**SECURITIES
        AND EXCHANGE COMMISSION**
 WASHINGTON,
        D.C. 20549
  
 **FORM
        10-Q**
 
 
 x**QUARTERLY
        REPORT
        PURSUANT TO SECTION 13 OR 15(D)**
 **OF
        THE SECURITIES EXCHANGE ACT OF 1934**
 
 For
        the
        quarterly period ended September 30, 2005
 
 OR
 
 o **TRANSITION
        REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE**
 **SECURITIES
        EXCHANGE ACT OF 1934**
 
 **FOR
        THE TRANSITION PERIOD FROM _______ TO _________**
 
 *COMMISSION
        FILE NO. 0-25053*
   **THEGLOBE.COM,
                  INC.**(EXACT
                  NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
   STATE
                  OF DELAWARE
              
              14-1782422(STATE
                  OR OTHER JURISDICTION OF
              
              (I.R.S.
                  EMPLOYERINCORPORATION
                  OR ORGANIZATION)
              
              IDENTIFICATION
                  NO.)
 
 110
                  EAST BROWARD BOULEVARD, SUITE 1400
                FORT
                  LAUDERDALE, FL. 33301(ADDRESS
                  OF PRINCIPAL EXECUTIVE OFFICES)(954)
                  769 - 5900(Registrant's
                  telephone number, including area
                  code)
 
 
 Indicate
        by check mark whether the registrant: (1) has filed all reports required
        to be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days.   x Yes o 
        No
 
 Indicate
        by check mark whether the registrant is an accelerated filer (as defined
        in Rule
        12b-2 of the Exchange Act). Yes o No x
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). Yes o  No x
 The
        number of shares outstanding of the Registrant's Common Stock, $.001 par
        value
        (the "Common Stock") as of November 11, 2005 was 173,252,690. ****
 
  **THEGLOBE.COM,
        INC.**
 **FORM
        10-Q**
  TABLE
        OF
        CONTENTS
 PART
                  I: FINANCIAL INFORMATIONItem
                  1.    Condensed Consolidated Financial
                  StatementsCondensed
                  Consolidated Balance Sheets at September 30, 2005
                  (unaudited)and December 31, 2004
              3Unaudited
                  Condensed Consolidated Statements of Operations for
                  the three and nine months ended September 30, 2005 and
                  2004
              4Unaudited
                  Condensed Consolidated Statements of Cash Flows for
                  the nine months ended September 30, 2005 and 2004
              5Notes
                  to Unaudited Condensed Consolidated Financial
                  Statements
              6Item
                  2.    Management's Discussion and
                  Analysis of Financial Condition and Results of
                  Operations
              19Item
                  3.    Quantitative and Qualitative
                  Disclosures about Market Risk
              50Item
                  4.    Controls and
                  Procedures
              51PART
                  II: OTHER INFORMATIONItem
                  1.    Legal
                  Proceedings
              52Item
                  2.    Unregistered Sales of Equity
                  Securities and Use of Proceeds
              52Item
                  3.    Defaults Upon Senior
                  Securities
              52Item
                  4.    Submission of Matters to a Vote
                  of Security Holders
              52Item
                  5.    Other
                  Information
              52Item
                  6.    Exhibits
              52SIGNATURES
              53
 
 
 -2-
 **Table
            of Contents**
  **PART
        I - FINANCIAL INFORMATION**
  **ITEM
          1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 
 **THEGLOBE.COM,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 SEPTEMBER
                  30,
              
              DECEMBER
                  31,2005
              
              2004(UNAUDITED)ASSETSCurrent
                  Assets:Cash
                  and cash equivalents
              
              $
              2,047,615
              
              $
              6,828,200Marketable
                  securities
              
              
              –
              
              
              42,736Accounts
                  receivable, less allowance for doubtful accounts of approximately
                  $269,000
                  and $274,000, respectively
              
              
              534,377
              
              
              1,120,310Inventory,
                  less reserves of approximately $361,000 and $1,333,000,
                  respectively
              
              
              187,385
              
              
              589,579Prepaid
                  expenses
              
              
              845,495
              
              
              941,316Assets
                  of discontinued operations
              
              
              23,241,377
              
              
              21,665,429Other
                  current assets
              
              
              274,380
              
              
              359,619Total
                  current assets
              
              
              27,130,629
              
              
              31,547,189Property
                  and equipment, net
              
              
              1,817,899
              
              
              2,442,613Intangible
                  assets
              
              
              517,011
              
              
              –Other
                  assets
              
              
              40,000
              
              
              27,363Total
                  assets
              
              $
              29,505,539
              
              $
              34,017,165LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  Liabilities:Accounts
                  payable
              
              $
              2,799,881
              
              $
              1,064,048Accrued
                  expenses and other current liabilities
              
              
              2,344,183
              
              
              1,720,001Deferred
                  revenue
              
              
              113,002
              
              
              163,715Notes
                  payable and current portion of long-term debt
              
              
              4,509,040
              
              
              1,277,405Liabilities
                  of discontinued operations
              
              
              8,457,598
              
              
              8,042,995Total
                  current liabilities
              
              
              18,223,704
              
              
              12,268,164Long-term
                  debt
              
              
              –
              
              
              26,997Other
                  long-term liabilities
              
              
              –
              
              
              204,616Total
                  liabilities
              
              
              18,223,704
              
              
              12,499,777Stockholders'
                  Equity:Common
                  stock, $0.001 par value; 500,000,000 shares authorized; 200,138,436
                  and
                  174,315,678 shares issued at September 30, 2005 and December 31,
                  2004,
                  respectively
              
              
              200,139
              
              
              174,316Additional
                  paid-in capital
              
              
              287,818,627
              
              
              282,289,404Treasury
                  stock, 699,281 common shares, at cost
              
              
              (371,458
              )
              
              (371,458
              )Accumulated
                  deficit
              
              
              (276,365,473
              )
              
              (260,574,874
              )Total
                  stockholders' equity
              
              
              11,281,835
              
              
              21,517,388Total
                  liabilities and stockholders' equity
              
              $
              29,505,539
              
              $
              34,017,165
 See
        notes
        to unaudited condensed consolidated financial statements.
   -3-
 **Table
            of Contents**
  **THEGLOBE.COM,
        INC. AND SUBSIDIARIES**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF
          OPERATIONS**
 Three
                  Months Ended
              
              Nine
                  Months EndedSeptember
                  30,
              
              September
                  30,2005
              
              2004
              
              2005
              
              2004(UNAUDITED)
              
              (UNAUDITED)Net
                  Revenue
              
              $
              409,258
              
              $
              877,727
              
              $
              1,689,418
              
              $
              2,559,954Operating
                  Expenses:Cost
                  of revenue
              
              
              2,213,574
              
              
              2,573,956
              
              
              6,379,145
              
              
              6,067,382Sales
                  and marketing
              
              
              481,573
              
              
              2,053,439
              
              
              1,722,058
              
              
              4,775,670Product
                  development
              
              
              356,409
              
              
              360,478
              
              
              1,010,666
              
              
              726,662General
                  and administrative
              
              
              2,321,295
              
              
              1,765,743
              
              
              5,734,072
              
              
              5,412,143Depreciation
              
              
              299,225
              
              
              381,593
              
              
              882,396
              
              
              873,943Intangible
                  asset amortization
              
              
              28,200
              
              
              25,901
              
              
              47,000
              
              
              68,2445,700,276
              
              
              7,161,110
              
              
              15,775,337
              
              
              17,924,044Operating
                  Loss from Continuing Operations
              
              
              (5,291,018
              )
              
              (6,283,383
              )
              
              (14,085,919
              )
              
              (15,364,090
              )Other
                  Income (Expense), net:Interest
                  expense, net
              
              
              (1,102,234
              )
              
              (9,463
              )
              
              (4,156,840
              )
              
              (811,586
              )Other
                  income (expense), net
              
              
              (3,157
              )
              
              260,904
              
              
              (281,994
              )
              
              126,075(1,105,391
              )
              
              251,441
              
              
              (4,438,834
              )
              
              (685,511
              )Loss
                  from Continuing Operations Before Income Tax
              
              
              (6,396,409
              )
              
              (6,031,942
              )
              
              (18,524,753
              )
              
              (16,049,601
              )Income
                  Tax Benefit
              
              
              (388,547
              )
              
              (61,860
              )
              
              (1,038,497
              )
              
              (61,860
              )Loss
                  from Continuing Operations
              
              
              (6,007,862
              )
              
              (5,970,082
              )
              
              (17,486,256
              )
              
              (15,987,741
              )Discontinued
                  Operations:Income
                  from operations
              
              
              1,009,026
              
              
              162,286
              
              
              2,734,154
              
              
              162,286Tax
                  provision
              
              
              372,971
              
              
              61,860
              
              
              1,038,497
              
              
              61,860Income
                  from Discontinued Operations
              
              
              636,055
              
              
              100,426
              
              
              1,695,657
              
              
              100,426Net
                  Loss
              
              $
              (5,371,807
              )
              $
              (5,869,656
              )
              $
              (15,790,599
              )
              $
              (15,887,315
              )Earnings
                  (Loss) Per Share - Basic and Diluted:Continuing
                  Operations
              
              $
              (0.03
              )
              $
              (0.04
              )
              $
              (0.10
              )
              $
              (0.14
              )Discontinued
                  Operations
              
              $
              –
              
              $
              –
              
              $
              0.01
              
              $
              –Net
                  Loss
              
              $
              (0.03
              )
              $
              (0.04
              )
              $
              (0.09
              )
              $
              (0.14
              )Weighted
                  Average Common Shares Outstanding
              
              
              192,210,000
              
              
              143,514,000
              
              
              182,577,000
              
              
              116,546,000
 See
        notes
        to unaudited condensed consolidated financial statements.
   -4-
 **Table
            of Contents**
  **THEGLOBE.COM,
        INC. AND SUBSIDIARIES**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOWS**
 Nine
                  Months Ended
                September
                  30,2005
              
              2004(UNAUDITED)Cash
                  Flows from Operating Activities:Net
                  loss
              
              $
              (15,790,599
              )
              $
              (15,887,315
              )(Income)from
                  discontinued operations
              
              
              (1,695,657
              )
              
              (100,426
              )Net
                  loss from continuing operations
              
              
              (17,486,256
              )
              
              (15,987,741
              )Adjustments
                  to reconcile net loss from continuing operations to net cash and
                  cash
                  equivalents used in operating activities:Depreciation
                  and amortization
              
              
              929,396
              
              
              942,187Provision
                  for uncollectible accounts receivable
              
              
              100,000
              
              
              160,509Provision
                  for excess and obsolete inventory
              
              
              95,054
              
              
              629,515Non-cash
                  interest expense
              
              
              4,000,000
              
              
              735,416Reserve
                  against amounts loaned to Tralliance prior to acquisition
              
              
              280,000
              
              
              365,250Contingent
                  commissions expenses
              
              
              (130,366
              )
              
              103,667Employee
                  stock compensation
              
              
              48,987
              
              
              177,638Compensation
                  related to non-employee stock options
              
              
              143,351
              
              
              398,687Non-cash
                  settlements of liabilities
              
              
              –
              
              
              (352,455
              )Other,
                  net
              
              
              2,246
              
              
              14,274Changes
                  in operating assets and liabilities, net of acquisition:Accounts
                  receivable, net
              
              
              485,933
              
              
              (147,873
              )Inventory,
                  net
              
              
              307,140
              
              
              (1,114,954
              )Prepaid
                  and other current assets
              
              
              213,859
              
              
              (282,796
              )Accounts
                  payable
              
              
              1,659,943
              
              
              (444,274
              )Accrued
                  expenses and other current liabilities
              
              
              395,062
              
              
              746,553Deferred
                  revenue
              
              
              (50,713
              )
              
              1,580Net
                  cash and cash equivalents used in operating activities of continuing
                  operations
              
              
              (9,006,364
              )
              
              (14,054,817
              )Net
                  cash and cash equivalents provided by / (used in) operating activities
                  of
                  discontinued operations
              
              
              1,152,597
              
              
              (905,974
              )Net
                  cash and cash equivalents used in operating activities
              
              
              (7,853,767
              )
              
              (14,960,791
              )Cash
                  Flows from Investing Activities:Proceeds
                  from sales and maturities of marketable securities
              
              
              42,736
              
              
              225,070Purchases
                  of property and equipment
              
              
              (257,682
              )
              
              (2,236,694
              )Net
                  cash acquired in acquisition of Tralliance
              
              
              14,450
              
              
              –Amounts
                  loaned to Tralliance prior to acquisition
              
              
              (280,000
              )
              
              (325,250
              )Other,
                  net
              
              
              (40,000
              )
              
              (84,483
              )Net
                  cash and cash equivalents used in investing activities of continuing
                  operations
              
              
              (520,496
              )
              
              (2,421,357
              )Acquisition
                  of discontinued operation, net of cash acquired
              
              
              –
              
              
              (2,389,520
              )Purchases
                  of property and equipment by discontinued operation
              
              
              (171,431
              )
              
              (18,993
              )Net
                  cash and cash equivalents used in investing activities
              
              
              (691,927
              )
              
              (4,829,870
              )Cash
                  Flows from Financing Activities:Borrowings
                  on notes payable and long-term debt
              
              
              4,000,000
              
              
              2,000,000Payments
                  on notes payable and long-term debt
              
              
              (277,608
              )
              
              (121,599
              )Proceeds
                  from issuance of common stock, net
              
              
              –
              
              
              26,972,745Proceeds
                  from exercise of common stock options
              
              
              31,881
              
              
              184,546Proceeds
                  from exercise of warrants
              
              
              10,836
              
              
              10,918Payments
                  of other long-term liabilities, net
              
              
              –
              
              
              (119,711
              )Net
                  cash and cash equivalents provided by financing activities
              
              
              3,765,109
              
              
              28,926,899Net
                  Increase (Decrease) in Cash and Cash Equivalents
              
              
              (4,780,585
              )
              
              9,136,238Cash
                  and Cash Equivalents, at beginning of period
              
              
              6,828,200
              
              
              1,061,702Cash
                  and Cash Equivalents, at end of period
              
              $
              2,047,615
              
              $
              10,197,940
 See
        notes
        to unaudited condensed consolidated financial statements.
   -5-
 **Table
            of Contents**
  **THEGLOBE.COM,
        INC. AND SUBSIDIARIES**
 **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. Originally, theglobe.com was an online
        community with registered members and users in the United States and abroad.
        That product gave users the freedom to personalize their online experience
        by
        publishing their own content and by interacting with others having similar
        interests. However, due to the deterioration of the online advertising market,
        the Company was forced to restructure and ceased the operations of its online
        community on August 15, 2001. The Company then sold most of its remaining
        online
        and offline properties. The Company continues to operate its Computer Games
        print magazine and the associated website Computer Games Online
        (www.cgonline.com), as well as the computer games distribution business of
        Chips
& Bits, Inc. (www.chipsbits.com). On June 1, 2002, Chairman Michael S. Egan
        and Director Edward A. Cespedes became Chief Executive Officer and President
        of
        the Company, respectively.
 
 On
        November 14, 2002, the Company acquired certain Voice over Internet Protocol
        ("VoIP") assets and is now pursuing opportunities related to this acquisition.
        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 structure upon the attainment of certain performance targets. The
        earn-out performance targets were not achieved and the 425,000 earn-out warrants
        expired on December 31, 2003.
 
 On
        May
        28, 2003, the Company acquired Direct Partner Telecom, Inc. ("DPT"), a company
        engaged in VoIP telephony services in exchange for 1,375,000 shares of the
        Company's Common Stock and the issuance of warrants to acquire 500,000 shares
        of
        the Company's Common Stock. The transaction included an earn-out arrangement
        whereby 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 upon the attainment of certain performance targets by DPT,
        or
        upon a change in control as defined, over approximately a three year period
        following the date of acquisition. Effective March 31, 2004, 500,000 of the
        earn-out warrants were forfeited as performance targets had not been achieved
        for the first of the three year periods. An additional 750,000 of the warrants
        were forfeited effective March 31, 2005, as performance targets for the second
        of the three year periods were not achieved.
 
 The
        Company acquired all of the physical assets and intellectual property of
        DPT and
        originally planned to continue to operate the company as a subsidiary and
        engage
        in the provision of VoIP services to other telephony businesses on a wholesale
        transactional basis. In the first quarter of 2004, the Company decided to
        suspend DPT's wholesale business and dedicate the DPT physical and intellectual
        assets to its retail VoIP business. As a result, the Company wrote-off the
        goodwill associated with the purchase of DPT as of December 31, 2003, and
        has
        since employed DPT's physical assets in the build out of the retail VoIP
        network.
 
 On
        September 1, 2004, the Company acquired SendTec, Inc. ("SendTec"), a direct
        response marketing services and technology company, for a total purchase
        price
        of approximately $18.0 million. As more fully discussed in Note 3, "Discontinued
        Operations - SendTec, Inc.," on October 31, 2005, the Company completed the
        sale
        of all of the business and substantially all of the net assets of SendTec
        for
        approximately $39.9 million.
 
 As
        more
        fully discussed in Note 4, "Acquisition of Tralliance Corporation," on May
        9,
        2005, the Company exercised its option to acquire Tralliance Corporation
        ("Tralliance"), a company which had recently entered into an agreement to
        become
        the registry for the ".travel" top-level Internet domain. The Company issued
        2,000,000 shares of its Common Stock, warrants to acquire 475,000 shares
        of its
        Common Stock and paid $40,000 in cash to acquire Tralliance.
 
 As
        of
        September 30, 2005, sources of the Company's revenue from continuing operations
        were derived principally from the operations of our games related businesses.
        The Company's retail VoIP products and services have yet to produce any
        significant revenue. Tralliance did not begin collecting fees from ".travel"
        registrars for its services until October 2005.
  -6-
 **Table
            of Contents**
 
 (b)
        PRINCIPLES OF CONSOLIDATION
 
 The
        condensed consolidated financial statements include the accounts of the Company
        and its wholly-owned subsidiaries from their respective dates of acquisition.
        All significant intercompany balances and transactions have been eliminated
        in
        consolidation.
 
 (c)
        UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
 
 The
        unaudited interim condensed consolidated financial statements of the Company
        as
        of September 30, 2005 and for the three and nine months ended September 30,
        2005
        and 2004 included herein have been prepared in accordance with the instructions
        for Form 10-Q under the Securities Exchange Act of 1934, as amended, and
        Article
        10 of Regulation S-X under the Securities Act of 1933, as amended. Certain
        information and note disclosures normally included in consolidated financial
        statements prepared in accordance with generally accepted accounting principles
        have been condensed or omitted pursuant to such rules and regulations relating
        to interim condensed consolidated financial statements.
 
 In
        the
        opinion of management, the accompanying unaudited interim condensed consolidated
        financial statements reflect all adjustments, consisting only of normal
        recurring adjustments, necessary to present fairly the financial position
        of the
        Company at September 30, 2005 and the results of its operations and its cash
        flows for the three and nine months ended September 30, 2005 and 2004. The
        results of operations and cash flows for such periods are not necessarily
        indicative of results expected for the full year or for any future period.
 
 (d)
        USE
        OF ESTIMATES
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States requires management to make estimates
        and assumptions that affect the reported amounts of assets and liabilities
        and
        the disclosure of contingent assets and liabilities at the date of the financial
        statements and the reported amounts of revenue and expenses during the reporting
        period. These estimates and assumptions relate to estimates of collectibility
        of
        accounts receivable, the valuation of inventory, accruals, the valuations
        of
        fair values of options and warrants, the impairment of long-lived assets
        and
        other factors. Actual results could differ from those estimates.
 
 (e)
        CASH
        AND CASH EQUIVALENTS
 
 Cash
        equivalents consist of money market funds and highly liquid short-term
        investments with qualified financial institutions. The Company considers
        all
        highly liquid securities with original maturities of three months or less
        to be
        cash equivalents. Included in cash and cash equivalents in the accompanying
        condensed consolidated balance sheet at September 30, 2005, was approximately
        $32,000 of cash held in escrow for purposes of sweepstakes promotions conducted
        by the VoIP telephony division.
 
 (f)
        COMPREHENSIVE INCOME (LOSS)
 
 The
        Company reports comprehensive income (loss) in accordance with SFAS No. 130,
        "Reporting Comprehensive Income." Comprehensive income (loss) generally
        represents all changes in stockholders' equity during the year except those
        resulting from investments by, or distributions to, stockholders. The Company's
        comprehensive loss was approximately $15.8 million and $15.9 million for
        the
        nine months ended September 30, 2005 and 2004, respectively, which approximated
        the Company's reported net loss.
 
 (g)
        INVENTORY
 
 Inventories
        are recorded on a first in, first out basis and valued at the lower of cost
        or
        market value. The Company's reserve for excess and obsolete inventory as
        of
        September 30, 2005 and December 31, 2004, was approximately $361,000 and
        $1,333,000, respectively.
 
 The
        Company manages its inventory levels based on internal forecasts of customer
        demand for its products, which is difficult to predict and can fluctuate
        substantially. In addition, the Company's inventories include high technology
        items that are specialized in nature or subject to rapid obsolescence. If
        the
        Company's demand forecast is greater than the actual customer demand for
        its
        products, the Company may be required to record additional charges related
        to
        increases in its inventory valuation reserves in future periods. The value
        of
        inventories is also dependent on the Company's estimate of future average
        selling prices, and, if projected average selling prices are over estimated,
        the
        Company may be required to further adjust its inventory value to reflect
        the
        lower of cost or market.
  -7-
 **Table
            of Contents**
 
 (h)
        CONCENTRATION OF CREDIT RISK
 
 Financial
        instruments which subject the Company to concentrations of credit risk consist
        primarily of cash and cash equivalents, marketable securities and trade accounts
        receivable. The Company maintains its cash and cash equivalents with various
        financial institutions and invests its funds among a diverse group of issuers
        and instruments. The Company performs ongoing credit evaluations of its
        customers' financial condition and establishes an allowance for doubtful
        accounts based upon factors surrounding the credit risk of customers, historical
        trends and other information. Concentration of credit risk in the Company's
        computer games and VoIP telephony services divisions is generally limited
        due to
        the large number of customers in these businesses.
 
 (i)
        REVENUE RECOGNITION
 
 ***Continuing
        Operations***
 
 **COMPUTER
        GAMES BUSINESSES**
 
 Advertising
        revenue from the sale of print advertisements under short-term contracts
        in the
        Company's magazine publications are recognized at the on-sale date of the
        magazines.
 
 Newsstand
        sales of the Company's magazine publications are recognized at the on-sale
        date
        of the magazines, net of provisions for estimated returns. Subscription revenue,
        which is net of agency fees, is deferred when initially received and recognized
        as income ratably over the subscription term.
 
 Sales
        of
        video games and related products from the Company's online store are recognized
        as revenue when the product is shipped to the customer. Amounts billed to
        customers for shipping and handling charges are included in net revenue.
        The
        Company provides an allowance for returns of merchandise sold through its
        online
        store. The allowance for returns provided to date has not been significant.
 
