UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-K
 
 (Mark
One)
 
 x   Annual Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934
 For
the fiscal year ended December 31, 2008
 
 or
  o   Transition Report Pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from
____________ to
___________
 
 COMMISSION
FILE NO. 0-25053
 
 THEGLOBE.COM,
INC.
 (EXACT
NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
 STATE
      OF DELAWARE
              
              14-1782422(STATE
      OR OTHER JURISDICTION OF
              
              (I.R.S.
      EMPLOYERINCORPORATION
      OR ORGANIZATION)
              
              IDENTIFICATION
      NO.)
  110 EAST
BROWARD BOULEVARD, SUITE 1400, FORT LAUDERDALE, FL. 33301
 (ADDRESS
OF PRINCIPAL EXECUTIVE OFFICES)
 
 Registrant’s
telephone number, including area code (954) 769 - 5900
 
 Securities
registered pursuant to Section 12(b) of the Act: None
 
 Securities
registered pursuant to Section 12(g) of the Act:
 
 Common
Stock, par value $.001 per share
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
 o Yes  x No
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
 o Yes  x No
 
 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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (Sec.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.  (check
one)
  Large
      accelerated filer o
              Accelerated
      filer oNon-accelerated
      filer (do not check if a smaller reporting company ) o
              Smaller
      reporting company x
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
 x  Yes 
o No
 
 Aggregate
market value of the voting Common Stock held by non-affiliates of the registrant
as of the close of business as of the last business day of the registrant’s most
recently completed second fiscal quarter, June 30, 2008:
$1,066,000.*
 
 *Includes
voting stock held by third parties, which may be deemed to be beneficially owned
by affiliates, but for which such affiliates have disclaimed beneficial
ownership.
 
 The
number of shares outstanding of the Registrant's Common Stock, $.001 par value
(the "Common Stock") as of March 13, 2009 was 441,484,838.
  
  theglobe.com,
inc.
 
 FORM
10-K
 
 TABLE
OF CONTENTS
  PagePART
      IItem
      1.
                          
                          Business
                          
                          1Item
      1A.
                          
                          Risk
      Factors
                          
                          4Item
      1B.
                          
                          Unresolved
      Staff Comments
                          
                          7Item
      2.
                          
                          Properties
                          
                          8Item
      3.
                          
                          Legal
      Proceedings
                          
                          8Item
      4.
                          
                          Submission
      of Matters to a Vote of Security Holders
                          
                          8PART
      IIItem
      5.
                          
                          Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                          
                          9Item
      6.
                          
                          Selected
      Financial Data
                          
                          10Item
      7.
                          
                          Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                          
                          10Item
      7A.
                          
                          Quantitative
      and Qualitative Disclosures About Market Risk
                          
                          17Item
      8.
                          
                          Financial
      Statements and Supplementary Data
                          
                          F-1Item
      9.
                          
                          Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
                          
                          18Item
      9A(T).
                          
                          Controls
      and Procedures
                          
                          18Item
      9B.
                          
                          Other
      Information
                          
                          19PART
      IIIItem
      10.
                          
                          Directors,
      Executive Officers and Corporate Governance
                          
                          19Item
      11.
                          
                          Executive
      Compensation
                          
                          21Item
      12.
                          
                          Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                          
                          23Item
      13.
                          
                          Certain
      Relationships and Related Transactions and Director
      Independence
                          
                          25Item
      14.
                          
                          Principal
      Accounting Fees and Services
                          
                          27PART
      IVItem
      15.
                          
                          Exhibits
      and Financial Statement Schedules
                          
                          28SIGNATURES
                          
                          
                          
                          32
 
 i
  FORWARD
LOOKING STATEMENTS
 
 This Form
10-K contains forward-looking statements within the meaning of the federal
securities laws that relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology, such as "may," "will," "should," "could," "expect," "plan,"
"anticipate," "believe," "estimate," "project," "predict," "intend," "potential"
or "continue" or the negative of such terms or other comparable terminology,
although not all forward-looking statements contain such terms. In addition,
these forward-looking statements include, but are not limited to, statements
regarding:
  ·
              the
      outcome of pending litigation;·
              our
      ability to negotiate favorable settlements with  unsecured
      creditors;·
              our
      ability to successfully resolve disputed liabilities;·
              our
      estimates or expectations of continued losses;·
              our
      expectations regarding future income (and in particular, income from an
      earn-out due from affiliate) and expenses;·
              our
      ability to raise sufficient capital; and·
              our
      ability to continue to operate as a going
  concern.
 
 These
statements are only predictions. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements. We
are not required to and do not intend to update any of the forward-looking
statements after the date of this Form 10-K 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-K 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-K.
  PART
I
 ITEM 1. BUSINESS
 DESCRIPTION
OF BUSINESS
 
 As more
fully discussed in the section below entitled “Sale of Tralliance and Share
Issuance,” on September 29, 2008, theglobe.com, inc. (the “Company” or
“theglobe”) consummated the sale of the business and substantially all of the
assets of its Tralliance Corporation subsidiary (“Tralliance”) to Tralliance
Registry Management Company, LLC (“Tralliance Registry Management”), an entity
controlled by Michael S. Egan, the Company’s Chairman and Chief Executive
Officer.  As a result of and on the effective date of the sale of its
Tralliance business, which was theglobe’s last remaining operating business,
theglobe became a “shell company,” as that term is defined in Rule 12b-2 of the
Exchange Act, with no material operations or assets.  At the present
time, theglobe has no plans to acquire or start-up any new
businesses.
 
 As part
of the consideration for the sale of its Tralliance business, theglobe received
earn-out rights from Tralliance Registry Management (as described below, the
“Earn-Out”), which will constitute the only source of future revenue for
theglobe as a shell company.  It is expected that theglobe’s future
operating expenses as a shell company will consist of customary public company
expenses, including accounting, financial reporting, legal, audit and other
related public company costs.
 
 As of
December 31, 2008, as reflected in our accompanying Consolidated Balance Sheet,
our current liabilities significantly exceed our total
assets.  Additionally, we received a report from our independent
registered public accountants, relating to our December 31, 2008 audited
financial statements, containing an explanatory paragraph regarding our ability
to continue as a going concern.
 
 It is the
Company’s preference to avoid filing for protection under the U.S. Bankruptcy
Code.  However, unless the Company is successful in restructuring or
settling its current liabilities and/or raising additional debt or equity
securities, it may not be able to continue to operate as a going concern for any
significant length of time in the future.  Notwithstanding the above,
theglobe currently intends to continue as a public company and make all the
requisite filings under the Securities and Exchange Act of 1934.
  1
 
 SALE
OF TRALLIANCE AND SHARE ISSUANCE
 
 On
September 29, 2008, the Company (i) sold the business and substantially all of
the assets of its Tralliance Corporation subsidiary to Tralliance Registry
Management and (ii) issued 229 million of its Common Stock (the “Shares”) to The
Registry Management Company, LLC (“Registry Management”), (the “Purchase
Transaction”).  Tralliance Registry Management and Registry Management
are entities directly or indirectly controlled by Michael S. Egan, our Chairman
and Chief Executive Officer and principal stockholder, and each of our two
remaining executive officers and Board members, Edward A. Cespedes, our
President, and Robin Segaul Lebowitz, our Vice President of Finance, own a
minority interest in Registry Management.  After giving effect to the
closing of the Purchase Transaction, and the issuance of the Shares thereunder,
Mr. Egan now beneficially owns approximately 77% of the Company’s issued and
outstanding Common Stock.
 
 In
connection with the Purchase Transaction, the Company received (i) consideration
totaling approximately $6.4 million which consisted of the surrender to theglobe
and satisfaction of secured demand convertible promissory notes issued by
theglobe and held by Registry Management in the aggregate principal amount of
$4.25 million, together with all accrued and unpaid interest of approximately
$1.3 million through the date of closing of the Purchase Transaction and
satisfaction of approximately $870 thousand in outstanding rent and
miscellaneous fees due and unpaid to the Registry Management through the date of
closing of the Purchase Transaction, and (ii) an earn-out equal to 10% (subject
to certain minimums) of Tralliance Registry Management’s “net revenue” (as
defined) derived from “.travel” names registered by Tralliance Registry
Management from September 29, 2008 through May 15, 2015 (the
“Earn-out”).  The minimum Earn-out payable by Tralliance Registry
Management to theglobe will be at least $300 thousand in the first year of the
Earn-out Agreement, increasing by $25 thousand each subsequent year (pro-rated
for the final year of the Earn-out).
 
 Commensurate
with the closing of the Purchase Transaction on September 29, 2008, the Company
also entered into Termination Agreements with each of its executive officers
(each a “Termination Agreement”).  Pursuant to the Termination
Agreements, the Company’s employment agreements with each of Michael S. Egan,
Edward A. Cespedes and Robin Segaul Lebowitz, the Chief Executive Officer,
President and Vice President of Finance, all dated August 1, 2003, respectively,
were terminated.  Notwithstanding the termination of these employment
agreements, each of Messrs. Egan, Cespedes and Ms. Lebowitz remains as an
officer and director of the Company.
 
 In
connection with the closing of the Purchase Transaction, the Company entered
into a Master Services Agreement (“Services Agreement”) with Dancing Bear
Investments, Inc. (“Dancing Bear”), an entity which is controlled by Mr.
Egan.  Under the terms of the Services Agreement, for a fee of $20
thousand per month ($240 thousand per annum), Dancing Bear will provide
personnel and services to the Company so as to enable it to continue its
existence as a public company without the necessity of any full-time employees
of its own (after an initial transition period that ended December 31,
2008).  The Services Agreement has an initial term of one year and is
subject to renewal or early termination under certain
events.  Services under the Services Agreement include, without
limitation, accounting, assistance with financial reporting, accounts payable,
treasury/financial planning, record retention and secretarial and investor
relations functions.
 
 OUR
FORMER INTERNET SERVICES BUSINESS
 
 On May 9,
2005, we exercised a purchase option and acquired all of the outstanding capital
stock of Tralliance.  From the date of acquisition until the sale of
the Tralliance business to Tralliance Registry Management on September 29, 2008,
theglobe operated Tralliance as its Internet Services line of
business.  The following discussion of the Tralliance business and its
contractual relationships relates to the period prior to such sale.
 
 Tralliance
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.  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 exclusive
registry for the “.travel” top-level domain (the “Registry”) for an initial
period of ten years.  Renewal of the ICANN contract beyond the initial
ten year term was then conditioned upon the negotiation of renewal terms
reasonably acceptable to ICANN.  Additionally, ICANN had the right to
immediately terminate the contract in the event of a material and fundamental
breach of the contract by the Registry and failure to cure such breach within
thirty days of notice.
 
 The
establishment of the “.travel” top-level domain enables businesses,
organizations, governmental agencies and other enterprises that operate within
the travel and tourism industry to establish a unique Internet domain name from
which to communicate and conduct commerce.  An Internet domain name is
made up of a top-level domain and a second-level domain.  For example,
in the domain name “companyX.travel”, “companyX” is the second-level domain and
“.travel” is the top-level domain.  The Registry for the “.travel”
top-level domain is responsible for maintaining the master database of all
second-level “.travel” domain names and their corresponding Internet Protocol
(“IP”) addresses.
 
 To
facilitate the “.travel” domain name registration process, the Registry entered
into contracts with a number of registrars.  The registrars act as
intermediaries between the Registry and customers (referred to as registrants)
seeking to register “.travel” domain names.  The registrars handle the
billing and collection of registration fees, customer service and technical
management of the registration database.  Registrants can register
“.travel” domain names for terms of one year (minimum) up to 10 years
(maximum).  For standard name registration transactions, registrars
retain a portion of the registration fee collected by them as their compensation
and remit the remainder, then $80 per domain name per year, of the registration
fee to the Registry.
  2
 
 In order
to register a “.travel” domain name, a registrant must first be verified as
being eligible (“authenticated”) by virtue of being a valid participant in the
travel industry.  Additionally, eligibility data is required to be
updated and reviewed annually, subsequent to initial
registration.  Once authenticated, a registrant is only permitted to
register “.travel” domain names that are associated with the registrant’s
business or organization.  The Registry entered into contracts with a
number of travel associations and other independent organizations
(“authentication providers”) whereby, in consideration for the payment of fixed
and/or variable fees, all required authentication procedures were performed by
such authentication providers.  The Registry had also outsourced
various other registry operations, database maintenance and policy formulation
functions to certain other independent businesses or organizations in
consideration for the payment of certain fixed and/or variable
fees.
 
 Commensurate
with the closing of the sale of the Tralliance business to Tralliance Registry
Management on September 29, 2008, all existing contracts relevant to the
operation of the “.travel” registry, including the ICANN contract and contracts
with entities who perform registry operations, authentication and registrar
functions, were assigned by Tralliance to Tralliance Registry
Management.  As discussed earlier in this Report, subsequent to the
sale of its Tralliance business, the Company’s sole interest in the “.travel”
registry relates to the Earn-out payable from Tralliance Registry Management to
the Company based upon net revenues derived from “.travel” names registered by
Tralliance Registry Management from September 29, 2008 through May 5,
2015.
 
 OUR
DISCONTINUED OPERATIONS
 
 COMPUTER
GAMES BUSINESS
 
 In
February 2000, the Company entered the computer games business by acquiring
Computer Games Magazine, a print publication for personal computer (“PC”)
gamers; CGOnline, the online counterpart to Computer Games Magazine; and Chips
& Bits, an e-commerce games distribution business.  Historically,
content of Computer Games Magazine and CGOnline focused primarily on the PC
games market niche.
 
 From 2001
through 2006, based upon a trend of decreasing net revenue, the profitability of
our Computer Games business also decreased.  Also, due in part to
unsuccessful attempts to diversify and expand its business beyond games and into
other areas of the entertainment industry, the Computer Games business incurred
significant operating losses during 2004, 2005 and 2006.
 
 In March
2007, management and the Board of Directors of the Company made the decision to
cease all activities related to its Computer Games businesses, including
discontinuing the operations of its magazine publications, game distribution
business and related websites.  The Company’s decision to shutdown its
Computer Games businesses was based primarily on the historical losses sustained
by these businesses during 2004 through 2006 and management’s expectations of
continued future losses.  As of December 31, 2008, all significant
elements of its computer games business shutdown plan have been completed by the
Company, except for the resolution and payment of remaining outstanding accounts
payable, aggregating approximately $40 thousand at December 31,
2008.
 
 VOIP
TELEPHONY SERVICES BUSINESS
 
 In
November 2002 and May 2003, the Company acquired certain Voice over Internet
Protocol (“VoIP”) assets and businesses and entered the VoIP telephony market
place.  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 allowed customers to communicate using VoIP
technology for dramatically reduced pricing compared to traditional telephony
networks.  The services also offered traditional telephony features
such as voicemail, caller ID, call forwarding, and call waiting for no
additional cost to the customer, as well as incremental services that were not
then supported by the public switched telephone network (“PSTN”) like the
ability to use numbers remotely and voicemail to email services.
 
 From the
initial launch of its VoIP services in 2003 through 2005, the Company continued
to expand its VoIP network, which was comprised of switching hardware and
software, services, billing and inventory systems, and telecommunication carrier
contractual relationships.  During this same period of time, the
Company attempted to market and distribute its VoIP retail products through
various direct and indirect sales channels.  None of the marketing and
sales programs implemented during these years were successful in generating a
significant number of customers or revenue.  As a result, the capacity
of the Company’s VoIP network greatly exceeded its usage, and the VoIP telephony
services business incurred substantial operating losses during this time
period.  During 2006, the Company developed and implemented a plan to
reconfigure, phase out and eliminate certain components of its VoIP network in
order to reduce network excess capacity and operating costs.
 
 In March
2007, management and the Board of Directors decided to discontinue the
operating, research and development activities of its VoIP telephony services
business and terminate all of the remaining employees of the
business.  On April 2, 2007, theglobe agreed to transfer to Michael S.
Egan all of its VoIP intellectual property in consideration for his agreement to
provide certain security and credit enhancements in connection with the MySpace
litigation Settlement Agreement (See Note 11, “Litigation,” in the accompanying
Notes to Consolidated Financial Statements for further
discussion).  The Company had previously written off the value of the
VoIP intellectual property as a result of its evaluation of the VoIP telephony
services business’ long-lived assets in connection with the preparation of the
Company’s 2004 year-end consolidated financial statements.  The
Company’s decision to discontinue the operations of its VoIP telephony services
business was based primarily on the historical losses sustained by the business
during 2003 through 2006, management’s expectations of continued losses for the
foreseeable future and estimates of the amount of capital required to attempt to
successfully monetize its business.  As of December 31, 2008, all
significant elements of its VoIP telephony services business shutdown plan have
been completed by the Company, except for the resolution of certain vendor
disputes and the payment of remaining outstanding vendor payables, aggregating
approximately $1.8 million at December 31, 2008.
  3
 
 Results
of operations for the Computer Games and VoIP telephony services businesses have
been reported separately as “Discontinued Operations” in the accompanying
consolidated statements of operations for all periods presented.  The
assets and liabilities of the computer games and VoIP telephony services
businesses have been included in the captions, “Assets of Discontinued
Operations” and “Liabilities of Discontinued Operations” in the accompanying
consolidated balance sheets for all periods presented.
 
 EMPLOYEES
 
 As of
March 13, 2009, we had no employees other than our executive
officers.  Each of our executive officers are officers or directors of
other companies, certain of which have ongoing business relationships with the
Company.  Our executive officers currently devote very limited time to
our business and receive no compensation from us.
 
 The
business of the Company is currently managed by Dancing Bear Investments, Inc.,
an entity which is controlled by our Chairman and Chief Executive Officer, under
a Master Services Agreement entered into on September 29,
2008.  Services under the Master Services Agreement include, without
limitation, assistance with accounting, financial reporting, treasury/financial
planning, record retention and secretarial and investor relations
functions.
 
 ITEM
1A. 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 MAY NOT BE ABLE TO CONTINUE AS A
GOING CONCERN.
 
 The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America on
a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Accordingly, the
consolidated financial statements do not include any adjustments relating to the
recoverability of assets and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern. However,
for the reasons described below, Company management does not believe that cash
on hand and cash flow generated internally by the Company will be adequate to
fund its limited overhead and other cash requirements beyond a short period of
time. These reasons raise significant doubt about the Company’s ability to
continue as a going concern.
 
 During
the years ended December 31, 2007 and 2008, the Company was able to continue
operating as a going concern due principally to funding of $1.25 million
received during 2007 from the sale of secured convertible demand promissory
notes (the “2007 Convertible Notes”) to an entity controlled by Michael S. Egan,
its Chairman and Chief Executive Officer, additional funding of $380 thousand
provided from the sale of all of the Company’s rights related to its
www.search.travel domain name and website to an entity also controlled by Mr.
Egan in December 2007 and funding of $500 thousand received during 2008 under a
Revolving Loan Agreement with an entity also controlled by Mr. Egan (See Note 8,
“Debt” and Note 12, “Related Party Transactions” in the accompanying Notes to
Consolidated Financial Statements for further details).
 
 At
December 31, 2008, the Company had a net working capital deficit of
approximately $3.0 million, inclusive of a cash and cash equivalents balance of
approximately $90 thousand. Such working capital deficit included (i) a total of
approximately $523 thousand in principal and accrued interest owed under the
aforementioned Revolving Loan Agreement to an entity controlled by Mr. Egan, and
(ii) an aggregate of approximately $2.7 million in unsecured accounts payable
and accrued expenses owed to vendors and other non-related third parties (of
which approximately $1.8 million relates to liabilities of our VoIP telephony
service discontinued business, with a significant portion of such liabilities
related to charges which have been disputed by theglobe). theglobe believes that
its ability to continue as a going concern for any significant length of time in
the future will be heavily dependent, among other things, on its ability to
prevail and avoid making any payments with respect to such disputed vendor
charges and/or to negotiate favorable settlements (including discounted payment
and/or payment term concessions) with the aforementioned creditors.
 
 As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance” in the
accompanying Notes to Consolidated Financial Statements, on September 29, 2008,
the Company (i) sold the business and substantially all of the assets of its
Tralliance Corporation subsidiary to Tralliance Registry Management, and (ii)
issued 229 million shares of its Common Stock (the “Shares”) to Registry
Management (the “Purchase Transaction”). Tralliance Registry Management and
Registry Management are entities controlled by Michael S. Egan. The closing of
the Purchase Transaction resulted in the cancellation of all of the Company’s
remaining Convertible Debt, related accrued interest and rent and accounts
payable owed to entities controlled by Mr. Egan as of the date of closing
(totaling approximately $6.4 million). However, the Company continues to be
obligated to repay its principal borrowings totaling $500 thousand, plus accrued
interest at the rate of 10% per annum, due to an entity controlled by Mr. Egan
under the aforementioned Revolving Loan Agreement. All unpaid borrowings under
the Revolving Loan Agreement, including accrued interest, are due and payable by
the Company in one lump sum on the earlier of (i) June 6, 2009, or (ii) the
occurrence of an event of default as defined in the Revolving Loan Agreement.
The Company currently has no ability to repay this loan when due. All borrowings
under the Revolving Loan Agreement are secured by a pledge of all of the assets
of the Company and its subsidiaries. After giving effect to the closing of the
Purchase Transaction and the issuance of the Shares thereunder, Mr. Egan now
beneficially owns approximately 77% of the Company’s issued and outstanding
Common Stock.
  4
 
 As
additional consideration under the Purchase Transaction, Tralliance Registry
Management is obligated to pay an earn-out to theglobe equal to 10% (subject to
certain minimums) of Tralliance Registry Management’s net revenue (as defined)
derived from “.travel” names registered by Tralliance Registry Management from
September 29, 2008 through May 5, 2015 (the “Earn-out”). The minimum Earn-out
payable by Tralliance Registry Management to theglobe will be at least $300
thousand in the first year, increasing by $25 thousand in each subsequent year
(pro-rated for the final year of the Earn-out).
 
 In
connection with the closing of the Purchase Transaction, the Company also
entered into a Master Services Agreement with an entity controlled by Mr. Egan
whereby for a fee of $20 thousand per month ($240 thousand per annum) such
entity will provide personnel and services to the Company so as to enable it to
continue its existence as a public company without the necessity of any
full-time employees of its own. Additionally, commensurate with the closing of
the Purchase Transaction, Termination Agreements with each of its current
executive officers, which terminated their previous and then existing employment
agreements, were executed. Notwithstanding the termination of these employment
agreements, each of our current executive officers and directors remain as
executive officers and directors of the Company.
 
 Immediately
following the closing of the Purchase Transaction, theglobe became a shell
company with no material operations or assets, and no source of revenue other
than under the Earn-out. It is expected that theglobe’s future operating
expenses as a public shell company will consist primarily of expenses incurred
under the aforementioned Master Services Agreement and other customary public
company expenses, including legal, audit and other miscellaneous public company
costs.
 
 Despite
the significant reductions in operating and cash flow losses expected to be
realized from selling its Tralliance business, and as a result of becoming a
shell company, management believes that theglobe will most likely continue to
incur operating and cash flow losses for the foreseeable future. However,
assuming that no significant unplanned costs are incurred, management believes
that theglobe’s future losses will be limited. Further, in the event that
Registry Management is successful in substantially increasing the net revenue
derived from “.travel” name registrations (and as the result maximizing
theglobe’s Earn-out revenue) in the future, theglobe’s prospects for achieving
profitability will be enhanced.
 
 It is the
Company’s preference to avoid filing for protection under the U.S. Bankruptcy
Code. However, based upon the Company’s current financial condition as discussed
above, management believes that additional debt or equity capital will need to
be raised in order for theglobe to continue to operate as a going concern. Such
capital will be needed both to (i) fund expected future operating losses and
(ii) repay the $500 thousand of secured debt and related accrued interest due
under the Revolving Loan Agreement and a portion of the $2.7 million unsecured
indebtedness (assuming theglobe is successful in favorably resolving and
settling certain disputed and non-disputed vendor charges related to such
unsecured indebtedness).
 
 Without
the infusion of additional capital and/or the continued indulgence of its
creditors, management does not believe the Company will have the ability to
operate as a going concern for any significant length of time beyond March 31,
2009. Any such additional capital would likely come from Mr. Egan, or affiliates
of Mr. Egan, as the Company currently has no access to credit facilities and has
traditionally relied upon borrowings from related parties to meet short-term
liquidity needs. Any such equity capital raised would likely result in very
substantial dilution in the number of outstanding shares of the Company’s Common
Stock. Given theglobe’s current financial condition and the state of the current
United States capital markets and economy, it has no current intent to seek to
acquire, or start, any other business.
 
 WE
MAY NOT BE SUCCESSFUL IN SETTLING DISPUTED VENDOR CHARGES.
 
