C Capital Partners,  LLLP,
                           and certain other investors named therein. (1)

                  10.2     Agreement  and  Plan of  Merger  dated  May 23,  2003
                           between theglobe.com,  DPT Acquisition,  Inc., Direct
                           Partner Telecom,  Inc., and the shareholders thereof.
                           (1)

                  10.3     Employment  Agreement  dated  May  28,  2003  between
                           theglobe.com and James Magruder.(1)

                  10.4     Form  of  Subscription   Agreement  relating  to  the
                           purchase  of Units of  securities  of  thegloble.com,
                           inc. (2)

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

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

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

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

         ---------------------------------



         (1)  Incorporated  by  reference  to our Form 8-K filed  June 6,  2003,
         relating to events  dated May 22, 2003 and May 28,  2003.

         (2)  Incorporated  by  reference  to our Form 8-K filed July 11,  2003,
         relating to an Item 5 event dated July 2, 2003.

         (b) Reports on Form 8-K.

         Form 8-K related to an event dated May 22, 2003,  relating to an Item 2
         disclosure of the  acquisition of Direct Partner  Telecom,  Inc. and an
         Item 5  disclosure  of a Note  Purchase  Agreement  and  issuance  of a
         warrant to acquire common stock.







                                       34
<PAGE>
                                   SIGNATURES


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



                                   theglobe.com, inc.



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

August  14, 2003





                                       35
<PAGE>




                                  EXHIBIT INDEX

         4.1      Form of Warrant  dated May 22, 2003 to acquire an aggregate of
                  3,888,889 shares of theglobe.com Common Stock. (1)

         4.2      Form of Convertible Promissory Note (1)

         4.3      Form of Warrant  dated May 28, 2003 to acquire an aggregate of
                  500,000 shares of theglobe.com Common Stock. (1)

         4.4      Certificate  Relating  to  the  Designation,  Preferences  and
                  Rights of Series G Preferred Stock. (2)

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

         10.1     Note   Purchase   Agreement   dated  May  22,   2003   between
                  thegloble.com,  inc.  and  E&C  Capital  Partners,  LLLP,  and
                  certain other investors named therein. (1)

         10.2     Agreement  and  Plan of  Merger  dated  May 23,  2003  between
                  theglobe.com,  DPT Acquisition,  Inc., Direct Partner Telecom,
                  Inc., and the shareholders thereof. (1)

         10.3     Employment  Agreement dated May 28, 2003 between  theglobe.com
                  and James Magruder.(1)

         10.4     Form of  Subscription  Agreement  relating to the  purchase of
                  Units of securities of thegloble.com, inc. (2)

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

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

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

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

---------------------------------

(1)      Incorporated by reference to our Form 8-K filed June 6, 2003,  relating
         to events dated May 22, 2003 and May 28, 2003.

(2)      Incorporated by reference to our Form 8-K filed July 11, 2003, relating
         to an Item 5 event dated July 2, 2003.




                                       36