 **VOIP
        TELEPHONY SERVICES**
 
 VoIP
        telephony services revenue represents fees charged to customers for voice
        services and is recognized based on minutes of customer usage or as services
        are
        provided. The Company records payments received in advance for prepaid services
        as deferred revenue until the related services are provided. Sales of peripheral
        VoIP telephony equipment are recognized as revenue when the product is shipped
        to the customer. Amounts billed to customers for shipping and handling charges
        are included in net revenue.
 
 ***Discontinued
        Operations***
 
 **MARKETING
        SERVICES**
 
 Revenue
        from the distribution of Internet advertising is recognized when Internet
        users
        visit and complete actions at an advertiser's website. Revenue consists of
        the
        gross value of billings to clients, including the recovery of costs incurred
        to
        acquire online media required to execute client campaigns. Recorded revenue
        is
        based upon reports generated by the Company's tracking software.
 
 Revenue
        derived from the purchase and tracking of direct response media, such as
        television and radio commercials, is recognized on a net basis when the
        associated media is aired. In many cases, the amount the Company bills to
        clients significantly exceeds the amount of revenue that is earned due to
        the
        existence of various "pass-through" charges such as the cost of the television
        and radio media. Amounts received in advance of media airings are deferred.
 
 Revenue
        generated from the production of direct response advertising programs, such
        as
        infomercials, is recognized on the completed contract method when such programs
        are complete and available for airing. Production activities generally take
        eight to twelve weeks and the Company usually collects amounts in advance
        and at
        various points throughout the production process. Amounts received from
        customers prior to completion of commercials are included in deferred revenue
        and direct costs associated with the production of commercials in process
        are
        deferred.
  -8-
 **Table
            of Contents**
 
 (j)
        NET
        LOSS PER SHARE
 
 The
        Company reports net loss per common share in accordance with SFAS No. 128,
        "Computation of Earnings Per Share." In accordance with SFAS No. 128 and
        the SEC
        Staff Accounting Bulletin No. 98, basic earnings per share is computed using
        the
        weighted average number of common shares outstanding during the period. Common
        equivalent shares consist of the incremental common shares issuable upon
        the
        conversion of convertible preferred stock and convertible notes (using the
        if-converted method), if any, and the shares issuable upon the exercise of
        stock
        options and warrants (using the treasury stock method). Common equivalent
        shares
        are excluded from the calculation if their effect is anti-dilutive.
 
 Due
        to
        the Company's net losses, the effect of potentially dilutive securities or
        common stock equivalents that could be issued was excluded from the diluted
        net
        loss per common share calculation due to the anti-dilutive effect. Such
        potentially dilutive securities and common stock equivalents consisted of
        the
        following for the periods ended September 30:
 2005
              
              2004Options
                  to purchase common stock
              
              
              19,570,000
              
              
              15,224,000Common
                  shares issuable upon exercise of warrants
              
              
              11,492,000
              
              
              20,713,000Common
                  shares issuable upon conversion of Convertible Notes
              
              
              68,000,000
              
              
              –Common
                  shares issuable upon conversion of Series H Preferred
                  Stock
              
              
              –
              
              
              17,500,000Total
              
              
              99,062,000
              
              
              53,437,000
 
 (k)
        RECENT ACCOUNTING PRONOUNCEMENTS
 
 In
        May
        2005, the FASB issued SFAS No. 154, "Accounting for Changes and Error
        Corrections, a Replacement of APB Opinion No. 20 and FASB Statement No. 3."
        SFAS
        154 applies to all voluntary changes in accounting principles and requires
        retrospective application to prior periods' financial statements of changes
        in
        accounting principles. This statement also requires that a change in
        depreciation, amortization or depletion method for long-lived, non-financial
        assets be accounted for as a change in accounting estimate effected by a
        change
        in accounting principle. SFAS 154 carries forward without change the guidance
        contained in APB Opinion No. 20 for reporting the correction of an error
        in
        previously issued financial statements and a change in accounting estimate.
        This
        statement is effective for accounting changes and corrections of errors made
        in
        fiscal years beginning after December 15, 2005. The Company does not expect
        the
        adoption of this standard to have a material impact on its financial condition,
        results of operations or liquidity.
 
 In
        March
        2005, the FASB issued Interpretation ("FIN") No. 47, "Accounting for Conditional
        Asset Retirement Obligations," an interpretation of FASB Statement No. 143,
        "Accounting for Asset Retirement Obligations." The interpretation clarifies
        that
        the term conditional asset retirement obligation refers to a legal obligation
        to
        perform an asset retirement activity in which the timing and/or method of
        settlement are conditional on a future event that may or may not be within
        the
        control of the entity. An entity is required to recognize a liability for
        the
        fair value of a conditional asset retirement obligation if the fair value
        of the
        liability can be reasonably estimated. FIN 47 also clarifies when an entity
        would have sufficient information to reasonably estimate the fair value of
        an
        asset retirement obligation. The effective date of this interpretation is
        no
        later than the end of fiscal years ending after December 15, 2005. The Company
        is currently investigating the effect, if any, that FIN 47 would have on
        the
        Company's financial position, cash flows and results of operations.
 
 In
        December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets,
        an amendment of APB Opinion No. 29." SFAS No. 153 requires exchanges of
        productive assets to be accounted for at fair value, rather than at carryover
        basis, unless (1) neither the asset received nor the asset surrendered has
        a
        fair value that is determinable within reasonable limits or (2) the transactions
        lack commercial substance. This statement is effective for nonmonetary asset
        exchanges occurring in fiscal periods beginning after June 15, 2005. The
        Company
        does not expect the adoption of this standard to have a material impact on
        its
        financial condition, results of operations, or liquidity.
 
 In
        December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment." This
        standard replaces SFAS No. 123, "Accounting for Stock-Based Compensation,"
        and
        supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting
        for
        Stock Issued to Employees." The standard requires companies to expense the
        fair
        value of stock options on the grant date and is effective for annual periods
        beginning after June 15, 2005. In accordance with the revised statement,
        the
        expense attributable to stock options granted or vested subsequent to January
        1,
        2006 will be required to be recognized by the Company. The precise impact
        of the
        adoption of SFAS No. 123R cannot be predicted at this time because it will
        depend on the levels of share-based payments that are granted in the future.
        However, the Company believes that the adoption of this standard may have
        a
        significant effect on the Company's results of operations or financial
        position.
  -9-
 **Table
            of Contents**
 
 In
        November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an amendment
        of
        ARB No. 43, Chapter 4." SFAS No. 151 requires all companies to recognize
        a
        current-period charge for abnormal amounts of idle facility expense, freight,
        handling costs and wasted materials. This statement also requires that the
        allocation of fixed production overhead to the costs of conversion be based
        on
        the normal capacity of the production facilities. SFAS No. 151 will be effective
        for fiscal years beginning after June 15, 2005. The Company does not expect
        the
        adoption of this statement to have a material effect on its consolidated
        financial statements.
 
 In
        December 2003, the FASB issued FIN No. 46-R, "Consolidation of Variable Interest
        Entities." FIN 46-R, which modifies certain provisions and effective dates
        of
        FIN 46, sets forth the criteria to be used in determining whether an investment
        in a variable interest entity should be consolidated. These provisions are
        based
        on the general premise that if a company controls another entity through
        interests other than voting interests, that company should consolidate the
        controlled entity. The Company believes that currently, it does not have
        any
        material arrangements that meet the definition of a variable interest entity
        which would require consolidation.
 
 (l)
        RECLASSIFICATIONS
 
 Certain
        2004 amounts have been reclassified to conform to the 2005 presentation.
        In
        accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
        Long-Lived Assets”, the operations of SendTec have been accounted for in
        accordance with the provisions of SFAS No. 144 and the results of SendTec’s
        operations have been included in income from discontinued operations. Prior
        periods have been reclassified for comparability, as required.
 
 (2)
        GOING
        CONCERN CONSIDERATIONS
 
 The
        Company received a report from its independent accountants, relating to its
        December 31, 2004 audited financial statements containing an explanatory
        paragraph stating that its recurring losses from operations and its accumulated
        deficit raise substantial doubt about the Company’s ability to continue as a
        going concern. The accompanying condensed consolidated financial statements
        have
        been prepared in accordance with accounting principles generally accepted
        in the
        United States of America on a going concern basis, which contemplates the
        realization of assets and the satisfaction of liabilities in the normal course
        of business. Accordingly, the condensed consolidated financial statements
        do not
        include any adjustments relating to the recoverability of assets and
        classification of liabilities that might be necessary should the Company
        be
        unable to continue as a going concern. Based upon the net cash proceeds received
        from the completion of the sale of the SendTec business on October 31, 2005,
        management believes the Company has sufficient liquidity to operate as a
        going
        concern through at least the end of 2006.
 
 (3)
        DISCONTINUED OPERATIONS - SENDTEC, INC.
 
 On
        August
        10, 2005, the Company entered into an Asset Purchase Agreement with
        RelationServe Media, Inc. ("RelationServe") whereby the Company agreed to
        sell
        all of the business and substantially all of the net assets of its SendTec
        marketing services subsidiary to RelationServe for $37,500,000 in cash, subject
        to certain net working capital adjustments. On August 23, 2005, the Company
        entered into Amendment No. 1 to the Asset Purchase Agreement with RelationServe
        (the “1 st Amendment” and together with the original Asset Purchase Agreement, the
“Purchase Agreement”). On October 31, 2005, the Company completed the asset
        sale. Including adjustments to the purchase price, related to excess working
        capital of SendTec as of the date of sale, the Company received an aggregate
        of
        approximately $39,900,000 in cash pursuant to the Purchase Agreement. In
        accordance with the terms of an escrow agreement established as a source
        to
        secure the Company’s indemnification obligations under the Purchase Agreement,
        $1,000,000 of the purchase price and an aggregate of 2,272,727 shares of
        theglobe’s unregistered Common Stock (valued at $750,000 pursuant to the terms
        of the Purchase Agreement based upon the average closing price of the stock
        in
        the 10 day period preceding the closing of the sale) were placed into escrow.
        Any of the shares of Common Stock released from escrow to RelationServe will
        be
        entitled to customary “piggy-back” registration rights.
 
 Additionally,
        as contemplated by the Purchase Agreement, immediately following the asset
        sale,
        the Company completed the redemption of 28,879,097 shares of its Common Stock
        owned by six members of management of SendTec for approximately $11,604,000
        in
        cash pursuant to a Redemption Agreement dated August 23, 2005. Pursuant to
        a
        separate Termination Agreement, the Company also terminated and canceled
        1,275,783 stock options and the contingent interest in 2,062,785 earn-out
        warrants held by the six members of management in exchange for approximately
        $400,000 in cash. The Company also terminated 829,678 stock options of certain
        other non-management employees of SendTec and entered into bonus arrangements
        with a number of other non-management SendTec employees for amounts totaling
        approximately $600,000.
  -10-
 **Table
            of Contents**
 
 Results
        of operations for SendTec have been reported separately as “Discontinued
        Operations” in the accompanying condensed consolidated statement of operations
        for all periods presented. The assets and liabilities of the SendTec marketing
        services business which was sold have been included in the captions, “Assets of
        Discontinued Operations” and “Liabilities of Discontinued Operations” in the
        accompanying condensed consolidated balance sheets.
 
 The
        following is a summary of the assets and liabilities of the discontinued
        operations of SendTec as included in the accompanying condensed consolidated
        balance sheets:
 September
                  30,
              
              December
                  31,2005
              
              2004Assets:Accounts
                  receivable
              
              $
              8,674,235
              
              $
              6,620,382Prepaid
                  and other current assets
              
              
              544,451
              
              
              683,380Property
                  and equipment, net
              
              
              874,135
              
              
              963,757Goodwill
              
              
              11,709,952
              
              
              11,702,317Non-compete
                  intangible assets
              
              
              1,410,000
              
              
              1,680,000Other
                  assets
              
              
              28,604
              
              
              15,593Assets
                  of discontinued operations
              
              $
              23,241,377
              
              $
              21,665,429Liabilities:Accounts
                  payable
              
              $
              7,940,291
              
              $
              6,383,502Accrued
                  expenses
              
              
              352,945
              
              
              1,083,543Deferred
                  revenue
              
              
              164,362
              
              
              575,950Liabilities
                  of discontinued operations
              
              $
              8,457,598
              
              $
              8,042,995
 
 Summarized
        financial information for the Discontinued Operations of SendTec was as
        follows:
 
 Three
                  Months Ended
                September
                  30,2005
              
              2004Net
                  revenue, net of intercompany eliminations
              
              $
              10,752,616
              
              $
              2,820,381Income
                  from discontinued operations
              
              $
              1,009,026
              
              $
              162,286Provision
                  for income taxes
              
              
              372,971
              
              
              61,860Income
                  from discontinued operations, net of tax
              
              $
              636,055
              
              $
              100,426
 
 Nine
                  Months Ended
                September
                  30,2005
              
              2004Net
                  revenue, net of intercompany eliminations
              
              $
              28,897,502
              
              $
              2,820,381Income
                  from discontinued operations
              
              $
              2,734,154
              
              $
              162,286Provision
                  for income taxes
              
              
              1,038,497
              
              
              61,860Income
                  from discontinued operations, net of tax
              
              $
              1,695,657
              
              $
              100,426
   -11-
 **Table
            of Contents**
  The
        Company originally acquired SendTec on September 1, 2004. In exchange for
        all of
        the issued and outstanding shares of capital stock of SendTec the Company
        paid
        consideration consisting of: (i) $6,000,000 in cash, excluding transaction
        costs, (ii) the issuance of an aggregate of 17,500,024 shares of the Company's
        Common Stock, (iii) the issuance of an aggregate of 175,000 shares of Series
        H
        Automatically Converting Preferred Stock (which was converted into approximately
        17,500,500 shares of the Company's Common Stock effective December 1, 2004),
        and
        (iv) the issuance of a subordinated promissory note in the amount of $1,000,009.
        The Company also issued an aggregate of 3,974,165 replacement options to
        acquire
        the Company's Common Stock for each of the issued and outstanding options
        to
        acquire SendTec shares held by the former employees of SendTec.
 
 The
        SendTec purchase price allocation was as follows:
 Cash
              
              $
              3,610,000Accounts
                  receivable
              
              
              5,534,000Other
                  current assets
              
              
              194,000Fixed
                  assets
              
              
              1,031,000Non-compete
                  agreements
              
              
              1,800,000Goodwill
              
              
              11,710,000Other
                  assets
              
              
              124,000Assumed
                  liabilities
              
              
              (5,605,000
              )$
              18,398,000
 
 In
        addition, warrants to acquire shares of theglobe.com Common Stock would be
        issued to the former shareholders of SendTec when and if SendTec exceeded
        forecasted operating income, as defined, of $10.125 million, for the year
        ending
        December 31, 2005. The number of earn-out warrants issuable ranged from an
        aggregate of approximately 250,000 to 2,500,000 (if actual operating income
        exceeds the forecast by at least 10%). Pursuant to the Termination Agreement
        mentioned above, the contingent interest in approximately 2,063,000 of the
        earn-out warrants was canceled effective October 31, 2005.
  As
        part
        of the SendTec acquisition transaction, certain executives of SendTec entered
        into new employment agreements with SendTec. The employment agreements each
        had
        a term of five years and contained certain non-compete provisions for periods
        as
        specified by the agreements. The $1,800,000 value assigned to the non-compete
        agreements was being amortized on a straight-line basis over five years.
        Pursuant to the Termination Agreement mentioned above, the employment agreements
        were terminated effective October 31, 2005.
  (4)
        ACQUISITION OF TRALLIANCE CORPORATION
 
 On
        February 25, 2003, theglobe.com entered into a Loan and Purchase Option
        Agreement, as amended, with Tralliance, an Internet related business venture,
        pursuant to which it agreed to fund, in the form of a loan, at the discretion
        of
        the Company, Tralliance's operating expenses and obtained the option to acquire
        all of the outstanding capital stock of Tralliance 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 was secured by a lien on the assets of the venture. On May 5, 2005,
        Tralliance and the Internet Corporation for Assigned Names and Numbers ("ICANN")
        entered into an agreement designating Tralliance as the registry for the
        ".travel" top-level domain. On May 9, 2005, the Company exercised its option
        to
        acquire all of the outstanding capital stock of Tralliance. The purchase
        price
        consisted of the issuance of 2,000,000 shares of theglobe.com Common Stock,
        warrants to acquire 475,000 shares of theglobe.com Common Stock and $40,000
        in
        cash. The warrants are exercisable for a period of five years at an exercise
        price of $0.11 per share. As part of the transaction, 10,000 shares of
        theglobe.com Common Stock were also issued to a third party in payment of
        a
        finder's fee resulting from the acquisition. The Common Stock issued as a
        result
        of the acquisition of Tralliance is entitled to certain "piggy-back"
        registration rights. In addition, as part of the transaction, the Company
        agreed
        to pay approximately $154,000 in outstanding liabilities of Tralliance
        immediately after the closing of the acquisition.
  -12-
 **Table
            of Contents**
 
 The
        preliminary Tralliance purchase price allocation was as follows:
 Cash
              
              $
              54,000Other
                  current assets
              
              
              6,000Intangible
                  assets
              
              
              564,000Assumed
                  liabilities
              
              
              (370,000
              )$
              254,000
 
 Upon
        acquisition, the existing CEO and CFO of Tralliance entered into employment
        agreements, which include certain non-compete provisions, whereby each would
        agree to remain in the employ of Tralliance for a period of two years in
        exchange for annual base compensation totaling $200,000 to each officer,
        plus
        participation in a bonus pool based upon the pre-tax income of the venture.
 
 The
        value
        assigned to the intangible assets acquired is being amortized on a straight-line
        basis over the expected useful life. Annual amortization expense of the
        intangible assets is estimated to be approximately $75,200 in 2005, $112,800
        for
        2006 through 2009 and $37,600 in 2010. The related accumulated amortization
        as
        of September 30, 2005 was $47,000 and amortization expense totaled $28,200
        and
        $47,000 for the three and nine months ended September 30, 2005, respectively.
 
 Advances
        to Tralliance totaled $1,281,500 prior to its acquisition by the Company.
        Due to
        the uncertainty of the ultimate collectibility of the Loan, the Company had
        historically provided a reserve equal to the full amount of the funds advanced
        to Tralliance. For the nine months ended September 30, 2005 and 2004, additions
        to the reserve of $280,000 and $365,250, respectively, were included in other
        expense in the accompanying condensed consolidated statements of operations.
 
 The
        following pro forma condensed consolidated results of operations for the
        three
        and nine months ended September 30, 2004 and the nine months ended September
        30,
        2005 assumes the acquisition of Tralliance occurred as of January 1, 2004.
        The
        pro forma information is not necessarily indicative of what the actual results
        of operations of the combined company would have been had the acquisition
        occurred on January 1, 2004, nor is it necessarily indicative of future results.
 
 PRO
                  FORMA RESULTS:
              
              2004Three
                  months ended September 30,Net
                  revenue
              
              $
              878,000Net
                  loss
              
              
              (5,900,000
              )Basic
                  and diluted net loss per common share
              
              $
              (0.04
              )
  2005
              
              2004Nine
                  months ended September 30,Net
                  revenue
              
              $
              1,689,000
              
              $
              2,560,000Net
                  loss
              
              
              (15,821,000
              )
              
              (16,039,000
              )Basic
                  and diluted net loss per common share
              
              $
              (0.09
              )
              $
              (0.14
              )
 
 (5)
        DEBT
 
 On
        April
        22, 2005, E&C Capital Partners, LLLP and E&C Capital Partners II, Ltd.
        (the "Noteholders"), entities controlled by the Company's Chairman and Chief
        Executive Officer, entered into a Note Purchase Agreement (the "Agreement")
        with
        theglobe pursuant to which they acquired secured demand convertible promissory
        notes (the "Convertible Notes") in the aggregate principal amount of $1,500,000.
        Under the terms of the Agreement, the Noteholders were also granted the optional
        right, for a period of 90 days from the date of the Agreement, to purchase
        additional Convertible Notes such that the aggregate principal amount of
        Convertible Notes issued under the Agreement could total $4,000,000 (the
        "Option"). On June 1, 2005, the Noteholders exercised a portion of the Option
        and acquired an additional $1,500,000 of Convertible Notes. On July 18, 2005,
        the Noteholders exercised the remainder of the Option and acquired an additional
        $1,000,000 of Convertible Notes.
  -13-
 **Table
            of Contents**
 
 The
        Convertible Notes are convertible at the option of the Noteholders into shares
        of the Company's Common Stock at an initial price of $0.05 per share. Through
        November 10, 2005, an aggregate of $600,000 of Convertible Notes were converted
        by the Noteholders into an aggregate of 12,000,000 shares of the Company’s
        Common Stock. Assuming full conversion of all Convertible Notes which remain
        outstanding as of November 10, 2005, an additional 68,000,000 shares of the
        Company's Common Stock would be issued to the Noteholders. The Convertible
        Notes
        provide for interest at the rate of ten percent per annum and are secured
        by a
        pledge of substantially all of the assets of the Company. The Convertible
        Notes
        are due and payable five days after demand for payment by the Noteholders.
 
 As
        the
        Notes were immediately convertible into common shares of the Company at
        issuance, an aggregate of $3,000,000 of non-cash interest expense was recorded
        during the 2005 second quarter and $1,000,000 of non-cash interest expense
        was
        recorded during the 2005 third quarter as a result of the beneficial conversion
        features of the Convertible Notes. The value attributed to the beneficial
        conversion features was calculated by comparing the fair value of the underlying
        common shares of the Convertible Notes on the date of issuance based on the
        closing price of theglobe's Common Stock as reflected on the OTCBB to the
        conversion price and was limited to the aggregate proceeds received from
        the
        issuance of the Convertible Notes.
 
 Effective
        October 12, 2005, the maturity date of the Company’s mortgage payable totaling
        approximately $70,000 was extended to September 30, 2006.
 
 As
        discussed in Note 3, “Discontinued Operations - SendTec, Inc.,” on September 1,
        2004 the Company issued a subordinated promissory note in the amount of
        $1,000,009 in connection with the acquisition of SendTec. The subordinated
        promissory note provided for interest at the rate of four percent per annum
        and
        was due on September 1, 2005. The Company paid the principal and interest
        due
        under the terms of the subordinated promissory note on October 31, 2005,
        including default interest at a rate of 15% per annum for the period the
        debt
        was outstanding subsequent to the original due date.
 
 (6)
        STOCK
        OPTION PLANS
 
 A
        total
        of 5,819,750 stock options were granted during the nine months ended September
        30, 2005, including grants of 775,000 stock options to non-employees. A total
        of
        677,169 stock options were exercised and a total of 1,557,074 stock options
        were
        cancelled during the nine months ended September 30, 2005.
 