 Our
balance sheet at December 31, 2008 includes certain material estimated
liabilities related to disputed vendor charges incurred primarily as the result
of the failure and subsequent shutdown of our discontinued VoIP telephony
services business. Although we are seeking to resolve and settle these disputed
charges for amounts substantially less than recorded amounts, there can be no
assurances that we will be successful in this regard. Additionally, the legal
and administrative costs of resolving these disputed charges may be expensive.
An adverse outcome in any of these matters could materially and adversely affect
our financial position, utilize a significant portion of our cash resources
and/or require additional capital to be infused into the Company, and adversely
affect our ability to continue to operate as a going concern. See Note 4,
“Discontinued Operations” in the Notes to Consolidated Financial Statements for
future details.
 
 OUR
NET OPERATING LOSS CARRYFORWARDS MAY BE SUBSTANTIALLY LIMITED.
 
 As of
December 31, 2008, we had net operating loss carryforwards which may be
potentially available for U.S. tax purposes of approximately $166 million. These
carryforwards expire through 2028. The Tax Reform Act of 1986 imposes
substantial restrictions on the utilization of net operating losses and tax
credits in the event of an "ownership change" of a corporation. Due to various
significant changes in our ownership interests, as defined in the Internal
Revenue Code of 1986, as amended, that occurred prior to December 31, 2008, we
have substantially limited the availability of our net operating loss
carryforwards. We believe that we have sufficient net operating loss
carryforwards available to offset taxable income generated during the year ended
December, 2008 (except for approximately $15 thousand in federal alternative
minimum taxes that we believe are payable and have been accrued at December 31,
2008).
  5
 
 OUR
OFFICERS, INCLUDING OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER AND PRESIDENT HAVE
OTHER INTERESTS; WE HAVE CONFLICTS OF INTEREST WITH OUR DIRECTORS; ALL OF OUR
DIRECTORS ARE EMPLOYEES OR STOCKHOLDERS OF THE COMPANY OR AFFILIATES OF OUR
LARGEST STOCKHOLDER.
 
 Our
Chairman and Chief Executive Officer, Mr. Michael Egan, is an officer or
director of other companies. Mr. Egan became our Chief Executive Officer
effective June 1, 2002. Mr. Egan is also the controlling investor of The
Registry Management Company, LLC, Dancing Bear Investments, Inc., E&C
Capital Partners LLLP, and E&C Capital Partners II, LLC, which are our
largest stockholders. Mr. Egan is also the controlling investor of Certified
Vacations Group, Inc. and Labigroup Holdings, LLC, entities which have had
various ongoing business relationships with the Company. Additionally, Mr. Egan
is the controlling investor of Tralliance Registry Management Company, LLC, an
entity which has recently acquired our Tralliance business (see Note 3, “Sale of
Tralliance and Share Issuance” in the Notes to Consolidated Financial Statements
for further details).
 
 Our
President, Treasurer and Chief Financial Officer and Director, Mr. Edward A.
Cespedes, is also an officer, director or shareholder of other companies,
including E&C Capital Partners LLLP, E&C Capital Partners II, LLC,
Labigroup Holdings LLC and The Registry Management Company, LLC. Accordingly, we
must compete for his time.
 
 Our Vice
President of Finance and Director, Ms. Robin Lebowitz is also an officer of
Dancing Bear Investments, Inc and director of Certified Vacations Group, Inc.
She is also an officer, director or shareholder of other companies or entities
controlled by Mr. Egan and Mr. Cespedes, including The Registry Management
Company, LLC.
 
 Due to
the relationships with his related entities, Mr. Egan will have an inherent
conflict of interest in making any decision related to transactions between the
related entities and us. Furthermore, the Company's Board of Directors presently
is comprised entirely of individuals which are executive officers of theglobe,
and therefore are not "independent." We intend to review related party
transactions in the future on a case-by-case basis.
 
 WE
CURRENTLY HAVE NO BUSINESS OPERATIONS AND ARE A SHELL COMPANY.
 
 Immediately
following the closing of the Purchase Transaction, theglobe became a shell
company with no material operations or assets, and no source of revenue other
than under the “net revenue” earn-out arrangement with Tralliance Registry
Management. It is expected that theglobe’s future operating expenses as a public
shell company will consist primarily of expenses incurred under the
aforementioned Master Services Agreement and other customary public company
expenses, including legal, audit and other miscellaneous public company costs.
Given theglobe’s current financial condition and the state of the current United
States capital markets and economy, the Company has no current intent to seek to
acquire, or start, any other business.
 
 RISKS
RELATING TO OUR COMMON STOCK
 
 WE
ARE CONTROLLED BY OUR CHAIRMAN.
 
 On
September 29, 2008, in connection with the closing of the Purchase Transaction
more fully described in Note 3, “Sale of Tralliance and Share Issuance,” in the
accompanying Notes to Consolidated Financial Statements, the Company issued 229
million shares of its Common Stock to Registry Management, an entity controlled
by Michael S. Egan, its Chairman and Chief Executive Officer. Previously on June
10, 2008, Dancing Bear Investments, Inc., also an entity controlled by Mr. Egan,
converted an aggregate of $400 thousand of outstanding convertible secured
promissory notes due to them by the Company into 40 million shares of our Common
Stock. As a result of the issuance of the 269 million shares under the
transactions described above, Mr. Egan’s beneficial ownership has been increased
to approximately 77% of the Company’s issued and outstanding Common Stock.
Accordingly, Mr. Egan is now in a position to control the vote on all corporate
actions in the future.
 
 DELISTING
OF OUR COMMON STOCK MAKES IT MORE DIFFICULT FOR INVESTORS TO SELL
SHARES.
 
 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. 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.
  6
 
 OUR
COMMON STOCK IS SUBJECT TO CERTAIN "PENNY STOCK" RULES WHICH MAY MAKE IT A LESS
ATTRACTIVE INVESTMENT.
 
 Since the
trading price of our Common Stock is less than $5.00 per share and our net
tangible assets are less than $2.0 million, trading in our Common Stock is
subject to the requirements of Rule 15g-9 of the Exchange Act. Under Rule 15g-9,
brokers who recommend penny stocks to persons who are not established customers
and accredited investors, as defined in the Exchange Act, must satisfy special
sales practice requirements, including requirements that they make an
individualized written suitability determination for the purchaser; and receive
the purchaser's written consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional
disclosures in connection with any trades involving a penny stock, including the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated with that market.
Such requirements may severely limit the market liquidity of our Common Stock
and the ability of purchasers of our equity securities to sell their securities
in the secondary market. For all of these reasons, an investment in our equity
securities may not be attractive to our potential investors.
 
 AS
A RESULT OF THE CLOSING OF THE PURCHASE AGREEMENT, WE ARE A SHELL COMPANY AND
ARE SUBJECT TO MORE STRINGENT REPORTING REQUIREMENTS AND CERTAIN RULE 144
RESTRICTIONS.
 
 As a
result of the consummation of the Purchase Transaction, we have no or nominal
operations and assets, and pursuant to Rule 405 and Exchange Act Rule 12b-2, we
are a shell company. Applicable securities rules prohibit shell companies from
using a Form S-8 to register securities pursuant to employee compensation plans.
However, the rules do not prevent us from registering securities pursuant to
certain other registration statements. Additionally, Form 8-K requires shell
companies to provide more detailed disclosure upon completion of a transaction
that causes it to cease being a shell company. To the extent we acquire a
business in the future, we must file a current report on Form 8-K containing the
information required in a registration statement on Form 10, within four
business days following completion of the transaction together with financial
information of the private operating company. In order to assist the SEC in the
identification of shell companies, we will also be required to check a box on
Form 10-Q and Form 10-K indicating that we are a shell company. To the extent
that we are required to comply with additional disclosure because we are a shell
company, we may be delayed in executing any mergers or acquiring other assets
that would cause us to cease being a shell company. In addition, the SEC adopted
amendments to Rule 144 effective February 15, 2008, which do not allow a holder
of restricted securities of a “shell company” to resell their securities
pursuant to Rule 144. Preclusion from any prospective purchase using the
exemptions from registration afforded by Rule 144 may make it more difficult for
us to sell equity securities in the future.
 
 RISK
FACTORS RELATING TO THE PURCHASE TRANSACTION AND THE DISPOSITION OF THE
TRALLIANCE BUSINESS
 
 THE
ANTICIPATED BENEFITS OF THE PURCHASE TRANSACTION MAY NOT BE REALIZED; WE WILL
CONTINUE TO HAVE A NEED FOR CAPITAL.
 
 As a
result of the closing of the Purchase Transaction, the Company has been relieved
of over $6.4 million of obligations under convertible secured demand promissory
notes and unsecured accounts payables. Additionally, the Company received
Earn-out rights equal to 10% (subject to certain minimums) of Tralliance
Registry Management’s “net revenue” (as defined) derived from “.travel” names
registeted by Tralliance Registry Management from September 29, 2008 through May
5, 2015. The minimum Earn-out payable by Tralliance Registry Management to
theglobe will be at least $300 thousand in the first year, increasing by $25
thousand in each subsequent year (pro-rated for the final year of the
Earn-out).
 
 However,
notwithstanding the fact that the Company’s total liabilities have been
significantly reduced as a result of the consummation of the Purchase
Transaction, the Company’s remaining liabilities and obligations are expected to
significantly exceed its assets for the foreseeable future. Additionally,
although the consummation of the Purchase Transaction is expected to
significantly reduce our future losses, we expect to continue to incur operating
and cash flow losses for the foreseeable future, and be dependent upon our
ability to raise equity or borrow funds in order to remain in business. There
can be no assurance that the Company will be successful in raising equity or
borrowing funds in order to continue as a going concern. Further, as a result of
the sale of its Tralliance business, the Company will no longer have any active
business operations and will be a shell company with no ability to generate
future revenue or profits other than through the Earn-out arrangement with
Tralliance Registry Management.
  ITEM 1B. UNRESOLVED STAFF
COMMENTS
 
 Not
applicable.
  7
 
 ITEM 2. PROPERTIES
 
 The
Company does not own or lease any property.  We currently use the
offices of Dancing Bear Investments, Inc., an entity controlled by our Chairman,
at no cost to us except for amounts included within the management services fees
charged to us by Dancing Bear Investments, Inc. under the Master Services
Agreement entered into on September 29, 2008.
 
 ITEM
3. LEGAL PROCEEDINGS
 
 On and
after August 3, 2001 six putative shareholder class action lawsuits were filed
against the Company, certain of its current and former officers and directors
(the “Individual Defendants”), and several investment banks that were the
underwriters of the Company's initial public offering and secondary offering.
The lawsuits were filed in the United States District Court for the Southern
District of New York. A Consolidated Amended Complaint, which is now the
operative complaint, was filed in the Southern District of New York on April 19,
2002.
 
 The
lawsuit purports to be a class action filed on behalf of purchasers of the stock
of the Company during the period from November 12, 1998 through December 6,
2000. The purported class action alleges violations of Sections 11 and 15 of the
Securities Act of 1933 (the “1933 Act”) and Sections 10(b), Rule 10b-5 and 20(a)
of the Securities Exchange Act of 1934 (the “1934 Act”). Plaintiffs allege that
the underwriter defendants agreed to allocate stock in the Company's initial
public offering and its secondary offering to certain investors in exchange for
excessive and undisclosed commissions and agreements by those investors to make
additional purchases of stock in the aftermarket at pre-determined prices.
Plaintiffs allege that the Prospectuses for the Company's initial public
offering and its secondary offering were false and misleading and in violation
of the securities laws because it did not disclose these arrangements. The
action seeks damages in an unspecified amount. On October 9, 2002, the Court
dismissed the Individual Defendants from the case without prejudice. This
dismissal disposed of the Section 15 and 20(a) control person claims without
prejudice. On December 5, 2006, the Second Circuit vacated a decision by the
district court granting class certification in six of the coordinated cases,
which are intended to serve as test, or “focus,” cases. The plaintiffs selected
these six cases, which do not include the Company. On April 6, 2007, the Second
Circuit denied a petition for rehearing filed by the plaintiffs, but noted that
the plaintiffs could ask the district court to certify more narrow classes than
those that were rejected.
 
 On August
14, 2007, the plaintiffs filed amended complaints in the six focus cases. The
amended complaints include a number of changes, such as changes to the
definition of the purported class of investors, and the elimination of the
individual defendants as defendants. On September 27, 2007, the plaintiffs moved
to certify a class in the six focus cases. On November 14, 2007, the issuers and
the underwriters named as defendants in the six focus cases filed motions to
dismiss the amended complaints against them. On March 26, 2008, the District
Court dismissed the Section 11 claims of those members of the putative classes
in the focus cases who sold their securities for a price in excess of the
initial offering price and those who purchased outside the previously certified
class period. With respect to all other claims, the motions to dismiss were
denied. On October 10, 2008, at the request of the plaintiffs, the plaintiffs’
motion for class certification was withdrawn, without prejudice.
 
 The
parties in the approximately 300 coordinated class actions, including
theglobe.com, the underwriter defendants in the theglobe.com class action, and
the plaintiff class in the theglobe.com class action, have reached an agreement
in principle under which the insurers for the issuer defendants in the
coordinated cases will make the settlement payment on behalf of the issuers,
including theglobe.com.  The settlement is subject to approval by the
parties, termination by the parties under certain circumstances, and Court
approval.  There is no assurance that the settlement will be concluded
or that the Court will approve the settlement.
 
 Due to
the inherent uncertainties of litigation, the Company cannot accurately predict
the ultimate outcome of the matter.   If the settlement is not
concluded or 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.
 
 The
Company is currently a party to certain other claims and disputes arising in the
ordinary course of business, including certain disputes related to vendor
charges incurred primarily as the result of the failure and subsequent shutdown
of its discontinued VoIP telephony services business. The Company believes that
it has recorded adequate accruals on its balance sheet to cover such disputed
charges and is seeking to resolve and settle such disputed charges for amounts
substantially less than recorded amounts. An adverse outcome in any of these
matters, however, could materially and adversely effect our financial position,
utilize a significant portion of our cash resources and adversely affect our
ability our ability to continue as a going concern (see Note 4, “Discontinued
Operations” in the accompanying Notes to Consolidated Financial
Statements).
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
  None.
  8
  PART II
  ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
 
 MARKET
INFORMATION
 
 The
shares of our Common Stock trade in the over-the-counter market on what is
commonly referred to as the electronic bulletin board, under the symbol
"TGLO.OB". The following table sets forth the range of high and low bid prices
of our Common Stock for the periods indicated as reported by the
over-the-counter market (the electronic bulletin board). The quotations below
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions:
 
 2008
                        
                        
                        2007High
                        
                        
                        Low
                        
                        
                        High
                        
                        
                        LowFourth
      Quarter
                        
                        $
                        0.02
                        
                        
                        $
                        0.01
                        
                        
                        $
                        0.03
                        
                        
                        $
                        0.01Third
      Quarter
                        
                        $
                        0.03
                        
                        
                        $
                        0.01
                        
                        
                        $
                        0.05
                        
                        
                        $
                        0.02Second
      Quarter
                        
                        $
                        0.03
                        
                        
                        $
                        0.01
                        
                        
                        $
                        0.05
                        
                        
                        $
                        0.03First
      Quarter
                        
                        $
                        0.03
                        
                        
                        $
                        0.01
                        
                        
                        $
                        0.10
                        
                        
                        $
                        0.03
 
 HOLDERS OF
COMMON STOCK
 
 We had
approximately 668 holders of record of Common Stock as of March 13, 2009. This
does not reflect persons or entities that hold Common Stock in nominee or
"street" name through various brokerage firms.
 
 DIVIDENDS
 
 We have
not paid any cash dividends on our Common Stock since our inception and do not
intend to pay dividends in the foreseeable future. Our board of directors will
determine if we pay any future dividends.
 
 SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION PLANS AS OF DECEMBER 31, 2008
  Plan
      Category
                      
                      Number
      of
                        securities
      to be
                        issued
      upon
                        exercise
      of
                        outstanding
                        options,
                        warrants
      and
                        rights
                      
                      
                      Weighted-average
                        exercise
      priceof
                        outstanding
      options,
                        warrants
      and rights
                      
                      
                      Number
      of
                        securities
                        remaining
                        available
      for
                        future
      issuance
                        under
      equity
                        compensation
                        plansEquity
      Compensation plans approved by security holders
                      
                      
                      7,923,660
                      
                      
                      $
                      .52
                      
                      
                      
                      3,995,560Equity
      Compensation plans not approved by security holders
                      
                      
                      7,040,000
                      
                      
                      $
                      .10
                      
                      
                      
                      4,025,141Total
                      
                      
                      14,963,660
                      
                      
                      $
                      .33
                      
                      
                      
                      8,020,701
 
 Equity
compensation plans not approved by security holders consist of the
following:
  ·
                1,750,000
      shares of Common Stock of theglobe.com, inc., issued to Edward A. Cespedes
      pursuant to the Non-Qualified Stock Option Agreement dated August 12, 2002
      at an exercise price of $0.02 per share. These stock options vested
      immediately and have a life of ten years from date of
    grant.·
                2,500,000
      shares of Common Stock of theglobe.com, inc., issued to Michael S. Egan
      pursuant to the Non-Qualified Stock Option Agreement dated August 12, 2002
      at an exercise price of $0.02 per share. These stock options vested
      immediately and have a life of ten years from date of
    grant.·
                500,000
      shares of Common Stock of theglobe.com, inc., issued to Robin S. Lebowitz
      pursuant to the Non-Qualified Stock Option Agreement dated August 12, 2002
      at an exercise price of $0.02 per share. These stock options vested
      immediately and have a life of ten years from date of
    grant.
  9
  ·
                In
      September 2003, the Company established the 2003 Sales Representative
      Stock Option Plan (the “2003 Plan”) and in August 2004 the Company
      established the 2004 Stock Incentive Plan (the “2004
      Plan”).  See Note 9, “Stock Option
      Plans” in the accompanying Notes to Consolidated Financial Statements for
      a description of the material features of the 2003 and 2004
      Plans.
  STOCK
PERFORMANCE GRAPH
 
 As a
“smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we
have elected scaled disclosure reporting and therefore are not required to
provide the stock performance graph.
 
 RECENT
SALES OF UNREGISTERED SECURITIES
 
 (a)  Unregistered
Sales of Equity Securities.
 
 The
registrant previously reported two separate sales of unregistered equity
securities that were made during the year ended December 31,
2008.  The registrant reported the conversion of $400,000 in principal
amount of secured demand convertible notes into an aggregate of 40,000,000
shares of theglobe Common Stock by Dancing Bear Investments, Inc. on June 10,
2008 in its Report on Form 8-K filed on June 13, 2008.  The registrant
also reported the issuance of 229,000,000 shares of theglobe Common Stock to the
Registry Management Company, LLC in connection with the closing of the Purchase
Agreement dated June 10, 2008 by and between theglobe, its subsidiary,
Tralliance Corporation and The Registry Management Company, LLC (the “Purchase
Agreement”) in its Report on Form 8-K filed on October 3, 2008.
 
 (b)  Use
of Proceeeds from Sales of Registered Securities.
 
 Not
applicable.
 
 ITEM
6. SELECTED FINANCIAL DATA
 
 As a
“smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we
have elected scaled disclosure reporting and therefore are not required to
provide the information required by this Item.
  ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  OVERVIEW
 
 As more
fully discussed in the section below entitled “Sale of Tralliance and Share
Issuance,” on September 29, 2008, theglobe.com, inc. (the “Company” or
“theglobe”) consummated the sale of the business and substantially all of the
assets of its Tralliance Corporation subsidiary (“Tralliance”) to an entity
controlled by Michael S. Egan, the Company’s Chairman and Chief Executive
Officer. We acquired Tralliance on May 9, 2005 and from the date of acquisition
until September 29, 2008, Tralliance operated as the registry for the “.travel”
top-level Internet domain.
 
 As part
of the consideration for the sale of its Tralliance business, theglobe received
earn-out rights equal to 10% of the “net revenue” derived from “.travel” names
registered by the acquirer, Tralliance Registry Management, from September 29,
2008 through May 5, 2015 (the “Earn-out”). The minimum Earn-out payable to
theglobe will be at least $300 thousand in the first year following closing,
increasing by $25 thousand in each subsequent year (pro-rated for the final year
of the Earn-out). Immediately following the sale of its Tralliance business,
theglobe became a shell company with no material operations or assets and no
source of revenue other than under the Earn-out. theglobe presently intends to
continue as a public company and make all the requisite filings under the
Securities and Exchange Act of 1934. It has no current intent to seek to acquire
or start any other businesses. It is expected that theglobe’s future operating
expenses as a public shell company will consist of customary public company
expenses, including accounting, financial reporting, legal, audit and other
related public company costs. For financial reporting purposes, theglobe will
continue to report the financial position and results of operation of its
Tralliance business as a component of its continuing operations.
 
 In March
2007, management and the Board of Directors of the Company made the decision to
cease all activities related to its computer games and VoIP telephony services
businesses. Results of operations for the computer games and VoIP telephony
services businesses have been reported separately as “Discontinued Operations”
in the accompanying condensed consolidated statements of operations for all
periods presented. The assets and liabilities of the computer games and VoIP
telephony services have been included in the captions, “Assets of Discontinued
Operations” and “Liabilities of Discontinued Operations” in the accompanying
condensed consolidated balance sheets.
  10
 
 SALE
OF TRALLIANCE AND SHARE ISSUANCE
 
 On
September 29, 2008, the Company (i) sold the business and substantially all of
the assets of its Tralliance Corporation subsidiary to Tralliance Registry
Management and (ii) issued 229 million shares of its Common Stock (the “Shares”)
to Registry Management (the “Purchase Transaction”) (see Note 3, “Sale of
Tralliance and Share Issuance” in the accompanying Notes to Consolidated
Financial Statements). Tralliance Registry Management and Registry Management
are entities directly or indirectly controlled by Michael S. Egan, our Chairman
and Chief Executive Officer and principal stockholder, and each of our two
remaining executive officers and Board members, Edward A. Cespedes, our
President, and Robin Segaul Lebowitz, our Vice President of Finance, own a
minority interest in Registry Management. After giving effect to the closing of
the Purchase Transaction and the issuance of the Shares thereunder, Mr. Egan now
beneficially owns approximately 77% of the Company’s issued and outstanding
Common Stock.
 
 In
connection with the Purchase Transaction, the Company received (i) consideration
totaling approximately $6.4 million which consisted of the surrender to theglobe
and satisfaction of secured demand convertible promissory notes issued by
theglobe and held by Registry Management in the aggregate principal amount of
$4.25 million, together with all accrued and unpaid interest of approximately
$1.3 million through the date of closing of the Purchase Transaction and
satisfaction of approximately $870 thousand in outstanding rent and
miscellaneous fees due and unpaid to the Registry Management through the date of
closing of the Purchase Transaction, and (ii) an earn-out equal to 10% (subject
to certain minimums) of Tralliance Registry Management’s “net revenue” (as
defined) derived from “.travel” names registered by Tralliance Registry
Management from September 29, 2008 through May 5, 2015 (the “Earn-out”). The
minimum Earn-out payable by Tralliance Registry Management to theglobe will be
at least $300 thousand in the first year of the Earn-out Agreement, increasing
by $25 thousand each subsequent year (pro-rated for the final year of the
Earn-out).
 
 Commensurate
with the closing of the Purchase Transaction, on September 29, 2008, the Company
also entered into Termination Agreements with each of its executive officers
(each a “Termination Agreement”). Pursuant to the Termination Agreements, the
Company’s employment agreements with each of Michael S. Egan, Edward A. Cespedes
and Robin Segaul Lebowitz, the Chief Executive Officer, President and Vice
President of Finance, all dated August 1, 2003, respectively, were terminated.
Notwithstanding the termination of these employment agreements, each of Messrs.
Egan, Cespedes and Ms. Lebowitz remains as an officer and director of the
Company.
 
 In
connection with the closing of the Purchase Transaction, the Company entered
into a Master Services Agreement (“Services Agreement”) with Dancing Bear
Investments, Inc. (“Dancing Bear”), an entity which is controlled by Mr. Egan.
Under the terms of the Services Agreement, for a fee of $20 thousand per month
($240 thousand per annum), Dancing Bear will provide personnel and services to
the Company so as to enable it to continue its existence as a public company
without the necessity of any full-time employees of its own (after an initial
transition period that ends December 31, 2008). The Services Agreement has an
initial term of one year and is subject to renewal or early termination under
certain events. Services under the Services Agreement include, without
limitation, accounting, assistance with financial reporting, accounts payable,
treasury/financial planning, record retention and secretarial and investor
relations functions.
  BASIS
OF PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS; GOING
CONCERN
 
 We
received a report from our independent registered public accountants, relating
to our December 31, 2008 audited financial statements, containing an explanatory
paragraph regarding our ability to continue as a going concern. Management
believes that the recent sale of its Tralliance business on September 29, 2008
will significantly reduce the amount of operating and cash flow losses
previously sustained by the Company. However, management does not believe that
the sale of its Tralliance business will in itself allow the Company to become
profitable and generate operating cash flows sufficient to fund its operations
and pay its existing current liabilities (including those liabilities related to
its discontinued operations) in the foreseeable future. Based upon our current
cash resources and without the infusion of additional capital and/or the
continued indulgence of its creditors, management does not believe the Company
can operate as a going concern for any significant length of time beyond the end
of March 31, 2009.  See “Future and Critical Need for Capital” section
of this Management’s Discussion and Analysis of Financial Condition and Results
of Operations for further details.
 