 As
        discussed in Note 3, “Discontinued Operations - SendTec, Inc.,” in connection
        with the acquisition of SendTec on September 1, 2004, the Company issued
        an
        aggregate of 3,974,165 replacement options to acquire shares of theglobe’s
        Common Stock for each of the then issued and outstanding options to acquire
        shares of SendTec common stock held by employees of SendTec. Of these
        replacement options, 3,273,663 had exercise prices of $0.06 and 700,497 had
        exercise prices of $0.27 per share. The Company also agreed to grant an
        aggregate of 225,000 options to employees of SendTec and 25,000 options to
        a
        consultant of SendTec at an exercise price of $0.34 per share under similar
        terms as other stock option grants of theglobe. The Company also granted
        1,000,000 stock options at an exercise price of $0.27 per share in connection
        with the establishment of a bonus option pool pursuant to which various
        employees of SendTec could vest in such options if SendTec exceeded forecasted
        operating income, as defined, of $10.125 million, for the year ending December
        31, 2005.
 
 As
        mentioned in Note 3, “Discontinued Operations - SendTec, Inc.”, pursuant to a
        Termination Agreement entered into as a result of the sale of the assets
        and
        business of SendTec, the Company terminated and canceled an aggregate of
        2,105,461 stock options held by employees of SendTec effective October 31,
        2005.
 
 Excluding
        the aforementioned stock options issued in connection with the acquisition
        of
        SendTec, a total of 1,745,000 stock options were granted during the nine
        months
        ended September 30, 2004, including grants of 365,000 stock options to
        non-employees. A total of 639,000 stock options were exercised and a total
        of
        1,049,220 stock options were cancelled during the nine months ended September
        30, 2004.
 
 Compensation
        expense of $143,351 was charged to continuing operations during the nine
        months
        ended September 30, 2005, as a result of the vesting of non-employee stock
        options granted in prior years, as well as expense resulting from stock options
        granted to non-employees during the first nine months of 2005. In addition,
        $48,987 of compensation expense was charged to continuing operations during
        the
        first nine months of 2005 primarily as a result of the accelerated vesting
        of
        stock options issued to a terminated employee. During the nine months ended
        September 30, 2004, stock compensation expense charged to continuing operations
        included $398,687 related to non-employee stock options, $160,450 related
        to
        employee option grants with below-market exercise prices and $17,188 related
        to
        the accelerated vesting of stock options issued to a terminated
        employee.
  -14-
 **Table
            of Contents**
 
 In
        2000,
        the Company re-priced a group of stock options issued to its employees. The
        Company is accounting for these re-priced options using variable accounting
        in
        accordance with FIN No. 44. No compensation expense was recorded in connection
        with the re-priced stock options during the nine months ended September 30,
        2005
        and 2004. At September 30, 2005, a total of 29,060 options remained outstanding
        which were being accounted for in accordance with FIN No. 44.
 
 Stock
        compensation expense totaling $446,854 and $59,507 for the nine months ended
        September 30, 2005 and 2004, respectively, was charged to income from the
        discontinued operations of the Company’s SendTec subsidiary. The expense
        resulted primarily from the deferred compensation attributable to the issuance
        of stock options in the Company’s acquisition of SendTec as mentioned above.
 
 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 2005: no dividend yield; an expected life
        of
        three to five years; 160% expected volatility and a risk free interest rate
        of
        3.00% to 4.00%.
 
 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. The following table presents the
        Company's pro forma net loss for the three and nine months ended September
        30,
        2005 and 2004, had the Company determined compensation cost based on the
        fair
        value at the grant date for all of its employee stock options issued under
        SFAS
        No. 123:
 
 Three
                  Months Ended
                September
                  30,
              
              Nine
                  Months Ended
                September
                  30,2005
              
              2004
              
              2005
              
              2004Net
                  loss - as reported
              
              $
              (5,371,807
              )
              $
              (5,869,656
              )
              $
              (15,790,599
              )
              $
              (15,887,315
              )Add:
                  Stock-based employee compensation expense included in net loss
                  as
                  reported
              
              
              126,331
              
              
              68,659
              
              
              494,201
              
              
              236,963Deduct:
                  Total stock-based employee compensation expense determined under
                  fair
                  value method for all awards
              
              
              (352,524
              )
              
              (317,003
              )
              
              (1,187,602
              )
              
              (1,299,648
              )Net
                  loss - pro forma
              
              $
              (5,598,000
              )
              $
              (6,118,000
              )
              $
              (16,484,000
              )
              $
              (16,950,000
              )Basic
                  net loss per share - as reported
              
              $
              (0.03
              )
              $
              (0.04
              )
              $
              (0.09
              )
              $
              (0.14
              )Basic
                  net loss per share - pro forma
              
              $
              (0.03
              )
              $
              (0.04
              )
              $
              (0.09
              )
              $
              (0.15
              )
  (7)
        LITIGATION ****
 
 On
        and
        after August 3, 2001 and as of the date of this filing, the Company is aware
        that six putative shareholder class action lawsuits were filed against the
        Company, certain of its current and former officers and directors (the
“Individual Defendants”), and several investment banks that were the
        underwriters of the Company's initial public offering. The lawsuits were
        filed
        in the United States District Court for the Southern District of New York.
 
 The
        lawsuits purport to be class actions 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. On December 5, 2001, an amended complaint
        was
        filed in one of the actions, alleging the same conduct described above in
        connection with the Company's November 23, 1998 initial public offering and
        its
        May 19, 1999 secondary offering. A Consolidated Amended Complaint, which
        is now
        the operative complaint, was filed in the Southern District of New York on
        April
        19, 2002. The action seeks damages in an unspecified amount. On February
        19,
        2003, a motion to dismiss all claims against the Company was denied by the
        Court. On October 13, 2004, the Court certified a class in six of the
        approximately 300 other nearly identical actions and noted that the decision
        is
        intended to provide strong guidance to all parties regarding class certification
        in the remaining cases. Plaintiffs have not yet moved to certify a class
        in
        theglobe.com case.
  -15-
 **Table
            of Contents**
 
 The
        Company has approved a settlement agreement and related agreements which
        set
        forth the terms of a settlement between the Company, the Individual Defendants,
        the plaintiff class and the vast majority of the other approximately 300
        issuer
        defendants. Among other provisions, the settlement provides for a release
        of the
        Company and the Individual Defendants for the conduct alleged in the action
        to
        be wrongful. The Company would agree to undertake certain responsibilities,
        including agreeing to assign away, not assert, or release certain potential
        claims the Company may have against its underwriters. The settlement agreement
        also provides a guaranteed recovery of $1 billion to plaintiffs for the cases
        relating to all of the approximately 300 issuers. To the extent that the
        underwriter defendants settle all of the cases for at least $1 billion, no
        payment will be required under the issuers’ settlement agreement. To the extent
        that the underwriter defendants settle for less than $1 billion, the issuers
        are
        required to make up the difference. It is anticipated that any potential
        financial obligation of the Company to plaintiffs pursuant to the terms of
        the
        settlement agreement and related agreements will be covered by existing
        insurance. The Company currently is not aware of any material limitations
        on the
        expected recovery of any potential financial obligation to plaintiffs from
        its
        insurance carriers. Its carriers are solvent, and the company is not aware
        of
        any uncertainties as to the legal sufficiency of an insurance claim with
        respect
        to any recovery by plaintiffs. Therefore, we do not expect that the settlement
        will involve any payment by the Company. If material limitations on the expected
        recovery of any potential financial obligation to the plaintiffs from the
        Company's insurance carriers should arise, the Company's maximum financial
        obligation to plaintiffs pursuant to the settlement agreement would be less
        than
        $3.4 million. On
        February 15, 2005, the Court granted preliminary approval of the settlement
        agreement, subject to certain modifications consistent with its opinion.
        Those
        modifications have been made. There is no assurance that the court will grant
        final approval to the settlement. If
        the
        settlement agreement is not approved and the Company is found liable, we
        are
        unable to estimate or predict the potential damages that might be awarded,
        whether such damages would be greater than the Company’s insurance coverage, and
        whether such damages would have a material impact on our results of operations
        or financial condition in any future period.
 
 On
        December 16, 2004, the Company, together with its wholly-owned subsidiary,
        voiceglo Holdings, Inc., were named as defendants in NeoPets, Inc. v. voiceglo
        Holdings, Inc. and theglobe.com, inc., a lawsuit filed in Los Angeles Superior
        Court. The Company and its subsidiary, were parties to an agreement dated
        May 6,
        2004, with NeoPets, Inc. ("NeoPets"), whereby NeoPets agreed to host a voiceglo
        advertising feature on its website for the purpose of generating registered
        activations of the voiceglo product featured. Consideration to NeoPets was
        to
        include specified commissions, including cash payments based on registered
        activations, as defined, as well as the issuance of Common Stock of theglobe.com
        and additional cash payments, upon the attainment of certain performance
        criteria. NeoPets' complaint asserts claims for breach of contract and specific
        performance and seeks payment of approximately $2.5 million in cash, plus
        interest, as well as the issuance of 1,000,000 shares of theglobe.com Common
        Stock. On February 22, 2005, the Company and voiceglo answered the complaint
        and
        asserted cross-claims against NeoPets for fraud and deceit, rescission, breach
        of contract, breach of the implied covenant of good faith and fair dealing
        and
        set-off. NeoPets answered the cross-claims on March 24, 2005.
 
 During
        2004, the Company recorded amounts due for commissions pursuant to the terms
        of
        the agreement totaling approximately $246,000. On August 5, 2005, the Company,
        together with voiceglo Holdings, Inc., its wholly-owned subsidiary, and NeoPets
        (collectively "the Parties") agreed to amicably resolve their dispute and
        entered into a settlement agreement (the "Settlement Agreement"). Under the
        terms of the Settlement Agreement, the Parties agreed to dismiss the lawsuit,
        release each other from all claims and to terminate their May 6, 2004 website
        advertising agreement in consideration for voiceglo Holdings, Inc. making
        cash
        payments totaling $200,000 to NeoPets within thirty days of the date of the
        Settlement Agreement.
 
 On
        October 4, 2005, Sprint Communications Company, L.P. (“Sprint”) filed a
        Complaint in the United States District Court for the District of Kansas
        against
        theglobe, theglobe’s subsidiary, voiceglo Holdings, inc. (“Voiceglo”), and
        Vonage Holdings Corp. (“Vonage”). On October 12, 2005, Sprint filed a First
        Amended Complaint naming Vonage America, Inc. (“Vonage America”) as an
        additional defendant. Neither theglobe nor Voiceglo has any affiliation with
        Vonage or Vonage America. Sprint alleges that Voiceglo has made unauthorized
        use
        of “inventions” described and claimed in seven patents held by Sprint. Sprint
        seeks monetary and injunctive relief for this alleged infringement. The
        complaint does not specify which claimed “inventions” allegedly have been used
        by Voiceglo or what specific activity of Voiceglo is alleged to infringe
        the
        asserted patents. On November 7, 2005, theglobe and Voiceglo filed an Answer
        to
        Sprint’s First Amended Complaint, denying infringement and interposing
        affirmative defenses, including that each of the asserted patents is invalid.
        It
        is not possible to predict the outcome of this litigation with any certainty
        or
        whether a decision adverse to theglobe or Voiceglo would have a material
        adverse
        affect on our developing VoIP business and the financial condition, results
        of
        operations, and prospects of theglobe generally.
  -16-
 **Table
            of Contents**
 
 The
        Company is currently a party to certain other legal proceedings, claims and
        disputes arising in the ordinary course of business, including those noted
        above. The Company currently believes that the ultimate outcome of these
        other
        matters, individually and in the aggregate, will not have a material adverse
        affect on the Company's financial position, results of operations or cash
        flows.
        However, because of the nature and inherent uncertainties of legal proceedings,
        should the outcome of these matters be unfavorable, the Company's business,
        financial condition, results of operations and cash flows could be materially
        and adversely affected.
 
 (8)
        SEGMENTS AND GEOGRAPHIC INFORMATION
 
 The
        Company applies the provisions of SFAS No. 131, "Disclosures About Segments
        of
        an Enterprise and Related Information," which establishes annual and interim
        reporting standards for operating segments of a company. SFAS No. 131 requires
        disclosures of selected segment-related financial information about products,
        major customers and geographic areas. Effective with the May 9, 2005 acquisition
        of Tralliance, the Company was organized in four operating segments for purposes
        of making operating decisions and assessing performance: the computer games
        division, the Internet services division, the marketing services division
        and
        the VoIP telephony services division. The computer games division consists
        of
        the operations of the Company's magazine publications and the associated
        websites and the operations of Chips & Bits, Inc., its games distribution
        business. The Internet services division consists of the newly acquired
        operations of Tralliance. The VoIP telephony services division is principally
        involved in the sale of telecommunications services over the Internet to
        consumers. The marketing services division consists of the operations of
        the
        Company's subsidiary, SendTec which was sold effective October 31, 2005 and
        has
        been reflected as “discontinued operations” where applicable within the segment
        data presented below.
 
 The
        chief
        operating decision maker evaluates performance, makes operating decisions
        and
        allocates resources based on financial data of each segment. Where appropriate,
        the Company charges specific costs to each segment where they can be identified.
        Certain items are maintained at the Company's corporate headquarters
        ("Corporate") and are not presently allocated to the segments. Corporate
        expenses primarily include personnel costs related to executives and certain
        support staff and professional fees. Corporate assets principally consist
        of
        cash and cash equivalents. Subsequent to its acquisition on September 1,
        2004,
        SendTec provided various intersegment marketing services to the Company's
        VoIP
        telephony services division. Prior to the acquisition of SendTec, there were
        no
        intersegment transactions. The accounting policies of the segments are the
        same
        as those for the Company as a whole.
 
 The
        following table presents financial information regarding the Company's different
        segments:
 
 Three
                  Months Ended
              
              Nine
                  Months EndedSeptember
                  30,
              
              September
                  30,2005
              
              2004
              
              2005
              
              2004NET
                  REVENUE FROM CONTINUING OPERATIONS:Computer
                  games
              
              $
              360,917
              
              $
              779,073
              
              $
              1,477,692
              
              $
              2,253,947VoIP
                  telephony services
              
              
              48,341
              
              
              98,654
              
              
              211,726
              
              
              306,007$
              409,258
              
              $
              877,727
              
              $
              1,689,418
              
              $
              2,559,954OPERATING
                  LOSS FROM CONTINUING OPERATIONS:Computer
                  games
              
              $
              (716,105
              )
              $
              (64,714
              )
              $
              (1,694,843
              )
              $
              (376,725
              )VoIP
                  telephony services
              
              
              (3,064,272
              )
              
              (5,501,761
              )
              
              (9,191,989
              )
              
              (12,268,015
              )Internet
                  services
              
              
              (431,990
              )
              
              –
              
              
              (645,564
              )
              
              –Corporate
                  expenses
              
              
              (1,078,651
              )
              
              (716,908
              )
              
              (2,553,523
              )
              
              (2,719,350
              )Operating
                  loss from continuing operations
              
              
              (5,291,018
              )
              
              (6,283,383
              )
              
              (14,085,919
              )
              
              (15,364,090
              )Other
                  income (expense), net
              
              
              (1,105,391
              )
              
              251,441
              
              
              (4,438,834
              )
              
              (685,511
              )Loss
                  from continuing operations before income tax
              
              $
              (6,396,409
              )
              $
              (6,031,942
              )
              $
              (18,524,753
              )
              $
              (16,049,601
              )
   -17-
 **Table
            of Contents**
  Three
                  Months Ended
              
              Nine
                  Months EndedSeptember
                  30,
              
              September
                  30,2005
              
              2004
              
              2005
              
              2004DEPRECIATION
                  AND AMORTIZATION OF CONTINUING OPERATIONS:Computer
                  games
              
              $
              7,723
              
              $
              1,358
              
              $
              23,161
              
              $
              6,146VoIP
                  telephony services
              
              
              280,584
              
              
              397,062
              
              
              829,160
              
              
              913,461Internet
                  services
              
              
              30,668
              
              
              –
              
              
              49,468
              
              
              –Corporate
                  expenses
              
              
              8,450
              
              
              9,074
              
              
              27,607
              
              
              22,580$
              327,425
              
              $
              407,494
              
              $
              929,396
              
              $
              942,187
 
 September
                  30,
              
              December
                  31,2005
              
              2004IDENTIFIABLE
                  ASSETS:Computer
                  games
              
              $
              830,031
              
              $
              1,585,944VoIP
                  telephony services
              
              
              2,324,572
              
              
              3,562,384Internet
                  services
              
              
              715,039
              
              
              –Corporate
                  assets *
              
              
              2,394,520
              
              
              7,203,408Continuing
                  operations
              
              
              6,264,162
              
              
              12,351,736Discontinued
                  operations
              
              
              23,241,377
              
              
              21,665,429$
              29,505,539
              
              $
              34,017,165
 
 *
              Corporate
                  assets includes cash held at subsidiaries for purposes of the presentation
                  above.
 
 (9)
        SUBSEQUENT EVENTS
 
 Reference
        should be made to Note 3, “Discontinued Operations - SendTec, Inc.”, for a
        discussion of the sale of substantially all of the assets and the business
        of
        SendTec, the Company’s wholly-owned marketing services subsidiary, effective
        October 31, 2005. Information regarding the repayment of the $1,000,009
        subordinated promissory note issued in the original acquisition of SendTec
        is
        presented in Note 5, “Debt”, and additional information regarding stock options
        held by SendTec employees which were terminated and canceled as a result
        of the
        SendTec asset sale is included in Note 6, “Stock Options Plans”.
 
 Effective
        November 4, 2005, the Company paid a total of approximately $3,953,000 in
        bonuses to certain of its officers, employees and consultants.
   -18-
 **Table
            of Contents**
  **ITEM
        2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS**
 
 **FORWARD
        LOOKING STATEMENTS**
 
 This
        Form
        10-Q contains forward-looking statements within the meaning of the federal
        securities laws that relate to future events or our future financial
        performance. In some cases, you can identify forward-looking statements by
        terminology, such as "may," "will," "should," "could," "expect," "plan,"
        "anticipate," "believe," "estimate," "project," "predict," "intend," "potential"
        or "continue" or the negative of such terms or other comparable terminology,
        although not all forward-looking statements contain such terms. In addition,
        these forward-looking statements include, but are not limited to, statements
        regarding:
 
 o
              implementing
                  our business plans;
 
 o
              marketing
                  and commercialization of our existing products and those products
                  under
                  development;
 
 o
              plans
                  for future products and services and for enhancements of existing
                  products
                  and services;
 
 o
              our
                  ability to implement cost-reduction programs;
 
 o
              potential
                  governmental regulation and taxation;
 
 o
              the
                  outcome of any pending litigation;
 
 o
              our
                  intellectual property;
 
 o
              our
                  estimates of future revenue and profitability;
 
 o
              our
                  estimates or expectations of continued losses;
 
 o
              our
                  expectations regarding future expenses, including cost of revenue,
                  product
                  development, sales and marketing, and general and administrative
                  expenses;
 
 o
              difficulty
                  or inability to raise additional financing, if needed, on terms
                  acceptable
                  to us;
 
 o
              our
                  estimates regarding our capital requirements and our needs for
                  additional
                  financing;
 
 o
              attracting
                  and retaining customers and employees;
 
 o
              rapid
                  technological changes in our industry and relevant markets;
 
 o
              sources
                  of revenue and anticipated revenue;
 
 o
              plans
                  for future acquisitions and entering new lines of business;
 
 o
              plans
                  for divestitures of certain businesses or assets;
 
 o
              competition
                  in our market; and
 
 o
              our
                  ability to continue to operate as a going concern.
 
 These
        statements are only predictions. Although we believe that the expectations
        reflected in these forward-looking statements are reasonable, we cannot
        guarantee future results, levels of activity, performance or achievements.
        We
        are not required to and do not intend to update any of the forward-looking
        statements after the date of this Form 10-Q or to conform these statements
        to
        actual results. In light of these risks, uncertainties and assumptions, the
        forward-looking events discussed in this Form 10-Q might not occur. Actual
        results, levels of activity, performance, achievements and events may vary
        significantly from those implied by the forward-looking statements. A
        description of risks that could cause our results to vary appears under "Risk
        Factors" and elsewhere in this Form 10-Q. The following discussion should
        be
        read together in conjunction with the accompanying unaudited condensed
        consolidated financial statements and related notes thereto and the audited
        consolidated financial statements and notes to those statements contained
        in the
        Annual Report on Form 10-KSB for the year ended December 31, 2004.
  -19-
 **Table
            of Contents**
 
 **OVERVIEW**
 
 As
        of
        September 30, 2005, theglobe.com, inc. (the "Company" or "theglobe") managed
        four primary lines of business. One line of business, Voice over Internet
        Protocol ("VoIP") telephony services, includes voiceglo Holdings, Inc., a
        wholly-owned subsidiary of theglobe that offers VoIP-based phone services.
        The
        term VoIP refers to a category of hardware and software that enables people
        to
        use the Internet to make phone calls. The second line of business consists
        of
        our historical network of three wholly-owned businesses, each of which
        specializes in the games business by delivering games information and selling
        games in the United States and abroad. These businesses are: our print
        publication business, which consists of Computer Games and Now Playing
        magazines; our online website business, which consists of our Computer Games
        Online website (www.cgonline.com) and our Now Playing Online website
        (www.nowplayingmag.com), which are the online counterparts to our magazine
        publications; and our Chips & Bits, Inc. (www.chipsbits.com) games
        distribution company ("Chips & Bits"). We entered a third line of business,
        marketing services, on September 1, 2004, with our acquisition of SendTec,
        Inc.
        ("SendTec"), a direct response marketing services and technology company,
        which
        business we disposed of on October 31, 2005. On May 9, 2005, we entered a
        fourth
        line of business, which we call our Internet Services business, when we
        exercised our option to acquire Tralliance Corporation ("Tralliance"), a
        company
        which had recently entered into an agreement to become the registry for the
        ".travel" top-level Internet domain.
 
 As
        of
        September 30, 2005, sources of our revenue from continuing operations were
        derived principally from the operations of our computer games related
        businesses. Our VoIP products and services have yet to produce any significant
        revenue. Tralliance did not begin collecting fees from “.travel” registrars for
        its services until October 2005.
 
 During
        the first quarter of 2005, management began actively reevaluating the Company's
        primary business lines, particularly in view of the Company's critical need
        for
        cash and the overall net losses of the Company. As a result, management began
        to
        explore a number of strategic alternatives for the Company and/or its
        businesses, including continuing to operate the businesses, selling certain
        businesses or assets, or entering into new lines of businesses.
 