 Our
condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America on
a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Accordingly, our
condensed consolidated financial statements do not include any adjustments
relating to the recoverability of assets and classification of liabilities that
might be necessary should we be unable to continue as a going
concern.
 
 Due to
the Sale of our Tralliance business and Share Issuance on September 29, 2008,
and the discontinuance of our computer games and VoIP telephony services
businesses in March 2007, the results of our operations for the year ended
December 31, 2008 and the year ended December 31, 2007 are not necessarily
comparable.
 
 YEAR ENDED DECEMBER 31, 2008 COMPARED TO YEAR ENDED DECEMBER 31,
2007
 
 CONTINUING
OPERATIONS
 
 NET REVENUE.  Net
revenue totaled approximately $3.2 million for the year ended December 31, 2008
as compared to approximately $2.2 million for the year ended December 31, 2007,
an increase of approximately $1.0 million. The increase is primarily
attributable to revenue recognized during the third quarter of the current year
of approximately $1.5 million related to the write-off of the remaining balance
of deferred revenue as a result of the sale of the Company’s Tralliance business
on September 29, 2008.  Additionally, the aforementioned Tralliance
sale also resulted in no revenue bring recognized during the fourth quarter of
2008 compared to revenue of approximately $553 thousand recognized during the
fourth quarter of 2007.
  11
 
 COST OF
REVENUE.  Cost of revenue totaled approximately $233 thousand for the
year ended December 31, 2008 as compared to approximately $420 thousand for the
year ended December 31, 2007, a decrease of approximately $187
thousand.  Such decrease was due primarily to cost savings resulting
from performing registration eligibility verification and .travel directory
hosting functions in-house rather than utilizing third party providers in 2008
compared to 2007.
 
 SALES AND
MARKETING.  Sales and marketing expenses totaled approximately $390
thousand for the year ended December 31, 2008 as compared to approximately $1.9
million for the year ended December 31, 2007, a decrease of approximately $1.5
million.  During 2007, the Company incurred substantial sales and
marketing costs related to promoting its .travel registry business in various
international markets and developing its search.travel search engine
business.  During the fourth quarter of 2007, the majority of the
Company’s international marketing programs were terminated and in December 2007,
the Company sold its www.search.travel
business, resulting in decreases in international and search.travel sales and
marketing costs of approximately $736 thousand and approximately $447 thousand
in 2008 compared to 2007, respectively.
 
 GENERAL
AND ADMINISTRATIVE.  General and administrative expenses totaled
approximately $1.6 million for the year ended December 31, 2008 as compared to
approximately $3.4 million for the year ended December 31, 2007, a decrease of
approximately $1.8 million.  During 2007, the Company restructured and
reduced management and administrative staff resulting in a decrease in personnel
costs of approximately $1.2 million in 2008 compared to
2007.  Additionally, professional fees and travel and entertainment
expenses decreased in 2008 and 2007 by approximately $188 thousand and $180
thousand, respectively.
 
 RELATED
PARTY TRANSACTIONS.  Related party transaction expense totaled
approximately $449 thousand for the year ended December 31, 2008 as compared to
approximately $498 thousand for the year ended December 31, 2007, a decrease of
approximately $49 thousand.  Such decrease was due primarily to lower
related party charges for office space in 2008 versus 2007.
 
 DEPRECIATION
AND AMORTIZATION.  Depreciation and amortization expense totaled
approximately $399 thousand for the year ended December 31, 2008 as compared to
$240 thousand for the year ended December 31, 2007.  The $159 thousand
increase is attributable mainly to higher intangible asset amortization expense
of approximately $211 thousand recorded in the current year related primarily to
the write-off of the remaining net book value of intangible assets which were
deemed to have no future value as a result of the sale of the Company’s
Tralliance business on September 29, 2008.
 
 GAIN ON
TRALLIANCE ASSET SALE.  During the year ended December 31, 2008, the
Company recorded a gain of approximately $2.5 million related to the sale of its
Tralliance business on September 29, 2008.
 
 RELATED
PARTY INTEREST EXPENSE.  Related party interest expense for the year
ended December 31, 2008 was approximately $359 thousand compared to $1.6 million
for the year ended December 31, 2007, a decrease of approximately $1.3
million.  During the second quarter and third quarter of 2007, a total
of 1.25 million of non-cash interest expense was recorded related to the
beneficial conversion features of a total of $1.25 million in convertible
promissory notes acquired by an entity controlled by its Chairman and Chief
Executive Officer.
 
 INTEREST
INCOME (EXPENSE), NET.  Net interest income of approximately $3
thousand was reported for the year ended December 31, 2008 compared to total net
interest income of $58 thousand reported for the year ended December 31,
2007.  As a result of the Company’s net losses incurred during 2007
and 2008 the Company had a lower level of funds available for investment during
the 2008 period as compared to 2007.
 
 RELATED
PARTY OTHER INCOME.  Related party other income of $75 thousand
related to Earn-out payments received from Tralliance Registry Management was
recognized during the year ended December 31, 2008.  Related party
other income of approximately $380 thousand related to the gain on the sale of
www.search.travel to
Search.Travel, LLC was recognized during the year ended December 31,
2007.
 
 INCOME
TAXES.  The provision for income taxes for the year ended December 31,
2008 consists of approximately $16 thousand in federal alternative minimum taxes
recorded and accrued as of December 31, 2008 (see Note 10, “Income Taxes” in the
accompanying Notes to Consolidated Financial Statements for further
details.).
  12
 
 DISCONTINUED
OPERATIONS
 
 Income
from discontinued operations before income taxes totaled approximately $50
thousand for the year ended December 31, 2008 as compared to a loss of
approximately $729 thousand for the year ended December 31, 2007, and is
summarized as follows:
 
 VoIPComputer
                        
                        
                        TelephonyGames
                        
                        
                        Services
                        
                        
                        TotalYear
      ended December 31, 2008:Net
      revenue
                        
                        $
                        21,695
                        
                        
                        $
                        —
                        
                        
                        $
                        21,695Operating
      expenses
                        
                        $
                        5,860
                        
                        
                        $
                        5,309
                        
                        
                        $
                        11,169Other
      income, net
                        
                        $
                        32,916
                        
                        
                        $
                        6,978
                        
                        
                        $
                        39,894Income
      from discontinued operations before income taxes
                        
                        $
                        48,751
                        
                        
                        $
                        1,669
                        
                        
                        $
                        50,420
  VoIPComputer
                        
                        
                        TelephonyGames
                        
                        
                        Services
                        
                        
                        TotalYear
      ended December 31, 2007:Net
      revenue
                        
                        $
                        634,164
                        
                        
                        $
                        630
                        
                        
                        $
                        634,794Operating
      expenses
                        
                        $
                        783,458
                        
                        
                        $
                        707,567
                        
                        
                        $
                        1,491,025Other
      income, net
                        
                        $
                        34,556
                        
                        
                        $
                        92,435
                        
                        
                        $
                        126,991Loss
      from discontinued operations before income taxes
                        
                        $
                        (114,738
                        )
                        
                        $
                        (614,502
                        )
                        
                        $
                        (729,240
                        )
 
 The
results of the Company’s discontinued operations for the year ended December 31,
2008 include a $64,000 provision for income taxes related to estimated taxes due
in connection with an ongoing prior year audit of a former subsidiary
company.  No income tax provision was recorded for the year ended
December 31, 2007.
 
 LIQUIDITY AND CAPITAL RESOURCES
 
 FUTURE
AND CRITICAL NEED FOR CAPITAL
 
 For the
reasons described below, Company management does not believe that cash on hand
and cash flow generated internally by the Company will be adequate to fund its
limited overhead and other cash requirements beyond a short period of time.
Additionally, we have received a report from our independent registered public
accountants, relating to our December 31, 2008 audited financial statements,
containing an explanatory paragraph regarding our ability to continue as a going
concern.
 
 During
the years ended December 31, 2007 and 2008, the Company was able to continue
operating as a going concern due principally to funding of $1.25 million
received during 2007 from the sale of secured convertible demand promissory
notes (the “2007 Convertible Notes”) to an entity controlled by Michael S. Egan,
its Chairman and Chief Executive Officer, additional funding of $380 thousand
provided from the sale of all of the Company’s rights related to its
www.search.travel domain name and website to an entity also controlled by Mr.
Egan in December 2007 and funding of $500 thousand received during 2008 under a
Revolving Loan Agreement with an entity also controlled by Mr. Egan (See Note 8,
“Debt” and Note 12, “Related Party Transactions” in the accompanying Notes to
Consolidated Financial Statements for further details).
 
 At
December 31, 2008, the Company had a net working capital deficit of
approximately $3.0 million, inclusive of a cash and cash equivalents balance of
approximately $90 thousand. Such working capital deficit included (i) a total of
approximately $523 thousand in principal and accrued interest owed under the
aforementioned Revolving Loan Agreement to an entity controlled by Mr. Egan, and
(ii) an aggregate of approximately $2.7 million in unsecured accounts payable
and accrued expenses owed to vendors and other non-related third parties (of
which approximately $1.8 million relates to liabilities of our VoIP telephony
service discontinued business, with a significant portion of such liabilities
related to charges which have been disputed by theglobe). theglobe believes that
its ability to continue as a going concern for any significant length of time in
the future will be heavily dependent, among other things, on its ability to
prevail and avoid making any payments with respect to such disputed vendor
charges and/or to negotiate favorable settlements (including discounted payment
and/or payment term concessions) with the aforementioned creditors.
  13
  As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance” in the
accompanying Consolidated Financial Statements, on September 29, 2008, the
Company (i) sold the business and substantially all of the assets of its
Tralliance Corporation subsidiary to Tralliance Registry Management, and (ii)
issued 229 million shares of its Common Stock (the “Shares”) to Registry
Management (the “Purchase Transaction”). Tralliance Registry Management and
Registry Management are entities controlled by Michael S. Egan. The closing of
the Purchase Transaction resulted in the cancellation of all of the Company’s
remaining Convertible Debt, related accrued interest and rent and accounts
payable owed to entities controlled by Mr. Egan as of the date of closing
(totaling approximately $6.4 million). However, the Company continues to be
obligated to repay its principal borrowings totaling $500 thousand, plus accrued
interest at the rate of 10% per annum, due to an entity controlled by Mr. Egan
under the aforementioned Revolving Loan Agreement. All unpaid borrowings under
the Revolving Loan Agreement, including accrued interest, are due and payable by
the Company in one lump sum on the earlier of (i) June 6, 2009, or (ii) the
occurrence of an event of default as defined in the Revolving Loan Agreement.
The Company currently has no ability to repay this loan when due. All borrowings
under the Revolving Loan Agreement are secured by a pledge of all of the assets
of the Company and its subsidiaries. After giving effect to the closing of the
Purchase Transaction and the issuance of the Shares thereunder, Mr. Egan now
beneficially owns approximately 77% of the Company’s issued and outstanding
Common Stock.
 
 As
additional consideration under the Purchase Transaction, Tralliance Registry
Management is obligated to pay an earn-out to theglobe equal to 10% (subject to
certain minimums) of Tralliance Registry Management’s net revenue (as defined)
derived from “.travel” names registered by Tralliance Registry Management from
September 29, 2008 through May 5, 2015 (the “Earn-out”). The minimum Earn-out
payable by Tralliance Registry Management to theglobe will be at least $300
thousand in the first year, increasing by $25 thousand in each subsequent year
(pro-rated for the final year of the Earn-out).
 
 In
connection with the closing of the Purchase Transaction, the Company also
entered into a Master Services Agreement with an entity controlled by Mr. Egan
whereby for a fee of $20 thousand per month ($240 thousand per annum) such
entity will provide personnel and services to the Company so as to enable it to
continue its existence as a public company without the necessity of any
full-time employees of its own. Additionally, commensurate with the closing of
the Purchase Transaction, Termination Agreements with each of its current
executive officers, which terminated their previous and then existing employment
agreements, were executed. Notwithstanding the termination of these employment
agreements, each of our current executive officers and directors remain as
executive officers and directors of the Company.
 
 Immediately
following the closing of the Purchase Transaction, theglobe became a shell
company with no material operations or assets, and no source of revenue other
than under the Earn-out. It is expected that theglobe’s future operating
expenses as a public shell company will consist primarily of expenses incurred
under the aforementioned Master Services Agreement and other customary public
company expenses, including legal, audit and other miscellaneous public company
costs.
 
 Despite
the significant reductions in operating and cash flow losses expected to be
realized from selling its Tralliance business, and as a result of becoming a
shell company, management believes that theglobe will most likely continue to
incur operating and cash flow losses for the foreseeable future. However,
assuming that no significant unplanned costs are incurred, management believes
that theglobe’s future losses will be limited. Further, in the event that
Registry Management is successful in substantially increasing net revenue
derived from “.travel” name registrations (and as the result maximizing
theglobe’s Earn-out revenue) in the future, theglobe’s prospects for achieving
profitability will be enhanced.
 
 It is the
Company’s preference to avoid filing for protection under the U.S. Bankruptcy
Code. However, based upon the Company’s current financial condition as discussed
above, management believes that additional debt or equity capital will need to
be raised in order for theglobe to continue to operate as a going concern. Such
capital will be needed both to (i) fund expected future operating losses and
(ii) repay the $500 thousand of secured debt and related accrued interest due
under the Revolving Loan Agreement and a portion of the $2.7 million unsecured
indebtedness (assuming theglobe is successful in favorably resolving and
settling certain disputed and non-disputed vendor charges related to such
unsecured indebtedness).
 
 Without
the infusion of additional capital and/or the continued indulgence of its
creditors, management does not believe the Company will have the ability to
operate as a going concern for any significant length of time beyond March 31,
2009. Any such additional capital would likely come from Mr. Egan, or affiliates
of Mr. Egan, as the Company currently has no access to credit facilities and has
traditionally relied upon borrowings from related parties to meet short-term
liquidity needs. Any such equity capital raised would likely result in very
substantial dilution in the number of outstanding shares of the Company’s Common
Stock. Given theglobe’s current financial condition and the state of the current
United States capital markets and economy, it has no current intent to seek to
acquire, or start, any other business.
 
 CASH
FLOW ITEMS
 
 YEAR
ENDED DECEMBER 31, 2008 COMPARED TO YEAR ENDED DECEMBER 31, 2007
  As of December 31, 2008, theglobe had approximately $90 thousand
in cash and cash equivalents as compared to approximately $631 thousand as of
December 31, 2007.  Net cash flows used in operating activities of
continuing operations totaled approximately $859 thousand and $3.3 million, for
the years ended December 31, 2008 and 2007, respectively, or a decrease of
approximately $2.4 million.  Such decrease was attributable primarily
to a lower net loss from continuing operations (after adjustments for the
non-cash impacts attributable to the Tralliance Asset Sale in the current period
and the non-cash impact related to beneficial conversion features of debt in the
prior year) for the year ended December 31, 2008 compared to the year ended
December 31, 2007.
  14
  Approximately
$6 thousand in net cash flows were provided from the operating activities of
discontinued operations during the year ended December 31, 2008 as compared to
net cash flow usage of approximately $3.2 million during the prior
year.  Such decrease was attributable to the shutdown of the Company’s
computer games and VoIP telephony services businesses in March
2007.
  Net cash
flows from investing activities and net cash flows from financing activities for
the year ended December 31, 2008 included allocations of $79 thousand and $113
thousand, respectively, related to transaction costs incurred in connection with
the Purchase Transaction that was consummated on September 29,
2008.  Net cash flows from investing activities for the year ended
December 31, 2007 also included proceeds of $380 thousand received from the sale
of www.search.travel in
December 2007 as well as aggregate proceeds received from the sale of property
and equipment of discontinued operations of $167 thousand.  Net cash
flows from financing activities for the year ended December 31, 2008 also
included proceeds of $500 thousand borrowed under a Revolving Loan Agreement
with Dancing Bear Investments, Inc., an entity controlled by the Company
Chairman and Chief Executive Officer.  Net cash flows from financing
activities for the year ended December 31, 2007 included proceeds of $1.25
million related to secured demand convertible notes issued to Dancing Bear
Investments, Inc.
 
 CONTRACTUAL
OBLIGATIONS
 
 As a
“smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we
have elected scaled disclosure reporting and therefore are not required to
provide the table required by (a)(5) of this Item.
 
 OFF-BALANCE
SHEET ARRANGEMENTS
 
 As of
December 31, 2008, we did not have any material off-balance sheet arrangements
that have or are reasonably likely to have a material effect on our current or
future financial condition, revenues or expenses, results of operations,
liquidity, or capital resources.
 
 EFFECTS
OF INFLATION
 
 Management
believes that inflation has not had a significant effect on our results of
operations during 2008 and 2007.
 
 MANAGEMENT'S
DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
 
 The
preparation of our financial statements in conformity with accounting principles
generally accepted in the United States of America requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. At December 31, 2008, a significant portion of our net liabilities of
discontinued operations relate to charges that have been disputed by the Company
and for which estimates have been required.  Additionally, certain
liabilities of our continuing operations, including federal and state income
taxes payable, have required the use of estimates.
 
 As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance” in the
accompanying Notes to Consolidated Financial Statements, significant estimates
related to the fair value of the Tralliance business and theglobe’s Common
Stock, as of the date of closing of the Purchase Transaction, were required in
order to allocate the total purchase price and related transaction costs between
the Tralliance Asset Sale and the Share Issuance.
 
 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 accounts receivable, valuation of intangible and other long-lived
assets and income tax accounting. Our accounting policies and procedures related
to these areas are summarized in Note 1, “Organization and Summary of
Significant Accounting Policies” in the accompanying Notes to Consolidated
Financial Statements.
 
 IMPACT
OF RECENTLY ISSUED ACCOUNTING STANDARDS
  In
December 2007, the FASB issued SFAS 141R, “Business Combinations” (“SFAS 141R”)
which requires an acquirer to recognize the assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree at the acquisition
date, measured at their fair values as of that date. SFAS 141R requires, among
other things, that in a business combination achieved through stages (sometimes
referred to as a “step acquisition”) that the acquirer recognize the
identifiable assets and liabilities, as well as the non-controlling interest in
the acquiree, at the full amounts of their fair values (or other amounts
determined in accordance with this Statement).
 
 SFAS 141R
also requires the acquirer to recognize goodwill as of the acquisition date,
measured as a residual, which in most types of business combinations will result
in measuring goodwill as the excess of the consideration transferred plus the
fair value of any non-controlling interest in the acquiree at the acquisition
date over the fair values of the identifiable net assets acquired. SFAS 141R
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. We do not expect that the adoption of SFAS 141R will
have a material impact on our financial statements.
  15
  In
December 2007, the FASB issued SFAS 160, “Non-controlling Interests in
Consolidated Financial Statements” (“SFAS 160”). This Statement changes the way
the consolidated income statement is presented. SFAS 160 requires consolidated
net income to be reported at amounts that include the amounts attributable to
both the parent and the non-controlling interest. It also requires disclosure,
on the face of the consolidated statement of income, of the amounts of
consolidated net income attributable to the parent and to the non-controlling
interest. Currently, net income attributable to the non-controlling interest
generally is reported as an expense or other deduction in arriving at
consolidated net income. It also is often presented in combination with other
financial statement amounts. SFAS 160 results in more transparent reporting of
the net income attributable to the non-controlling interest. This Statement is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. The Company does not believe that SFAS
160 will have a material impact on its financial statements.
  In February 2007, the Financial Accounting Standards Board
(“FASB”) issued SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities.” SFAS No. 159 expands the scope of what entities may
carry at fair value by offering an irrevocable option to record many types of
financial assets and liabilities at fair value. Changes in fair value would be
recorded in an entity’s income statement. This accounting standard also
establishes presentation and disclosure requirements that are intended to
facilitate comparisons between entities that choose different measurement
attributes for similar types of assets and liabilities. SFAS No. 159 is
effective for the Company on January 1, 2008. Earlier application is permitted
under certain circumstances.  The adoption of SFAS No. 159 did not
have a material impact on the Company’s financial statements.
 
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
standard defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosure about fair value
measurements. SFAS No. 157 applies to other accounting standards that require or
permit fair value measurements. Accordingly, this statement does not require any
new fair value measurement. This statement is effective for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
The adoption of SFAS No. 157 did not have a material impact on the Company’s
financial statements.
 
 In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161,
“Disclosures about Derivative
Instruments and Hedging Activities,” (“SFAS 161”).  SFAS 161
has the same scope as Statement 133 and requires enhanced disclosures about an
entity’s derivative and hedging activities and thereby improves the transparency
of financial reporting.  This Statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged.  This Statement
encourages, but does not require, comparative disclosures for earlier periods at
initial adoption.  This Statement changes the disclosure requirements
for derivative instruments and hedging activities.  Entities are
required to provide enhanced disclosures about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for under Statement 133 and its related interpretations, and (c)
how derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows.  The Company does not
believe that adoption of SFAS 161 will have a material impact on the Company’s
consolidated financial statements.
 
 In April
2008, the FASB issued FSP SFAS No. 142-3, “Determination of the Useful Life of
Intangible Assets.”  142-3 is effective for fiscal years
beginning after December 15, 2008.  The Company does not believe that
the implementation of this standard will have a material impact on the Company’s
consolidated financial statements.
 
 In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162,
“The Hierarchy of Generally
Accepted Accounting Principles,” (“SFAS 162”), which identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles (GAAP) in the United States (the GAAP hierarchy).  SFAS No.
162 became effective on November 15, 2008.  The implementation of this
standard did not have a material impact on the Company’s consolidated financial
statements.
 
 APB 14-1
“Accounting for Convertible
Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial
Cash Settlement)” applies to convertible debt instruments that, by their
stated terms, may be settled in cash (or other assets) upon conversion,
including partial cash settlement, unless the embedded conversion options is
required to be separately accounted for as a derivative under FASB Statement No.
133, “Accounting for
Derivative Instruments and Hedging Activities.”  APB 14-1 is
effective for fiscal years beginning after December 15, 2008.  The
Company does not believe that the implementation of this standard will have a
material impact n the Company’s consolidated financial statements.
 
 EITF
07-05, “Determining Whether an
Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock,”
applies to any freestanding financial instrument or embedded feature that has
all the characteristics of a derivative in FAS Statement 133, for purposes of
determining whether that instrument or embedded feature qualifies for the first
part of the scope exception in paragraph 11 (a) of Statement
133.  This issue also applies to any freestanding financial instrument
that is potentially settled in an entity’s own stock, regardless of whether the
instrument has all the characteristics of a derivative in paragraphs 6-9 of
Statement 133, for purposes of determining whether the instrument is within the
scope of EITF 00-19.  EITF 07-05 is effective for fiscal years
beginning after December 15, 2008.  The Company does not believe that
the implementation of this standard will have a material impact on the Company’s
consolidated financial statements.
  16
 
 ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 As a
“smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we
have elected scaled disclosure reporting and therefore are not required to
provide the information required by this Item.
  17
  ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
  CONSOLIDATED
FINANCIAL STATEMENTS
  THEGLOBE.COM,
INC. AND SUBSIDIARIES
  INDEX
TO FINANCIAL STATEMENTS
  PAGEREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                          
                          F-2CONSOLIDATED
      FINANCIAL STATEMENTSBALANCE
      SHEETS
                          
                          F-3STATEMENTS
      OF OPERATIONS
                          
                          F-4STATEMENTS
      OF STOCKHOLDERS' EQUITY (DEFICIT) AND COMPREHENSIVE INCOME
      (LOSS)
                          
                          F-5STATEMENTS
      OF CASH FLOWS
                          
                          F-6NOTES
      TO FINANCIAL STATEMENTS
                          
                          F-8
  F-1
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Board of
Directors and Stockholders
 theglobe.com,
inc. and Subsidiaries
 
 We have
audited the accompanying consolidated balance sheets of theglobe.com, inc. and
Subsidiaries as of December 31, 2008 and 2007, and the related consolidated
statements of operations, stockholders' equity and comprehensive income (loss),
and cash flows for each of the years in the two-year period ended December 31,
2008. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of theglobe.com,
inc. and Subsidiaries as of December 31, 2008 and 2007, and the consolidated
results of its operations and its cash flows for each of the years in the
two-year period ended December 31, 2008, in conformity with accounting
principles generally accepted in the United States.
 
 The
accompanying 2008 consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has historically suffered
significant net losses, has an accumulated deficit of approximately $298 million
and has sold its last remaining operating business.  These factors
raise substantial doubt about its ability to continue as a going concern.
Management’s plans in regard to these matters are also described in Note 2. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 
 RACHLIN
LLP
  Fort
Lauderdale, Florida
 March 25,
2009
  F-2
  
 THEGLOBE.COM,
      INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETS
  December
      31,
                                            
                                            
                                            December
      31,2008
                                            
                                            
                                            2007ASSETSCurrent
      Assets:Cash
      and cash equivalents
                                            
                                            $
                                            89,754
                                            
                                            
                                            $
                                            631,198Accounts
      receivable from related parties
                                            
                                            
                                            75,000
                                            
                                            
                                            
                                            416,566Accounts
      receivable
                                            
                                            
                                            —
                                            
                                            
                                            
                                            12,213Prepaid
      expenses
                                            
                                            
                                            19,576
                                            
                                            
                                            
                                            173,794Other
      current assets
                                            
                                            
                                            —
                                            
                                            
                                            
                                            4,219Net
      assets of discontinued operations
                                            
                                            
                                            —
                                            
                                            
                                            
                                            30,000Total
      current assets
                                            
                                            
                                            184,330
                                            
                                            
                                            
                                            1,267,990Property
      and equipment, net
                                            
                                            
                                            —
                                            
                                            
                                            
                                            35,748Intangible
      assets, net
                                            
                                            
                                            —
                                            
                                            
                                            
                                            368,777Other
      assets
                                            
                                            
                                            40,000
                                            
                                            
                                            
                                            40,000Total
      assets
                                            
                                            $
                                            224,330
                                            
                                            
                                            $
                                            1,712,515LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      Liabilities:Accounts
      payable to related parties
                                            
                                            $
                                            40,667
                                            
                                            
                                            $
                                            499,631Accounts
      payable
                                            
                                            
                                            200,385
                                            
                                            
                                            
                                            263,683Accrued
      expenses and other current liabilities
                                            
                                            
                                            567,182
                                            
                                            
                                            
                                            953,826Accrued
      interest due to related parties
                                            
                                            
                                            23,233
                                            
                                            
                                            
                                            954,795Notes
      payable due to related parties
                                            
                                            
                                            500,000
                                            
                                            
                                            
                                            4,650,000Deferred
      revenue
                                            
                                            
                                            —
                                            
                                            
                                            
                                            1,443,589Net
      liabilities of discontinued operations
                                            
                                            
                                            1,899,110
                                            
                                            
                                            
                                            1,902,344Total
      current liabilities
                                            
                                            
                                            3,230,577
                                            
                                            
                                            
                                            10,667,868Deferred
      revenue
                                            
                                            
                                            —
                                            
                                            
                                            
                                            401,248Total
      liabilities
                                            
                                            
                                            3,230,577
                                            
                                            
                                            
                                            11,069,116Stockholders'
      Deficit:Common
      stock, $0.001 par value; 500,000,000 shares authorized; 441,484,838 and
      172,484,838 shares issued at December 31, 2008 and December 31, 2007,
      respectively
                                            
                                            
                                            441,485
                                            
                                            
                                            
                                            172,485Additional
      paid in capital
                                            
                                            
                                            294,298,990
                                            
                                            
                                            
                                            290,486,232Accumulated
      deficit
                                            
                                            
                                            (297,746,722
                                            )
                                            
                                            
                                            (300,015,318
                                            )Total
      stockholders' deficit
                                            
                                            
                                            (3,006,247
                                            )
                                            
                                            
                                            (9,356,601
                                            )Total
      liabilities and stockholders' deficit
                                            
                                            $
                                            224,330
                                            
                                            
                                            $
                                            1,712,515
 
 See notes to consolidated financial
statements.
  F-3




THEGLOBE.COM,
INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS




Year Ended December 31,2008
                  
                  
                  2007Net
      Revenue
                  
                  $
                  3,165,587
                  
                  
                  $
                  2,230,270Operating
      Expenses:Cost
      of revenue
                  
                  
                  232,664
                  
                  
                  
                  420,129Sales
      and marketing
                  
                  
                  389,519
                  
                  
                  
                  1,850,486General
      and administrative
                  
                  
                  1,627,511
                  
                  
                  
                  3,443,007Related
      party transactions
                  
                  
                  448,806
                  
                  
                  
                  498,018Depreciation
                  
                  
                  30,379
                  
                  
                  
                  81,606Intangible
      asset amortization
                  
                  
                  368,777
                  
                  
                  
                  158,047Total
      Operating Expenses
                  
                  
                  3,097,656
                  
                  
                  
                  6,451,293Operating
      Income (Loss) from Continuing Operations
                  
                  
                  67,931
                  
                  
                  
                  (4,221,023
                  )Other
      Income (Expense), net:Gain
      on Tralliance Asset Sale
                  
                  
                  2,510,638
                  
                  
                  
                  —Related
      party interest expense
                  
                  
                  (358,754
                  )
                  
                  
                  (1,648,630
                  )Interest
      income (expense), net
                  
                  
                  2,789
                  
                  
                  
                  57,835Related
      party other income
                  
                  
                  75,000
                  
                  
                  
                  379,791Other
      income
                  
                  
                  247
                  
                  
                  
                  10,1382,229,920
                  
                  
                  
                  (1,200,866
                  )Income
      (Loss) from Continuing Operations Before Income Tax
                  
                  
                  2,297,851
                  
                  
                  
                  (5,421,889
                  )Income
      Tax Provision
                  
                  
                  15,675
                  
                  
                  
                  —Income
      (Loss) from Continuing Operations
                  
                  
                  2,282,176
                  
                  
                  
                  (5,421,889
                  )Discontinued
      Operations, net of tax
                  
                  
                  (13,580
                  )
                  
                  
                  (729,240
                  )Net
      Income (Loss)
                  
                  $
                  2,268,596
                  
                  
                  $
                  (6,151,129
                  )Net
      Income (Loss) Per Share:Basic
      and Diluted:Continuing
      Operations
                  
                  $
                  0.01
                  
                  
                  $
                  (0.03
                  )Discontinued
      Operations
                  
                  $
                  —
                  
                  
                  $
                  (0.01
                  )Net
      Income (Loss)
                  
                  $
                  0.01
                  
                  
                  $
                  (0.04
                  )Weighted
      Average Common Shares Outstanding
                  
                  
                  252,968,360
                  
                  
                  
                  172,484,838




See notes
to consolidated financial statements.


F-4




THEGLOBE.COM,
INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIT


AND
COMPREHENSIVE INCOME (LOSS)





AdditionalCommon Stock
                  
                  
                  Paid-in
                  
                  
                  AccumulatedShares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Deficit
                  
                  
                  TotalBalance,
      December 31, 2006
                  
                  
                  172,484,838
                  
                  
                  $
                  172,485
                  
                  
                  $
                  289,088,557
                  
                  
                  $
                  (293,864,189
                  )
                  
                  $
                  (4,603,147
                  )Year
      Ended December 31, 2007:Net
      loss
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (6,151,129
                  )
                  
                  
                  (6,151,129
                  )Employee
      stock-based compensation
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  140,549
                  
                  
                  
                  —
                  
                  
                  
                  140,549Stock
      compensation to non-employees
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  7,126
                  
                  
                  
                  —
                  
                  
                  
                  7,126Beneficial
      conversion features of 2007 Convertible Notes
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,250,000
                  
                  
                  
                  —
                  
                  
                  
                  1,250,000Balance,
      December 31, 2007
                  
                  
                  172,484,838
                  
                  
                  
                  172,485
                  
                  
                  
                  290,486,232
                  
                  
                  
                  (300,015,318
                  )
                  
                  
                  (9,356,601
                  )Year
      Ended December 31, 2008:Net
      Income
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  2,268,596
                  
                  
                  
                  2,268,596Employee
      stock-based compensation
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  21,858
                  
                  
                  
                  —
                  
                  
                  
                  21,858Stock
      compensation to non-employees
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,704
                  
                  
                  
                  —
                  
                  
                  
                  1,704Conversion
      of Convertible Notes
                  
                  
                  40,000,000
                  
                  
                  
                  40,000
                  
                  
                  
                  360,000
                  
                  
                  
                  —
                  
                  
                  
                  400,000Share
      Issuance
                  
                  
                  229,000,000
                  
                  
                  
                  229,000
                  
                  
                  
                  3,429,196
                  
                  
                  
                  —
                  
                  
                  
                  3,658,196Balance,
      December 31, 2008
                  
                  
                  441,484,838
                  
                  
                  $
                  441,485
                  
                  
                  $
                  294,298,990
                  
                  
                  $
                  (297,746,722
                  )
                  
                  $
                  (3,006,247
                  )





See notes
to consolidated financial statements.


F-5





THEGLOBE.COM,
INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOW




Year ended December 31,2008
                    
                    
                    2007Cash
      Flows from Operating Activities:Net
      income (loss)
                    
                    $
                    2,268,596
                    
                    
                    $
                    (6,151,129
                    )Loss
      from discontinued operations
                    
                    
                    13,580
                    
                    
                    
                    729,240Net
      income (loss) from continuing operations
                    
                    
                    2,282,176
                    
                    
                    
                    (5,421,889
                    )Adjustments
      to reconcile net income (loss) from continuing operationsto
      net cash flows from operating activities:Gain
      on Tralliance Asset Sale
                    
                    
                    (2,510,638
                    )
                    
                    
                    —Depreciation
      and amortization
                    
                    
                    399,156
                    
                    
                    
                    239,653Non-cash
      interest expense
                    
                    
                    —
                    
                    
                    
                    1,250,000Employee
      stock compensation expense
                    
                    
                    21,858
                    
                    
                    
                    140,549Stock
      compensation to non-employees
                    
                    
                    1,704
                    
                    
                    
                    7,126Gain
      on sale of search.travel
                    
                    
                    —
                    
                    
                    
                    (379,791
                    )Other,
      net
                    
                    
                    —
                    
                    
                    
                    (209
                    )Changes
      in operating assets and liabilities:Accounts
      receivable from related parties
                    
                    
                    341,566
                    
                    
                    
                    (410,133
                    )Accounts
      receivable
                    
                    
                    12,213
                    
                    
                    
                    33,657Prepaid
      and other current assets
                    
                    
                    118,007
                    
                    
                    
                    187,256Accounts
      payable to related parties
                    
                    
                    410,539
                    
                    
                    
                    327,912Accounts
      payable
                    
                    
                    (63,298
                    )
                    
                    
                    (130,316
                    )Accrued
      expenses and other current liabilities
                    
                    
                    (386,644
                    )
                    
                    
                    83,461Accrued
      interest due to related parties
                    
                    
                    358,753
                    
                    
                    
                    398,631Deferred
      revenue
                    
                    
                    (1,844,837
                    )
                    
                    
                    389,699Net
      cash flows from operating activities of continuing
    operations
                    
                    
                    (859,445
                    )
                    
                    
                    (3,284,394
                    )Net
      cash flows from operating activities of discontinued
      operations
                    
                    
                    6,186
                    
                    
                    
                    (3,171,074
                    )Net
      cash flows from operating activities
                    
                    
                    (853,259
                    )
                    
                    
                    (6,455,468
                    )Cash
      Flows from Investing Activities:Tralliance
      Asset Sale termination costs
                    
                    
                    (78,992
                    )
                    
                    
                    —Purchases
      of property and equipment
                    
                    
                    (3,301
                    )
                    
                    
                    (26,345
                    )Proceeds
      from the sale of search.travel
                    
                    
                    —
                    
                    
                    
                    380,000Net
      cash flows from investing activities of continuing
    operations
                    
                    
                    (82,293
                    )
                    
                    
                    353,655Net
      cash flows from investing activities of discontinued
      operations:Proceeds
      from the sale of property and equipment
                    
                    
                    7,000
                    
                    
                    
                    166,793Net
      cash flows from investing activities
                    
                    
                    (75,293
                    )
                    
                    
                    520,448Cash
      Flows from Financing Activities:Borrowing
      on notes payable – related party
                    
                    
                    500,000
                    
                    
                    
                    1,250,000Share
      Issuance transaction costs
                    
                    
                    (112,892
                    )
                    
                    
                    —Net
      cash flows from financing activities
                    
                    
                    387,108
                    
                    
                    
                    1,250,000Net
      change in cash & equivalents
                    
                    
                    (541,444
                    )
                    
                    
                    (4,685,020
                    )Cash
      & equivalents at beginning of period
                    
                    
                    631,198
                    
                    
                    
                    5,316,218Cash
      & equivalents at end of period
                    
                    $
                    89,754
                    
                    
                    $
                    631,198





See notes
to consolidated financial statements.


F-6




THEGLOBE.COM,
INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS




(Continued)Year Ended December 31,2008
                          
                          2007Supplemental
      Disclosure of Cash Flow Information:Cash
      paid during the period for:Interest
                          
                          $
                          470
                          
                          
                          $
                          3,903Supplemental
      Disclosure of Non-Cash Investing and Financing Activities:Conversion
      of debt securities into common stock
                          
                          $
                          400,000
                          
                          
                          $
                          —Cancellation
      of debt and other liabilities related to Purchase
    Transaction
                          
                          $
                          6,409,818
                          
                          
                          $
                          —Issuance
      of Common Stock related to Purchase Transaction
                          
                          $
                          3,771,088
                          
                          
                          $
                          —Additional
      paid-in capital attributable to the beneficial conversionfeatures
      of debt and equity securities
                          
                          $
                          —
                          
                          
                          $
                          1,250,000




See notes
to consolidated financial statements.


F-7




THEGLOBE.COM,
INC. AND SUBSIDIARIES


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


December
31, 2008 and 2007




(1)
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





DESCRIPTION
OF THE COMPANY





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





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





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





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





PRINCIPLES
OF CONSOLIDATION





The
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.




USE
OF ESTIMATES





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. These estimates and assumptions relate to estimates of collectability of
accounts receivable, the valuations of fair values of our Common Stock, options,
warrants and our former Tralliance business, the impairment of long-lived
assets, accounts payable and accrued expenses and other factors. Actual results
could differ from those estimates. In addition, the accompanying consolidated
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business (See Note 2, “Going Concern
Considerations”).




CASH
AND CASH EQUIVALENTS





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


F-8


ACCOUNTS
RECEIVABLE FROM RELATED PARTIES





Accounts
receivable from related parties at December 31, 2008 consists of a $75,000
minimum Earn-out quarterly payment due from Tralliance Registry Management under
an Earn-out Agreement related to the sale of the Company’s Tralliance business
on September 29, 2008.  Such receivable was collected in full by the
Company in January 2009.  Accounts receivable from related parties at
December 31, 2007 consists primarily of receivables totaling $412,050 due from
Labigroup Holdings, LLC in connection with a Bulk Registration Co-Marketing
Agreement, which were collected in full during the first quarter of 2008 (see
Note 3, “Sale of Tralliance and Share Issuance” and Note 12, “Related Party
Transactions” for further details).





PREPAID
EXPENSES





Prepaid
expenses at December 31, 2008 consist primarily of prepaid insurance and
government regulatory costs, which are amortized to expense based upon usage of
the underlying service. Prepaid expenses at December 31, 2007 also consisted of
fees paid to Tralliance third party service providers for various services
related to domain name registrations.  Such fees have been amortized
to cost of revenue over the term of the related domain name
registration.   In connection with the Company’s sale of its
Tralliance business on September 29, 2008, the remaining book value of prepaid
expenses related to Tralliance third party service providers fees at the date of
closing, totaling $101,308 was written off to cost of revenue during the quarter
ended September 30, 2008.  Additionally, a total of $37,230 in prepaid
travel costs, which were sold to the buyer of Tralliance’s business, were
written off and included as a component of the gain recognized on such
sale.





FAIR
VALUE OF FINANCIAL INSTRUMENTS





The
carrying amount of certain of the Company's financial instruments, including
cash, cash equivalents, accounts receivable, accounts payable and accrued
expenses, approximate their fair values at December 31, 2008 and 2007,
respectively, due to their short maturities.




LONG-LIVED
ASSETS





Long-lived
assets, including property and equipment and intangible assets subject to
amortization are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable, in accordance with SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." If events or changes in circumstances indicate
that the carrying amount of an asset, or an appropriate grouping of assets, may
not be recoverable, the Company estimates the undiscounted future cash flows to
result from the use of the asset, or asset group. If the sum of the undiscounted
cash flows is less than the carrying value, the Company recognizes an impairment
loss, measured as the amount by which the carrying value exceeds the fair value
of the assets.





Long-lived
assets are stated at cost, net of accumulated depreciation and amortization.
Long-lived assets are depreciated using the straight-line method over the
estimated useful lives of the related assets, as follows:





Estimated Useful LivesCapitalized
      software
                              
                              3
      yearsEquipment
                              
                              3
      yearsFurniture
      and fixtures
                              
                              3-7
      yearsLeasehold
      improvements
                              
                              3-4
      yearsIntangible
      assets
                              
                              5
      years




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.





REVENUE
RECOGNITION





Continuing
Operations





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


F-9


Discontinued
Operations





COMPUTER
GAMES BUSINESSES





Advertising
revenue from the sale of print advertisements under short-term contracts in the
Company’s magazine publications was recognized at the on-sale date of the
magazines.





Newsstand
sales of the Company’s magazine publications were recognized at the on-sale date
of the magazines, net of provisions for estimated returns. Subscription revenue,
net of agency fees, was deferred when initially received and recognized as
income ratably over the subscription term.





Sales of
games and related products from the Company’s online store were recognized as
revenue when the product was shipped to the customer. Amounts billed to
customers for shipping and handling charges were included in net revenue. The
Company provided an allowance for returns of merchandise sold through its online
store.





VOIP
TELEPHONY SERVICES





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





STOCK-BASED
COMPENSATION





In
December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment." This
statement is a revision of SFAS No. 123, "Accounting for Stock-Based
Compensation", supersedes Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees" and amends SFAS No. 95, “Statement of
Cash Flows.” The statement eliminates the alternative to use the intrinsic value
method of accounting that was provided in SFAS No. 123, which generally resulted
in no compensation expense recorded in the financial statements related to the
issuance of equity awards to employees. The statement also requires that the
cost resulting from all share-based payment transactions be recognized in the
financial statements. It establishes fair value as the measurement objective in
accounting for share-based payment arrangements and generally requires all
companies to apply a fair-value-based measurement method in accounting for
share-based payment transactions with employees. The Company adopted SFAS No.
123R effective January 1, 2006, using the modified prospective
application method in accordance with the statement. This application requires
the Company to record compensation expense for all awards granted to employees
and directors after the adoption date and for the unvested portion of awards
that are outstanding at the date of adoption. The Company’s consolidated
financial statements as of and for the years ended December 31, 2008 and 2007,
reflect the impact of SFAS No. 123R.





No stock
options were granted by the Company during the year ended December 31,
2008.





During
the year ended December 31, 2007, a total of 100,000 stock options were granted
with a per share weighted-average fair value of $0.07. All stock options granted
during 2007 were granted at exercise prices which equaled the market price of
the stock on the date of grant.





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





INCOME
TAXES





The
Company accounts for income taxes using the asset and liability method. Under
this method, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the consolidated financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases for operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the consolidated results
of operations in the period that the tax change occurs. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.





NET
LOSS PER COMMON SHARE





The
Company reports net loss per common share in accordance with SFAS No. 128,
"Computation of Earnings Per Share." In accordance with SFAS 128 and the 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.


F-10





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





December 31,2008
                                
                                2007Options
      to purchase common stock
                                
                                
                                14,964,000
                                
                                16,341,000Common
      shares issuable upon conversion of Convertible Notes
                                
                                
                                —
                                
                                193,000,000Common
      shares issuable upon exercise of Warrants
                                
                                
                                13,439,000
                                
                                16,911,000Total
                                
                                
                                28,403,000
                                
                                226,252,000




COMPREHENSIVE
INCOME (LOSS)





The
Company reports comprehensive income (loss) in accordance with the 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 income was approximately $2.3 million for the year ended December
31, 2008, and the Company’s comprehensive loss was approximately $6.2 million
for the year ended December 31, 2007, which approximated the Company's reported
net income and net loss for such periods.





RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENTS





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





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





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





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


F-11





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This
standard defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosure about fair value
measurements. SFAS No. 157 applies to other accounting standards that require or
permit fair value measurements. Accordingly, this statement does not require any
new fair value measurement. This statement is effective for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal
years.  The adoption of SFAS No. 157 did not have a material impact on
the Company’s financial statements.





In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161,
“Disclosures about Derivative
Instruments and Hedging Activities,” (“SFAS 161”).  SFAS 161
has the same scope as Statement 133 and requires enhanced disclosures about an
entity’s derivative and hedging activities and thereby improves the transparency
of financial reporting.  This Statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged.  This Statement
encourages, but does not require, comparative disclosures for earlier periods at
initial adoption.  This Statement changes the disclosure requirements
for derivative instruments and hedging activities.  Entities are
required to provide enhanced disclosures about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for under Statement 133 and its related interpretations, and (c)
how derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows.  The Company does not
believe that adoption of SFAS 161 will have a material impact on the Company’s
consolidated financial statements.





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





In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162,
“The Hierarchy of Generally
Accepted Accounting Principles,” (“SFAS 162”), which identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles (GAAP) in the United States (the GAAP hierarchy).  SFAS No.
162 became effective on November 15, 2008.  The implementation of this
standard did not have a material impact on the Company’s consolidated financial
statements.





APB 14-1
“Accounting for Convertible
Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial
Cash Settlement)” applies to convertible debt instruments that, by their
stated terms, may be settled in cash (or other assets) upon conversion,
including partial cash settlement, unless the embedded conversion options is
required to be separately accounted for as a derivative under FASB Statement No.
133, “Accounting for
Derivative Instruments and Hedging Activities.”  APB 14-1 is
effective for fiscal years beginning after December 15, 2008.  The
Company does not believe that the implementation of this standard will have a
material impact n the Company’s consolidated financial statements.





EITF
07-05, “Determining Whether an
Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock,”
applies to any freestanding financial instrument or embedded feature that has
all the characteristics of a derivative in FAS Statement 133, for purposes of
determining whether that instrument or embedded feature qualifies for the first
part of the scope exception in paragraph 11 (a) of Statement
133.  This issue also applies to any freestanding financial instrument
that is potentially settled in an entity’s own stock, regardless of whether the
instrument has all the characteristics of a derivative in paragraphs 6-9 of
Statement 133, for purposes of determining whether the instrument is within the
scope of EITF 00-19.  EITF 07-05 is effective for fiscal years
beginning after December 15, 2008.  The Company does not believe that
the implementation of this standard will have a material impact on the Company’s
consolidated financial statements.





RECLASSIFICATIONS





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





(2)
GOING CONCERN CONSIDERATIONS





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





During
the years ended December 31, 2007 and 2008, the Company was able to continue
operating as a going concern due principally to funding of $1,250,000 received
during 2007 from the sale of secured convertible demand promissory notes (the
“2007 Convertible Notes”) to an entity controlled by Michael S. Egan, its
Chairman and Chief Executive Officer, additional funding of $380,000 provided
from the sale of all of the Company’s rights related to its www.search.travel
domain name and website to an entity also controlled by Mr. Egan in December
2007 and funding of $500,000 received during 2008 under a Revolving Loan
Agreement with an entity also controlled by Mr. Egan (See Note 8, “Debt” and
Note 12, “Related Party Transactions” in the accompanying Notes to Consolidated
Financial Statements for further details).


F-12





At
December 31, 2008, the Company had a net working capital deficit of
approximately $3,000,000, inclusive of a cash and cash equivalents balance of
approximately $90,000.  Such working capital deficit included (i) a
total of approximately $523,000 in principal and accrued interest owed under the
aforementioned Revolving Loan Agreement to an entity controlled by Mr. Egan, and
(ii) an aggregate of approximately $2,700,000 in unsecured accounts payable and
accrued expenses owed to vendors and other non-related third parties (of which
approximately $1,800,000 relates to liabilities of our VoIP telephony service
discontinued business, with a significant portion of such liabilities related to
charges which have been disputed by theglobe). theglobe believes that its
ability to continue as a going concern for any significant length of time in the
future will be heavily dependent, among other things, on its ability to prevail
and avoid making any payments with respect to such disputed vendor charges
and/or to negotiate favorable settlements (including discounted payment and/or
payment term concessions) with the aforementioned creditors.





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





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





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





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





MANAGEMENT’S
PLANS





Despite
the significant reductions in operating and cash flow losses expected to be
realized from selling its Tralliance business, and as a result of becoming a
shell company, management believes that theglobe will most likely continue to
incur operating and cash flow losses for the foreseeable future. However,
assuming that no significant unplanned costs are incurred, management believes
that theglobe’s future losses will be limited. Further, in the event that
Registry Management is successful in substantially increasing net revenue
derived from “.travel” name registrations (and as the result maximizing
theglobe’s Earn-out revenue) in the future, theglobe’s prospects for achieving
profitability will be enhanced.