 On
        August
        10, 2005, we entered into an Asset Purchase Agreement with RelationServe
        Media,
        Inc. ("RelationServe") whereby we agreed to sell all of the business and
        substantially all of the net assets of our SendTec marketing services subsidiary
        to RelationServe for $37.5 million in cash, subject to certain net working
        capital adjustments. On August 23, 2005, we entered into Amendment No. 1
        to the
        Asset Purchase Agreement with RelationServe (the “1 st Amendment” and together with the original Asset Purchase Agreement, the
“Purchase Agreement”). On October 31, 2005, we completed the asset sale.
        Including adjustments to the purchase price, related to excess working capital
        of SendTec as of the date of sale, the Company received an aggregate of
        approximately $39.9 million in cash pursuant to the Purchase Agreement. In
        accordance with the terms of an escrow agreement established as a source
        to
        secure our indemnification obligations under the Purchase Agreement, $1.0
        million of the purchase price and an aggregate of 2,272,727 shares of theglobe’s
        unregistered Common Stock (valued at $750,000 pursuant to the terms of the
        Purchase Agreement based upon the average closing price of the stock in the
        10
        day period preceding the closing of the sale) were placed into escrow. Any
        of
        the shares of Common Stock released from escrow to RelationServe will be
        entitled to customary “piggy-back” registration rights.
 
 Additionally,
        as contemplated by the Purchase Agreement, immediately following the asset
        sale,
        we completed the redemption of 28,879,097 shares of our Common Stock owned
        by
        six members of management of SendTec for approximately $11.6 million in cash
        pursuant to a Redemption Agreement dated August 23, 2005. Pursuant to a separate
        Termination Agreement, we also terminated and canceled 1,275,783 stock options
        and the contingent interest in 2,062,785 earn-out warrants held by the six
        members of management in exchange for approximately $0.4 million in cash.
        We
        also terminated 829,678 stock options of certain other non-management employees
        of SendTec and entered into bonus arrangements with a number of other
        non-management SendTec employees for amounts totaling approximately $0.6
        million.
 
 Results
        of operations for SendTec have been reported separately as “Discontinued
        Operations” in the accompanying condensed consolidated statement of operations
        for all periods presented. The assets and liabilities of the SendTec marketing
        services business which was sold have been included in the captions, “Assets of
        Discontinued Operations” and “Liabilities of Discontinued Operations” in the
        accompanying condensed consolidated balance sheets.
  -20-
 **Table
            of Contents**
 
 **BASIS
        OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS; GOING CONCERN**
 
 We
        received a report from our independent accountants, relating to our December
        31,
        2004 audited financial statements containing an explanatory paragraph stating
        that our recurring losses from operations and our accumulated deficit raise
        substantial doubt about our ability to continue as a going concern. Our
        condensed consolidated financial statements have been prepared in accordance
        with accounting principles generally accepted in the United States of America
        on
        a going concern basis, which contemplates the realization of assets and the
        satisfaction of liabilities in the normal course of business. Accordingly,
        our
        condensed consolidated financial statements do not include any adjustments
        relating to the recoverability of assets and classification of liabilities
        that
        might be necessary should we be unable to continue as a going concern. Based
        upon the net cash proceeds received from the sale of our SendTec business
        on
        October 31, 2005, management believes the Company has sufficient liquidity
        to
        operate as a going concern through at least the end of 2006. See the “Liquidity
        and Capital Resources” section of this Management’s Discussion and Analysis of
        Financial Condition and Results of Operations for a more complete discussion.
 
 **DESCRIPTION
        OF BUSINESS---CONTINUING OPERATIONS**
 
 **OUR
        VOIP TELEPHONY BUSINESS**
 
 During
        the third quarter of 2003, the Company launched its first suite of consumer
        and
        business level VoIP services. The Company launched its browser-based VoIP
        product during the first quarter of 2004. These services allow consumers
        and
        enterprises to communicate using VoIP technology for dramatically reduced
        pricing compared to traditional telephony networks. The services also offer
        traditional telephony features such as voicemail, caller ID, call forwarding,
        and call waiting for no additional cost to the consumer, as well as incremental
        services that are not currently supported by the public switched telephone
        network ("PSTN") like the ability to use numbers remotely and voicemail to
        email
        services. In the fourth quarter of 2004, the Company announced an "instant
        messenger" or "IM" related application which enables users to chat via voice
        or
        text across multiple platforms using their preferred instant messenger service.
        Additionally, during the second quarter of 2005, the Company released a number
        of new VoIP products and features which allow users to communicate via mobile
        phones, traditional land line phones and/or computers.
 
 The
        Company now provides the following VoIP services, on a retail basis, to
        individual consumers and businesses:
 
 o
        Browser-Based - full functioning voice and messaging capabilities that reside
        on
        the computer desktop and also include web-based solutions. The only system
        requirements are a browser and an Internet connection. The Company is seeking
        various patents to protect its position. The browser-based products work
        on
        broadband, dial-up and wi-fi Internet connections and can optionally be used
        with a USB phone or other peripheral devices.
 
 o
        Hardware-Based - a long distance or phone line replacement service. Requires
        an
        Internet connection and can optionally be used with an adapter or regular,
        cellular, wi-fi or USB phone directly over a user's computer if desired.
        The
        service works on broadband, dial-up and wi-fi Internet connections.
 
 The
        Company's retail VoIP products are provided under various tradenames including
        "voiceglo", "GloPhone" and "tglo". Customers choose their levels of service
        from
        a number of available packages and complete online registrations and credit
        card
        payment transactions via websites maintained by the Company. The Company's
        browser-based plans require the customers to download a simple "plug-in"
        to
        their browsers to enable voice and messaging communications. Certain of the
        Company's hardware-based plans require the customer to either register the
        phones (and phone numbers) that the customer will be using and/or to purchase
        and install certain peripheral equipment such as adapters or bridge devices
        prior to activating service.
 
 **OUR
        COMPUTER GAMES BUSINESS**
 
 Computer
        Games Magazine is a consumer print magazine for gamers. As a leading consumer
        print publication for games, Computer Games magazine boasts: a reputation
        for
        being a reliable, trusted, and engaging games magazine; more editorial content,
        tips and hints than most other similar magazines; a knowledgeable editorial
        staff providing increased editorial integrity and content; and, broad-based
        editorial coverage, appealing to a wide audience of gamers. In Spring 2004,
        a
        new magazine, Now Playing began to be delivered within Computer Games magazine
        and in March 2005, Now Playing began to be distributed as a separate
        publication. Now Playing covers movies, DVDs, television, music, games, comics
        and anime, and is designed to fulfill the wider pop culture interests of
        our
        current readers and to attract a more diverse group of advertisers; autos,
        television, telecommunications and film to name a few.
  -21-
 **Table
            of Contents**
 
 Computer
        Games Online (www.cgonline.com) is the online counterpart to Computer Games
        magazine. Computer Games Online is a source of free computer games news and
        information for the sophisticated gamer, featuring news, reviews and previews.
        Features of Computer Games Online include: game industry news; truthful,
        concise
        reviews; first looks, tips and hints; multiple content links; thousands of
        archived files; and easy access to game buying.
 
 Now
        Playing Online (www.nowplayingmag.com) is the online counterpart for Now
        Playing
        magazine. Now Playing Online provides free, up-to-date entertainment news
        and
        information for the pop culture consumer. Features of Now Playing Online
        include: industry news in music, movies and games; reviews of concerts, movies
        and DVDs; and exclusive video interviews by Now Playing writers done with
        well-known Hollywood stars.
 
 Chips
        & Bits (www.chipsbits.com) is a games distribution business that attracts
        customers in the United States and abroad. Chips & Bits covers all the major
        game platforms available, including Macintosh, Window-based PCs, Sony
        PlayStation, Sony PlayStation2, Microsoft's Xbox, Nintendo 64, Nintendo's
        GameCube, Nintendo's Game Boy, and Sega Dreamcast, among others.
 
 **OUR
        INTERNET SERVICES BUSINESS**
 
 Tralliance,
        headquartered in New York City, was incorporated in 2002 to develop products
        and
        services to enhance online commerce between consumers and the travel and
        tourism
        industries, including administration of the ".travel" top-level domain. In
        February 2003, theglobe.com entered into a Loan and Purchase Option Agreement,
        as amended, with Tralliance in which theglobe.com agreed to fund, in the
        form of
        a loan, at the discretion of theglobe.com, Tralliance's operating expenses
        and
        obtained the option to acquire all of the outstanding capital stock of
        Tralliance. On May 5, 2005, the Internet Corporation for Assigned Names and
        Numbers (ICANN) and Tralliance entered into a contract whereby Tralliance
        was
        designated as the registry for the ".travel" top-level domain for a period
        of
        ten years. Effective May 9, 2005, theglobe.com exercised its option to purchase
        Tralliance.
 
 As
        the
        registry for the ".travel" top-level domain, Tralliance will be responsible
        for
        the administration and maintenance of the master directory and database of
        all
        second-level ".travel" domain names. In addition, Tralliance will be offering,
        free of charge, to all ".travel" top-level domain registrants the ".travel"
        directory, a global online source of travel data organized according to a
        unique
        vocabulary for the travel industry. Tralliance has outsourced or is planning
        to
        outsource to third parties many of the processes required to operate as the
        ".travel" registry. Tralliance launched its “.travel” registry services in the
        2005 fourth quarter and began collecting fees from “.travel” registrars for its
        services in October 2005.
 
 **DESCRIPTION
        OF BUSINESS---DISCONTINUED OPERATIONS**
 
 **DISCONTINUED
        OPERATIONS OF OUR MARKETING SERVICES BUSINESS**
 
 As
        previously discussed, based upon the Company’s decision to sell substantially
        all of the assets and the business of its SendTec subsidiary, the results
        of
        operations and assets and liabilities of SendTec have been reported separately
        as “Discontinued Operations” for all periods presented in this
        report.
 
 On
        September 1, 2004, the Company acquired SendTec, a direct response marketing
        services and technology company. SendTec provides clients a complete offering
        of
        direct marketing products and services to help their clients market their
        products both on the Internet ("online") and through traditional media channels
        such as television, radio and print advertising ("offline"). SendTec is
        organized into two primary product line divisions: the DirectNet Advertising
        Division, which provides digital marketing services; and the Creative South
        Division, which provides creative production and media buying services.
        Additionally, its proprietary iFactz technology provides software tracking
        solutions that benefit both the DirectNet Advertising and Creative South
        businesses.
 
 o
              DirectNet
                  Advertising ("DNA") - DNA delivers results based interactive marketing
                  programs for advertisers through a network of online distribution
                  partners
                  including websites, search engines and email publishers. SendTec's
                  proprietary software technology is used to track, optimize and
                  report
                  results of marketing campaigns to advertising clients and distribution
                  partners. Pricing options for DNA's services include cost-per-action
                  ("CPA"), cost-per-click ("CPC") and cost-per-thousand impressions
                  ("CPM"),
                  with most payments resulting from CPA agreements.
 
 o
              Creative
                  South - Creative South provides online and offline agency marketing
                  services including creative development, campaign management, creative
                  production, post production, media planning and media buying services.
                  Most services provided by Creative South are priced on a fee-per-project
                  basis, where the client pays an agreed upon fixed fee for a designated
                  scope of work. Creative South also receives monthly retainer fees
                  from
                  clients for service to such clients as their Agency of Record.
 
 o
              iFactz
                  - iFactz is SendTec's Application Service Provider ("ASP") technology
                  that
                  tracks and reports on a real time basis the online responses generated
                  from offline direct response advertising, such as television, radio,
                  print
                  advertising and direct mail. iFactz' Intelligent Sourcing (TM)
                  is a
                  patent-pending media technology that informs the user where online
                  customers come from, and what corresponding activity they produced
                  on the
                  user's website. The iFactz patent application was filed in November
                  2001
                  and the Company expects the application to be reviewed during 2005.
                  iFactz
                  is licensed to clients based on a monthly fixed license fee, with
                  license
                  terms ranging from three months to one year.
   -22-
 **Table
            of Contents**
  **RESULTS
        OF OPERATIONS**
 
 The
        nature of our business has significantly changed from 2004 to 2005. On September
        1, 2004, we entered into a new line of business, marketing services, as a
        result
        of our acquisition of SendTec, Inc. ("SendTec"). On October 31, 2005, we
        completed the sale of substantially all of the net assets and the business
        of
        SendTec. As a result, we now account for and report SendTec as a “discontinued
        operation”. Also, on May 9, 2005, the Company entered into another line of
        business, Internet services, when it exercised its option to acquire Tralliance
        Corporation ("Tralliance"), a company which had recently been designated
        as the
        registry for the ".travel" top-level Internet domain. The results of both
        SendTec and Tralliance are included in the Company's consolidated operating
        results from their respective dates of acquisition. Primarily, as a result
        of
        the acquisition of SendTec, our results of operations for the three and nine
        months ended September 30, 2005, are not necessarily comparable to our results
        of operations for the three and nine months ended September 30, 2004.
 
 **THREE
        MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER
        30,
        2004**
 
 **CONTINUING
        OPERATIONS**
 
 NET
        REVENUE. Net revenue totaled $0.4 million for the three months ended September
        30, 2005 as compared to $0.9 million for the three months ended September
        30,
        2004. The $0.5 million decrease in consolidated net revenue was principally
        the
        result of the $0.4 million decline in net revenue of our computer games business
        segment.
 
 **NET
        REVENUE BY BUSINESS SEGMENT:**
 2005
              
              2004Computer
                  games
              
              $
              360,917
              
              $
              779,073VoIP
                  telephony services
              
              
              48,341
              
              
              98,654$
              409,258
              
              $
              877,727
  Advertising
        revenue from the sale of print advertisements in the magazines published
        by our
        computer games business declined $0.3 million in the 2005 third quarter as
        compared to the third quarter of 2004. Sales of electronic games and related
        products through Chips & Bits, Inc., our Internet-based retail distribution
        subsidiary, decreased $0.1 million in the 2005 third quarter as compared
        to the
        same quarter of 2004. The $0.4 million decline in net revenue of our computer
        games segment in 2005 compared to 2004 negatively impacted the profitability
        of
        this segment, with the operating loss for computer games increasing to $0.7
        million in the third quarter of 2005 compared to $0.1 million in the same
        period
        of the prior year.
  -23-
 **Table
            of Contents**
 
 **OPERATING
        EXPENSES BY BUSINESS SEGMENT:**
 DepreciationCost
                  of
              
              Sales
                  and
              
              Product
              
              General
                  and
              
              andThree
                  months ended:
              
              Revenue
              
              Marketing
              
              Development
              
              Administrative
              
              Amortization
              
              Total2005Computer
                  games
              
              $
              502,345
              
              $
              97,140
              
              $
              178,366
              
              $
              291,448
              
              $
              7,723
              
              $
              1,077,022Internet
                  services
              
              
              –
              
              
              87,143
              
              
              –
              
              
              314,179
              
              
              30,668
              
              
              431,990VoIP
                  telephony services
              
              
              1,711,229
              
              
              297,290
              
              
              178,043
              
              
              645,467
              
              
              280,584
              
              
              3,112,613Corporate
                  expenses
              
              
              –
              
              
              –
              
              
              –
              
              
              1,070,201
              
              
              8,450
              
              
              1,078,651$
              2,213,574
              
              $
              481,573
              
              $
              356,409
              
              $
              2,321,295
              
              $
              327,425
              
              $
              5,700,276
 
 DepreciationCost
                  of
              
              Sales
                  and
              
              Product
              
              General
                  and
              
              andRevenue
              
              Marketing
              
              Development
              
              Administrative
              
              Amortization
              
              Total2004Computer
                  games
              
              $
              492,934
              
              $
              81,059
              
              $
              107,736
              
              $
              160,700
              
              $
              1,358
              
              $
              843,787VoIP
                  telephony services
              
              
              2,081,022
              
              
              1,972,380
              
              
              252,742
              
              
              897,209
              
              
              397,062
              
              
              5,600,415Corporate
                  expenses
              
              
              –
              
              
              –
              
              
              –
              
              
              707,834
              
              
              9,074
              
              
              716,908$
              2,573,956
              
              $
              2,053,439
              
              $
              360,478
              
              $
              1,765,743
              
              $
              407,494
              
              $
              7,161,110
 
 COST
        OF
        REVENUE. Cost of revenue totaled $2.2 million for the three months ended
        September 30, 2005, a decline of $0.4 million from the $2.6 million reported
        for
        the three months ended September 30, 2004. The decrease in cost of revenue
        as
        compared to the 2004 third quarter was principally attributable to the $0.4
        million decrease in cost of revenue of our VoIP telephony services business.
        Cost of revenue of our VoIP telephony services business segment is principally
        comprised of carrier transport and circuit interconnection costs related
        to our
        retail products, as well as personnel and consulting costs incurred in support
        of our Internet telecommunications network. During the 2004 third quarter,
        cost
        of revenue included charges of $0.6 million related to writedowns of telephony
        equipment inventory. The impact of the prior year’s inventory writedown coupled
        with $0.2 million lower network operations personnel costs in the third quarter
        of 2005 as compared to the same period of 2004, were partially offset by
        $0.4
        million higher software costs in support of our VoIP telecommunications network.
        The Company is no longer capitalizing software development costs of its VoIP
        telephony business and is charging such costs to operations as a result of
        the
        review of long-lived assets for impairment performed in connection with the
        preparation of its 2004 year-end consolidated financial statements. Gross
        margin
        losses related to our new Now Playing magazine, which we began distributing
        in
        March 2005, coupled with advertising revenue decreases related to our Computer
        Games magazine in 2005 versus 2004, negatively impacted profit margins of
        our
        computer games segment during 2005.
 
 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 and promotional activities. Sales
        and
        marketing expenses totaled $0.5 million for the three months ended September
        30,
        2005 versus $2.1 million for the same period in 2004. A decrease of $1.7
        million
        in sales and marketing expenses of the VoIP telephony services business segment
        was the principal factor contributing to the decrease in sales and marketing
        expenses as compared to the third quarter of 2004. During the third quarter
        of
        2004, the VoIP telephony services business incurred significant costs in
        marketing and advertising its then existing retail products, and also recorded
        significant commissions expenses related to its "free" GloPhone customer
        registrations. During the first quarter of 2005, the Company reevaluated
        its
        existing VoIP telephony services business plan and began the process of
        terminating and/or modifying certain of its existing product offerings and
        marketing programs. The Company also began to develop and test certain new
        VoIP
        products and features. As a result, the VoIP telephony services business
        segment
        has significantly slowed its sales and marketing efforts and lowered the
        related
        personnel costs as compared to the same period in 2004.
 
 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 telephony products. Product development expenses totaled $0.4 million
        in both the third quarter of 2005 and 2004.
  -24-
 **Table
            of Contents**
  GENERAL
        AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist
        primarily of salaries and other personnel costs related to management, finance
        and accounting functions, facilities, outside legal and professional fees,
        information-technology consulting, directors and officers insurance, bad
        debt
        expenses and general corporate overhead costs. General and administrative
        expenses totaled $2.3 million in the third quarter of 2005 versus $1.8 million
        reported for the third quarter of 2004. The $0.5 million increase in
        consolidated general and administrative expenses as compared to the 2004
        third
        quarter was primarily attributable to the $0.3 million of general and
        administrative expenses incurred by the Company's new Internet services segment,
        as well as increases of $0.4 million and $0.1 million in general and
        administrative costs of the corporate and computer games segments, respectively.
        These increases were partially offset by a $0.3 decrease in general and
        administrative expenses of our VoIP telephony services business. Higher
        professional fees, principally legal and accounting fees, were primarily
        responsible for the $0.4 million increase in corporate general and
        administrative expenses as compared to the 2004 third quarter. The decrease
        of
        $0.3 million in general and administrative expenses incurred by the VoIP
        telephony services division was primarily due to reductions in consulting
        costs.
  DEPRECIATION
        AND AMORTIZATION. Depreciation and amortization expense totaled $0.3 million
        for
        the three months ended September 30, 2005 as compared to $0.4 million for
        the
        three months ended September 30, 2004. The $0.1 million decline in this expense
        category as compared to the same period of the prior year resulted principally
        from decreases in depreciation and intangible asset amortization expenses
        incurred by the Company's VoIP telephony services business.
 
 OTHER
        INCOME (EXPENSE), NET. Approximately $1.0 million of non-cash interest expense
        was recorded during the third quarter of 2005 related to the beneficial
        conversion features of the $1,000,000 in secured demand convertible promissory
        notes acquired by entities controlled by our Chairman and Chief Executive
        Officer. See "Capital Transactions" below and Note 5, "Debt," of the Notes
        to
        Unaudited Condensed Consolidated Financial Statements for further discussion.
        During the 2004 third quarter a favorable settlement of a previously disputed
        vendor claim of approximately $0.4 million was partially offset by $0.1 million
        in reserves against amounts loaned by the Company to Tralliance prior to
        its
        acquisition.
 
 INCOME
        TAXES. For continuing operations, an income tax benefit of approximately
        $0.4
        million was recorded for the three months ended September 30, 2005 versus
        an
        income tax benefit of approximately $0.1 million for the same period of the
        prior year. Other than the income tax liability resulting from the sale of
        our
        SendTec business, which is not expected to exceed $1.0 million, the Company
        does
        not expect to incur an income tax liability on a consolidated basis for either
        2005 or 2004. Accordingly, income tax benefits of continuing operations serve
        to
        offset the income tax provisions recorded for discontinued operations. No
        consolidated federal income tax or benefit was recorded for the third quarters
        of 2005 and 2004 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 carry forwards
        in future periods. As of December 31, 2004, the Company had net operating
        loss
        carryforwards available for U.S. and foreign tax purposes of approximately
        $162
        million. These carryforwards expire through 2024. The Tax Reform Act of 1986
        imposes substantial restrictions on the utilization of net operating losses
        and
        tax credits in the event of an "ownership change" of a corporation. Due to
        various significant changes in our ownership interests, as defined in the
        Internal Revenue Code of 1986, as amended, commencing in August 1997 through
        our
        most recent issuance of convertible notes in July 2005, and assuming conversion
        of such notes, we may have substantially limited or eliminated the availability
        of our net operating loss carryforwards. There can be no assurance that we
        will
        be able to utilize any net operating loss carryforwards in the future.
 
 **DISCONTINUED
        OPERATIONS**
 
 Income
        from discontinued operations, net of income taxes totaled $0.6 million in
        the
        third quarter of 2005 as compared to $0.1 million in the third quarter of
        2004.
        As a result of the Company’s decision to sell its SendTec marketing services
        business, which sale was completed in October 2005, the results of SendTec’s
        operations have been reported as discontinued operations in the accompanying
        condensed consolidated statements of operations. The third quarter of 2004
        includes the results of only one month of SendTec’s operations as SendTec was
        originally acquired by the Company on September 1, 2004.
  -25-
 **Table
            of Contents**
 
 **NINE
        MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
        30,
        2004**
 
 **CONTINUING
        OPERATIONS**
 
 NET
        REVENUE. Net revenue totaled $1.7 million for the nine months ended September
        30, 2005 as compared to $2.6 million for the nine months ended September
        30,
        2004. The $0.9 million decrease in consolidated net revenue was principally
        the
        result of a decline of $0.8 million in net revenue of our computer games
        business segment.
 