It is the
Company’s preference to avoid filing for protection under the U.S. Bankruptcy
Code. However, based upon the Company’s current financial condition as discussed
above, management believes that additional debt or equity capital will need to
be raised in order for theglobe to continue to operate as a going concern. Such
capital will be needed both to (i) fund expected future operating losses and
(ii) repay the $500 thousand of secured debt and related accrued interest due
under the Revolving Loan Agreement and a portion of the $2.7 million unsecured
indebtedness (assuming theglobe is successful in favorably resolving and
settling certain disputed and non-disputed vendor charges related to such
unsecured indebtedness).


F-13





Without
the infusion of additional capital and/or the continued indulgence of its
creditors, management does not believe the Company will have the ability to
operate as a going concern for any significant length of time beyond March 31,
2009. Any such additional capital would likely come from Mr. Egan, or affiliates
of Mr. Egan, as the Company currently has no access to credit facilities and has
traditionally relied upon borrowings from related parties to meet short-term
liquidity needs. Any such equity capital raised would likely result in very
substantial dilution in the number of outstanding shares of the Company’s Common
Stock. Given theglobe’s current financial condition and the state of the current
United States capital markets and economy, it has no current intent to seek to
acquire, or start, any other business.





(3)  SALE
OF TRALLIANCE AND SHARE ISSUANCE





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





The
consideration of $6,409,800 received by theglobe has been allocated between the
Share Issuance and the Tralliance Asset Sale based upon proportionate estimated
fair values as of the date of closing of the Purchase
Transaction.  Additionally, transaction costs consisting primarily of
legal, accounting and other professional fees, totaling approximately $192,000,
were also incurred in connection with the Purchase Transaction and allocated
between the Share Issuance and the Tralliance Asset Sale on the same
proportionate fair value basis.  Such allocations resulted in a net
allocation of approximately $3,658,000 to the Share Issuance, which has been
credited to the Company’s Common Stock and additional paid in capital accounts
in its Consolidated Balance Sheet as of December 31, 2008, and a net allocation
of approximately $2,560,000 to the Tralliance Asset Sale.  As a result
of such allocations and the related write-off of assets sold to Tralliance
Registry Management of approximately $49,000, the Company recorded a gain on the
Tralliance Asset Sale of approximately $2,511,000 in its Consolidated Statement
of Operations for the year ended December 31, 2008.   The
Company’s operating results for the year ended December 31, 2008 also reflect a
net benefit of approximately $1,176,000 related to the write-off of certain
assets and liabilities, including prepaid assets, intangible assets and deferred
revenue, which although not transferred to Tralliance Registry Management, were
deemed to have either no future value to the Company or require no future
obligations by the Company subsequent to the Tralliance Asset Sale.





Due to
various factors related to the collectability of Earn-out payments from
Tralliance Registry Management, including the current weak financial condition
of Tralliance Registry Management, the uncertainty of its ability to become
profitable in the future, and the fact that such Earn-out payments are payable
to theglobe over an extended period of time (approximately 6 1⁄2 years), no
portion of the Earn-out was included in the purchase price for the Purchase
Transaction.  Instead, the Company intends to recognize income related
to the Earn-out on a prospective basis as and to the extent that future Earn-out
payment are collected.  During January 2009, the Company received its
initial minimum Earn-out installment payment from Tralliance Registry Management
in the amount of $75,000, which was recorded as a credit to Other Income in the
Consolidated Statement of Operations for the year ended December 31,
2008.





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


F-14





In
connection with the closing of the Purchase Agreement, the Company also entered
into a Master Services Agreement (“Services Agreement”) with Dancing Bear
Investments, Inc. (“Dancing Bear”), which is controlled by Mr.
Egan.  Under the terms of the Services Agreement, for a fee of $20,000
per month ($240,000 per annum), Dancing Bear will provide personnel and services
to the Company so as to enable it to continue its existence as a public company
without the necessity of any full-time employees of its own (after an initial
transition period that ends December 31, 2008).  The Services
Agreement has an initial term of one year and is subject to renewal or early
termination under certain events.  Services under the Services
Agreement include, without limitation, accounting, assistance with financial
reporting, accounts payable, treasury/financial planning, record retention and
secretarial and investor relations functions. A total of $60,667 related to the
Services Agreement has been expensed during 2008, with $40,667 of such amount
remaining unpaid and accrued at December 31, 2008.





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





The
following unaudited pro forma condensed results of operations for the years
ended December 31, 2008 and 2007 assume that the Tralliance Asset Sale and the
Share Issuance occurred as of January 1, 2007.  The unaudited pro
forma information is not necessarily indicative of what the actual results of
operations of the Company would have been had the Tralliance Asset Sale and the
Share Issuance occurred on January 1, 2007, nor is it necessarily indicative of
future results.





Year ended December 31,2008
                  
                  
                  2007Net
      revenue from continuing operations
                  
                  $
                  —
                  
                  
                  $
                  —Loss
      from continuing operations
                  
                  
                  (255,000
                  )
                  
                  
                  (1,586,000
                  )Net
      loss
                  
                  $
                  (269,000
                  )
                  
                  $
                  (2,315,000
                  )Basic
      and diluted net loss per common share:Loss
      from continuing operations
                  
                  $
                  —
                  
                  
                  $
                  —Net
      loss
                  
                  $
                  —
                  
                  
                  $
                  (0.01
                  )




(4)
DISCONTINUED OPERATIONS





In March
2007, management and the Board of Directors of the Company made the decision to
cease all activities related to its Computer Games businesses, including
discontinuing the operations of its magazine publications, games distribution
business and related websites. The Company’s decision to shutdown its computer
games businesses was based primarily on the historical losses sustained by these
businesses during the recent past and management’s expectations of continued
future losses. As of December 31, 2008, all significant elements of its computer
games business shutdown plan have been completed by the Company, except for the
resolution and payment of remaining outstanding accounts payables.





In
addition, in March 2007, management and the Board of Directors of the Company
decided to discontinue the operating, research and development activities of its
VoIP telephony services business and terminate all of the remaining employees of
the business.  The
Company’s decision to discontinue the operations of its VoIP telephony services
business was based primarily on the historical losses sustained by the business
during the past several years, management’s expectations of continued losses for
the foreseeable future and estimates of the amount of capital required to
attempt to successfully monetize its business. On April 2, 2007, theglobe agreed
to transfer to Michael Egan all of its VoIP intellectual property in
consideration for his agreement to provide the Security in connection with the
MySpace litigation Settlement Agreement (See Note 11, “Litigation,” for further
discussion). The Company had previously written off the value of the VoIP
intellectual property as a result of its evaluation of the VoIP telephony
services business’ long-lived assets in connection with the preparation of the
Company’s 2004 year-end consolidated financial statements. As of December 31,
2008, all significant elements of its VoIP telephony services business shutdown
plan have been completed by the Company, except for the resolution of certain
vendor disputes and the payment of remaining outstanding vendor
payables.





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





The
following is a summary of the assets and liabilities of the discontinued
operations of the computer games and VoIP telephony services businesses as
included in the accompanying condensed consolidated balance sheets. A
significant portion of the net liabilities of discontinued operations at
December 31, 2008 relate to charges that have been disputed by the Company and
for which estimates have been required.


F-15




December 31,
                            
                            
                            December 31,2008
                            
                            
                            2007Assets:Computer
      GamesAccounts
      receivable, net
                            
                            $
                            —
                            
                            
                            $
                            30,000—
                            
                            
                            
                            30,000VoIP
      Telephony Services
                            
                            
                            —
                            
                            
                            
                            —Net
      assets
                            
                            $
                            —
                            
                            
                            $
                            30,000





December 31,
                
                
                December 31,2008
                
                
                2007Liabilities:Computer
      GamesAccounts
      payable
                
                $
                35,584
                
                
                $
                35,584Subscriber
      liability, net
                
                
                4,971
                
                
                
                5,39740,555
                
                
                
                40,981VoIP
      Telephony ServicesAccounts
      payable
                
                
                1,565,845
                
                
                
                1,632,653Other
      accrued expenses
                
                
                228,710
                
                
                
                228,7101,794,555
                
                
                
                1,861,363Net
      liabilities
                
                $
                1,835,110
                
                
                $
                1,902,344




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





Years Ended December 31,
                
                2008
                
                
                2007Computer
      Games:Net
      revenue
                
                $
                21,695
                
                
                $
                634,164Income
      (Loss) from operations, net of tax
                
                $
                48,751
                
                
                $
                (114,738
                )VoIP
      Telephony ServicesNet
      revenue
                
                $
                —
                
                
                $
                630Income
      (Loss) from operations, net of tax
                
                $
                1,669
                
                
                $
                (614,502
                )




F-16




The
Company has estimated the costs expected to be incurred in shutting down its
computer games and VoIP telephony services businesses and has accrued charges as
of December 31, 2008, as follows:




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




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




Net
current liabilities of discontinued operations at December 31, 2008 include
accounts payable and accruals totaling $355,466 related to the estimated
shut-down costs summarized above.





The
results of the Company’s discontinued operations for the year ended December 31,
2008 and net current liabilities of discontinued operations at December 31, 2008
include a $64,000 provision for income taxes related to estimated taxes due in
connection with an ongoing prior year audit of a former subsidiary
company.





(5)
PROPERTY AND EQUIPMENT





Property
and equipment consisted of the following:




December 31,2008
                
                
                2007Equipment
                
                $
                61,117
                
                
                $
                160,810Capitalized
      software costs
                
                
                —
                
                
                
                121,352Furniture
      and fixtures
                
                
                1,873
                
                
                
                14,136Leasehold
      improvements
                
                
                2,740
                
                
                
                7,00765,730
                
                
                
                303,305Less:
      Accumulated depreciation and amortization
                
                
                65,730
                
                
                
                267,557$
                —
                
                
                $
                35,748





In
connection with the Company’s sale of its Tralliance business on September 29,
2008, the remaining net book value of property and equipment sold to the buyer
of Tralliance’s business at the date of closing, totaling $8,670, was written
off and included as a component of the gain recognized on such
sale.


F-17





(6)  INTANGIBLE
ASSETS





Upon the
acquisition of Tralliance on May 9, 2005, the then existing CEO and CFO of
Tralliance entered into employment agreements which included certain non-compete
provisions as specified by the agreements.  At December 31, 2007,
intangible assets consisted of the $790,236 value assigned to the non-compete
agreements less related accumulated amortization of $421,459.





In
connection with the Company’s sale of its Tralliance business on September 30,
2008, the remaining net book value of the non-compete intangible asset at the
date of closing, totaling $250,241, was written off to intangible asset
amortization expense.  Inclusive of such write-off, intangible asset
amortization expense related to the non-compete agreements totaled $368,777 for
the year ended December 31, 2008 versus $158,047 for the year ended December 31,
2007.





(7)
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES





Accrued
expenses and other current liabilities consisted of the following:




December 31,2008
                                    
                                    2007Accrued
      registry transaction fees
                                    $
                                    
                                    221,512
                                    
                                    $
                                    
                                    661,637Other
                                    
                                    
                                    345,669
                                    
                                    
                                    
                                    291,789$
                                    
                                    567,181
                                    
                                    $
                                    
                                    953,426




(8)
DEBT





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




December 31, 2008
                  
                  
                  December 31, 20072008
      Revolving Loan Notes due to affiliates; due June 6, 2009
                  
                  $
                  500,000
                  
                  
                  $
                  —2007
      Convertible Notes due to affiliates; due on demand
                  
                  
                  —
                  
                  
                  
                  1,250,0002005
      Convertible Notes due to affiliates; due on demand
                  
                  
                  —
                  
                  
                  
                  3,400,000500,000
                  
                  
                  
                  4,650,000LESS:
      Short-term portion
                  
                  
                  500,000
                  
                  
                  
                  4,650,000Long-term
      portion
                  
                  $
                  —
                  
                  
                  $
                  —





On June
6, 2008, the Company and its subsidiaries, as guarantors, entered into a
Revolving Loan Agreement with Dancing Bear Investments, Inc. (“Dancing Bear”),
pursuant to which Dancing Bear may loan up to $500,000 to the Company on a
revolving basis (the “Credit Line”).  In connection with its entry
into the Credit Line, the Company borrowed $100,000 under the Credit
Line.  Subsequently, on June 19, 2008, July 10, 2008 and August 6,
2008, the Company made additional borrowings of $100,000 each under the Credit
Line.  On September 3, 2008, the Company borrowed the final $100,000
available under the Credit Line.  As of December 31, 2008, outstanding
principal and accrued interest of $500,000 and $23,233, respectively, related to
this Credit Line have been reflected as current liabilities in our Consolidated
Balance Sheet.  All amounts under the Credit Line, including principal
and accrued interest, will become due and payable in one lump sum on the first
anniversary date of the Credit Line, or sooner upon the occurrence of an event
of default under the loan documentation.  All funds borrowed under the
Credit Line may be prepaid in whole or in part, without penalty, at any time
during the term of the Credit Line.  The Company currently has no
ability to repay this loan when due.  Dancing Bear is controlled by
Michael S. Egan, our Chairman and Chief Executive Officer.  In
connection with the Credit Line, the Company executed and delivered a promissory
note to Dancing Bear in the amount of $500,000 bearing interest at ten percent
(10%) per annum on the principal amount then outstanding.  The
Company’s subsidiaries unconditionally guaranteed the Credit Line by entering
into an Unconditional Guaranty Agreement.  All amounts outstanding
from time to time under the Credit Line are secured by a lien on all of the
assets of the Company and its subsidiaries pursuant to a Security Agreement with
Dancing Bear.


F-18


On June
10, 2008, Dancing Bear converted an aggregate of $400,000 of then outstanding
2007 Convertible Notes due to them by the Company into an aggregate of
40,000,000 shares of the Company’s Common Stock.  Additionally, as
more fully described in Note 3, “Sale of Tralliance and Stock Issuance,” on
September 29, 2008, the Company closed upon a Purchase Transaction with certain
entities controlled by Mr. Egan whereby the Company (i) sold the business and
substantially all of the assets of its Tralliance Corporation subsidiary and
(ii) issued 229,000,000 shares of its Common Stock to such
entities.  As part of the consideration for the Purchase Transaction,
the Company’s obligation to repay all remaining outstanding principal and
accrued interest due under secured demand convertible promissory notes to
entities controlled by Mr. Egan through the date of closing of the Purchase
Transaction, including outstanding principal and accrued interest related to the
2007 Convertible Notes of $850,000 and $139,850, respectively, and outstanding
principal and accrued interest related to the 2005 Convertible Notes of
$3,400,000 and $1,150,465, respectively, were terminated.





In
connection with the issuance of the 2007 Convertible Notes, an aggregate of
$1,250,000 of non-cash interest expense was recognized and credited to
additional paid-in capital during the year ended December 31, 2007, as a result
of the beneficial conversion features of the 2007 Convertible
Notes.  The value attributable to the beneficial conversion features
was calculated by comparing the fair value of the underlying common shares of
the 2007 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 2007
Convertible Notes.





Total
related party interest expense related to the 2008 Revolving Loan Notes and the
2007 and 2005 Convertible Notes of $358,754 and $1,648,630 (inclusive of the
$1,250,000 of interest expense resulting from the beneficial conversion features
of the 2007 Convertible Notes) was recognized during the years ended December
31, 2008 and 2007, respectively.





(9)
STOCK OPTION PLANS





During
1995, the Company established the 1995 Stock Option Plan, which was amended (the
"Amended Plan") by the Board of Directors in December 1996 and August 1997.
Under the Amended Plan, a total of 1,582,000 common shares were reserved for
issuance. Any incentive stock options granted under the Amended Plan were
required to be granted at the fair market value of the Company's Common Stock at
the date the option was issued.





Under the
Company's 1998 Stock Option Plan (the "1998 Plan") a total of 3,400,000 common
shares were reserved for issuance and provides for the grant of "incentive stock
options" intended to qualify under Section 422 of the Code and stock options
which do not so qualify. The granting of incentive stock options is subject to
limitation as set forth in the 1998 Plan. Directors, officers, employees and
consultants of the Company and its subsidiaries are eligible to receive grants
under the 1998 Plan.





In
January 2000, the Board adopted the 2000 Broad Based Employee Stock Option Plan
(the "Broad Based Plan"). Under the Broad Based Plan, 850,000 shares of Common
Stock were reserved for issuance. The intention of the Broad Based Plan is that
at least 50% of the options granted will be to individuals who are not managers
or officers of theglobe. In April 2000, the Company's 2000 Stock Option Plan
(the "2000 Plan") was adopted by the Board of Directors and approved by the
stockholders of the Company. The 2000 Plan authorized the issuance of 500,000
shares of Common Stock, subject to adjustment as provided in the 2000 Plan. The
Broad Based Plan and the 2000 Plan provide for the grant of "incentive stock
options" intended to qualify under Section 422 of the Code and stock options
which do not so qualify. The granting of incentive stock options is subject to
limitation as set forth in the Broad Based Plan and the 2000 Plan. Directors,
officers, employees and consultants of the Company and its subsidiaries are
eligible to receive grants under the Broad Based Plan and the 2000
Plan.




In
September 2003, the Board adopted the 2003 Sales Representative Stock Option
Plan (the "2003 Plan") which authorized the issuance of up to 1,000,000
non-qualified stock options to purchase the Company's Common Stock to sales
representatives who are not employed by the Company or its subsidiaries. In
January 2004, the Board amended the 2003 Plan to include certain employees and
consultants of the Company.





The
Company's Board of Directors adopted a new benefit plan entitled the 2004 Stock
Incentive Plan (the "2004 Plan") on August 31, 2004. An aggregate of 7,500,000
shares of the Company's Common Stock may be issued pursuant to the 2004 Plan.
Employees, consultants, and prospective employees and consultants of theglobe
and its affiliates and non-employee directors of theglobe are eligible for
grants of non-qualified stock options, stock appreciation rights, restricted
stock awards, performance awards and other stock-based awards under the 2004
Plan.





On
December 1, 2004, based upon approval of the stockholders of the Company, the
2000 Plan was amended and restated to (i) increase the number of shares reserved
for issuance under the 2000 Plan by 7,500,000 shares to a total of 8,000,000
shares and (ii) to remove a previous plan provision that limited the number of
options that may be awarded to any one individual.





In
accordance with the provisions of the Company's stock option plans, nonqualified
stock options may be granted to officers, directors, other employees,
consultants and advisors of the Company. The option price for nonqualified stock
options shall be at least 85% of the fair market value of the Company's Common
Stock. In general, options granted under the Company's stock option plans expire
after a ten-year period and in certain circumstances options, under the 1995 and
1998 plans, are subject to the acceleration of vesting. Incentive options
granted to stockholders who own greater than 10% of the total combined voting
power of all classes of stock of the Company must be issued at 110% of the fair
market value of the stock on the date the options are granted. A committee
selected by the Company's Board of Directors has the authority to approve
optionees and the terms of the stock options granted, including the option price
and the vesting terms. Stock option awards are generally granted with an
exercise price equal to the market price of theglobe’s Common Stock at the date
of grant with 25% of the stock option grant vesting immediately and the
remainder vesting equally over the next twelve quarters.


F-19





No stock
options were granted by the Company during the year ended December 31,
2008.  During the year ended December 31, 2007, a total of 100,000
stock options were granted to a consultant.   No stock options
were exercised during the years ended December 31, 2008 and
2007.





Stock
option activity during the years ended December 31, 2007 and December 31, 2008
was as follows:





Number of
                      Options
                    
                    
                    Weighted
                      Average Exercise
                      Price
                    
                    Weighted
                      Average
                      Remaining
                      Contractual
                      Term
                    
                    Aggregate Intrinsic
                      ValueOutstanding
      at December 31, 2006
                    
                    
                    20,142,620
                    
                    
                    $
                    0.36Granted
                    
                    
                    100,000
                    
                    
                    
                    0.08Exercised
                    
                    
                    —
                    
                    
                    
                    —Canceled
                    
                    
                    (3,901,960
                    )
                    
                    
                    0.17Outstanding
      at December 31, 2007
                    
                    
                    16,340,660
                    
                    
                    $
                    0.40
                    
                    6.3
      years
                    
                    $
                    —Exercisable
      at December 31, 2007
                    
                    
                    15,800,770
                    
                    
                    $
                    0.41
                    
                    6.2
      years
                    
                    $
                    —Options
      available at December 31, 2007
                    
                    
                    6,643,701





Number of
                              Options
                            
                            
                            Weighted
                              AverageExercise
                              Price
                            
                            Weighted
                              Average
                              Remaining
                              Contractual
                              Term
                            
                            Aggregate Intrinsic
                              ValueOutstanding
      at December 31, 2007
                            
                            
                            16,340,660
                            
                            
                            $
                            0.40Granted
                            
                            
                            —
                            
                            
                            
                            —Exercised
                            
                            
                            —
                            
                            
                            
                            —Canceled
                            
                            
                            (1,377,000
                            )
                            
                            
                            1.27Outstanding
      at December 31, 2008
                            
                            
                            14,963,660
                            
                            
                            $
                            0.33
                            
                            5.3
      years
                            
                            $
                            —Exercisable
      at December 31, 2008
                            
                            
                            14,868,669
                            
                            
                            $
                            0.33
                            
                            5.3
      years
                            
                            $
                            —Options
      available at December 31, 2008
                            
                            
                            8,020,701




A total
of $21,858 and $140,549 of employee stock compensation expense was charged to
operating expenses during the years ended December 31, 2008 and 2007,
respectively.  Employee stock compensation expense included $35,468
resulting from modifications made to stock option grants to accelerate vesting
upon termination of employees during the year ended December 31,
2007.





Compensation
cost charged to operating expenses of continuing operations in connection with
stock options granted in recognition of services rendered by non-employees was
$1,704 and $7,126 for the years ended December 31, 2008 and 2007,
respectively.





At
December 31, 2008, there was approximately $7,500 of unrecognized compensation
expense related to unvested stock options which is expected to be recognized
over a weighted-average period of .82 years.


F-20





(10)
INCOME TAXES





The
provision for income taxes is summarized as follows:




Year Ended December 31,2008
                          
                          
                          2007Continuing
      operations
                          
                          $
                          15,675
                          
                          
                          $
                          —Discontinued
      operations
                          
                          
                          64,000
                          
                          
                          
                          —$
                          79,675
                          
                          
                          $
                          —




The
provision attributable to the loss from continuing operations before income
taxes was as follows:




Year Ended December 31,Current:
                  
                  2008
                  
                  
                  2007Federal
                  
                  $
                  15,000
                  
                  
                  $
                  —State
                  
                  
                  675
                  
                  
                  
                  —15,675
                  
                  
                  
                  —Deferred:Federal
                  
                  
                  —
                  
                  
                  
                  —State
                  
                  
                  —
                  
                  
                  
                  ——
                  
                  
                  
                  —Provision
      for income taxes
                  
                  $
                  15,675
                  
                  
                  $
                  —




The
following is a reconciliation of the federal income tax provision at the federal
statutory rate to the Company’s tax provision attributable to continuing
operations:




Year Ended December 31,2008
                              
                              
                              2007Statutory
      federal income tax rate
                              
                              
                              34.00
                              %
                              
                              
                              34.00
                              %Beneficial
      conversion interest
                              
                              
                              —
                              
                              
                              
                              (7.84
                              )Nondeductible
      items
                              
                              
                              0.16
                              
                              
                              
                              (0.23
                              )State
      income taxes, net of federal benefit
                              
                              
                              3.95
                              
                              
                              
                              3.02Change
      in valuation allowance
                              
                              
                              (40.43
                              )
                              
                              
                              (29.01
                              )Other
                              
                              
                              3.00
                              
                              
                              
                              0.06Effective
      tax rate
                              
                              
                              0.68
                              %
                              
                              
                              0.00
                              %




The tax
effects of temporary differences that give rise to significant portions of the
deferred tax assets and deferred tax liabilities at December 31, 2008 and 2007
are presented below.




December 31,
                
                
                December 31,2008
                
                
                2007Deferred
      tax assets (liabilities):Net
      operating loss carryforwards
                
                $
                62,869,000
                
                
                $
                63,300,000Issuance
      of warrants
                
                
                1,447,000
                
                
                
                1,438,000Allowance
      for doubtful accounts
                
                
                11,000
                
                
                
                13,000Inventory
      reserve
                
                
                —
                
                
                
                7,000AMT
      tax credit
                
                
                328,000
                
                
                
                313,000Accrued
      interest
                
                
                —
                
                
                
                362,000Accrued
      expenses
                
                
                806,000
                
                
                
                843,000Depreciation
      and amortization
                
                
                37,000
                
                
                
                (97,000
                )Other
                
                
                33,000
                
                
                
                300,000Total
      gross deferred tax assets
                
                
                65,531,000
                
                
                
                66,479,000Less:
      valuation allowance
                
                
                (65,531,000
                )
                
                
                (66,479,000
                )Total
      net deferred tax assets
                
                $
                —
                
                
                $
                —




F-21


Because
of the Company's lack of earnings history, the net deferred tax assets have been
fully offset by a 100% valuation allowance. The valuation allowance for net
deferred tax assets was $65.5 million and $66.5 million as of December 31, 2008
and 2007, respectively. The net change in the total valuation allowance was $948
thousand and $1.8 million for the years ended December 31, 2008 and 2007,
respectively.





In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets, which
consist of tax benefits primarily from net operating loss carryforwards, is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income
and tax planning strategies in making this assessment. Of the total valuation
allowance of $65.5 million as of December 31, 2008, subsequently recognized tax
benefits, if any, in the amount of $6.4 million will be applied directly to
contributed capital.





At
December 31, 2008, the Company had net operating loss carryforwards available
for U.S. tax purposes of approximately $166 million. These carryforwards expire
through 2028. Under Section 382 of the Internal Revenue Code of 1986, as amended
(the "Code"), the utilization of net operating loss carryforwards may be limited
under the change in stock ownership rules of the Code. Due to various
significant changes in our ownership interests, as defined in the Internal
Revenue Code of 1986, as amended, the Company has substantially limited the
availability of its net operating loss carryforwards. There can be no assurance
that the Company will be able to avail itself of any net operating loss
carryforwards.





During
the year ended December 31, 2008, a provision for income taxes of $64,000 was
recorded for discontinued operations. Such provision related to the Company’s
estimate of amounts payable in connection with an ongoing prior year tax audit
of a former subsidiary company.




(11)
LITIGATION





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





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





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


F-22





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





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





The
lawsuit purports to be a class action filed on behalf of purchasers of the stock
of the Company during the period from November 12, 1998 through December 6,
2000. The purported class action alleges violations of Sections 11 and 15 of the
Securities Act of 1933 (the “1933 Act”) and Sections 10(b), Rule 10b-5 and 20(a)
of the Securities Exchange Act of 1934 (the “1934 Act”). Plaintiffs allege that
the underwriter defendants agreed to allocate stock in the Company's initial
public offering and its secondary offering to certain investors in exchange for
excessive and undisclosed commissions and agreements by those investors to make
additional purchases of stock in the aftermarket at pre-determined prices.
Plaintiffs allege that the Prospectuses for the Company's initial public
offering and its secondary offering were false and misleading and in violation
of the securities laws because it did not disclose these arrangements. The
action seeks damages in an unspecified amount. On October 9, 2002, the Court
dismissed the Individual Defendants from the case without prejudice. This
dismissal disposed of the Section 15 and 20(a) control person claims without
prejudice. On December 5, 2006, the Second Circuit vacated a decision by the
district court granting class certification in six of the coordinated cases,
which are intended to serve as test, or “focus,” cases. The plaintiffs selected
these six cases, which do not include the Company. On April 6, 2007, the Second
Circuit denied a petition for rehearing filed by the plaintiffs, but noted that
the plaintiffs could ask the district court to certify more narrow classes than
those that were rejected.





On August
14, 2007, the plaintiffs filed amended complaints in the six focus cases. On
September 27, 2007, the plaintiffs moved to certify a class in the six focus
cases. On November 14, 2007, the issuers and the underwriters named as
defendants in the six focus cases filed motions to dismiss. On March 26, 2008,
the District Court dismissed the Section 11 claims of those members of the
putative classes in the focus cases who sold their securities for a price in
excess of the initial offering price and those who purchased outside the
previously certified class period. With respect to all other claims, the motions
to dismiss were denied. On October 10, 2008, at the request of the plaintiffs,
the plaintiffs’ motion for class certification was withdrawn, without
prejudice.





The
parties in the approximately 300 coordinated class actions, including
theglobe.com, the underwriter defendants in the theglobe.com class action, and
the plaintiff class in the theglobe.com class action, have reached an agreement
in principle under which the insurers for the issuer defendants in the
coordinated cases will make the settlement payment on behalf of the issuers,
including theglobe.com.  The settlement is subject to approval by the
parties, termination by the parties under certain circumstances, and Court
approval.  There is no assurance that the settlement will be concluded
or that the Court will approve the settlement.





Due to
the inherent uncertainties of litigation, the Company cannot accurately predict
the ultimate outcome of the matter. If the settlement is not concluded or
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.





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





(12)
RELATED PARTY TRANSACTIONS





Certain
directors of the Company also serve as officers and directors of and own
controlling interests in Dancing Bear Investments, Inc., E&C Capital
Partners LLLP, E&C Capital Partners II, LLLP, The Registry Management
Company, LLC, Tralliance Registry Management Company, LLC, Labigroup Holdings,
LLC and Search.Travel LLC.  Dancing Bear Investments, Inc., E&C
Capital Partners, LLLP and E&C Capital Partners II, LLLP are stockholders of
the Company and are entities controlled by our Chairman.


F-23





As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance,” on September
29, 2008, the Company (i) sold the business and substantially all of the assets
of its Tralliance Corporation subsidiary to Tralliance Registry Management
Company LLC (“Tralliance Registry Management”) and (ii) issued 229,000,000
shares of its Common Stock (the “Shares”) to The Registry Management Company,
LLC (“Registry Management”) (the “Purchase Transaction”).  Tralliance
Registry Management and Registry Management are entities directly or indirectly
controlled by Michael S. Egan, our Chairman and Chief Executive Officer and
principal stockholder, and each of our two remaining executive officers and
Board members, Edward A. Cespedes, our President, and Robin Segaul Lebowitz, our
Vice President of Finance, own a minority interest in Registry
Management.  After giving effect to the closing of the Purchase
Transaction and the issuance of the Shares thereunder, Mr. Egan now beneficially
owns approximately 77% of the Company’s issued and outstanding Common
Stock.





In
connection with the Purchase Transaction, the Company received (i) consideration
totaling approximately $6,409,800 and consisting of the surrender to theglobe
and satisfaction of secured demand convertible promissory notes issued by
theglobe and held by Registry Management in the aggregate principal amount of
$4,250,000, together with all accrued and unpaid interest of approximately
$1,290,300 through the date of closing of the Purchase Transaction and
satisfaction of approximately $869,500 in outstanding rent and miscellaneous
fees due and unpaid to the Registry Management through the date of closing of
the Purchase Transaction, and (ii) an earn-out equal to 10% (subject to certain
minimums) of Tralliance Registry Management’s “net revenue” (as defined) derived
from “.travel” names registered by Tralliance Registry Management from September
29, 2008 through May 5, 2015 (the “Earn-out”).  The minimum Earn-out
payable by Tralliance Registry Management to theglobe will be at least $300,000
in the first year of the Earn-out Agreement, increasing by $25,000 each
subsequent year (pro-rated for the final year of the
Earn-out).  During January 2009, the Company received its initial
minimum Earn-out installment payment in the amount of $75,000 from Tralliance
Registry Management.





Commensurate
with the closing of the Purchase Transaction, on September 29, 2008, the Company
also entered into Termination Agreements with each of its executive officers
(each a “Termination Agreement”).  Pursuant to the Termination
Agreements, the Company’s employment agreements with each of Michael S. Egan,
Edward A. Cespedes and Robin Segaul Lebowitz, the Chief Executive Officer,
President and Vice President of Finance, all dated August 1, 2003, respectively,
were terminated.  Notwithstanding the termination of these employment
agreements, each of Messrs. Egan, Cespedes and Ms. Lebowitz remains as an
officer and director of the Company.





In
connection with the closing of the Purchase Transaction, the Company also
entered into a Master Services Agreement (“Services Agreement”) with Dancing
Bear Investments, Inc. (“Dancing Bear”), an entity which is controlled by Mr.
Egan.  Under the terms of the Services Agreement, for a fee of $20,000
per month ($240,000 per annum), Dancing Bear will provide personnel and services
to the Company so as to enable it to continue its existence as a public company
without the necessity of any full-time employees of its own.  The
Services Agreement has an initial term of one year and is subject to renewal or
early termination under certain events.  Services under the Services
Agreement include, without limitation, accounting, assistance with financial
reporting, accounts payable, treasury/financial planning, record retention and
secretarial and investor relations functions.  A total of $60,667
related to the Services Agreement has been expensed during 2008, with $40,667 of
such amount remaining unpaid and accrued at December 31, 2008.





As more
fully discussed in Note 8 “Debt,” on June 6, 2008, the Company and its
subsidiaries, as guarantors, entered into a Revolving Loan Agreement with
Dancing Bear, pursuant to which Dancing Bear may loan up to $500,000 to the
Company on a revolving basis (the “Credit Line”).  In connection with
its entry into the Credit Line, the Company borrowed $100,000 under the Credit
Line.  Subsequently, on June 19, 2008, July 10, 2008 and August 6,
2008, the Company made additional borrowings of $100,000 each under the Credit
Line.  On September 3, 2008, the Company borrowed the final $100,000
available under the Credit Line.  All borrowings under the Credit
Line, including accrued interest on borrowed funds at the rate of 10% per annum,
are due and payable in one lump sum on the first anniversary date of the Credit
Line, or June 6, 2009, or sooner upon the occurrence of an event of default
under the loan documentation.  All amounts outstanding from time to
time under the Credit Line are secured by a lien on all of the assets of the
Company and its subsidiaries.





Also, as
more fully described in Note 8, “Debt,” on June 10, 2008 Dancing Bear converted
an aggregate of $400,000 of outstanding 2007 Convertible Notes due to them by
the Company into an aggregate of 40,000,000 shares of the Company’s Common
Stock.





On
December 20, 2007, Tralliance entered into a Bulk Registration Co-Marketing
Agreement (the “Co-Marketing Agreement”) with Labigroup Holdings, LLC
(“Labigroup”), under Tralliance’s bulk purchase program. Labigroup is a private
entity controlled by the Company’s Chairman and our remaining directors own a
minority interest in Labigroup. Under the Co-Marketing Agreement, Labigroup
committed to purchase a predetermined minimum number of “.travel” domain names
on a bulk basis from an accredited “.travel” registrar of its own choosing and
to establish a predetermined minimum number of related “.travel” websites. As
consideration for the “.travel” domain names to be purchased under the
Co-Marketing Agreement, Labigroup agreed to pay certain fixed fees and make
certain other payments including, but not limited to, an ongoing royalty
calculated as a percentage share of its net revenue, as defined in the
Co-Marketing Agreement (the “Labigroup Royalties”), to Tralliance. The
Co-Marketing Agreement has an initial term which expires September 30, 2010
after which it may be renewed for successive periods of two and three years,
respectively. During the years ended December 31, 2007 and 2008, Labigroup
registered a total of 164,708 and 10,595 “.travel” domain names under the
Co-Marketing Agreement, respectively.  During the years ended December
31, 2007 and 2008, Labigroup paid a total of $262,500 and $454,430 in fees and
costs to Tralliance under the Co-Marketing Agreement,
respectively.  Such amounts, which are equal to the amount of
incremental fees and costs incurred by Tralliance in registering these bulk
purchase names, have been treated as a reimbursement of these incremental fees
and costs in the Company’s financial statements.   As part of the
sale of its Tralliance business on September 29, 2008, all of the Company’s
rights and obligations under the Co-Marketing Agreement were assigned to
Tralliance Registry Management.


F-24





On
December 13, 2007, the Company entered into and closed an Assignment, Conveyance
and Bill of Sale Agreement with Search.Travel, LLC (“Search.Travel”). Pursuant
to this agreement, Tralliance sold all of its rights relating to the
www.search.travel domain name, website and related assets to Search.Travel for a
purchase price of $380,000, which was paid in cash at the closing date.
Search.Travel is a private entity controlled by the Company’s Chairman, of which
our remaining directors also own a minority interest. The purchase price was
determined by the Board of Directors taking into account the valuation given to
the assets by an independent investment banking firm. A gain on the sale of
Search.Travel in the amount of $379,791 was recognized and has been included
within Other Income in the Consolidated Statement of Operations for the year
ended December 31, 2007.




On May
29, 2007, Dancing Bear entered into a note purchase agreement (the “2007
Agreement”) with the Company pursuant to which Dancing Bear acquired a secured
demand convertible promissory note (the “2007 Convertible Note”) in the amount
of $250,000. Under the terms of the 2007 Agreement, Dancing Bear was granted the
optional right, for a period of 180 days from the date of the 2007 Agreement, to
purchase additional 2007 Convertible Notes such that the aggregate principal
amount issued under the 2007 Agreement could total $3,000,000. On June 25, 2007,
July 19, 2007 and September 6, 2007, Dancing Bear acquired additional 2007
Convertible Notes in the principal amounts of $250,000, $500,000 and $250,000
respectively.  Interest associated with the 2007 Convertible Notes of
approximately $81,250 and $58,600 was charged to expense during the years ended
December 31, 2008 and 2007, respectively.  As more fully discussed in
Note 8 “Debt,” the Company’s obligation to repay the remaining $850,000 in
principal (after the conversion of $400,000 of debt on June 10, 2008) and
$139,850 of accrued interest related to the 2007 Convertible Notes was
terminated on September 29, 2008 in connection with the consummation of the
Purchase Transaction.





On April
2, 2007, theglobe agreed to transfer to Michael Egan all of its VoIP
intellectual property in consideration for his agreement to provide certain
security and credit enhancements in connection with the MySpace litigation
Settlement Agreement (See Note 11, “Litigation”, for further discussion). The
Company had previously written off the value of the VoIP intellectual property
as a result of its evaluation of the VoIP telephony services business’
long-lived assets in connections with the preparation of the Company’s 2004
year-end consolidated financial statements.





Several
entities controlled by the Company’s Chairman and Chief Executive Officer (the
“Related Entities”) have provided services to the Company, including: the lease
of office space; and the outsourcing of customer services, human resources and
payroll processing functions. During the years ended December 31, 2008 and 2007,
approximately $354,000 and $473,000 of expense related to these services was
recorded, respectively.  In connection with the Purchase Transaction
discussed above and in Note 3, “Sale of Tralliance and Share Issuance,” all of
the receivables owed by the Company to the Related Entities as of the date of
closing of the Purchase Transaction, totaling $869,500, were assigned and
contributed to Registry Management, who then surrendered their right to receive
payment for such obligations from the Company as part of the consideration for
the Purchase Transaction.





An entity
owned solely by the sister of the Company’s President, Treasurer and Chief
Financial Officer and Director provided certain administrative services to the
Company.  During the years ended December 31, 2008 and 2007, $33,350
and $11,250 of expense related to these services was recorded,
respectively.


F-25




ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
 
 None.
 
 ITEM
9A (T). CONTROLS AND PROCEDURES
 
 Disclosure
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 December 31, 2008. Based on that
evaluation, our Chief Executive Officer and our Chief Financial Officer have
concluded that our disclosure controls and procedures are effective in alerting
them in a timely manner to material information regarding us (including our
consolidated subsidiaries) that is required to be included in our periodic
reports to the SEC.
 
 Management’s
Annual Report on Internal Control and Financial Reporting
 
 The
Company’s management, under the supervision of the Chief Executive Officer and
the Chief Financial Officer, is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rules 13a -
15(f) and 15d - 15(f) under the Exchange Act). Internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP. Internal control over financial
reporting includes policies and procedures that:
 
 (i)
              pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of the assets of the
      Company;
 
 (ii)
              provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with GAAP, and that
      receipts and expenditures of the Company are being made only in accordance
      with authorizations of management and directors of the Company;
      and
 
 (iii)
              provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use, or disposition of the Company’s assets that
      could have a material effect on the financial
  statements.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with existing policies or procedures may deteriorate.
 
 Under the
supervision of the Chief Executive Officer and the Chief Financial Officer, the
Company’s management conducted an evaluation of the Company’s internal control
over financial reporting as of December 31, 2008 in accordance with the
interpretive guidance published in the SEC’s “Commission Guidance Regarding
Management’s Report on Internal Control Over Financial Reporting Under Section
13(a) or 15(d) of the Securities Exchange Act of 1934” dated and effective on
June 27, 2007. Such evaluation was based on the framework and criteria
established in “Internal Control - Integrated Framework” issued by the Committee
of Sponsoring Organizations of the Treadway Commission (“COSO”). Based upon this
evaluation and management’s assessment, management has concluded that internal
control over financial reporting was effective as of December 31,
2008.
 
 Because we are a smaller public company, we are not yet required
to provide an independent public accountant’s attestation report covering our
assessment of internal control over financial reporting. At the present time,
such attestation report will be first required in connection with our annual
report as of December 31, 2009.




18




Changes
in Internal Control over Financial Reporting





Our
management, with the participation of our Chief Executive Officer, have
evaluated any change in our internal control over financial reporting that
occurred during the quarter ended December 31, 2008 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting, and have determined there to be no reportable
changes.




ITEM
9B. OTHER INFORMATION





None.





PART
III




ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The
following table sets forth the names, ages and current positions with the
Company held by our Directors and Executive Officers. There is no immediate
family relationship between or among any of the Directors or Executive Officers,
and the Company is not aware of any arrangement or understanding between any
Director or Executive Officer and any other person pursuant to which he was
elected to his current position. Each of the following persons are Directors of
the Company.





NAME
                    
                    AGE
                    
                    POSITION
      OR OFFICE WITH THE COMPANY
                    
                    DIRECTOR SINCEMichael
      S. Egan
                    
                    68
                    
                    Chairman
      and Chief Executive Officer
                    
                    1997Edward
      A. Cespedes
                    
                    43
                    
                    President,
      Treasurer and Chief Financial Officer and Director
                    
                    1997Robin
      S. Lebowitz
                    
                    44
                    
                    Vice
      President of Finance and Director
                    
                    2001





Michael
S. Egan. Michael Egan has served as theglobe’s Chairman since 1997 and as its
Chief Executive Officer since June 1, 2002. Since 1996, Mr. Egan has been the
controlling investor of Dancing Bear Investments, Inc., a privately held
investment company. Additionally, Mr. Egan is the controlling investor of
E&C Capital Partners LLLP and E&C Capital Partners II, LLLP, privately
held investment partnerships, and Search.Travel, LLC, Labigroup Holdings, LLC,
The Registry Management Company, LLC and Tralliance Registry Management, LLC,
entities that are involved in the Internet domain name registration business.
Mr. Egan is also Chairman of Certified Vacations, a privately held wholesale
travel company which was founded in 1980. Certified Vacations specializes in
designing, marketing and delivering vacation packages. Mr. Egan spent over 30
years in the rental car business.  He began with Alamo
Rent-A-Car in 1973, became an owner in 1979, and became Chairman and majority
owner from January 1986 until November 1996 when he sold the company to
AutoNation. In 2000, AutoNation spun off the rental division, ANC Rental
Corporation (Other OTC: ANCXZ.PK), and Mr. Egan served as Chairman until October
2003. Prior to acquiring Alamo, he held various administration positions at Yale
University and taught at the University of Massachusetts at Amherst. Mr. Egan is
a graduate of Cornell University where he received his Bachelor’s degree in
Hotel Administration.





Edward A.
Cespedes. Edward Cespedes has served as a director of theglobe since 1997, as
President of theglobe since June 1, 2002 and as Treasurer and Chief Financial
Officer of theglobe since February 1, 2005. Mr. Cespedes is also the President
of E&C Capital Ventures, Inc., the general partner of E&C Capital
Partners LLLP and an executive officer and director of Search.Travel, LLC,
Labigroup Holdings, LLC, The Registry Management Company, LLC and Tralliance
Registry Management Company, LLC. Mr. Cespedes served as the Vice Chairman of
Prime Ventures, LLC, from May 2000 to February 2002. From August 2000 to August
2001, Mr. Cespedes served as the President of the Dr. Koop Lifecare Corporation
and was a member of the Company’s Board of Directors from January 2001 to
December 2001. From 1996 to 2000, Mr. Cespedes was a Managing Director of
Dancing Bear Investments, Inc. Concurrent with his position at Dancing Bear
Investments, Inc., from 1998 to 2000, Mr. Cespedes also served as Vice President
for corporate development for theglobe where he had primary responsibility for
all mergers, acquisitions, and capital markets activities. In 1996, prior to
joining Dancing Bear Investments, Inc., Mr. Cespedes was the Director of
Corporate Finance for Alamo Rent-A-Car. From 1988 to 1996, Mr. Cespedes worked
in the Investment Banking Division of J.P. Morgan and Company, where he most
recently focused on mergers and acquisitions. In his capacity as a venture
capitalist, Mr. Cespedes has served as a member of the board of directors of
various portfolio companies. Mr. Cespedes is the founder of the Columbia
University Hamilton Associates, a foundation for university academic endowments.
In 1988 Mr. Cespedes received a Bachelor’s degree in International Relations
from Columbia University.





Robin S.
Lebowitz. Robin Lebowitz has served as a director of theglobe since December
2001, as Secretary of theglobe since June 1, 2002, and as Vice President of
Finance of theglobe since February 23, 2004. Ms. Lebowitz also served as
Treasurer of theglobe from June 1, 2002 until February 23, 2004 and as Chief
Financial Officer of theglobe from July 1, 2002 until February 23, 2004. Ms.
Lebowitz has worked in various capacities for the Company’s Chairman, Michael
Egan, for fifteen years. She is the Controller/Managing Director of Dancing Bear
Investments, Inc., Mr. Egan’s privately held investment management and holding
company, and is an executive officer of Search.Travel, LLC, Labigroup Holdings,
LLC, The Registry Management Company, LLC and Tralliance Registry Management
Company, LLC. Previously, Ms. Lebowitz served on the Board of Directors of
theglobe from August 1997 to October 1998. At Alamo Rent-A-Car, she served as
Financial Assistant to the Chairman (Mr. Egan). Prior to joining Alamo, Ms.
Lebowitz was the Corporate Tax Manager at Blockbuster Entertainment Group where
she worked from 1991 to 1994. From 1986 to 1989, Ms. Lebowitz worked in the
audit and tax departments of Arthur Andersen & Co. Ms. Lebowitz received a
Bachelor of Science in Economics from the Wharton School of the University of
Pennsylvania; a Masters in Business Administration from the University of Miami
and is a Certified Public Accountant.


19





INVOLVEMENT
IN CERTAIN LEGAL PROCEEDINGS





None.





COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT





Section
16(a) of the Securities and Exchange Act of 1934 requires our officers and
directors, and persons who own more than ten percent (10%) of a registered class
of our equity securities, to file certain reports regarding ownership of, and
transactions in, our securities with the SEC and with The NASDAQ Stock Market,
Inc. Such officers, directors, and 10% stockholders are also required to furnish
theglobe with copies of all Section 16(a) forms that they file.





Based
solely on our review of copies of Forms 3 and 4 and any amendments furnished to
us pursuant to Rule 16a-3(e) and any written representations referred to in Item
405(b)(2)(i) of Regulation S-K stating that no Forms 5 were required, we believe
that, during the 2008 fiscal year, our officers, directors and all persons
owning more than 10% of a registered class of our equity securities have
complied with all Section 16(a) applicable filing requirements.




CODE
OF ETHICS





The
Company has adopted a Code of Ethics applicable to its officers, including its
principal executive officer, principal financial officer, principal accounting
officer or controller and any other persons performing similar functions. The
Code of Ethics will be provided free of charge by the Company to interested
parties upon request. Requests should be made in writing and directed to the
Company at the following address: 110 East Broward Boulevard; Suite 1400; Fort
Lauderdale, Florida 33301.





BOARD
MEETINGS AND COMMITTEES OF THE BOARD





Including
unanimous written actions of the Board, the Board of Directors met 6 times in
2008. No incumbent director who was on the Board for the entire year attended
less than 75% of the total number of all meetings of the Board and any
committees of the Board on which he or she served, if any, during 2008.





The Board
of Directors has a standing Audit and Compensation Committee but no standing
Nominating Committee.





Audit Committee. The Audit
Committee, which was formed in July 1998, reviews, acts on and reports to the
Board of Directors with respect to various auditing and accounting matters,
including the selection of our independent auditors, the scope of the annual
audits, fees to be paid to the auditors, the performance of our auditors and our
accounting practices and internal controls. The Audit Committee operates
pursuant to a written charter, as amended, adopted by the Board of Directors on
June 12, 2000. The current members of the Audit Committee are Messrs. Egan and
Cespedes and Ms. Lebowitz, all of whom are employee directors. None of the
current committee members are considered “independent” within the meaning of
applicable NASD rules. Ms. Lebowitz serves as the “audit committee financial
expert” within the meaning of applicable SEC rules, but is not considered
“independent” within the meaning of applicable NASD rules. Including unanimous
written actions of the Committee, the Audit Committee held 3 meetings in
2008.





Compensation Committee . The
Compensation Committee, which did not meet in 2008, (including unanimous written
actions of the Committee), establishes salaries, incentives and other forms of
compensation for officers and other employees of theglobe. The Compensation
Committee (as well as the entire Board of Directors) also approves option grants
under all of our outstanding stock based incentive plans. The current members of
the Compensation Committee are Messrs. Egan and Cespedes.





Nominating Committee . The
Board of Directors does not have a separate nominating committee. Rather, the
entire Board of Directors acts as nominating committee. Based on the Company’s
Board currently consisting only of employee directors, the Board of Directors
does not believe the Company would derive any significant benefit from a
separate nominating committee. Due primarily to their status as employees of the
Company, none of the members of the Board are “independent” as defined in the
NASD listing standards. The Company does not have a Nominating Committee
charter.