 **NET
        REVENUE BY BUSINESS SEGMENT:**
 2005
              
              2004Computer
                  games
              
              $
              1,477,692
              
              $
              2,253,947VoIP
                  telephony services
              
              
              211,726
              
              
              306,007$
              1,689,418
              
              $
              2,559,954
  The
        decline in net revenue of the Company’s computer games business segment as
        compared to the prior year resulted from decreases of $0.4 million in net
        revenue from our Chips & Bits, Inc., retail games distribution subsidiary,
        due primarily to a decrease in the volume of games products sold, $0.3 million
        in print advertising revenue generated by our magazine publications and $0.1
        million in net revenue from magazine sales. The $0.8 million decline in net
        revenue of our computer games segment in 2005 compared to 2004 negatively
        impacted the profitability of this segment, with the operating loss for computer
        games increasing to $1.7 million for the nine months ended September 30,
        2005
        compared to $0.4 million for the same period of the prior year.
 
 **OPERATING
        EXPENSES BY BUSINESS SEGMENT:**
 DepreciationCost
                  of
              
              Sales
                  and
              
              Product
              
              General
                  and
              
              andNine
                  months ended:
              
              Revenue
              
              Marketing
              
              Development
              
              Administrative
              
              Amortization
              
              Total2005Computer
                  games
              
              $
              1,717,730
              
              $
              318,342
              
              $
              497,493
              
              $
              615,809
              
              $
              23,161
              
              $
              3,172,535Internet
                  services
              
              
              –
              
              
              96,381
              
              
              –
              
              
              499,715
              
              
              49,468
              
              
              645,564VoIP
                  telephony services
              
              
              4,661,415
              
              
              1,307,335
              
              
              513,173
              
              
              2,092,632
              
              
              829,160
              
              
              9,403,715Corporate
                  expenses
              
              
              –
              
              
              –
              
              
              –
              
              
              2,525,916
              
              
              27,607
              
              
              2,553,523$
              6,379,145
              
              $
              1,722,058
              
              $
              1,010,666
              
              $
              5,734,072
              
              $
              929,396
              
              $
              15,775,337
 
 DepreciationCost
                  of
              
              Sales
                  and
              
              Product
              
              General
                  and
              
              andRevenue
              
              Marketing
              
              Development
              
              Administrative
              
              Amortization
              
              Total2004Computer
                  games
              
              $
              1,598,833
              
              $
              252,214
              
              $
              341,645
              
              $
              431,834
              
              $
              6,146
              
              $
              2,630,672VoIP
                  telephony services
              
              
              4,468,549
              
              
              4,523,456
              
              
              385,017
              
              
              2,283,539
              
              
              913,461
              
              
              12,574,022Corporate
                  expenses
              
              
              –
              
              
              –
              
              
              –
              
              
              2,696,770
              
              
              22,580
              
              
              2,719,350$
              6,067,382
              
              $
              4,775,670
              
              $
              726,662
              
              $
              5,412,143
              
              $
              942,187
              
              $
              17,924,044
  COST
        OF
        REVENUE. Cost of revenue totaled $6.4 million for the nine months ended
        September 30, 2005 versus $6.1 million reported for the nine months ended
        September 30, 2004. Cost of revenue of our computer games segment totaled
        $1.7
        million for the nine months ended September 30, 2005, an increase of $0.1
        million from the same period in 2004, due primarily to the costs of $0.3
        million
        associated with our new magazine publication, Now Playing, which we began
        distributing in March 2005. Gross margin losses related to our new Now Playing
        magazine and advertising revenue decreases related to our Computer Games
        magazine in 2005 compared to 2004 negatively impacted profit margins of our
        computer games segment during 2005.
  -26-
 **Table
            of Contents**
 
 As
        mentioned in the comparison of the three months ended September 30, 2005
        to the
        three months ended September 30, 2004, cost of revenue in the prior year
        included charges of $0.6 million related to writedowns of telephony equipment
        inventory. Excluding the impact of the 2004 inventory charge, VoIP telephony
        services cost of revenue increased $0.8 million compared to the first nine
        months of 2004. Throughout 2004, the Company increased its VoIP network capacity
        by entering into agreements with numerous carriers for leased equipment and
        services and with third parties for a number of leased data center facilities.
        The Company also expanded its internal network support function by hiring
        additional technical personnel. As a result, the Company incurred higher
        network
        operating and support costs during the nine months ended September 30, 2005
        compared to the first nine months of the prior year. In addition, the Company
        is
        no longer capitalizing software development costs in its VoIP telephony business
        and is charging such costs to operations as a result of the review of long-lived
        assets for impairment performed in connection with the preparation of its
        2004
        year-end consolidated financial statements. The first nine months of 2005
        include $0.4 million in expenses related to such software costs.
 
 SALES
        AND
        MARKETING. Sales and marketing expenses totaled $1.7 million for the nine
        months
        ended September 30, 2005, a decrease of $3.1 million from the $4.8 million
        reported for the same period in 2004. The decline in consolidated sales and
        marketing expenses was primarily due to the $3.2 million decrease in sales
        and
        marketing expenses of the VoIP telephony services business. As discussed
        in the
        comparison of the three months ended September 30, 2005 compared to the three
        months ended September 30, 2004, the VoIP telephony services business incurred
        significant costs during the nine months of 2004 for advertising campaigns
        and
        marketing services, as well as commissions expenses related to its VoIP
        products. During the first quarter of 2005, the Company reevaluated its existing
        VoIP telephony services business plan and began the process of terminating
        and/or modifying certain of its existing product offerings and marketing
        programs. The Company also began to develop and test certain new VoIP products
        and features. As a result, the VoIP telephony services business segment has
        significantly slowed its sales and marketing efforts, as compared to the
        same
        period in 2004.
 
 PRODUCT
        DEVELOPMENT. Product development expenses totaled $1.0 million for the nine
        months ended September 30, 2005 as compared to $0.7 million for the nine
        months
        ended September 30, 2004. The increase in product development expenses as
        compared to the first nine months of 2004 was primarily due to increases
        in
        personnel costs related to the continued development of our retail VoIP
        telephony products and services and increases in website development costs
        incurred by our computer games business.
 
 GENERAL
        AND ADMINISTRATIVE EXPENSES. General and administrative expenses of $5.7
        million
        for the nine months ended September 30, 2005 increased $0.3 million from
        the
        $5.4 million reported for the same period of 2004. The increase in general
        and
        administrative expenses as compared to 2004 was primarily attributable to
        the
        inclusion of $0.5 million of general and administrative expenses incurred
        by the
        Company's Internet services business. Tralliance, which comprises our Internet
        services segment, was acquired in May 2005 and its results of operations
        have
        been included in our results only since its date of acquisition. Corporate
        general and administrative expense declined $0.2 million as compared to the
        first six months of 2004 primarily due to lower personnel related expenses.
        Declines of $0.2 million in general and administrative expenses in each of
        the
        VoIP telephony services and corporate divisions as compared to the first
        nine
        months of 2004, were partially offset by an increase of $0.2 million in general
        and administrative expenses of the computer games business.
 
 DEPRECIATION
        AND AMORTIZATION. Depreciation and amortization expense totaled $0.9 million
        for
        the first nine months of both 2005 and 2004.
 
 INTEREST
        EXPENSE, NET. Interest expense, net of interest income, totaled $4.2 million
        for
        the first nine months of 2005 as compared to $0.8 million in the same period
        of
        the prior year. Non-cash interest expense of $4.0 million was recorded during
        2005 related to the beneficial conversion feature of the $4,000,000 secured
        demand convertible promissory notes issued by the Company. During the first
        nine
        months of 2004, $0.7 million of non-cash interest expense was recorded related
        to the beneficial conversion feature of the $2,000,000 demand convertible
        promissory note acquired by our Chairman and Chief Executive Officer and
        his
        spouse in February 2004.
 
 OTHER
        INCOME (EXPENSE), NET. Other expense, net of approximately $0.3 million was
        recorded during the nine months ended September 30, 2005 as compared to other
        income, net of approximately $0.1 million during the nine months ended September
        30, 2004. Reserves against the amounts advanced by the Company to Tralliance
        Corporation prior to its acquisition of $0.3 million and $0.4 million were
        charged to other expense during the first nine months of 2005 and 2004,
        respectively. The 2004 period also included recognition of approximately
        $0.4
        million of other income related to a favorable settlement of a previously
        disputed vendor claim of the computer games business segment.
  -27-
 **Table
            of Contents**
 
 INCOME
        TAXES. For continuing operations, an income tax benefit of approximately
        $1.0
        million was recorded for the nine months ended September 30, 2005 versus
        an
        income tax benefit of approximately $0.1 million for the same period of the
        prior year. Other than the income tax liability resulting from the sale of
        our
        SendTec business, which is not expected to exceed $1.0 million, the Company
        does
        not expect to incur an income tax liability on a consolidated basis for either
        2005 or 2004. Accordingly, income tax benefits of continuing operations serve
        to
        offset the income tax provisions recorded for discontinued operations. As
        was
        the case in the third quarter of 2005, no federal income tax benefit was
        recorded on a consolidated basis for the first nine months of 2005 as we
        recorded a 100% valuation allowance against our otherwise recognizable deferred
        tax assets due to the uncertainty surrounding the timing or ultimate realization
        of the benefits of our net operating loss carryforwards in future periods.
 
 **DISCONTINUED
        OPERATIONS**
 
 Income
        from discontinued operations, net of income taxes totaled $1.7 million in
        the
        first nine months of 2005 as compared to $0.1 million in the same period
        of the
        prior year. As a result of the sale of the Company’s SendTec marketing services
        business which was completed in October 2005, the results of SendTec’s
        operations have been reported as discontinued operations in the accompanying
        condensed consolidated statements of operations. The nine months ended September
        30, 2004 includes the results of only one month of SendTec’s operations as
        SendTec was originally acquired by the Company on September 1,
        2004.
 
 **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 **CASH
        FLOW ITEMS**
 
 As
        of
        September 30, 2005, we had approximately $2.0 million in cash and cash
        equivalents as compared to $6.8 million as of December 31, 2004. Net cash
        used
        in operating activities of continuing operations was $9.0 million and $14.1
        million, for the nine months ended September 30, 2005 and 2004, respectively.
        Notwithstanding an increase of approximately $1.5 million in the net loss
        from
        continuing operations in 2005 compared to 2004, net cash used in operating
        activities of continuing operations increased by approximately $5.1 million
        in
        2005 compared to 2004 due primarily to the favorable impact of working capital
        changes and higher non-cash interest expense.
 
 Net
        cash
        and cash equivalents of $1.2 million were provided by our discontinued SendTec
        operations during the nine months ended September 31, 2005 as compared to
        a use
        of $0.9 million in cash and cash equivalents by discontinued operations during
        the same period of the prior year. The increase in the net income contribution
        by SendTec was the principal factor resulting in the period-to-period increase
        in cash and cash equivalents provided by discontinued operations. SendTec
        was
        acquired on September 1, 2004 and its results of operations were included
        in the
        Company’s consolidated results only since acquisition date.
 
 Net
        cash
        and cash equivalents of $0.7 million were used in investing activities during
        the nine months ended September 30, 2005 as compared to $4.8 million in the
        same
        period of the prior year. The Company incurred costs totaling $0.3 million
        and
        $2.2 million for capital expenditures of its continuing operations during
        the
        nine months ended September 30, 2005 and 2004, respectively. Capital
        expenditures during both periods related primarily to the development of
        its
        VoIP telephony network, and during the prior year period included costs incurred
        in the development of its VoIP customer billing system. We also loaned
        approximately $0.3 million to Tralliance prior to its acquisition by the
        Company
        during each of the nine month periods ended September 30, 2005 and
        2004.
 
 Net
        cash
        and cash equivalents used in investing activities related to the Company’s
        discontinued operations totaled approximately $0.2 million and $2.4 million
        during the nine months ended September 30, 2005 and 2004, respectively. As
        more
        fully described in Note 3, “Discontinued Operations - SendTec, Inc.” in the
        accompanying condensed consolidated financial statements, in connection with
        its
        acquisition of SendTec on September 1, 2004, the Company paid cash consideration
        of approximately $6.0 million, excluding transaction costs. As of the date
        of
        acquisition, SendTec held approximately $3.6 million of cash. Thus, the Company
        used a net amount of approximately $2.4 million of cash to acquire SendTec.
 
 Net
        cash
        and cash equivalents provided by financing activities was $3.8 million and
        $28.9
        million for the nine months ended September 30, 2005 and 2004, respectively.
        As
        discussed previously, we issued $4.0 million in Convertible Notes during
        the
        first nine months of 2005. During March 2004, the Company completed a private
        offering of its Common Stock and warrants to acquire its Common Stock, for
        net
        proceeds totaling approximately $27.0 million. In addition, on February 2,
        2004,
        the Company issued a $2,000,000 Bridge Note which was subsequently converted
        into our Common Stock in connection with the March 2004 private
        offering.
  -28-
 **Table
            of Contents**
 
 **CAPITAL
        TRANSACTIONS**
 
 On
        August
        10, 2005, we entered into an Asset Purchase Agreement with RelationServe
        Media,
        Inc. ("RelationServe") whereby we agreed to sell all of the business and
        substantially all of the net assets of our SendTec marketing services subsidiary
        to RelationServe for $37.5 million in cash, subject to certain net working
        capital adjustments. On August 23, 2005, we entered into Amendment No. 1
        to the
        Asset Purchase Agreement with RelationServe (the “1 st Amendment” and together with the original Asset Purchase Agreement, the
“Purchase Agreement”). On October 31, 2005, we completed the asset sale.
        Including adjustments to the purchase price, related to excess working capital
        of SendTec as of the date of sale, the Company received an aggregate of
        approximately $39.9 million in cash pursuant to the Purchase Agreement. In
        accordance with the terms of an escrow agreement established as a source
        to
        secure our indemnification obligations under the Purchase Agreement, $1.0
        million of the purchase price and an aggregate of 2,272,727 shares of theglobe’s
        unregistered Common Stock (valued at $750,000 pursuant to the terms of the
        Purchase Agreement based upon the average closing price of the stock in the
        10
        day period preceding the closing of the sale) were placed into escrow. Any
        of
        the shares of Common Stock released from escrow to RelationServe will be
        entitled to customary “piggy-back” registration rights.
 
 Additionally,
        as contemplated by the Purchase Agreement, immediately following the asset
        sale,
        we completed the redemption of 28,879,097 shares of our Common Stock owned
        by
        six members of management of SendTec for approximately $11.6 million in cash
        pursuant to a Redemption Agreement dated August 23, 2005. Pursuant to a separate
        Termination Agreement, we also terminated and canceled 1,275,783 stock options
        and the contingent interest in 2,062,785 earn-out warrants held by the six
        members of management in exchange for approximately $0.4 million in cash.
        We
        also terminated 829,678 stock options of certain other non-management employees
        of SendTec and entered into bonus arrangements with a number of other
        non-management SendTec employees for amounts totaling approximately $0.6
        million.
 
 On
        May 9,
        2005, we exercised our option to acquire all of the outstanding capital stock
        of
        Tralliance. The purchase price consisted of the issuance of 2.0 million shares
        of theglobe.com Common Stock, warrants to acquire 475,000 shares of theglobe.com
        Common Stock and $40,000 in cash. The warrants are exercisable for a period
        of
        five years at an exercise price of $0.11 per share. As part of the transaction,
        10,000 shares of our Common Stock were also issued to a third party in payment
        of a finder's fee resulting from the acquisition. The Common Stock issued
        as a
        result of the acquisition of Tralliance is entitled to certain "piggy-back"
        registration rights.
 
 On
        April
        22, 2005, E&C Capital Partners, LLLP and E&C Capital Partners II, Ltd.
        (the "Noteholders"), entities controlled by the Company's Chairman and Chief
        Executive Officer, entered into a Note Purchase Agreement (the "Agreement")
        with
        theglobe pursuant to which they acquired secured demand convertible promissory
        notes (the "Convertible Notes") in the aggregate principal amount of $1.5
        million. Under the terms of the Agreement, the Noteholders were also granted
        the
        optional right, for a period of 90 days from the date of the Agreement, to
        purchase additional Convertible Notes such that the aggregate principal amount
        of Convertible Notes issued under the Agreement could total $4.0 million
        (the
        "Option"). On June 1, 2005, the Noteholders exercised a portion of the Option
        and acquired an additional $1.5 million of Convertible Notes. On July 18,
        2005,
        the Noteholders exercised the remainder of the Option and acquired an additional
        $1.0 million of Convertible Notes.
 
 The
        Convertible Notes are convertible at the option of the Noteholders into shares
        of the Company's Common Stock at an initial price of $0.05 per share. Through
        November 10, 2005, an aggregate of $0.6 million of Convertible Notes were
        converted by the Noteholders into an aggregate of 12 million shares of the
        Company’s Common Stock. Assuming full conversion of all Convertible Notes which
        remain outstanding as of November 10, 2005, an additional 68 million shares
        of
        the Company's Common Stock would be issued to the Noteholders. The Convertible
        Notes provide for interest at the rate of ten percent per annum and are secured
        by a pledge of substantially all of the assets of the Company. The Convertible
        Notes are due and payable five days after demand for payment by the Noteholders.
 
 **FUTURE
        CAPITAL NEEDS**
 
 As
        a
        result of the completion of the sale of our SendTec business on October 31,
        2005, the Company received net cash proceeds of approximately $25.0 million
        (after giving effect to the repurchase of shares and cancellation of options
        and
        warrants from SendTec management and certain employees and payment of all
        other
        direct transaction costs). The Company anticipates using its prior and current
        year net operating losses to offset the recognized gain on the sale and
        estimates that the total of federal and state income taxes to be paid in
        connection with the gain on the sale of its SendTec business will not exceed
        $1.0 million. We believe that these net cash proceeds provide sufficient
        liquidity to enable the Company to operate its remaining businesses on a
        going
        concern basis while it completes the development of and begins the
        implementation of a new strategic business plan. Our new business plan may
        involve making certain changes to improve the profitability of existing
        businesses or may instead result in decisions to sell or dispose of certain
        unprofitable businesses or components. Additionally, we may use a portion
        of the
        net cash proceeds from the sale of the SendTec business to enter into one
        or
        more new businesses, through either acquisitions or internal
        development.
  -29-
 **Table
            of Contents**
 
 The
        Company continues to incur substantial consolidated net losses and management
        believes the Company will continue to be unprofitable and use cash in its
        operations for the foreseeable future. The Company's consolidated net losses
        and
        cash usage during its recent past and projected future periods relate primarily
        to the operation of its VoIP telephony services business and to a lesser
        extent
        to corporate overhead expenses and the operations of its computer games
        business.
 
 In
        order
        to offer our VoIP services, we have invested substantial capital and made
        substantial commitments related to the development of the VoIP network. The
        VoIP
        network is comprised of switching hardware and software, servers, billing
        and
        inventory systems, and telecommunications carrier services. We own and operate
        VoIP equipment located in leased data center facilities in Miami, New York,
        Atlanta and Boston, and interconnect this equipment utilizing a leased transport
        network through numerous carrier agreements with third party providers. Through
        these carrier relationships we are able to carry the traffic of our customers
        over the Internet and interact with the public switched telephone network.
        Based
        upon our existing contractual commitments at September 30, 2005, minimum
        amounts
        payable during the next twelve months for network data center and carrier
        circuit interconnection service expenses, exclusive of regulatory taxes,
        fees
        and charges, are approximately $1.0 million. The Company believes that the
        capacity of its VoIP network, including its lease obligations relating to
        such
        network, will continue to be greatly in excess of customer demand and usage
        levels for the foreseeable future. Therefore, the Company is currently
        attempting to reduce its total commitment for future network data center
        and
        carrier circuit interconnection services, including further reducing the
        $1.0
        minimum amounts payable during the next twelve months.
 
 The
        Company has expended, particularly during 2004, significant costs to implement
        a
        number of marketing programs geared toward increasing the number of its VoIP
        retail customers and telephony revenue. None of these programs have proven
        to be
        successful to any significant degree. Our inability to generate telephony
        revenue sufficient to cover the fixed costs of operating our VoIP network,
        including carrier, data center, personnel and administrative costs, as well
        as
        our marketing and other variable costs, has resulted in the Company incurring
        substantial net losses during 2004 and during the first nine months of 2005.
 
 During
        the first quarter of 2005, the Company reevaluated its existing VoIP telephony
        services business plan and subsequently terminated or is in the process of
        terminating and/or modifying certain of its existing product offerings and
        marketing programs. Additionally, the Company began to develop and test certain
        new VoIP products and features, some of which were completed and released
        during
        the nine month period ended September 30, 2005. Additionally, in order to
        reduce
        its near term consolidated net losses and cash usage, the Company implemented
        a
        number of cost-reduction actions at its VoIP telephony services business,
        including decreases in personnel and salary levels, carrier and data center
        costs (including the minimum commitment costs discussed above), and
        marketing/advertising expenses during the first quarter of 2005.
 
 Management
        believes that it will be difficult to implement its new VoIP product and
        marketing plans, once fully developed and tested, without significant additional
        cash being invested in its VoIP business. Accordingly, in November 2005 we
        engaged a financial advisor to assist the Company in seeking out prospective
        parties who would be interested in either acquiring all or part of our VoIP
        business or alternatively partnering with the Company by making strategic
        investments in our Common Stock. While the Company pursues a prospective
        purchaser for its VoIP business or a strategic investor, it plans to continue
        to
        improve the quality of the products, services and operations of its VoIP
        business, while at the same time seeking to limit the losses and cash usage
        attributable to its VoIP business operations. Other than existing network
        technology commitments totaling approximately $0.4 million no other significant
        capital expenditures are planned for the VoIP telephony services segment
        or any
        of the Company’s other business segments at the present time.
 
 The
        Company has recently made a number of operational changes in its computer
        games
        business, including the implementation of an online games auction website.
        Pending the completion of its 2006 computer games business plan, additional
        operations changes geared mainly toward achieving profitability and positioning
        the computer games business for future growth, are expected to be implemented
        by
        the first quarter of 2006.
  -30-
 **Table
            of Contents**
 
 Tralliance,
        the Company’s Internet services business, began collecting fees related to its
“.travel” registry business in October 2005. Having recently emerged from its
        development stage, Tralliance is now in the beginning stages of a phased
        launch
        of its “.travel” registry business, including implementation of initial
        advertising programs. Tralliance is also in the process of developing its
        marketing plan for fiscal 2006, the implementation of which may require
        substantial cash expenditures.
 
 Subsequent
        to the receipt of approximately $25.0 million in net cash proceeds from the
        sale
        of our SendTec business on October 31, 2005, the Company repaid the $1.0
        million
        subordinated promissory note issued in connection with the SendTec acquisition
        along with accrued interest of approximately $66,000. The Company also made
        vendor payments totaling approximately $1.0 million related to delinquent
        accounts payable invoices and paid bonuses to certain Company officers,
        employees and consultants totaling approximately $4.0 million during the
        early
        part of November 2005. The bonus payments, the majority of which related
        to the
        successful sale of the Company’s SendTec business, will increase the net loss
        expected to be reported for the fourth quarter of fiscal 2005. As of November
        10, 2005, the Company’s total cash and cash equivalents balance was
        approximately $20.0 million, inclusive of $1.0 million held in escrow to
        secure
        the Company’s indemnification obligations related to the sale of the SendTec
        business. Management believes that its current cash resources balance provides
        sufficient liquidity to enable the Company to operate as a going concern
        through
        at least the end of 2006. The Company currently has no access to credit
        facilities with traditional third party lenders and its longer term viability
        will be determined mainly by its ability to successfully execute its existing
        and future business plans.
 
 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. Since the trading
        price
        of our Common Stock is less than $5.00 per share, trading in our Common Stock
        is
        also subject to the requirements of Rule 15g-9 of the Exchange Act. Our Common
        Stock is also considered a penny stock under the Securities Enforcement Remedies
        and Penny Stock Reform Act of 1990, which defines a penny stock, generally,
        as
        any equity security not traded on an exchange or quoted on the Nasdaq SmallCap
        Market that has a market price of less than $5.00 per share. Under Rule 15g-9,
        brokers who recommend our Common Stock to persons who are not established
        customers and accredited investors, as defined in the Exchange Act, must
        satisfy
        special sales practice requirements, including requirements that they make
        an
        individualized written suitability determination for the purchaser; and receive
        the purchaser's written consent prior to the transaction. The Securities
        Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional
        disclosures in connection with any trades involving a penny stock, including
        the
        delivery, prior to any penny stock transaction, of a disclosure schedule
        explaining the penny stock market and the risks associated with that market.
        Such requirements may severely limit the market liquidity of our Common Stock
        and the ability of purchasers of our equity securities to sell their securities
        in the secondary market. Consequently, it has also made it more difficult
        for us
        to raise additional capital, although the Company has had some success in
        offering its securities as consideration for the acquisition of various business
        opportunities or assets. We may also incur additional costs under state blue
        sky
        laws if we sell equity due to our delisting.
 
 **EFFECTS
        OF INFLATION**
 
 Due
        to
        relatively low levels of inflation in 2005 and 2004, inflation has not had
        a
        significant effect on our results of operations since inception.
 
 **MANAGEMENT'S
        DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES**
 
 The
        preparation of our financial statements in conformity with accounting principles
        generally accepted in the United States of America requires us to make estimates
        and assumptions that affect the reported amounts of assets and liabilities
        and
        disclosure of contingent assets and liabilities at the date of the financial
        statements and the reported amounts of revenue and expenses during the reporting
        period. 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, valuation of inventories, valuation of goodwill, intangible
        assets
        and other long-lived assets and capitalization of computer software costs.
        Our
        accounting policies and procedures related to these areas are summarized
        below.
  -31-
 **Table
            of Contents**
 
 **REVENUE
        RECOGNITION**
 
 The
        Company's revenue from continuing operations was derived principally from
        the
        sale of print advertisements under short-term contracts in our games information
        magazine Computer Games; through the sale of our games information magazine
        through newsstands and subscriptions; from the sale of video games and related
        products through our online store Chips & Bits; and from the sale of VoIP
        telephony services. There is no certainty that events beyond anyone's control
        such as economic downturns or significant decreases in the demand for our
        services and products will not occur and accordingly, cause significant
        decreases in revenue.
 
 **COMPUTER
        GAMES BUSINESSES**
 
 Advertising
        revenues for the Company's magazine publications are recognized at the on-sale
        date of the magazine.
 
 Newsstand
        sales of the Company's magazine publications are recognized at the on-sale
        date
        of the magazine, net of provisions for estimated returns. Subscription revenue,
        which is net of agency fees, is deferred when initially received and recognized
        as income ratably over the subscription term.
 
 Sales
        of
        video games and related products from the online store are recognized as
        revenue
        when the product is shipped to the customer. Amounts billed to customers
        for
        shipping and handling charges are included in net revenue. The Company provides
        an allowance for returns of merchandise sold through its online store. The
        allowance provided to date has not been significant.
 
 **VOIP
        TELEPHONY SERVICES**
 
 VoIP
        telephony services revenue represents fees charged to customers for voice
        services and is recognized based on minutes of customer usage or as services
        are
        provided. The Company records payments received in advance for prepaid services
        as deferred revenue until the related services are provided. Sales of peripheral
        VoIP telephony equipment are recognized as revenue when the product is shipped
        to the customer. Amounts billed to customers for shipping and handling charges
        are included in net revenue.
 
 **DISCONTINUED
        OPERATIONS---MARKETING SERVICES**
 
 Revenue
        from the distribution of Internet advertising is recognized when Internet
        users
        visit and complete actions at an advertiser's website. Revenue consists of
        the
        gross value of billings to clients, including the recovery of costs incurred
        to
        acquire online media required to execute client campaigns. Recorded revenue
        is
        based upon reports generated by the Company's tracking software.
 
 Revenue
        derived from the purchase and tracking of direct response media, such as
        television and radio commercials, is recognized on a net basis when the
        associated media is aired. In many cases, the amount the Company bills to
        clients significantly exceeds the amount of revenue that is earned due to
        the
        existence of various "pass-through" charges such as the cost of the television
        and radio media. Amounts received in advance of media airings are deferred.
 
 Revenue
        generated from the production of direct response advertising programs, such
        as
        infomercials, is recognized on the completed contract method when such programs
        are complete and available for airing. Production activities generally take
        eight to twelve weeks and the Company usually collects amounts in advance
        and at
        various points throughout the production process. Amounts received from
        customers prior to completion of commercials are included in deferred revenue
        and direct costs associated with the production of commercials in process
        are
        deferred.
 
 **VALUATION
        OF CUSTOMER RECEIVABLES**
 
 Provisions
        for the allowance for doubtful accounts are made based on historical loss
        experience adjusted for specific credit risks. Measurement of such losses
        requires consideration of the Company's historical loss experience, judgments
        about customer credit risk, and the need to adjust for current economic
        conditions.
  -32-
 **Table
            of Contents**
 
 **VALUATION
        OF INVENTORIES**
 
 Inventories
        are recorded on a first-in, first-out basis and valued at the lower of cost
        or
        market value. We generally manage our inventory levels based on internal
        forecasts of customer demand for our products, which is difficult to predict
        and
        can fluctuate substantially. Our inventories include high technology items
        that
        are specialized in nature or subject to rapid obsolescence. If our demand
        forecast is greater than the actual customer demand for our products, we
        may be
        required to record charges related to increases in our inventory valuation
        reserves. The value of our inventory is also dependent on our estimate of
        future
        average selling prices, and, if our projected average selling prices are
        over
        estimated, we may be required to adjust our inventory value to reflect the
        lower
        of cost or market.
 
 **GOODWILL
        AND INTANGIBLE ASSETS**
 
 In
        June
        2001, the Financial Accounting Standards Board ("FASB") issued Statement
        of
        Financial Accounting Standards ("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.
 
 Our
        policy calls for the assessment of the potential impairment of goodwill and
        other identifiable intangibles with indefinite lives whenever events or changes
        in circumstances indicate that the carrying value may not be recoverable
        or at
        least on an annual basis. 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
 
 o
              significant
                  negative industry or economic trends.
 
 When
        we
        determine that the carrying value of goodwill or other identified intangibles
        with indefinite lives may not be recoverable, we measure any impairment based
        on
        a projected discounted cash flow method.
 
 **LONG-LIVED
        ASSETS**
 
 Historically,
        the Company's long-lived assets, other than goodwill, have primarily consisted
        of property and equipment, capitalized costs of internal-use software, values
        attributable to covenants not to compete, acquired technology and patent
        costs.
 
 Long-lived
        assets held and used by the Company and intangible assets with determinable
        lives are reviewed for impairment whenever events or circumstances indicate
        that
        the carrying amount of assets may not be recoverable in accordance with SFAS
        No.
        144, "Accounting for the Impairment or Disposal of Long-Lived Assets." We
        evaluate recoverability of assets to be held and used by comparing the carrying
        amount of the assets, or the appropriate grouping of assets, to an estimate
        of
        undiscounted future cash flows to be generated by the assets, or asset group.
        If
        such assets are considered to be impaired, the impairment to be recognized
        is
        measured as the amount by which the carrying amount of the assets exceeds
        the
        fair value of the assets. Fair values are based on quoted market values,
        if
        available. If quoted market prices are not available, the estimate of fair
        value
        may be based on the discounted value of the estimated future cash flows
        attributable to the assets, or other valuation techniques deemed reasonable
        in
        the circumstances.
 
 **CAPITALIZATION
        OF COMPUTER SOFTWARE COSTS**
 
 The
        Company capitalizes the cost of internal-use software which has a useful
        life in
        excess of one year in accordance with Statement of Position No. 98-1,
        "Accounting for the Costs of Computer Software Developed or Obtained for
        Internal Use." Subsequent additions, modifications, or upgrades to internal-use
        software are capitalized only to the extent that they allow the software
        to
        perform a task it previously did not perform. Software maintenance and training
        costs are expensed in the period in which they are incurred. Capitalized
        computer software costs are amortized using the straight-line method over
        the
        expected useful life, or three years.
  -33-
 **Table
            of Contents**
 
 **IMPACT
        OF RECENTLY ISSUED ACCOUNTING STANDARDS**
 
 In
        May
        2005, the FASB issued SFAS No. 154, "Accounting for Changes and Error
        Corrections, a Replacement of APB Opinion No. 20 and FASB Statement No. 3."
        SFAS
        154 applies to all voluntary changes in accounting principles and requires
        retrospective application to prior periods' financial statements of changes
        in
        accounting principles. This statement also requires that a change in
        depreciation, amortization or depletion method for long-lived, non-financial
        assets be accounted for as a change in accounting estimate effected by a
        change
        in accounting principle. SFAS 154 carries forward without change the guidance
        contained in APB Opinion No. 20 for reporting the correction of an error
        in
        previously issued financial statements and a change in accounting estimate.
        This
        statement is effective for accounting changes and corrections of errors made
        in
        fiscal years beginning after December 15, 2005. The Company does not expect
        the
        adoption of this standard to have a material impact on its financial condition,
        results of operations or liquidity.
 
 In
        March
        2005, the FASB issued Interpretation ("FIN") No. 47, "Accounting for Conditional
        Asset Retirement Obligations," an interpretation of FASB Statement No. 143,
        "Accounting for Asset Retirement Obligations." The interpretation clarifies
        that
        the term conditional asset retirement obligation refers to a legal obligation
        to
        perform an asset retirement activity in which the timing and/or method of
        settlement are conditional on a future event that may or may not be within
        the
        control of the entity. An entity is required to recognize a liability for
        the
        fair value of a conditional asset retirement obligation if the fair value
        of the
        liability can be reasonably estimated. FIN 47 also clarifies when an entity
        would have sufficient information to reasonably estimate the fair value of
        an
        asset retirement obligation. The effective date of this interpretation is
        no
        later than the end of fiscal years ending after December 15, 2005. The Company
        is currently investigating the effect, if any, that FIN 47 would have on
        the
        Company's financial position, cash flows and results of operations.
 
 In
        December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets,
        an amendment of APB Opinion No. 29." SFAS No. 153 requires exchanges of
        productive assets to be accounted for at fair value, rather than at carryover
        basis, unless (1) neither the asset received nor the asset surrendered has
        a
        fair value that is determinable within reasonable limits or (2) the transactions
        lack commercial substance. This statement is effective for nonmonetary asset
        exchanges occurring in fiscal periods beginning after June 15, 2005. The
        Company
        does not expect the adoption of this standard to have a material impact on
        its
        financial condition, results of operations, or liquidity.
 
 In
        December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment." This
        standard replaces SFAS No. 123, "Accounting for Stock-Based Compensation"
        and
        supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting
        for
        Stock Issued to Employees." The standard requires companies to expense the
        fair
        value of stock options on the grant date and is effective for annual periods
        beginning after June 15, 2005. In accordance with the revised statement,
        the
        expense attributable to stock options granted or vested subsequent to January
        1,
        2006 will be required to be recognized by the Company. The precise impact
        of the
        adoption of SFAS No. 123R cannot be predicted at this time because it will
        depend on the levels of share-based payments that are granted in the future.
        However, the Company believes that the adoption of this standard may have
        a
        significant effect on the Company's results of operations or financial position.
 
 In
        November 2004, the FASB issued SFAS No. 151, "Inventory Costs - An Amendment
        of
        ARB No. 43, Chapter 4." SFAS No. 151 requires all companies to recognize
        a
        current-period charge for abnormal amounts of idle facility expense, freight,
        handling costs and wasted materials. This statement also requires that the
        allocation of fixed production overhead to the costs of conversion be based
        on
        the normal capacity of the production facilities. SFAS No. 151 will be effective
        for fiscal years beginning after June 15, 2005. The Company does not expect
        the
        adoption of this statement to have a material effect on its consolidated
        financial statements.
 
 In
        December 2003, the FASB issued FIN No. 46-R "Consolidation of Variable Interest
        Entities." FIN 46-R, which modifies certain provisions and effective dates
        of
        FIN 46, sets forth the criteria to be used in determining whether an investment
        in a variable interest entity should be consolidated. These provisions are
        based
        on the general premise that if a company controls another entity through
        interests other than voting interests, that company should consolidate the
        controlled entity. The Company believes that currently, it does not have
        any
        material arrangements that meet the definition of a variable interest entity
        which would require consolidation.
  -34-
 **Table
            of Contents**
 
 **RISK
        FACTORS**
 
 In
        addition to the other information in this report, the following factors should
        be carefully considered in evaluating our business and prospects.
 
 **RISKS
        RELATING TO OUR BUSINESS GENERALLY**
 
 **WE
        HAVE A HISTORY OF OPERATING LOSSES AND EXPECT TO CONTINUE TO INCUR
        LOSSES.**
 
 Since
        our
        inception, we have incurred net losses in each quarter, except the fourth
        quarter of 2002 where we had net income of approximately $17,000. We expect
        that
        we will continue to incur net losses for the foreseeable future. We had net
        losses of approximately $24.3 million and $11.0 million for the years ended
        December 31, 2004 and 2003, respectively, and approximately $15.8 million
        for
        the first nine months of 2005. 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
              selling,
                  general and administrative expenses.
 
 Although
        we have restructured our businesses, we still expect to continue to incur
        losses
        as we continue to develop our VoIP telephony services business and while
        we
        explore a number of strategic alternatives for our businesses, including
        continuing to operate the businesses, selling certain businesses or assets,
        or
        acquiring or developing additional businesses or complementary products.
 
 **WE
        MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN.**
 
 We
        received a report from our independent accountants, relating to our December
        31,
        2004 audited financial statements, containing an explanatory paragraph stating
        that our recurring losses from operations and our accumulated deficit raise
        substantial doubt about our ability to continue as a going concern. Based
        upon
        the net proceeds received from the sale of our SendTec business on October
        31,
        2005, management believes that the Company has sufficient liquidity to operate
        as a going concern through at least the end of 2006. In order to assure its
        longer term financial viability, the Company must complete the development
        of
        and successfully implement its new strategic business plan. The Company’s new
        business plan may include making certain changes which transform its
        unprofitable businesses into profitable ones, selling or otherwise disposing
        of
        businesses or components, acquiring or internally developing new profitable
        businesses, including Tralliance, and/or raising additional equity capital.
        There can be no assurance that the Company will be successful in taking any
        of
        the above actions which would enable it to continue as a going concern on
        a
        long-term future basis (see the “Liquidity and Capital Resources” section of
        Management’s Discussion and Analysis of Financial Condition and Results of
        Operations for further details).
   -35-
 **Table
            of Contents**
 
 **OUR
        ENTRY INTO NEW LINES OF BUSINESS, AS WELL AS POTENTIAL FUTURE ACQUISITIONS,
        JOINT VENTURES OR STRATEGIC TRANSACTIONS ENTAILS NUMEROUS RISKS AND
        UNCERTAINTIES.**
 
 We
        have
        entered into new business lines: VoIP telephony services and Internet services.
        In November 2002, we acquired certain VoIP assets from an entrepreneur in
        exchange for 1,750,000 warrants to purchase our Common Stock. On May 28,
        2003,
        we acquired Direct Partner Telecom, Inc. ("DPT"), an international licensed
        telecommunications carrier then engaged in the purchase and resale of
        telecommunication services over the Internet. On May 9, 2005, we acquired
        Tralliance Corporation ("Tralliance"), an Internet related business venture.
        Tralliance was recently awarded the contract to operate as the registry for
        the
        ".travel" top-level domain by the Internet Corporation for Assigned Names
        and
        Numbers. We may also enter into new or different lines of business, as
        determined by management and our Board of Directors. Our acquisitions, 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 our
                  Common
                  Stock, which could have a material adverse effect on our stock
                  price;
 
 o
              diversion
                  of management's attention and resources from our existing businesses;
 
 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 impairment charges
                  related to goodwill and other long-lived assets;
 
 o
              difficulties
                  in the assimilation of operations, personnel, technologies, products
                  and
                  information systems of the acquired companies;
 
 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;
 
 o
              the
                  risk that the acquired business will not perform as expected; and
 
 o
              material
                  decreases in short-term or long-term liquidity.
 
 **THE
        ANTICIPATED BENEFITS OF THE SENDTEC ASSET SALE MAY NOT BE
        REALIZED.**
 
 The
        cash
        proceeds received from the SendTec Asset Sale are expected to provide sufficient
        liquidity to enable the Company to operate on a going concern basis and to
        complete the development of and begin the implementation of a strategic business
        plan. SendTec represented the Company’s only profitable business, with its VoIP
        telephony services and computer games businesses continuing to incur operating
        losses at the present time. It’s newly acquired Internet services business,
        Tralliance Corporation (“Tralliance”), is in the process of evolving from the
        start-up phase of its operations and began collecting fees for its services
        in
        October 2005. In order to capitalize on and realize the benefits of the SendTec
        Asset Sale, the Company must either sell or otherwise dispose of unprofitable
        businesses, make changes which transform unprofitable businesses into profitable
        ones, and/or acquire or internally develop new profitable businesses, including
        Tralliance. There can be no assurance that the Company will be successful
        in
        taking any of the above actions which would enable it to achieve satisfactory
        investment returns in future periods and realize the benefits of selling
        its
        SendTec business.
 
 **THE
        MARKET PRICE OF OUR COMMON STOCK MAY DECLINE AS A RESULT OF THE SENDTEC ASSET
        SALE.**
 
 The
        market price of our Common Stock may decline as a result of the SendTec Asset
        Sale if:
 
 o
              the
                  sale of the SendTec business, theglobe’s only profitable business, is
                  perceived negatively by investors; or
 
 o
              investors
                  become skeptical that theglobe can invest the cash proceeds received
                  for
                  the SendTec Asset Sale in businesses that have acceptable returns
                  on
                  investment in future periods.
 
 The
        market price of theglobe.com’s Common Stock could also decline as a result of
        unforeseen factors related to the SendTec Asset Sale.
  -36-
 **Table
            of Contents**
 
 **OUR
        NET OPERATING LOSS CARRYFORWARDS MAY BE LIMITED.**
 
 As
        of
        December 31, 2004, we had net operating loss carryforwards potentially available
        for U.S. and foreign tax purposes of approximately $162 million. These
        carryforwards expire through 2024. The Tax Reform Act of 1986 imposes
        substantial restrictions on the utilization of net operating losses and tax
        credits in the event of an "ownership change" of a corporation. Due to various
        significant changes in our ownership interests, as defined in the Internal
        Revenue Code of 1986, as amended, commencing in August 1997 through our most
        recent issuance of convertible notes in July 2005, and assuming conversion
        of
        such notes, we may have substantially limited or eliminated the availability
        of
        our net operating loss carryforwards. There can be no assurance that we will
        be
        able to utilize any net operating loss carryforwards in the future.
 
 **WE
        DEPEND ON THE CONTINUED GROWTH IN THE USE AND COMMERCIAL VIABILITY OF THE
        INTERNET.**
 
 Our
        VoIP
        telephony services business, Internet services business and computer games
        businesses are substantially dependent upon the continued growth in the general
        use of the Internet. Internet and electronic commerce growth may be inhibited
        for a number of reasons, including:
 
 o
              inadequate
                  network infrastructure;
 
 o
              security
                  and authentication concerns;
 
 o
              inadequate
                  quality and availability of cost-effective, high-speed service;
 
 o
              general
                  economic and business downturns; and
 
 o
              catastrophic
                  events, including war and terrorism.
 
 As
        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.
        Websites 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.
 
 **WE
        MAY FACE INCREASED GOVERNMENT REGULATION, TAXATION AND LEGAL UNCERTAINTIES
        IN
        OUR INDUSTRY, WHICH COULD HARM OUR BUSINESS.**
 
 There
        are
        an increasing number of federal, state, local and foreign laws and regulations
        pertaining to the Internet and telecommunications. In addition, a number
        of
        federal, state, local and foreign legislative and regulatory proposals are
        under
        consideration. Laws or regulations have been and may continue to 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, data protection,
        pricing, content, copyrights, distribution, electronic contracts and other
        communications, consumer protection, public safety issues like enhanced 911
        emergency service ("E911"), the Communications Assistance for Law Enforcement
        Act ("CALEA"), the provision of online payment services, broadband residential
        Internet access, and the characteristics and quality of products and services.
 
 Changes
        in tax laws relating to electronic commerce could materially affect our
        business, prospects and financial condition. One or more states or foreign
        countries may seek to impose sales or other tax collection obligations on
        out-of-jurisdiction companies that engage in electronic commerce. A successful
        assertion by one or more states or foreign countries that we should collect
        sales or other taxes on services could result in substantial tax liabilities
        for
        past sales, decrease our ability to compete with traditional telephony, and
        otherwise harm our business.
  -37-
 **Table
            of Contents**
  Currently,
        decisions of the U.S. Supreme Court restrict the imposition of obligations
        to
        collect state and local sales and use taxes with respect to electronic commerce.
        However, a number of states, as well as the U.S. Congress, have been considering
        various initiatives that could limit or supersede the Supreme Court's position
        regarding sales and use taxes on electronic commerce. If any of these
        initiatives addressed the Supreme Court's constitutional concerns and resulted
        in a reversal of its current position, we could be required to collect sales
        and
        use taxes. The imposition by state and local governments of various taxes
        upon
        electronic commerce could create administrative burdens for us and could
        adversely affect our VoIP business operations, and ultimately our financial
        condition, operating results and future prospects.
  Regardless
        of the type of state tax imposed, the threshold issue involving state taxation
        of any transaction is always whether sufficient nexus, or contact, exists
        between the taxing entity and the taxpayer or the transaction to which the
        tax
        is being applied. The concept of nexus is constantly changing and no bright
        line
        exists that would sufficiently alert a business as to whether it is subject
        to
        tax in a specific jurisdiction. All states which have attempted to tax Internet
        access or online services have done so by asserting that the sale of such
        telecommunications services, information services, data processing services
        or
        other type of transaction is subject to tax in that particular state.
 