In
recommending director candidates in the future (including director candidates
recommended by stockholders), the Board intends to take into consideration such
factors as it deems appropriate based on the Company’s current needs. These
factors may include diversity, age, skills, decision-making ability,
inter-personal skills, experience with businesses and other organizations of
comparable size, community activities and relationships, and the
interrelationship between the candidate’s experience and business background,
and other Board members’ experience and business background, whether such
candidate would be considered “independent”, as such term is defined in the NASD
listing standards, as well as the candidate’s ability to devote the required
time and effort to serve on the Board.


20





The Board
will consider for nomination by the Board director candidates recommended by
stockholders if the stockholders comply with the following requirements. Under
our By-Laws, if a stockholder wishes to nominate a director at the Annual
Meeting, we must receive the stockholder’s written notice not less than 60 days
nor more than 90 days prior to the date of the annual meeting, unless we give
our stockholders less than 70 days’ notice of the date of our Annual Meeting. If
we provide less than 70 days’ notice, then we must receive the stockholder’s
written notice by the close of business on the 10th day after we provide notice
of the date of the Annual Meeting. The notice must contain the specific
information required in our By-Laws. A copy of our By-Laws may be obtained by
writing to the Corporate Secretary. If we receive a stockholder’s proposal
within the time periods required under our By-Laws, we may choose, but are not
required, to include it in our proxy statement. If we do, we may tell the other
stockholders what we think of the proposal, and how we intend to use our
discretionary authority to vote on the proposal. All proposals should be made in
writing and sent via registered, certified or express mail, to our executive
offices, 110 East Broward Boulevard, Suite 1400, Fort Lauderdale, Florida 33301,
Attention: Robin S. Lebowitz, Corporate Secretary.





Shareholder Communications with the
Board of Directors. Any shareholder who wishes to send communications to
the Board of Directors should mail them addressed to the intended recipient by
name or position in care of: Corporate Secretary, theglobe.com, inc., 110 East
Broward Boulevard, Suite 1400, Fort Lauderdale, Florida, 33301. Upon receipt of
any such communications, the Corporate Secretary will determine the identity of
the intended recipient and whether the communication is an appropriate
shareholder communication. The Corporate Secretary will send all appropriate
shareholder communications to the intended recipient. An "appropriate
shareholder communication" is a communication from a person claiming to be a
shareholder in the communication, the subject of which relates solely to the
sender’s interest as a shareholder and not to any other personal or business
interest.





In the
case of communications addressed to the Board of Directors, the Corporate
Secretary will send appropriate shareholder communications to the Chairman of
the Board. In the case of communications addressed to any particular directors,
the Corporate Secretary will send appropriate shareholder communications to such
director. In the case of communications addressed to a committee of the Board,
the Corporate Secretary will send appropriate shareholder communications to the
Chairman of such committee.





ATTENDANCE
AT ANNUAL MEETINGS





The Board
of Directors encourages, but does not require, its directors to attend the
Company’s annual meeting of stockholders. The Company did not hold an annual
meeting last year.





ITEM
11. EXECUTIVE COMPENSATION





OVERVIEW





As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance” of the
accompanying Notes to Consolidated Financial Statements, on September 29, 2008
the Company sold its last remaining operating business,
Tralliance.  Commensurate with the sale of its Tralliance business on
September 29, 2008, the Company also entered into Termination Agreements with
each of its Named Executive Officers (each a “Termination
Agreement”).  Pursuant to the Termination Agreements, the Company’s
employment agreements with each of Michael S. Egan, Edward A. Cespedes and Robin
S. Lebowitz, the Company’s Chief Executive Officer, President and Vice President
of Finance, all dated August 1, 2003, respectively, were
terminated.  Notwithstanding the termination of these employment
agreements, each of Messrs Egan and Cespedes and Ms. Lebowitz remain in their
previous positions as officers and directors of the Company, however they now
receive no compensation from the Company.  Additionally, on September
29, 2008 the Company entered into a Master Services Agreement with Dancing Bear
Investments, Inc., an entity controlled by our Chairman Michael S. Egan, to
provide management resources and other services to the Company.





EMPLOYMENT
AGREEMENTS





On August
1, 2003, we entered into separate employment agreements with each of our named
executive officers, each of which was terminated on September 29, 2008. The
employment agreements with the Chief Executive Officer and President each
provided for an annual base salary of $250,000 with eligibility to receive
annual increases as determined in the sole discretion of the Board of Directors
and an annual cash bonus, which would be awarded upon the achievement of
specified pre-tax operating income, not to be less than $50,000 per year.
Effective October 1, 2007, these employment agreements were amended so as to
irrevocably terminate the Company’s obligation to pay guaranteed annual minimum
bonuses of $50,000 to these officers in the future. The employment agreement, as
amended, with the Vice President of Finance currently provided for an annual
base salary of $140,000 and a discretionary annual cash bonus, awarded at the
discretion of the Board of Directors.


21





Additionally,
each of the employment agreements with the named executive officers provided for
(i) employment as one of our executives; (ii) participation in all welfare,
benefit and incentive plans, including equity based compensation plans, offered
to senior management; and (iii) a term of employment which commenced on August
1, 2003 through the first anniversary thereof, and which automatically extends
for one day each day unless either the Company or the executive provides written
notice to the other not to further extend. Each of the employment agreements
also provided for payments to be made to the executive officers if they were
terminated “without cause” or if the executive terminated with “good reason,” or
in the event that the executive officer’s employment was terminated as a result
of disability or death, or in the event of a change in control of the
Company.





As
discussed earlier, the Company’s August 1, 2003 employment agreements (as
amended) with Messrs Egan and Cespedes and Ms. Lebowitz were terminated on
September 29, 2008.





SUMMARY
COMPENSATION TABLE





The
following table sets forth information concerning compensation for services in
all capacities awarded to, earned by or paid by us to those persons serving as
the principal executive officer and principal financial officer at any time
during the last calendar year and our other executive officer for the years
ended December 31, 2008 and 2007 (collectively, the "Named Executive
Officers"):




Name and Principal Position
                              
                              Year
                              
                              Salary
                                ($)
                              
                              
                              Bonus
                                ($)
                              
                              
                              Option
                                Awards (2)
                                ($)
                              
                              
                              All Other (3)
                                ($)
                              
                              
                              Total
                                ($)Michael
      S. Egan,
                              
                              2008
                              (1)
                              
                              193,678
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              496
                              
                              
                              
                              194,174Chairman,
      Chief Executive Officer (4)
                              
                              2007
                              
                              
                              250,000
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              1,163
                              
                              
                              
                              251,163Edward
      A. Cespedes,
                              
                              2008
                              (1)
                              
                              193,678
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              15,036
                              
                              
                              
                              208,713President,
      Treasurer and Chief
                              
                              2007
                              
                              
                              250,000
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              16,418
                              
                              
                              
                              266,418Financial
      Officer (5)Robin
      S. Lebowitz,
                              
                              2008
                              (1)
                              
                              108,459
                              
                              
                              
                              2,500
                              
                              
                              
                              0
                              
                              
                              
                              14,602
                              
                              
                              
                              125,561Former
      Chief Financial Officer;
                              
                              2007
                              
                              
                              140,000
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              15,182
                              
                              
                              
                              155,182Vice
      President of Finance (6)





(1)
Reflects amounts awarded to, earned by or paid by us through September 29, 2008,
the termination date of the Employment Agreements with the Named Executive
Officers.





(2) No
stock options were granted to any of the Named Executive Officers during 2008 or
2007.





(3) Other
compensation includes the cost of life, disability and accidental death and
dismemberment insurance premiums paid on behalf of the Named Executive
Officers.  In the case of the President and Vice President of Finance
other compensation also includes the cost of medical and dental insurance
coverage for the named executive officer, their spouse and dependents, as
applicable.





(4) Mr.
Egan became and executive officer in July 1998.  We began paying Mr.
Egan a base salary in July 2003.  The amount reported in 2008 includes
$107,139 of accrued and unpaid salary.





(5)
Cespedes became President in June 2002 and Treasurer and Chief Financial Officer
in February 2005.





(6) Ms.
Lebowitz became an officer of the Company in June 2002 and Chief Financial
Officer in July 2002. In February 2004, Ms. Lebowitz resigned her position as
Chief Financial Officer and became Vice President of Finance.


22





OUTSTANDING
EQUITY AWARDS AT FISCAL 2008 YEAR-END





Number of Securities
                                                                  Underlying Unexercised Options
      (1)
                                                                
                                                                Option
                                                                  Exercise
                                                                
                                                                Option
                                                                  ExpirationName
                                                                
                                                                Exercisable (#)
                                                                
                                                                Unexercisable (#)
                                                                
                                                                Price ($)
                                                                
                                                                DateMichael
      S. Egan
                                                                
                                                                
                                                                70,000
                                                                
                                                                
                                                                —
                                                                
                                                                $
                                                                15.75
                                                                
                                                                1/6/200910,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                6.69
                                                                
                                                                2/17/20107,500
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                .23
                                                                
                                                                6/27/20117,500
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                .04
                                                                
                                                                6/21/20122,500,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                .02
                                                                
                                                                8/13/20121,000,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                .56
                                                                
                                                                5/22/20131,750,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                .12
                                                                
                                                                4/7/2015Edward
      A. Cespedes
                                                                
                                                                
                                                                50,000
                                                                
                                                                
                                                                —
                                                                
                                                                $
                                                                15.75
                                                                
                                                                1/6/200915,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                6.69
                                                                
                                                                2/17/201020,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                2.50
                                                                
                                                                4/18/20107,500
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                2.38
                                                                
                                                                6/8/20107,500
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                .23
                                                                
                                                                6/27/20117,500
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                .04
                                                                
                                                                6/21/20121,750,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                .02
                                                                
                                                                8/13/2012550,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                .56
                                                                
                                                                5/22/20131,750,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                .12
                                                                
                                                                4/7/2015Robin
      S. Lebowitz
                                                                
                                                                
                                                                1,580
                                                                
                                                                
                                                                —
                                                                
                                                                $
                                                                1.59
                                                                
                                                                5/31/201025,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                0.05
                                                                
                                                                12/14/20117,500
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                0.04
                                                                
                                                                6/21/2012500,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                0.02
                                                                
                                                                8/13/2012100,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                0.56
                                                                
                                                                5/22/2013400,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                0.12
                                                                
                                                                4/7/2015100,000
                                                                
                                                                
                                                                —
                                                                
                                                                
                                                                0.14
                                                                
                                                                8/16/2016




(1) All
stock option awards included in the above table are fully vested. None of the
Named Executive Officers exercised any stock options during the year ended
December 31, 2008.




COMPENSATION
OF DIRECTORS





Directors
who are also our employees receive no compensation for serving on our Board or
committees. We reimburse non-employee directors for all travel and other
expenses incurred in connection with attending Board and committee meetings.
Non-employee directors are also eligible to receive automatic stock option
grants under our 1998 Stock Option Plan, as amended and restated. As of December
31, 2008 there were no directors who met this definition.





Each
director who becomes an eligible non-employee director for the first time
receives an initial grant of options to acquire 25,000 shares of our Common
Stock. In addition, each eligible non-employee director will receive an annual
grant of options to acquire 7,500 shares of our Common Stock on the first
business day following each annual meeting of stockholders that occurs while the
1998 Stock Option Plan or 2000 Stock Option Plan is in effect. These stock
options will be granted with per share exercise prices equal to the fair market
value of our common stock as of the date of grant.




ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS





The
following table sets forth certain information regarding beneficial ownership of
our Common Stock as of March 10, 2009 (except as otherwise indicated) by (i)
each person who owns beneficially more than 5% of our Common Stock, (ii) each of
our directors, (iii) each of our "Named Executive Officers" and (iv) all
directors and executive officers as a group. A total of 441,484,838 shares of
theglobe’s Common Stock were issued and outstanding on March 10,
2009.


23





The
amounts and percentage of common stock beneficially owned are reported on the
basis of regulations of the Securities and Exchange Commission ("SEC") governing
the determination of beneficial ownership of securities. Under the rules of the
SEC, a person is deemed to be a "beneficial owner" of a security if that person
has or shares "voting power," which includes the power to vote or to direct the
voting of such security, or "investment power," which includes the power to
dispose of or to direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities of which that person has a
right to acquire beneficial ownership within 60 days. Under these rules, more
than one person may be deemed a beneficial owner of the same securities and a
person may be deemed to be a beneficial owner of securities as to which such
person has no economic interest. Unless otherwise indicated below, the address
of each person named in the table below is in care of theglobe.com, inc., P.O.
Box 029006, Fort Lauderdale, Florida 33302.





SHARES BENEFICIALLY
OWNEDDIRECTORS, NAMED EXECUTIVE OFFICERS AND 5%
                        STOCKHOLDERS
                      
                      NUMBER
                      
                      PERCENT
                      
                      TITLE OF CLASSDancing
      Bear Investments, Inc. (1)
                      
                      
                      48,303,148
                      
                      10.9
                      %
                      CommonMichael
      S. Egan (1)(2)(6)(7)(8)(9)
                      
                      
                      350,449,034
                      
                      76.7
                      %
                      CommonEdward
      A. Cespedes (3)
                      
                      
                      4,157,500
                      
                      *
                      
                      CommonRobin
      S. Lebowitz (4)
                      
                      
                      1,134,080
                      
                      *
                      
                      CommonCarl
      Ruderman (5)
                      
                      
                      10,000,000
                      
                      2.2
                      %
                      CommonE&C
      Capital Partners, LLLP (6)(8)
                      
                      
                      48,469,012
                      
                      10.7
                      %
                      CommonE&C
      Capital Partners II, LLLP(7)
                      
                      
                      6,000,000
                      
                      1.4
                      %
                      CommonThe
      Registry Management Company, LLC (9)
                      
                      
                      229,000,000
                      
                      51.9
                      %
                      CommonAll
      directors and executive officers
                        as a group (3 persons)
                      
                      
                      355,740,614
                      
                      76.9
                      %
                      Common





* less
than 1%





(1) Mr.
Egan owns Dancing Bear Investments, Inc.





(2)
Includes the shares that Mr. Egan is deemed to beneficially own as the
controlling investor of Dancing Bear Investments, Inc., E&C Capital
Partners, LLLP, and E&C Capital Partners II, LLLP and as the Trustee of the
Michael S. Egan Grantor Retained Annuity Trusts for the benefit of his children.
Also includes (i) 5,345,000 shares of our Common Stock issuable upon exercise of
options that are currently exercisable; (ii) 3,541,337 shares of our Common
Stock held by Mr. Egan's wife, as to which he disclaims beneficial ownership;
and (iii) 204,082 shares of our Common Stock issuable upon exercise of warrants
at $1.22 per share owned by Mr. Egan and his wife.





(3)
Consists of 4,157,500 shares of our Common Stock issuable upon exercise of
options that are currently exercisable.





(4)
Consists of 1,134,080 shares of our Common Stock issuable upon exercise of
options that are currently exercisable.





(5)
Consists of 10,000,000 shares of Common Stock issuable upon the exercise of
warrants at $0.15 per share.





(6)
E&C Capital Partners, LLLP is a privately held investment vehicle controlled
by our Chairman, Michael S. Egan. Our President, Edward A. Cespedes, has a
minority, non-controlling interest in E&C Capital Partners,
LLLP.  Includes 10,000,000 shares of Common Stock if and to the extent
issued upon exercise of the warrants described in footnote (5) over which
E&C holds an irrevocable proxy pursuant to the Stockholders’ Agreement
described in footnote (8) below.





(7)
E&C Capital Partners II, LLLP is a privately held investment vehicle
controlled by our Chairman, Michael S. Egan.


24





(8) In
connection with certain Marketing Services Agreements entered with Universal
Media of Miami, Inc. and Trans Digital Media, LLC on November 22, 2006, the
Company entered into a warrant purchase agreement with Carl Ruderman, the
controlling shareholder of such entities. In connection with the issuance of the
warrants, Mr. Ruderman entered into a Stockholders’ Agreement with our Chairman
and Chief Executive Officer, Michael S. Egan, our President, Edward A. Cespedes,
and certain of their affiliates. Pursuant to the Stockholders’ Agreement, Mr.
Ruderman granted an irrevocable proxy over the shares issuable upon exercise of
the warrants to E&C Capital Partners, LLLP and granted a right of first
refusal over his shares to all of the other parties to the Stockholders’
Agreement. Mr. Ruderman also agreed to sell his shares under certain
circumstances in which the other parties to the Stockholders’ Agreement have
agreed to sell their respective shares. Mr. Ruderman was granted the right to
participate in certain sales of the Company’s Common Stock by the other parties
to the Stockholders’ Agreement. The amount set forth in the table includes
10,000,000 shares of Common Stock if and to the extent issued upon exercise of
the warrants described in footnote (5) over which E&C holds such irrevocable
proxy.





(9)  The
Registry Management Company, LLC is a privately held investment vehicle
controlled by our Chairman, Michael S. Egan.  Our President, Edward A.
Cespedes and our Vice President of Finance, Robin S. Lebowitz, have minority,
non-controlling interests in The Registry Management Company, LLC.





ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE





Transactions with Related
Persons .





Certain
directors of the Company also serve as officers and directors of and own
controlling interests in Dancing Bear Investments, Inc., E&C Capital
Partners LLLP, E&C Capital Partners II, LLLP, The Registry Management
Company, LLC, Tralliance Registry Management Company, LLC, Labigroup Holdings,
LLC and Search.Travel LLC.  Dancing Bear Investments, Inc., E&C
Capital Partners, LLLP and E&C Capital Partners II, LLLP are stockholders of
the Company and are entities controlled by our Chairman.





As more
fully discussed in Note 3, “Sale of Tralliance and Share Issuance,” in the
accompanying Notes to Consolidated Financial Statements on September 29, 2008,
the Company closed upon a definitive agreement whereby it (i) sold the business
and substantially all of the assets of its Tralliance Corporation subsidiary to
Tralliance Registry Management Company LLC (“Tralliance Registry Management”)
and (ii) issued 229,000,000 shares of its Common Stock (the “Shares”) to The
Registry Management Company, LLC (“Registry Management”) (the “Purchase
Transaction”).  Tralliance Registry Management and Registry Management
are entities directly or indirectly controlled by Michael S. Egan, our Chairman
and Chief Executive Officer and principal stockholder, and each of our two
remaining executive officers and Board members, Edward A. Cespedes, our
President, and Robin Segaul Lebowitz, our Vice President of Finance, own a
minority interest in Registry Management.  After giving effect to the
closing of the Purchase Transaction and the issuance of the Shares thereunder,
Mr. Egan now beneficially owns approximately 77% of the Company’s issued and
outstanding Common Stock.





In
connection with the Purchase Transaction, the Company received (i) consideration
totaling approximately $6,409,800 and consisting of the surrender to theglobe
and satisfaction of secured demand convertible promissory notes issued by
theglobe and held by Registry Management in the aggregate principal amount of
$4,250,000, together with all accrued and unpaid interest of approximately
$1,290,300 through the date of closing of the Purchase Transaction and
satisfaction of approximately $869,500 in outstanding rent and miscellaneous
fees due and unpaid to the Registry Management through the date of closing of
the Purchase Transaction, and (ii) an earn-out equal to 10% (subject to certain
minimums) of Tralliance Registry Management’s “net revenue” (as defined) derived
from “.travel” names registered by Tralliance Registry Management from September
29, 2008 through May 5, 2015 (the “Earn-out”).  The minimum Earn-out
payable by Tralliance Registry Management to theglobe will be at least $300,000
in the first year of the Earn-out Agreement, increasing by $25,000 each
subsequent year (pro-rated for the final year of the
Earn-out).  During January 2009, the Company received its initial
minimum Earn-out installment payment in the amount of $75,000 from Tralliance
Registry Management.





Commensurate
with the closing of the Purchase Transaction, on September 29, 2008, the Company
also entered into Termination Agreements with each of its executive officers
(each a “Termination Agreement”).  Pursuant to the Termination
Agreements, the Company’s employment agreements with each of Michael S. Egan,
Edward A. Cespedes and Robin Segaul Lebowitz, the Chief Executive Officer,
President and Vice President of Finance, all dated August 1, 2003, respectively,
were terminated.  Notwithstanding the termination of these employment
agreements, each of Messrs. Egan, Cespedes and Ms. Lebowitz remains as an
officer and director of the Company.





In
connection with the closing of the Purchase Transaction, the Company also
entered into a Master Services Agreement (“Services Agreement”) with Dancing
Bear Investments, Inc. (“Dancing Bear”), an entity which is controlled by Mr.
Egan.  Under the terms of the Services Agreement, for a fee of $20,000
per month ($240,000 per annum), Dancing Bear will provide personnel and services
to the Company so as to enable it to continue its existence as a public company
without the necessity of any full-time employees of its own.  The
Services Agreement has an initial term of one year and is subject to renewal or
early termination under certain events.  Services under the Services
Agreement include, without limitation, accounting, assistance with financial
reporting, accounts payable, treasury/financial planning, record retention and
secretarial and investor relations functions.  A total of $60,667
related to the Services Agreement has been expensed during 2008, with $40,667 of
such amount remaining unpaid and accrued at December 31, 2008.


25





As more
fully discussed in Note 8, “Debt” in the accompanying Notes to Consolidated
Financial Statements, on June 6, 2008, the Company and its subsidiaries, as
guarantors, entered into a Revolving Loan Agreement with Dancing Bear, pursuant
to which Dancing Bear may loan up to $500,000 to the Company on a revolving
basis (the “Credit Line”).  In connection with its entry into the
Credit Line, the Company borrowed $100,000 under the Credit
Line.  Subsequently, on June 19, 2008, July 10, 2008 and August 6,
2008, the Company made additional borrowings of $100,000 each under the Credit
Line.  On September 3, 2008, the Company borrowed the final $100,000
available under the Credit Line.  All borrowings under the Credit
Line, including accrued interest on borrowed funds at the rate of 10% per annum,
are due and payable in one lump sum on the first anniversary date of the Credit
Line, or June 6, 2009, or sooner upon the occurrence of an event of default
under the loan documentation.  All amounts outstanding from time to
time under the Credit Line are secured by a lien on all of the assets of the
Company and its subsidiaries.





Also, as
more fully described in Note 8, “Debt,” on June 10, 2008 Dancing Bear converted
an aggregate of $400,000 of outstanding 2007 Convertible Notes due to them by
the Company into an aggregate of 40,000,000 shares of the Company’s Common
Stock.





On
December 20, 2007, Tralliance entered into a Bulk Registration Co-Marketing
Agreement (the “Co-Marketing Agreement”) with Labigroup Holdings, LLC
(“Labigroup”), under Tralliance’s bulk purchase program. Labigroup is a private
entity controlled by the Company’s Chairman and our remaining directors own a
minority interest in Labigroup. Under the Co-Marketing Agreement, Labigroup
committed to purchase a predetermined minimum number of “.travel” domain names
on a bulk basis from an accredited “.travel” registrar of its own choosing and
to establish a predetermined minimum number of related “.travel” websites. As
consideration for the “.travel” domain names to be purchased under the
Co-Marketing Agreement, Labigroup agreed to pay certain fixed fees and make
certain other payments including, but not limited to, an ongoing royalty
calculated as a percentage share of its net revenue, as defined in the
Co-Marketing Agreement (the “Labigroup Royalties”), to Tralliance. The
Co-Marketing Agreement has an initial term which expires September 30, 2010
after which it may be renewed for successive periods of two and three years,
respectively. During the years ended December 31, 2007 and 2008, Labigroup
registered a total of 164,708 and 10,595 “.travel” domain names under the
Co-Marketing Agreement, respectively.  During the years ended December
31, 2007 and 2008, Labigroup paid a total of $262,500 and $454,430 in fees and
costs to Tralliance under the Co-Marketing Agreement,
respectively.  Such amounts, which are equal to the amount of
incremental fees and costs incurred by Tralliance in registering these bulk
purchase names, have been treated as a reimbursement of these incremental fees
and costs in the Company’s financial statements.   As part of the
sale of its Tralliance business on September 29, 2008, all of the Company’s
rights and obligations under the Co-Marketing Agreement were assigned to
Tralliance Registry Management.





On
December 13, 2007, the Company entered into and closed an Assignment, Conveyance
and Bill of Sale Agreement with Search.Travel, LLC (“Search.Travel”). Pursuant
to this agreement, Tralliance sold all of its rights relating to the
www.search.travel domain name, website and related assets to Search.Travel for a
purchase price of $380,000, which was paid in cash at the closing date.
Search.Travel is a private entity controlled by the Company’s Chairman, of which
our remaining directors also own a minority interest. The purchase price was
determined by the Board of Directors taking into account the valuation given to
the assets by an independent investment banking firm. A gain on the sale of
Search.Travel in the amount of $379,791 was recognized and has been included
within Other Income in the Consolidated Statement of Operations for the year
ended December 31, 2007.