 A
        handful
        of states impose taxes on computer services, data processing services,
        information services and other similar types of services. Some of these states
        have asserted that Internet access and/or online information services are
        subject to these taxes.
 
 Most
        states have telecommunications sales or gross receipts taxes imposed on
        interstate calls or transmissions of data. A sizable minority tax only
        intrastate calls. Although these taxes were enacted long before the birth
        of
        electronic commerce and VoIP, several states have asserted that Internet
        access
        and/or online information services are subject to these taxes.
 
 For
        example, in the 2005 Florida legislative session, Florida incorporated into
        the
        tax imposed by Chapter 202, Florida Statutes, (the Communications Services
        Tax)
        language which establishes tax nexus in Florida for VoIP. The Florida
        legislature inserted this language to protect the scope of the tax base for
        the
        Communications Services Tax. The language could have the effect of imposing
        the
        Communications Services Tax on VoIP services not based in the state of Florida.
 
 The
        Florida legislature borrowed the language that it used to amend the Florida
        Statute from the national Streamlined Sales Tax Project. This project is
        being
        touted by many states as a proposed tax simplification plan. If adopted by
        other
        states, the language included in the Florida law could have a far reaching
        effect in many states in the United States.
 
 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. It is not clear how existing laws governing issues such as property
        ownership, sales and other taxes, libel, and personal privacy apply to the
        Internet and electronic commerce. Any new legislation or regulation, or the
        application or interpretation of existing laws or regulations, may decrease
        the
        growth in the use of the Internet or VoIP telephony services, may impose
        additional burdens on electronic commerce or may alter how we do business.
        This
        could decrease the demand for our existing or proposed services, increase
        our
        cost of doing business, increase the costs of products sold through the Internet
        or otherwise have a material adverse effect on our business, plans, prospects,
        results of operations and financial condition.
 
 Our
        ability to offer VoIP services outside the U.S. is also subject to the local
        regulatory environment, which may be complicated and often uncertain. Regulatory
        treatment of Internet telephony outside the United States varies from country
        to
        country.
 
 **WE
        RELY ON INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS.**
 
 We
        regard
        substantial elements of our websites 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.
  -38-
 **Table
            of Contents**
 
 We
        pursue
        the registration of our trademarks in the United States and, in some cases,
        internationally. We are also seeking patent protection for certain VoIP assets
        which we acquired or which we have developed. 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 and product offerings 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 websites
        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 have asserted and
        may
        in the future assert claims of alleged infringement by us of their intellectual
        property rights. Sprint recently filed one such lawsuit against us and our
        voiceglo subsidiary alleging infringement by us. Any litigation claims or
        counterclaims could impair our business because they could:
 
 o
              be
                  time-consuming;
 
 o
              result
                  in significant costs;
 
 o
              subject
                  us to significant liability for damages;
 
 o
              result
                  in invalidation of our proprietary rights;
 
 o
              divert
                  management's attention;
 
 o
              cause
                  product release delays; or
 
 o
              require
                  us to redesign our products or require us to enter into royalty
                  or
                  licensing agreements that may not be available on terms acceptable
                  to us,
                  or at all.
 
 We
        license from third parties various technologies incorporated into our products,
        networks and 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 products and services or could adversely affect the
        performance of our existing products and 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 and have established additional
        top-level domains, could appoint additional domain name registrars or could
        modify the requirements for holding domain names, any or all of which may
        dilute
        the strength of our names or our “.travel” domain registry business. We may not
        acquire or maintain our domain names in all of the countries in which our
        websites 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.
 
 **WE
        MAY BE UNSUCCESSFUL IN ESTABLISHING AND MAINTAINING BRAND AWARENESS; BRAND
        IDENTITY IS CRITICAL TO OUR COMPANY.**
 
 Our
        success in the markets in which we operate will depend on our ability to
        create
        and maintain brand awareness for our product offerings. This has in some
        cases
        required, and may continue to require, a significant amount of capital to
        allow
        us to market our products and establish brand recognition and customer loyalty.
        Many of our competitors 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.
 
 If
        we
        fail to promote and maintain our various brands or our businesses' brand
        values
        are diluted, our businesses, operating results, financial condition, and
        our
        ability to attract buyers for any of our businesses 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
        revenue to justify these costs.
  -39-
 **Table
            of Contents**
 
 **OUR
        QUARTERLY OPERATING RESULTS FLUCTUATE.**
 
 Due
        to
        our significant change in operations, including the entry into new lines
        of
        business and disposition of other lines of business, our historical quarterly
        operating results are not necessarily reflective of future results. The factors
        that will cause our quarterly operating results to fluctuate in the future
        include:
 
 o
              acquisitions
                  of new businesses or sales of our businesses or assets;
 
 o
              changes
                  in the number of sales or technical employees;
 
 o
              the
                  level of traffic on our websites;
 
 o
              the
                  overall demand for Internet telephony services, print, television,
                  radio
                  and Internet advertising and electronic commerce;
 
 o
              the
                  addition or loss of VoIP customers, advertisers of our computer
                  games
                  businesses, subscribers to our magazine, and electronic commerce
                  partners
                  on our websites;
 
 o
              overall
                  usage and acceptance of the Internet;
 
 o
              seasonal
                  trends in advertising and electronic commerce sales and member
                  usage in
                  our businesses;
 
 o
              costs
                  relating to the implementation or cessation of marketing plans
                  for our
                  various lines of business;
 
 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; and
 
 o
              competition
                  from others providing services similar to ours.
 
 **OUR
        LIMITED OPERATING HISTORY MAKES FINANCIAL FORECASTING DIFFICULT. OUR
        INEXPERIENCE IN THE VOIP TELEPHONY BUSINESS AND INTERNET SERVICES BUSINESS
        WILL
        MAKE FINANCIAL FORECASTING EVEN MORE 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
                  or increase levels of user traffic on our e-commerce websites;
 
 o
              attract
                  customers to our VoIP telephony service;
 
 o
              adequately
                  forecast anticipated customer purchase and usage of our retail
                  VoIP
                  products;
 
 o
              maintain
                  or increase advertising revenue for our magazines;
 
 o
              adapt
                  to meet changes in our markets and competitive developments; and
 
 o
              identify,
                  attract, retain and motivate qualified personnel.
   -40-
 **Table
            of Contents**
  **OUR
        MANAGEMENT TEAM IS INEXPERIENCED IN THE MANAGEMENT OF A LARGE OPERATING 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 us.
        The
        loss of the services of members of our management team or other key personnel
        could harm our business. Our future success depends to a significant extent
        on
        the continued service of key management, client service, product development,
        sales and technical personnel. We do not maintain key person life insurance
        on
        any of our executive officers and do not intend to purchase any in the future.
        Although we generally enter into non-competition agreements with our key
        employees, our business could be harmed if one or more of our officers or
        key
        employees decided to join a competitor or otherwise compete with us.
 
 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. 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; 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.
 
 Our
        President, Treasurer and Chief Financial Officer 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,
        Inc.
 
 Our
        Vice
        President of Finance and Director, Ms. Robin Lebowitz is also affiliated
        with
        Dancing Bear Investments, Inc. 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, including investment in our securities. Furthermore,
        the Company's Board of Directors presently is comprised entirely of individuals
        which are employees of theglobe, and therefore are not "independent." We
        intend
        to review related party transactions in the future on a case-by-case
        basis.
  -41-
 **Table
            of Contents**
 
 **WE
        RELY ON THIRD PARTY OUTSOURCED HOSTING FACILITIES OVER WHICH WE HAVE LIMITED
        CONTROL.**
 
 Our
        principal servers are located in Florida and New York primarily 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 could have a material adverse effect on us. In addition,
        computer viruses, electronic break-ins or other similar disruptive problems
        could also materially adversely affect our businesses. Our reputation,
        theglobe.com brand and the brands of our individual businesses could be
        materially and adversely affected by any problems experienced by our sites
        or
        our supporting VoIP network. 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 or confidential information (including
        customer billing 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.**
 
 Users
        may
        access content on our websites or the websites of our distribution partners
        or
        other third parties through website 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 websites.
        Claims have been brought against online services in the past and we have
        received inquiries from third parties regarding these matters. Such claims
        could
        be material in the future.
 
 **WE
        MAY BE EXPOSED TO LIABILITY FOR PRODUCTS OR SERVICES SOLD OVER THE INTERNET,
        INCLUDING PRODUCTS AND SERVICES SOLD BY OTHERS.**
 
 We
        enter
        into agreements with commerce partners and sponsors under which, in some
        cases,
        we are entitled to receive a share of 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.
 
 **WE
        ARE A PARTY TO LITIGATION MATTERS THAT MAY SUBJECT US TO SIGNIFICANT LIABILITY
        AND BE TIME CONSUMING AND EXPENSIVE.**
 
 We
        are
        currently a party to litigation. At this time we cannot reasonably estimate
        the
        range of any loss or damages resulting from any of the pending lawsuits due
        to
        uncertainty regarding the ultimate outcome. The defense of this litigation
        may
        be expensive and divert management's attention from day-to-day operations.
        An
        adverse outcome in this litigation could materially and adversely affect
        our
        results of operations and financial position and may utilize a significant
        portion of our cash resources.
  -42-
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            of Contents**
 
 **WE
        MAY NOT BE ABLE TO IMPLEMENT SECTION 404 OF THE SARBANES-OXLEY ACT ON A TIMELY
        BASIS.**
 
 The
        SEC,
        as directed by Section 404 of The Sarbanes-Oxley Act, adopted rules generally
        requiring each public company to include a report of management on the company's
        internal controls over financial reporting in its annual report on Form 10-K
        that contains an assessment by management of the effectiveness of the company's
        internal controls over financial reporting. In addition, the company's
        independent registered public accounting firm must attest to and report on
        management's assessment of the effectiveness of the company's internal controls
        over financial reporting. This requirement will first apply to our annual
        report
        on Form 10-K for the fiscal year ending December 31, 2007.
 
 We
        are
        currently at the beginning stages of developing our Section 404 implementation
        plan. We have in the past discovered, and may in the future discover, areas
        of
        our internal controls that need improvement. How companies should be
        implementing these new requirements including internal control reforms to
        comply
        with Section 404's requirements, and how independent auditors will apply
        these
        requirements and test companies' internal controls, is still reasonably
        uncertain.
 
 We
        expect
        that we will need to hire and/or engage additional personnel and incur
        incremental costs in order to complete the work required by Section 404.
        There
        can be no assurance that we will be able to complete our Section 404 plan
        on a
        timely basis. The Company's liquidity position in 2005, 2006 and 2007
        may
        also impact our ability to adequately fund our Section 404 efforts.
 
 Even
        if
        we timely complete our Section 404 plan, we may not be able to conclude that
        our
        internal controls over financial reporting are effective, or in the event
        that
        we conclude that our internal controls are effective, our independent
        accountants may disagree with our assessment and may issue a report that
        is
        qualified. This could subject the Company to regulatory scrutiny and a loss
        of
        public confidence in our internal controls. In addition, any failure to
        implement required new or improved controls, or difficulties encountered
        in
        their implementation, could harm the Company's operating results or cause
        the
        Company to fail to meet its reporting obligations.
 
 **RISKS
        RELATING TO OUR VOIP TELEPHONY BUSINESS**
 
 **WE
        ARE UNABLE TO PREDICT THE VOLUME OF USAGE AND OUR CAPACITY NEEDS FOR OUR
        VOIP
        BUSINESS; DISADVANTAGEOUS CONTRACTS HAVE REDUCED OUR OPERATING MARGINS AND
        MAY
        ADVERSELY AFFECT OUR LIQUIDITY AND FINANCIAL CONDITION.**
 
 We
        have
        entered into a number of agreements (generally for terms of one year, with
        the
        terms of several agreements extending to three to five years) for leased
        communications transmission capacity and data center facilities with various
        carriers and other third parties. The minimum amounts payable under these
        agreements and the underlying current capacity of our VoIP network greatly
        exceeds our current estimates of customer demand and usage for the foreseeable
        future. The Company is currently attempting to reduce the amounts payable
        under
        these network-related agreements. Although at the beginning of 2005 the Company
        was successful in terminating substantially all of the minimum usage requirement
        commitments for which it was previously obligated under certain of its carrier
        agreements, there can be no assurance that it will be able to further reduce
        its
        network-related contractual commitments. If the Company is not successful
        in
        significantly reducing such commitments, its liquidity and financial condition
        could be materially and adversely impacted.
 
 **THE
        VOIP MARKET IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND WE WILL NEED TO
        DEPEND
        ON NEW PRODUCT INTRODUCTIONS 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 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 and selling such
        products and services will depend on a variety of factors, including:
 
 o
              access
                  to sufficient capital to complete our development efforts;
 
 o
              the
                  identification of market demand for new products;
 
 o
              the
                  determination of appropriate product inventory levels;
  -43-
 **Table
            of Contents**
  o
              product
                  and feature selection;
 
 o
              timely
                  implementation of product design and development;
 
 o
              product
                  performance;
 
 o
              cost-effectiveness
                  of products under development;
 
 o
              securing
                  effective sources of equipment supply; 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
        or
        if such new or enhanced products do not achieve sufficient market acceptance,
        our operating results will suffer and our business will not grow.
 
 **OUR
        ABILITY AND PLANS TO PROVIDE TELECOMMUNICATION SERVICES AT ATTRACTIVE RATES
        ARISE IN LARGE PART FROM THE FACT VOIP SERVICES ARE NOT CURRENTLY SUBJECT
        TO THE
        SAME REGULATION AS TRADITIONAL TELEPHONY.**
 
 Because
        their services are not currently regulated to the same extent as traditional
        telephony, some VoIP providers can currently avoid paying certain charges
        that
        traditional telephone companies must pay. Many traditional telephone operators
        are lobbying the Federal Communications Commission (FCC) and the states to
        regulate VoIP on the same or similar basis as traditional telephone services.
        The FCC and several states are examining this issue.
 
 If
        the
        FCC or any state determines to regulate VoIP, they may impose surcharges,
        taxes
        or additional regulations upon providers of VoIP. These surcharges could
        include
        access charges payable to local exchange carriers to carry and terminate
        traffic, contributions to the Universal Service Fund or other charges.
        Regulations requiring compliance with the CALEA could also place a significant
        financial burden on us. The imposition of any such additional fees, charges,
        taxes, licenses and regulations on VoIP services could materially increase
        our
        costs and may reduce or eliminate the competitive pricing advantage we seek
        to
        enjoy.
 
 **WE
        WILL INCUR INCREASED COSTS AND RISKS ASSOCIATED WITH THE PROVISION OF 911
        EMERGENCY DIALING WITH VOIP SERVICES.**
 
 In
        May
        2005, the FCC adopted an Order and Notice of Proposed Rulemaking that requires
        VoIP providers to supply enhanced emergency 911 ("E911") service. On June
        3,
        2005, the FCC released the text of the First Report and Order and Notice
        of
        Proposed Rulemaking in the E911 proceeding (the "E911 Order"). Previously,
        Texas
        and Connecticut Attorneys General filed lawsuits against Vonage, accusing
        Vonage
        of not warning customers about limits to its 911 service. As a result of
        the
        E911 Order, VoIP service providers that interconnect to the public switched
        telephone network ("Interconnected VoIP Providers") will be required to mimic
        the 911 emergency calling capabilities offered by traditional landline phone
        companies. All Interconnected VoIP Providers must deliver 911 calls to the
        appropriate local public safety answering point ("PSAP"), along with call
        back
        number and location, where the PSAP is able to receive that information.
        E911
        must be included in the basic service offering; it cannot be an optional
        or
        extra feature. The PSAP delivery obligation, along with call back number
        and
        location information must be provided regardless of whether the service is
        "fixed" or "nomadic." User registration of location is permissible initially,
        although the FCC is committed to an advanced form of E911 that will determine
        user location without user intervention, one of the topics of the further
        Notice
        of Proposed Rulemaking to be released.
 
 Additionally,
        all interconnected VoIP providers must obtain affirmative acknowledgement
        from
        all subscribers that they have been advised of the circumstances under which
        E911 service may not be available. Further, an interconnected VoIP provider
        must
        make it possible for customers to update their address (i.e., change their
        registered location) via at least one option that requires no equipment other
        than that needed to access the VoIP service. All interconnected VoIP providers
        must comply with the requirements of the E911 Order within 120 days of the
        publication of the E911 Order in the Federal Register, with the exception
        that
        the customer notification obligations must be complied with within 30 days
        of
        the publication.
  -44-
 **Table
            of Contents**
 
 The
        E911
        Order applies to certain of our products. Even with E911 provisioned, the
        IP
        dialtone service provided by us is only as reliable as a customer's underlying
        broadband data service and Internet service provider (neither service is
        provided by us), and may not be suitable for use in all emergency situations.
 
 The
        E911
        Order will increase our cost of doing business and may adversely affect our
        ability to deliver the VoIP telephony services to new and existing customers
        in
        all geographic regions. We cannot guarantee that E911 service will be available
        to all of our subscribers. There is also risk that specific E911 requirements
        may impede our ability to offer service in a manner that conforms to these
        requirements. The E911 Order and subsequent orders or clarifications could
        have
        a material adverse effect on our business, financial condition and operating
        results.
 
 **THE
        INTERNET TELEPHONY BUSINESS IS HIGHLY COMPETITIVE AND ALSO COMPETES WITH
        TRADITIONAL AND CELLULAR 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
        include major and emerging telecommunications carriers in the U.S. and abroad.
        Financial difficulties in the past several years of many telecommunications
        providers are rapidly altering the number, identity and competitiveness of
        the
        marketplace. Many of the competitors for our current and planned VoIP service
        offerings 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, Verizon, Sprint and MCI, either presently or potentially compete or
        can compete directly with us. Other Internet telephony service providers,
        such
        as Net2Phone, Vonage and deltathree, also focus on a retail customer base
        and
        compete with us. These companies may offer the kinds of voice services we
        currently offer or intend to offer in the future. In addition, companies
        currently in related markets have begun to provide voice over the Internet
        services or adapt their products to enable voice over the Internet services.
        These related companies may potentially migrate into the Internet telephony
        market as direct competitors. A number of cable operators have also begun
        to
        offer VoIP telephony services via cable modems which provide access to the
        Internet. These companies, which tend to be large entities with substantial
        resources, generally have large budgets available for research and development,
        and therefore may further enhance the quality and acceptance of the transmission
        of voice over the Internet. We also compete with cellular telephony providers.
 
 **PRICING
        PRESSURES AND INCREASING USE OF VOIP TECHNOLOGY MAY LESSEN OUR COMPETITIVE
        PRICING ADVANTAGE.**
 
 One
        of
        the main competitive advantages of our current and planned VoIP service
        offerings is the ability to provide discounted local and long distance telephony
        services by taking advantage of cost savings achieved by carrying voice traffic
        employing VoIP technology, as compared to carrying calls over traditional
        networks. In recent years, the price of telephone service has fallen. The
        price
        of telephone service may continue to fall for various reasons, including
        the
        adoption of VoIP technology by other communications carriers. Many carriers
        have
        adopted pricing plans such that the rates that they charge are not always
        substantially higher than the rates that VoIP providers charge for similar
        service. In addition, other providers of long distance services are offering
        unlimited or nearly unlimited use of some of their services for increasingly
        lower monthly rates.
 
 **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.**
 
 Our
        success in the VoIP market is partly dependent on our ability to forge
        marketing, engineering and carrier 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 operations and 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.
  -45-
 **Table
            of Contents**
 
 **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. VoIP networks will not be a viable alternative
        to
        traditional circuit switched telephony unless they can provide reliability
        and
        quality consistent with these standards.
 
 **ONLINE
        CREDIT CARD FRAUD CAN HARM OUR BUSINESS.**
 
 The
        sale
        of our products and services over the Internet exposes us to credit card
        fraud
        risks. Many of our products and services, including our VoIP services, can
        be
        ordered or established (in the case of new accounts) over the Internet using
        a
        major credit card for payment. As is prevalent in retail telecommunications
        and
        Internet services industries, we are exposed to the risk that some of these
        credit card accounts are stolen or otherwise fraudulently obtained. In general,
        we are not able to recover fraudulent credit card charges from such accounts.
        In
        addition to the loss of revenue from such fraudulent credit card use, we
        also
        remain liable to third parties whose products or services are engaged by
        us
        (such as termination fees due telecommunications providers) in connection
        with
        the services which we provide. In addition, depending upon the level of credit
        card fraud we experience, we may become ineligible to accept the credit cards
        of
        certain issuers. We are currently authorized to accept Discover, together
        with
        Visa and MasterCard (which are both covered by a single merchant agreement
        with
        us). Visa/MasterCard constitutes the primary credit card used by our VoIP
        customers. The loss of eligibility for acceptance of Visa/MasterCard could
        significantly and adversely affect our business. During 2004, we updated
        our
        fraud controls and will attempt to manage fraud risks through our internal
        controls and our monitoring and blocking systems. If those efforts are not
        successful, fraud could cause our revenue to decline significantly and our
        business, financial condition and results of operations to be materially
        and
        adversely affected.
 
 **RISKS
        RELATING TO OUR COMPUTER GAMES BUSINESS**
 
 **THE
        MARKET SITUATION CONTINUES TO BE A CHALLENGE FOR CHIPS & BITS DUE TO
        ADVANCES IN CONSOLE AND ONLINE GAMES, WHICH HAVE LOWER MARGINS AND TRADITIONALLY
        LESS SALES LOYALTY TO CHIPS & BITS.**
 
 Our
        subsidiary, Chips & Bits depends on major releases in the Personal Computer
        (PC) market for the majority of sales and profits. Advances in technology
        and
        the game industry's increased focus on console and online game platforms,
        such
        as Xbox, 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. Because of the large installed base of personal
        computers, revenue and gross margin percentages may fluctuate with changes
        in
        the PC game market. However, we are unable to predict when, if ever, there
        will
        be a turnaround in the PC game market, or if we will be successful in adequately
        increasing our future sales of non-PC games.
 
 **WE
        HAVE HISTORICALLY RELIED SUBSTANTIALLY ON ADVERTISING REVENUES, WHICH COULD
        DECLINE IN THE FUTURE.**
 
 We
        historically derived a substantial portion of our revenues from the sale
        of
        advertisements, primarily in our Computer Games Magazine. Our games business
        model and our ability to generate sufficient future levels of print and online
        advertising revenues are highly dependent on the print circulation of our
        magazines, as well as the amount of traffic on our websites and our ability
        to
        properly monetize website traffic. Print and online advertising market volumes
        have declined in the past and may decline in the future, which could have
        a
        material adverse effect on us. Many advertisers have been experiencing financial
        difficulties which could further negatively 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 computer
        games businesses.
  -46-
 **Table
            of Contents**
 
 **WE
        MAY NOT BE ABLE TO SUCCESSFULLY COMPETE IN THE ELECTRONIC COMMERCE MARKETPLACE.**
 
 The
        games
        marketplace has become increasingly competitive due to acquisitions, strategic
        partnerships and the continued consolidation of a previously fragmented
        industry. In addition, an increasing number of major retailers have increased
        the selection of video games offered by both their traditional "bricks and
        mortar" locations and their online commerce sites, resulting in increased
        competition. Our Chips & Bits subsidiary may not be able to compete
        successfully in this highly competitive marketplace.
 