On May
29, 2007, Dancing Bear entered into a note purchase agreement (the “2007
Agreement”) with the Company pursuant to which Dancing Bear acquired a secured
demand convertible promissory note (the “2007 Convertible Note”) in the amount
of $250,000. Under the terms of the 2007 Agreement, Dancing Bear was granted the
optional right, for a period of 180 days from the date of the 2007 Agreement, to
purchase additional 2007 Convertible Notes such that the aggregate principal
amount issued under the 2007 Agreement could total $3,000,000. On June 25, 2007,
July 19, 2007 and September 6, 2007, Dancing Bear acquired additional 2007
Convertible Notes in the principal amounts of $250,000, $500,000 and $250,000
respectively.  Interest associated with the 2007 Convertible Notes of
approximately $81,250 and $58,600 was charged to expense during the years ended
December 31, 2008 and 2007, respectively.  As more fully discussed in
Note 8 “Debt,” the Company’s obligation to repay the remaining $850,000 in
principal (after the conversion of $400,000 of debt on June 10, 2008) and
$139,850 of accrued interest related to the 2007 Convertible Notes was
terminated on September 29, 2008 in connection with the consummation of the
Purchase Transaction.





On April
2, 2007, theglobe agreed to transfer to Michael Egan all of its VoIP
intellectual property in consideration for his agreement to provide certain
security and credit enhancements in connection with the MySpace litigation
Settlement Agreement (See Note 11, “Litigation”, for further discussion). The
Company had previously written off the value of the VoIP intellectual property
as a result of its evaluation of the VoIP telephony services business’
long-lived assets in connections with the preparation of the Company’s 2004
year-end consolidated financial statements.





Several
entities controlled by the Company’s Chairman and Chief Executive Officer (the
“Related Entities”) have provided services to the Company, including: the lease
of office space; and the outsourcing of customer services, human resources and
payroll processing functions. During the years ended December 31, 2008 and 2007,
approximately $354,000 and $473,000 of expense related to these services was
recorded, respectively.  In connection with the Purchase Transaction
discussed above and in Note 3, “Sale of Tralliance and Share Issuance,” all of
the receivables owed by the Company to the Related Entities as of the date of
closing of the Purchase Transaction, totaling $869,500, were assigned and
contributed to Registry Management, who then surrendered their right to receive
payment for such obligations from the Company as part of the consideration for
the Purchase Transaction.


26





An entity
owned solely by the sister of the Company’s President, Treasurer and Chief
Financial Officer and Director provided certain administrative services to the
Company.  During the years ended December 31, 2008 and 2007, $33,350
and $11,250 of expense related to these services was recorded,
respectively.





Director Independence
.. None of the current members of the Company’s Board of Directors are considered
“independent” within the meaning of applicable NASD rules





ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES





Audit Fees . The
aggregate fees billed by Rachlin Cohen & Holtz LLP (“Rachlin Cohen”),
independent public accountants, for professional services rendered for the audit
of our annual financial statements during 2008 and 2007 and the reviews of the
financial statements included in our Forms 10-Q and 10-K, as appropriate, were
$83,856 and $81,529, respectively.





Audit-Related Fees .
During the last two fiscal years, Rachlin Cohen provided the Company with the
following services that are reasonably related to the performance of the audit
of our financial statements:





Aggregate
fees billed during 2008 for assurance and related services related to the filing
of an Information Statement in connection with the Tralliance Asset Sale and
Share Issuance were $28,963.  No such audit-related fees were incurred
during 2007.





Other
services relating to research of various accounting pronouncements and technical
issues were $170 for 2008 and $518 for 2007.





Tax Fees . The
aggregate fees billed for tax services provided by Rachlin Cohen in connection
with tax compliance, tax consulting and tax planning services during 2008 and
2007, were $67,751 and $81,358, respectively.





All Other Fees .
Except as described above, the Company had no other fees for services provided
by Rachlin Cohen during 2008 and 2007.





Pre-Approval of Services by
the External Auditor . In April 2004, the Audit Committee adopted a
policy for pre-approval of audit and permitted non-audit services by the
Company’s external auditor. The Audit Committee will consider annually and, if
appropriate, approve the provision of audit services by its external auditor and
consider and, if appropriate, pre-approve the provision of certain defined audit
and non-audit services. The Audit Committee will also consider on a case-by-case
basis and, if appropriate, approve specific engagements that are not otherwise
pre-approved. The Audit Committee pre-approved the audit related engagements and
tax services billed by the amounts described above.


27




PART
IV





ITEM 15. EXHIBITS AND FINANCIAL
STATEMENT SCHEDULES




(a).
              
              List
      of all documents filed as part of this report.(1)
              
              Financial
      statements are listed in the index to the consolidated financial
      statements on page F-1 of this Report.(2)
              
              No
      financial statement schedules are included because they are not applicable
      or are not required or the information required to be set forth therein is
      included in the consolidated financial statements or notes
      thereto.(3)
              
              Exhibit
      Index3.1
              
              Form
      of Fourth Amended and Restated Certificate of Incorporation of the Company
      (3).3.2
              
              Certificate
      of Amendment to Fourth Amended and Restated Certificate of Incorporation
      (15).3.3
              
              Certificate
      of Amendment to Fourth Amended and Restated Certificate of Incorporation
      filed with the Secretary of State of Delaware on July 29, 2003
      (15).3.4
              
              Certificate
      relating to Previously Outstanding Series of Preferred Stock and Relating
      to the Designation, Preferences and Rights of the Series F Preferred Stock
      (11).3.5
              
              Certificate
      of Amendment Relating to the Designation Preferences and Rights of the
      Junior Participating Preferred Stock (12).3.6
              
              Form
      of By-Laws of the Company (15).3.7
              
              Certificate
      of Amendment Relating to the Designation Preferences and Rights of the
      Series H Automatically Converting Preferred Stock (14).3.8
              
              Certificate
      of Amendment to Fourth Amended and Restated Certificate of Incorporation
      filed with the Secretary of State of Delaware on December 1, 2004
      (17).4.1
              
              Registration
      Rights Agreement, dated as of September 1, 1998 (5).4.2
              
              Amendment
      No.1 to Registration Rights Agreement, dated as of April 9, 1999
      (6).4.3
              
              Specimen
      certificate representing shares of Common Stock of the Company
      (4).4.4
              
              Amended
      and Restated Warrant to Acquire Shares of Common Stock
  (2).4.5
              
              Form
      of Rights Agreement, by and between the Company and American Stock
      Transfer & Trust Company as Rights Agent (3).4.6
              
              Form
      of Warrant dated November 12, 2002 to acquire shares of Common Stock
      (8).4.7
              
              Form
      of Warrant dated May 28, 2003 to acquire an aggregate of 500,000 shares of
      theglobe.com Common Stock (9).4.8
              
              Form
      of Warrant dated March 5, 2004 to acquire securities of theglobe.com, inc.
      (13).4.9
              
              Warrant
      to Acquire 5,000,000 shares of theglobe.com, inc. dated as of November 22,
      2006 to Carl Ruderman (19)*4.10
              
              Warrant
      to Acquire 5,000,000 shares of theglobe.com, inc. dated as of November 22,
      2006 to Carl Ruderman (19).*4.11
              
              Security
      Agreement dated May 29, 2007 by and between theglobe.com, inc. and Dancing
      Bear Investments, Inc. (20).4.12
              
              Unconditional
      Guaranty Agreement dated May 29, 2007 (20).4.13
              
              $250,000
      Secured Demand Convertible Promissory Note dated May 29, 2007
      (20).




28





4.14
              
              $250,000
      Secured Demand Convertible Promissory Note dated June 25, 2007
      (21).4.15
              
              $250,000
      Secured Demand Convertible Promissory Note dated July 19, 2007
      (22).4.16
              
              $250,000
      Secured Demand Convertible Promissory Note dated September 6, 2007
      (23).10.1
              
              Form
      of Indemnification Agreement between the Company and each of its Directors
      and Executive Officers (1).10.2
              
              2000
      Broad Based Stock Option Plan (7).**10.3
              
              1998
      Stock Option Plan, as amended (6).**10.4
              
              1995
      Stock Option Plan (1).**10.5
              
              Employment
      Agreement dated August 1, 2003 between theglobe.com, inc. and Michael S.
      Egan (10).**10.6
              
              Employment
      Agreement dated August 1, 2003 between theglobe.com, inc. and Edward A.
      Cespedes (10).**10.7
              
              Employment
      Agreement dated August 1, 2003 between theglobe.com, inc. and Robin Segaul
      Lebowitz (10).**10.8
              
              Amended
      & Restated Non-Qualified Stock Option Agreement effective as of August
      12, 2002 between theglobe.com, inc. and Michael S. Egan
      (10).**10.9
              
              Amended
      & Restated Non-Qualified Stock Option Agreement effective as of August
      12, 2002 between theglobe.com, inc. and Edward A. Cespedes
      (10).**10.10
              
              Amended
      & Restated Non-Qualified Stock Option Agreement effective as of August
      12, 2002 between theglobe.com, inc. and Robin Segaul Lebowitz
      (10).**10.11
              
              2003
      Amended and Restated Non-Qualified Stock Option Plan
    (18).**10.12
              
              theglobe.com
      2004 Amended and Restated Stock Option Plan (16).10.13
              
              Warrant
      Purchase Agreement dated as of November 22, 2006 by and between
      theglobe.com, inc. and Carl Ruderman (19).*10.14
              
              Stockholders’
      Agreement dated as of November 22, 2006 by and among theglobe.com, inc.,
      Michael S. Egan, Edward A. Cespedes, E&C Capital Partners, LLLP,
      E&C Capital Partners II, Ltd., Dancing Bear Investments, Inc. and Carl
      Ruderman (19).10.15
              
              Note
      Purchase Agreement dated May 29, 2007 between theglobe.com, inc. and
      Dancing Bear Investments, Inc. (20).10.16
              
              Amendment
      to Employment Agreement dated October 1, 2007 between theglobe.com and
      Michael S. Egan (24).**10.17
              
              Amendment
      to Employment Agreement dated October 1, 2007 between theglobe.com and
      Edward A. Cespedes (24).**10.18
              
              Master
      Co-Marketing Agreement dated October 1, 2007 between Neustar, Inc. and
      Tralliance Corporation (24).*10.19
              
              Agreement
      Conveyance and Bill of Sale dated as of December 13, 2007 by and between
      theglobe.com, inc., Tralliance Corporation and Search.Travel LLC
      (25).10.20
              
              Letter
      of Intent Agreement dated as of February 1, 2008 by and between The
      Registry Management Company LLC, Tralliance Corporation and theglobe,com,
      inc. (26).10.21
              
              Bulk
      Registration Co-Marketing Agreement dated as of December 20, 2007 by and
      between Tralliance Corporation and Labigroup Holdings, LLC.
      (27)*10.22
              
              Revolving
      Loan Agreement dated as of June 6, 2008 by and between theglobe.com, inc.
      and Dancing Bear Investments, Inc. (28).10.23
              
              $500,000
      Promissory Note dated June 6, 2008 (28).10.24
              
              Unconditional
      Guaranty Agreement dated June 6, 2008 (28).




29





10.25
              
              Security
      Agreement dated June 6, 2008 (28).10.26
              
              Purchase
      Agreement dated as of June 10, 2008 by and between theglobe.com, inc.,
      Tralliance Corporation and The Registry Management Company, LLC
      (29).10.27
              
              Earn-out
      Agreement dated September 29, 2008 by and between theglobe.com. inc. and
      Tralliance Registry Management Company, LLC (30).10.28
              
              Management
      Services Agreement dated September 29, 2008 with Dancing Bear Investments,
      Inc. (30).10.29
              
              Termination
      Agreement dated September 29, 2008 with Michael S. Egan
    (30).10.30
              
              Termination
      Agreement dated September 29, 2008 with Edward A. Cespedes
      (30).10.31
              
              Termination
      Agreement dated September 29, 2008 with Robin Segaul-Lebowitz
      (30).21.
              
              Subsidiaries31.1
              
              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.







EXHIBIT
INDEX


NO.
ITEM




1.
Incorporated by reference from our registration statement on Form S-1 filed July
24, 1998 (Registration No. 333-59751).





2.
Incorporated by reference from our Form S-1/A filed August 20,
1998.





3.
Incorporated by reference from our Form S-1/A filed September 15,
1998.





4.
Incorporated by reference from our Form S-1/A filed October 14,
1998.





5.
Incorporated by reference from our Form 10-K for the year ended December 31,
1998 filed March 30, 1999.





6.
Incorporated by reference from our Form S-1 filed April 13, 1999.





7.
Incorporated by reference from our Form 10-Q for the quarter ended March 31,
2000 dated May 15, 2000.





8.
Incorporated by reference from our Form 8-K filed on November 26,
2002.





9.
Incorporated by reference from our Form 8-K filed on June 6, 2003.





10.
Incorporated by reference from our Form 10-QSB filed on November 14,
2003.





11.
Incorporated by reference from our Form 10-K filed on March 31,
2003.





12.
Incorporated by reference from our Registration Statement on Form SB-2 filed on
April 16, 2004 (Registration No. 333-114556).





13.
Incorporated by reference from our Form 8-K filed on March 17,
2004.





14.
Incorporated by reference from our Form 8-K filed September 7,
2004.


30





15.
Incorporated by reference from our Form SB-2 filed April 16, 2004.





16.
Incorporated by reference from our S-8 filed October 13, 2004.





17.
Incorporated by reference from our Form 8-K filed on December 2,
2004.





18.
Incorporated by reference from our Form S-8 filed January 22, 2004.





19.
Incorporated by reference from our Form 10-K filed on March 30,
2007.





20.
Incorporated by reference from our Form SC 13D/A-3 filed on May 30,
2007.





21.
Incorporated by reference from our Form 8-K filed on June 26, 2007.





22.
Incorporated by reference from our Form 10-Q filed on July 23,
2007.





23.
Incorporated by reference from our Form 8-K filed on September 7,
2007.





24.
Incorporated by reference from our Form 10-Q/A filed on November 14,
2007.





25.
Incorporated by reference from our Form 8-K filed on December 20,
2007.





26.
Incorporated by reference from our Form 8-K filed on February 7,
2008.





27.
Incorporated by reference from our Form 10-K filed on March 27,
2008.





28.
Incorporated by reference from our Form 8-K filed on June 11, 2008.





29.
Incorporated by reference from our Form 8-Kfiled on June 13, 2008.





30.
Incorporated by reference from our Form 8-K filed on October 3,
2008.





*
Confidential portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential
treatment.




**
Management contract or compensatory plan or arrangement.


31




SIGNATURES





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




theglobe.com,
      inc.Dated:
      March 27, 2009
                  By:
                  /s/ 
      Michael S.
      EganMichael
      S. EganChief
      Executive Officer
                    (Principal
      Executive Officer)
 
 By:
                    /s/ 
      Edward A.
      CespedesEdward
      A. CespedesPresident,
      Chief Financial Officer
                      (Principal
      Financial
Officer)




Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Registrant in the capacities
and on the dates indicated.




/s/
      Michael S. Egan
                    
                    March 27,
      2009Michael
      S. EganChairman,
      Director/s/
      Edward A. Cespedes
                    
                    March 27,
      2009Edward
      A. CespedesDirector/s/
      Robin Lebowitz
                    
                    March 27, 
      2009Robin
      LebowitzDirector




32




EXHIBIT
INDEX





NO.
ITEM


3.1
              
              Form
      of Fourth Amended and Restated Certificate of Incorporation of the Company
      (3).3.2
              
              Certificate
      of Amendment to Fourth Amended and Restated Certificate of Incorporation
      (15).3.3
              
              Certificate
      of Amendment to Fourth Amended and Restated Certificate of Incorporation
      filed with the Secretary of State of Delaware on July 29, 2003
      (15).3.4
              
              Certificate
      relating to Previously Outstanding Series of Preferred Stock and Relating
      to the Designation, Preferences and Rights of the Series F Preferred Stock
      (11).3.5
              
              Certificate
      of Amendment Relating to the Designation Preferences and Rights of the
      Junior Participating Preferred Stock (12).3.6
              
              Form
      of By-Laws of the Company (15).3.7
              
              Certificate
      of Amendment Relating to the Designation Preferences and Rights of the
      Series H Automatically Converting Preferred Stock (14).3.8
              
              Certificate
      of Amendment to Fourth Amended and Restated Certificate of Incorporation
      filed with the Secretary of State of Delaware on December 1, 2004
      (17).4.1
              
              Registration
      Rights Agreement, dated as of September 1, 1998 (5).4.2
              
              Amendment
      No.1 to Registration Rights Agreement, dated as of April 9, 1999
      (6).4.3
              
              Specimen
      certificate representing shares of Common Stock of the Company
      (4).4.4
              
              Amended
      and Restated Warrant to Acquire Shares of Common Stock
  (2).4.5
              
              Form
      of Rights Agreement, by and between the Company and American Stock
      Transfer & Trust Company as Rights Agent (3).4.6
              
              Form
      of Warrant dated November 12, 2002 to acquire shares of Common Stock
      (8).4.7
              
              Form
      of Warrant dated May 28, 2003 to acquire an aggregate of 500,000 shares of
      theglobe.com Common Stock (9).4.8
              
              Form
      of Warrant dated March 5, 2004 to acquire securities of theglobe.com, inc.
      (13).4.9
              
              Warrant
      to Acquire 5,000,000 shares of theglobe.com, inc. dated as of November 22,
      2006 to Carl Ruderman (19)*4.10
              
              Warrant
      to Acquire 5,000,000 shares of theglobe.com, inc. dated as of November 22,
      2006 to Carl Ruderman (19).*4.11
              
              Security
      Agreement dated May 29, 2007 by and between theglobe.com, inc. and Dancing
      Bear Investments, Inc. (20).4.12
              
              Unconditional
      Guaranty Agreement dated May 29, 2007 (20).4.13
              
              $250,000
      Secured Demand Convertible Promissory Note dated May 29, 2007
      (20).4.14
              
              $250,000
      Secured Demand Convertible Promissory Note dated June 25, 2007
      (21).4.15
              
              $250,000
      Secured Demand Convertible Promissory Note dated July 19, 2007
      (22).4.16
              
              $250,000
      Secured Demand Convertible Promissory Note dated September 6, 2007
      (23).10.1
              
              Form
      of Indemnification Agreement between the Company and each of its Directors
      and Executive Officers (1).10.2
              
              2000
      Broad Based Stock Option Plan
(7).**




33





10.3
              
              1998
      Stock Option Plan, as amended (6).**10.4
              
              1995
      Stock Option Plan (1).**10.5
              
              Employment
      Agreement dated August 1, 2003 between theglobe.com, inc. and Michael S.
      Egan (10).**10.6
              
              Employment
      Agreement dated August 1, 2003 between theglobe.com, inc. and Edward A.
      Cespedes (10).**10.7
              
              Employment
      Agreement dated August 1, 2003 between theglobe.com, inc. and Robin Segaul
      Lebowitz (10).**10.8
              
              Amended
      & Restated Non-Qualified Stock Option Agreement effective as of August
      12, 2002 between theglobe.com, inc. and Michael S. Egan
      (10).**10.9
              
              Amended
      & Restated Non-Qualified Stock Option Agreement effective as of August
      12, 2002 between theglobe.com, inc. and Edward A. Cespedes
      (10).**10.10
              
              Amended
      & Restated Non-Qualified Stock Option Agreement effective as of August
      12, 2002 between theglobe.com, inc. and Robin Segaul Lebowitz
      (10).**10.11
              
              2003
      Amended and Restated Non-Qualified Stock Option Plan
    (18).**10.12
              
              theglobe.com
      2004 Amended and Restated Stock Option Plan (16).10.13
              
              Warrant
      Purchase Agreement dated as of November 22, 2006 by and between
      theglobe.com, inc. and Carl Ruderman (19).*10.14
              
              Stockholders’
      Agreement dated as of November 22, 2006 by and among theglobe.com, inc.,
      Michael S. Egan, Edward A. Cespedes, E&C Capital Partners, LLLP,
      E&C Capital Partners II, Ltd., Dancing Bear Investments, Inc. and Carl
      Ruderman (19).10.15
              
              Note
      Purchase Agreement dated May 29, 2007 between theglobe.com, inc. and
      Dancing Bear Investments, Inc. (20).10.16
              
              Amendment
      to Employment Agreement dated October 1, 2007 between theglobe.com and
      Michael S. Egan (24).**10.17
              
              Amendment
      to Employment Agreement dated October 1, 2007 between theglobe.com and
      Edward A. Cespedes (24).**10.18
              
              Master
      Co-Marketing Agreement dated October 1, 2007 between Neustar, Inc. and
      Tralliance Corporation (24).*10.19
              
              Agreement
      Conveyance and Bill of Sale dated as of December 13, 2007 by and between
      theglobe.com, inc., Tralliance Corporation and Search.Travel LLC
      (25).10.20
              
              Letter
      of Intent Agreement dated as of February 1, 2008 by and between The
      Registry Management Company LLC, Tralliance Corporation and theglobe,com,
      inc. (26).10.21
              
              Bulk
      Registration Co-Marketing Agreement dated as of December 20, 2007 by and
      between Tralliance Corporation and Labigroup Holdings, LLC.
      (27)*10.22
              
              Revolving
      Loan Agreement dated as of June 6, 2008 by and between theglobe.com, inc.
      and Dancing Bear Investments, Inc. (28).10.23
              
              $500,000
      Promissory Note dated June 6, 2008 (28).10.24
              
              Unconditional
      Guaranty Agreement dated June 6, 2008 (28).10.25
              
              Security
      Agreement dated June 6, 2008 (28).10.26
              
              Purchase
      Agreement dated as of June 10, 2008 by and between theglobe.com, inc.,
      Tralliance Corporation and The Registry Management Company, LLC
      (29).10.27
              
              Earn-out
      Agreement dated September 29, 2008 by and between theglobe.com. inc. and
      Tralliance Registry Management Company, LLC (30).10.28
              
              Management
      Services Agreement dated September 29, 2008 with Dancing Bear Investments,
      Inc. (30).




34





10.29
                
                Termination
      Agreement dated September 29, 2008 with Michael S. Egan
    (30).10.30
                
                Termination
      Agreement dated September 29, 2008 with Edward A. Cespedes
      (30).10.31
                
                Termination
      Agreement dated September 29, 2008 with Robin Segaul-Lebowitz
      (30).21.
                
                Subsidiaries31.1
                
                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.







EXHIBIT
INDEX


NO.
ITEM




1.
Incorporated by reference from our registration statement on Form S-1 filed July
24, 1998 (Registration No. 333-59751).




2.
Incorporated by reference from our Form S-1/A filed August 20,
1998.





3.
Incorporated by reference from our Form S-1/A filed September 15,
1998.





4.
Incorporated by reference from our Form S-1/A filed October 14,
1998.





5.
Incorporated by reference from our Form 10-K for the year ended December 31,
1998 filed March 30, 1999.





6.
Incorporated by reference from our Form S-1 filed April 13, 1999.





7.
Incorporated by reference from our Form 10-Q for the quarter ended March 31,
2000 dated May 15, 2000.





8.
Incorporated by reference from our Form 8-K filed on November 26,
2002.





9.
Incorporated by reference from our Form 8-K filed on June 6, 2003.





10.
Incorporated by reference from our Form 10-QSB filed on November 14,
2003.





11.
Incorporated by reference from our Form 10-K filed on March 31,
2003.





12.
Incorporated by reference from our Registration Statement on Form SB-2 filed on
April 16, 2004 (Registration No. 333-114556).





13.
Incorporated by reference from our Form 8-K filed on March 17,
2004.





14.
Incorporated by reference from our Form 8-K filed September 7,
2004.





15.
Incorporated by reference from our Form SB-2 filed April 16, 2004.





16.
Incorporated by reference from our S-8 filed October 13, 2004.





17.
Incorporated by reference from our Form 8-K filed on December 2,
2004.





18.
Incorporated by reference from our Form S-8 filed January 22,
2004.


35





19.
Incorporated by reference from our Form 10-K filed on March 30,
2007.





20.
Incorporated by reference from our Form SC 13D/A-3 filed on May 30,
2007.





21.
Incorporated by reference from our Form 8-K filed on June 26, 2007.





22.
Incorporated by reference from our Form 10-Q filed on July 23,
2007.





23.
Incorporated by reference from our Form 8-K filed on September 7,
2007.





24.
Incorporated by reference from our Form 10-Q/A filed on November 14,
2007.





25.
Incorporated by reference from our Form 8-K filed on December 20,
2007.





26.
Incorporated by reference from our Form 8-K filed on February 7,
2008.





27.
Incorporated by reference from our Form 10-K filed on March 27,
2008.





28.
Incorporated by reference from our Form 8-K filed on June 11, 2008.





29.
Incorporated by reference from our Form 8-Kfiled on June 13, 2008.





30.
Incorporated by reference from our Form 8-K filed on October 3,
2008.





*
Confidential portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential
treatment.




**
Management contract or compensatory plan or arrangement.


36