 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; and
 
 o
              the
                  possibility that our vendors may sell their products through other
                  sites.
 
 Additionally,
        if use of the Internet for electronic commerce does not continue to grow,
        our
        business and financial condition would be materially and adversely affected.
 
 **INTENSE
        COMPETITION FOR ELECTRONIC COMMERCE REVENUES HAS RESULTED IN DOWNWARD PRESSURE
        ON GROSS MARGINS.**
 
 Due
        to
        the ability of consumers to easily compare prices of similar products or
        services on competing websites and consumers' potential preference for competing
        website'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.
 
 **OUR
        ELECTRONIC COMMERCE BUSINESS MAY RESULT IN SIGNIFICANT LIABILITY CLAIMS AGAINST
        US.**
 
 Consumers
        may sue us if any of the products that we sell are defective, fail to perform
        properly or injure the user. Consumers are also increasingly seeking to impose
        liability on game manufacturers and distributors based upon the content of
        the
        games and the alleged affect of such content on behavior. 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.
 
 **RISKS
        RELATING TO OUR INTERNET SERVICES BUSINESS**
 
 **OUR
        CONTRACT TO SERVE AS THE REGISTRY FOR THE ".TRAVEL" TOP-LEVEL DOMAIN MAY
        BE
        TERMINATED EARLY, WHICH WOULD LIKELY DO IRREPARABLE HARM TO OUR NEWLY DEVELOPING
        INTERNET SERVICES BUSINESS.**
 
 Our
        contract with the Internet Corporation for Assigned Names and Numbers ("ICANN")
        to serve as the registry for the ".travel" top-level Internet domain is for
        an
        initial term of ten years. Additionally, we have agreed to engage in good
        faith
        negotiations at regular intervals throughout the term of our contract (at
        least
        once every three years) regarding possible changes to the provisions of the
        contract, including changes in the fees and payments that we are required
        to
        make to ICANN. In the event that we materially and fundamentally breach the
        contract and fail to cure such breach within thirty days of notice, ICANN
        has
        the right to immediately terminate our contract.
  -47-
 **Table
            of Contents**
 
 Should
        our ".travel" registry contract be terminated early by ICANN, we could suffer
        a
        loss of prestige that could force us to permanently shutdown our Internet
        services business. Further, we could be held liable to pay additional fees
        or
        financial damages to ICANN or certain of our related subcontractors and,
        in
        certain limited circumstances, to pay punitive, exemplary or other damages
        to
        ICANN. Any such developments could have a material adverse effect on our
        financial condition and results of operations.
 
 **OUR
        BUSINESS COULD BE MATERIALLY HARMED IF IN THE FUTURE THE ADMINISTRATION AND
        OPERATION OF THE INTERNET NO LONGER RELIES UPON THE EXISTING DOMAIN NAME
        SYSTEM.**
 
 The
        domain name registration industry continues to develop and adapt to changing
        technology. This development may include changes in the administration or
        operation of the Internet, including the creation and institution of alternate
        systems for directing Internet traffic without the use of the existing domain
        name system. The widespread acceptance of any alternative systems could
        eliminate the need to register a domain name to establish an online presence
        and
        could materially adversely affect our business, financial condition and results
        of operations.
 
 **WE
        OUTSOURCE CERTAIN OPERATIONS WHICH EXPOSES US TO RISKS RELATED TO OUR THIRD
        PARTY VENDORS.**
 
 We
        do not
        develop and maintain all of the products and services that we offer. We offer
        most of our services to our customers through various third party service
        providers engaged to perform these services on our behalf and also outsource
        most of our operations to third parties. Accordingly, we are dependent, in
        part,
        on the services of third party service providers, which may raise concerns
        by
        our customers regarding our ability to control the services we offer them
        if
        certain elements are managed by another company. In the event that these
        service
        providers fail to maintain adequate levels of support, do not provide high
        quality service, discontinue their lines of business, cease or reduce operations
        or terminate their contracts with us, our business, operations and customer
        relations may be impacted negatively and we may be required to pursue
        replacement third party relationships, which we may not be able to obtain
        on as
        favorable terms or at all. If a problem should arise with a provider,
        transitioning services and data from one provider to another can often be
        a
        complicated and time consuming process and we cannot assure that if we need
        to
        switch from a provider we would be able to do so without significant
        disruptions, or at all. If we were unable to complete a transition to a new
        provider on a timely basis, or at all, we could be forced to either temporarily
        or permanently discontinue certain services which may disrupt services to
        our
        customers. Any failure to provide services would have a negative impact on
        our
        revenue, profitability and financial condition and could materially harm
        our
        Internet services business.
 
 **REGULATORY
        AND STATUTORY CHANGES COULD HARM OUR INTERNET SERVICES BUSINESS.**
 
 We
        cannot
        predict with any certainty the effect that new governmental or regulatory
        policies, including changes in consumer privacy policies or industry reaction
        to
        those policies, will have on our domain name registry business. Additionally,
        ICANN's limited resources may seriously affect its ability to carry out its
        mandate or could force ICANN to impose additional fees on registries. Changes
        in
        governmental or regulatory statutes or policies could cause decreases in
        future
        revenue and increases in future costs which could have a material adverse
        effect
        on the development of our domain name registry business.
 
 **RISKS
        RELATING TO OUR COMMON STOCK**
 
 **THE
        VOLUME OF SHARES AVAILABLE FOR FUTURE SALE IN THE OPEN MARKET COULD DRIVE
        DOWN
        THE PRICE OF OUR STOCK OR KEEP OUR STOCK PRICE FROM IMPROVING, EVEN IF OUR
        FINANCIAL PERFORMANCE IMPROVES.**
 
 As
        of
        November 11, 2005, we had issued and outstanding approximately 173.3 million
        shares, of which approximately 56.1 million shares were freely tradable over
        the
        public markets. There is limited trading volume in our shares and we are
        now
        traded only in the over-the-counter market. On April 16, 2004, we filed a
        registration statement relating to the potential resale of up to approximately
        131 million of our shares (including approximately 27 million shares underlying
        then outstanding warrants to acquire our Common Stock). The registration
        statement became effective on May 11, 2004.
 
 Sales
        of
        significant amounts of Common Stock in the public market in the future, the
        perception that sales will occur or the registration of additional shares
        pursuant to existing contractual obligations could materially and adversely
        drive down the price of our stock. In addition, such factors could adversely
        affect the ability of the market price of the Common Stock to increase even
        if
        our business prospects were to improve. Substantially all of our stockholders
        holding restricted securities, including shares issuable upon the exercise
        of
        warrants or the conversion of the Convertible Notes to acquire our Common
        Stock
        (which are convertible into 68 million shares), have registration rights
        under
        various conditions and will become available for resale in the
        future.
  -48-
 **Table
            of Contents**
 
 In
        addition, as of September 30, 2005, there were outstanding options to purchase
        approximately 19.6 million shares of our Common Stock, which become eligible
        for
        sale in the public market from time to time depending on vesting and the
        expiration of lock-up agreements. The shares issuable upon exercise of these
        options are registered under the Securities Act and consequently, subject
        to
        certain volume restrictions as to shares issuable to executive officers,
        will be
        freely tradable.
 
 Also
        as
        of November 11, 2005, we had issued and outstanding warrants to acquire
        approximately 7.5 million shares of our Common Stock. In addition, the Company
        holds in escrow warrants to acquire up to 1.5 shares of Common Stock, subject
        to
        release over approximately the next year (some of which may accelerate under
        certain events) upon the attainment of certain performance objectives. Many
        of
        the outstanding instruments representing the warrants contain anti-dilution
        provisions pursuant to which the exercise prices and number of shares issuable
        upon exercise may be adjusted.
 
 **OUR
        CHAIRMAN MAY CONTROL US.**
 
 Michael
        S. Egan, our Chairman and Chief Executive Officer, beneficially owns or
        controls, directly or indirectly, approximately 140.7 million shares of our
        Common Stock as of November 11, 2005, which in the aggregate represents
        approximately 57% of the outstanding shares of our Common Stock **** (treating
        as outstanding for this purpose the shares of Common Stock issuable upon
        exercise and/or conversion of the options, Convertible Notes and warrants
        owned
        by Mr. Egan or his affiliates). Accordingly, Mr. Egan will be able to exercise
        significant influence over, if not control, any stockholder vote.
 
 **DELISTING
        OF OUR COMMON STOCK MAKES IT MORE DIFFICULT FOR INVESTORS TO SELL SHARES.
        THIS
        MAY POTENTIALLY LEAD TO FUTURE MARKET DECLINES.**
 
 The
        shares of our Common Stock were delisted from the NASDAQ national market
        in
        April 2001 and are now traded in the over-the-counter market on what is commonly
        referred to as the electronic bulletin board or "OTCBB." As a result, an
        investor may find it more difficult to dispose of or obtain accurate quotations
        as to the market value of the securities. The delisting has made trading
        our
        shares more difficult for investors, potentially leading to further declines
        in
        share price and making it less likely our stock price will increase. It has
        also
        made it more difficult for us to raise additional capital. We may also incur
        additional costs under state blue-sky laws if we sell equity due to our
        delisting.
 
 **OUR
        COMMON STOCK IS PRESENTLY SUBJECT TO THE "PENNY STOCK" RULES WHICH MAY MAKE
        IT A
        LESS ATTRACTIVE INVESTMENT.**
 
 Since
        the
        trading price of our Common Stock is less than $5.00 per share, trading in
        our
        Common Stock is also subject to the requirements of Rule 15g-9 of the Exchange
        Act. Our Common Stock is also considered a penny stock under the Securities
        Enforcement Remedies and Penny Stock Reform Act of 1990, which defines a
        penny
        stock, generally, as any equity security not traded on an exchange or quoted
        on
        the Nasdaq SmallCap Market that has a market price of less than $5.00 per
        share.
        Under Rule 15g-9, brokers who recommend our Common Stock to persons who are
        not
        established customers and accredited investors, as defined in the Exchange
        Act,
        must satisfy special sales practice requirements, including requirements
        that
        they make an individualized written suitability determination for the purchaser;
        and receive the purchaser's written consent prior to the transaction. The
        Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also requires
        additional disclosures in connection with any trades involving a penny stock,
        including the delivery, prior to any penny stock transaction, of a disclosure
        schedule explaining the penny stock market and the risks associated with
        that
        market. Such requirements may severely limit the market liquidity of our
        Common
        Stock and the ability of purchasers of our equity securities to sell their
        securities in the secondary market. For all of these reasons, an investment
        in
        our equity securities may not be attractive to our potential investors.
 
 **ANTI-TAKEOVER
        PROVISIONS AFFECTING US COULD PREVENT OR DELAY A CHANGE OF CONTROL.**
 
 Provisions
        of our charter, by-laws and stockholder rights plan and provisions of applicable
        Delaware law may:
 
 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.
  -49-
 **Table
            of Contents**
  Certain
        Delaware laws could have the effect of delaying, deterring or preventing
        a
        change in control of our company. One of these laws prohibits us from engaging
        in a business combination with any interested stockholder for a period of
        three
        years from the date the person became an interested stockholder, unless various
        conditions are met. In addition, provisions of our charter and by-laws, and
        the
        significant amount of Common Stock held by our current executive officers,
        directors and affiliates, could together have the effect of discouraging
        potential takeover attempts or making it more difficult for stockholders
        to
        change management. In addition, the employment contracts of our Chairman
        and
        CEO, President and Vice President of Finance provide for substantial lump
        sum
        payments ranging from 2 (for the Vice President) to 10 times (for each of
        the
        Chairman and President) of their respective average combined salaries and
        bonuses (together with the continuation of various benefits for extended
        periods) in the event of their termination without cause or a termination
        by the
        executive for "good reason," which is conclusively presumed in the event
        of a
        "change-in-control" (as such terms are defined in such agreements).
 
 **OUR
        STOCK PRICE IS VOLATILE AND MAY DECLINE.**
 
 The
        trading price of our Common Stock has been volatile and may continue to be
        volatile in response to various factors, including:
 
 o
              the
                  performance and public acceptance of our new product lines;
 
 o
              quarterly
                  variations in our operating results;
 
 o
              competitive
                  announcements;
 
 o
              sales
                  of any of our businesses, including the recent sale of our SendTec
                  business;
 
 o
              the
                  operating and stock price performance of other companies that investors
                  may deem comparable to us;
 
 o
              news
                  relating to trends in our markets; and
 
 o
              disposition
                  or entry into new lines of business and acquisitions of businesses,
                  including our Tralliance acquisition.
 
 The
        market price of our Common Stock could also decline as a result of unforeseen
        factors related to the acquisitions. The stock market has experienced
        significant price and volume fluctuations, and the market prices of technology
        companies, particularly Internet related companies, have been highly volatile.
        Our stock is also more volatile due to the limited trading volume and the
        high
        number of shares eligible for trading in the market.
 
 **ITEM
        3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
 
 Interest
        Rate Risk. Interest rate risk refers to fluctuations in the value of a security
        resulting from changes in the general level of interest rates. Investments
        that
        we classify as cash and cash equivalents have original maturities of three
        months or less and therefore, are not affected in any material respect by
        changes in market interest rates. At September 30, 2005 **,** debt
        outstanding includes approximately $4.5 million of fixed rate instruments
        with
        an aggregate average interest rate of 11.10% and approximately $39,000 of
        variable rate instruments with an aggregate average interest rate of 6.76%.
        All
        debt outstanding as of the end of the third quarter of 2005 is either due
        on
        demand (including $1.0 million of fixed rate debt which is past due and in
        default) or matures within the next twelve months.
 
 Foreign
        Currency Risk. We transact business in U.S. dollars. Our exposure to changes
        in
        foreign currency rates has been limited to a related party obligation payable
        in
        Canadian dollars, which totals approximately $39,000 (U.S.) at September
        30,
        2005. Foreign currency exchange rate fluctuations do not have a material
        effect
        on our results of operations.
 
 -50-
 **Table
            of Contents**
 
 **ITEM
        4. CONTROLS AND PROCEDURES**
 
 We
        maintain disclosure controls and procedures that are designed to ensure (1)
        that
        information required to be disclosed by us in the reports we file or submit
        under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
        is
        recorded, processed, summarized and reported within the time periods specified
        in the Securities and Exchange Commission's ("SEC") rules and forms, and
        (2)
        that this information is accumulated and communicated to management, including
        our Chief Executive Officer and Chief Financial Officer, as appropriate,
        to
        allow timely decisions regarding required disclosure. In designing and
        evaluating the disclosure controls and procedures, management recognizes
        that
        any controls and procedures, no matter how well designed and operated, can
        provide only reasonable assurance of achieving the desired control objectives,
        and management necessarily was required to apply its judgment in evaluating
        the
        cost benefit relationship of possible controls and procedures.
 
 Our
        Chief
        Executive Officer and Chief Financial Officer have evaluated the effectiveness
        of our disclosure controls and procedures as of September 30, 2005. Based
        on
        that evaluation, our Chief Executive Officer and our Chief Financial Officer
        have concluded that our disclosure controls and procedures are effective
        in
        alerting them in a timely manner to material information regarding us (including
        our consolidated subsidiaries) that is required to be included in our periodic
        reports to the SEC.
 
 Our
        management, with the participation of our Chief Executive Officer and our
        Chief
        Financial Officer, have evaluated any change in our internal control over
        financial reporting that occurred during the quarter ended September 30,
        2005
        that has materially affected, or is reasonably likely to materially affect,
        our
        internal control over financial reporting, and have determined there to be
        no
        reportable changes.
  -51-
 **Table
            of Contents**
  **PART
        II - OTHER INFORMATION**
 
 **ITEM
        1. LEGAL PROCEEDINGS**
 
 See
        Note
        7, "Litigation," of the Financial Statements included in this
        Report.
 
 **ITEM
        2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
        PROCEEDS**
 
 (a)
        Unregistered Sales of Equity Securities.
 
 On
        October 31, 2005, theglobe completed the sale of substantially all of the
        assets
        and business of its subsidiary, SendTec, Inc., to RelationServe Media, Inc.
        pursuant to an Asset Purchase Agreement dated August 10, 2005, and as amended
        on
        August 23, 2005. In accordance with the terms of an escrow agreement established
        as a source to secure theglobe’s indemnification obligations under the Asset
        Purchase Agreement, $1.0 million in cash and 2,272,727 shares of theglobe’s
        unregistered Common Stock (valued at $750,000 pursuant to the terms of the
        Asset
        Purchase Agreement based upon the average closing price of the stock in the
        10
        day period preceding the closing) were placed into escrow. To the extent
        any of
        these shares are released to RelationServe Media, Inc., they will be issued
        in
        reliance on the exemption from registration afforded by Section 4(2) of the
        Securities Act of 1933. Any shares released from escrow to RelationServe
        Media,
        Inc. will be entitled to customary “piggy-back” registration
        rights.
  (b)
        Use
        of Proceeds From Sales of Registered Securities.
 
 Not
        applicable.
 
 **ITEM
        3. DEFAULTS UPON SENIOR SECURITIES**
 
 None.
 
 **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
        HOLDERS**
 
 None.
 
 **ITEM
        5. OTHER INFORMATION**
 
 None.
 
 **ITEM
        6. EXHIBITS**
 4.1
              
              Form
                  of Secured Demand Convertible Promissory Note (1).4.2
              
              Security
                  Agreement dated April 22, 2005 by theglobe.com, inc. and certain
                  other
                  parties named therein (1).4.3
              
              Unconditional
                  Guaranty Agreement dated April 22, 2005 (1).10.1
              
              Note
                  Purchase Agreement dated April 22, 2005 between theglobe.com, inc.
                  and
                  certain named investors (1).10.2
              
              Asset
                  Purchase Agreement dated as of August 10, 2005 by and among theglobe.com,
                  inc., SendTec, Inc. and RelationServe Media, Inc. (2).10.3
              
              1stAmendment to the Asset Purchase Agreement dated as of August 23,
                  2005, by
                  and among theglobe.com, inc., SendTec, Inc. and RelationServe Media,
                  Inc.
                  (3).10.4
              
              Redemption
                  Agreement dated August 23, 2005 between theglobe.com, inc. and
                  certain
                  members of management of SendTec, Inc. (4).10.5
              
              Escrow
                  Agreement dated as of October 31, 2005, by and among theglobe.com,
                  inc.,
                  SendTec, Inc., RelationServe Media, Inc. and Olshan Grundman Frome
                  Rosenzweig & Wolosky LLP. (5).10.6
              
              Termination
                  Agreement dated as of October 1, 2005, by and among theglobe.com,
                  inc.,
                  SendTec, Inc., Paul Soltoff, Eric Obeck, Donald Gould, Harry Greene,
                  Irvine and Nadine Brechner, as tenants by the entirety, Allen Vance,
                  G.
                  Thomas Alison and Steven Morvay. (5).31.1
              
              Certification
                  of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
                  15d-14(a).31.2
              
              Certification
                  of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
                  15d-14(a).32.1
              
              Certification
                  of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350
                  as
                  adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.32.2
              
              Certification
                  of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350
                  as
                  adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
 
 (1)
              Incorporated
                  by reference from our Form 8-K filed on April 26, 2005.
 (2)
              Incorporated
                  by reference from our Form 8-K filed on August 16,
                  2005.
 (3)
              Incorporated
                  by reference to Annex A of our preliminary information statement
                  filed on
                  August 23, 2005.
 (4)
              Incorporated
                  by reference to Annex B of our preliminary information statement
                  filed on
                  August 23, 2005.
 (5)
              Incorporated
                  by reference from our Form 8-K filed on November 4,
                  2005.
 
 
  -52-
 **Table
            of Contents**
  **SIGNATURES**
 
 Pursuant
        to the requirements of Section 13 or 15(d) of the Securities Exchange Act
        of
        1934, the Registrant has duly caused this report to be signed on its behalf
        by
        the undersigned, thereunto duly authorized.
  **THEGLOBE.COM,
                INC.**Dated: 
                November 21, 2005
              By:
              /s/ Michael
                S. EganMichael
                  S. Egan
                Chief Executive Officer
                (Principal Executive
                  Officer)
 By:
                /s/ Edward
                  A. CespedesEdward
                    A. Cespedes
                  President and Chief Financial Officer
                  (Principal Financial
                    Officer)
  -53-
 **Table
            of Contents**
  **EXHIBIT
        INDEX**
 
 4.1
              Form
                  of Secured Demand Convertible Promissory Note (1).4.2
              Security
                  Agreement dated April 22, 2005 by theglobe.com, inc. and certain
                  other
                  parties named therein (1).4.3
              Unconditional
                  Guaranty Agreement dated April 22, 2005 (1).10.1
              Note
                  Purchase Agreement dated April 22, 2005 between theglobe.com, inc.
                  and
                  certain named investors (1).10.2
              Asset
                  Purchase Agreement dated as of August 10, 2005 by and among theglobe.com,
                  inc., SendTec, Inc. and RelationServe Media, Inc. (2).10.3
              1stAmendment to the Asset Purchase Agreement dated as of August 23,
                  2005, by
                  and among theglobe.com, inc., SendTec, Inc. and RelationServe Media,
                  Inc.
                  (3).10.4
              Redemption
                  Agreement dated August 23, 2005 between theglobe.com, inc. and
                  certain
                  members of management of SendTec, Inc. (4).10.5
              Escrow
                  Agreement dated as of October 31, 2005, by and among theglobe.com,
                  inc.,
                  SendTec, Inc., RelationServe Media, Inc. and Olshan Grundman Frome
                  Rosenzweig & Wolosky LLP. (5).10.6
              Termination
                  Agreement dated as of October 1, 2005, by and among theglobe.com,
                  inc.,
                  SendTec, Inc., Paul Soltoff, Eric Obeck, Donald Gould, Harry Greene,
                  Irvine and Nadine Brechner, as tenants by the entirety, Allen Vance,
                  G.
                  Thomas Alison and Steven Morvay. (5).31.1
              Certification
                  of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
                  15d-14(a).31.2
              Certification
                  of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
                  15d-14(a).32.1
              Certification
                  of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350
                  as
                  adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.32.2
              Certification
                  of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350
                  as
                  adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
 
 (1)
              Incorporated
                  by reference from our Form 8-K filed on April 26, 2005.
 (2)
              Incorporated
                  by reference from our Form 8-K filed on August 16,
                  2005.
 (3)
              Incorporated
                  by reference to Annex A of our preliminary information statement
                  filed on
                  August 23, 2005.
 (4)
              Incorporated
                  by reference to Annex B of our preliminary information statement
                  filed on
                  August 23, 2005.
 (5)
              Incorporated
                  by reference from our Form 8-K filed on November 4,
                  2005.
 
  -54-