SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 COMMISSION FILE NO.: 0-25053

                               THEGLOBE.COM, INC.

             (Exact name of registrant as specified in its charter)


                DELAWARE                                       14-1782422
     (State or other jurisdiction of                        (I.R.S. Employer
      incorporation or organization)                     Identification Number)

        110 East Broward Blvd., Suite 1400
               Fort Lauderdale, FL                                33301
     (Address of principal executive offices)                   (Zip Code)


                                 (954) 769-5900
                (Registrant's telephone number, including area code)



        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
                         Preferred Stock Purchase Rights

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

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 an accelerated filer (as
defined  in Rule 12b-2 of the Securities Exchange Act of 1934).  Yes      No [X]

The  number  of  shares  outstanding of the Registrant's Common Stock, $.001 par
value  (the  "Common  Stock")  as  of  March  18,  2003  was  30,382,293.

Aggregate  market value of the voting Common Stock held by non-affiliates of the
registrant  as  of  the  close  of  business  on  June  28,  2002:  $892,594.
_________
*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.

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

The information required by Part III of this report, to the extent not set forth
herein,  is  incorporated  by  reference  from the registrant's definitive proxy
statement  relating  to  the  annual  meeting of stockholders to be held in 2003
which definitive proxy statement shall be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year to which this Report
relates.


<PAGE>
                               THEGLOBE.COM, INC.
                         2002 ANNUAL REPORT ON FORM 10-K
                                TABLE OF CONTENTS


PART I
Item  1.     Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Item  2.     Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Item  3.     Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . .9
Item  4.     Submission of Matters to a Vote of Security Holders. . . . . . . .9

PART II

Item  5.     Market for Registrant's Common Equity and Related Stockholder
             Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item  6.     Selected Consolidated Financial Data . . . . . . . . . . . . . . 11
Item  7.     Management's Discussion and Analysis of Financial Condition and
             Results of Operations. . . . . . . . . . . . . . . . . . . . . . 13
Item  7A.    Quantitative and Qualitative Disclosures About Market Risk . . . 34
Item  8.     Consolidated Financial Statements and Supplementary Data . . . . 35
Item  9.     Changes in and Disagreements with Accountants and Accounting and
             Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . 36

PART III

Item  10.    Directors and Executive Officers of the Registrant . . . . . . . 37
Item  11.    Executive Compensation . . . . . . . . . . . . . . . . . . . . . 37
Item  12.    Security Ownership of Certain Beneficial Owners and
             Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Item  13.    Certain Relationships and Related Transactions . . . . . . . . . 37
Item  14.    Controls and Procedures. . . . . . . . . . . . . . . . . . . . . 37

PART IV

Item  15.    Exhibits, Financial Statement Schedules and Reports
             on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . 38

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
CERTIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42


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<PAGE>
FORWARD LOOKING STATEMENTS
--------------------------

This Form 10-K, including without limitation Management's Discussion and
Analysis of Financial Condition and Results of Operations, contains
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements can be identified by the use of predictive,
future-tense or forward-looking terminology, such as "believes," "anticipates,"
"expects," "estimates," "plans," "may," "intends," "will," or similar terms.
Investors are cautioned that any forward-looking statements are not guarantees
of future performance and involve significant risks and uncertainties, and that
actual results may differ materially from those projected in the forward-looking
statements as a result of various factors described under "Risk Factors" and
elsewhere in this report. The following discussion should be read together with
the consolidated financial statements and notes to those statements included
elsewhere in this report, as well as the "Risk Factors" set forth in Part I,
Item 7 below.


                                     PART I
ITEM 1. BUSINESS

OVERVIEW AND BUSINESS STRATEGY

theglobe.com, inc. (the "Company" or "theglobe") was incorporated on May 1, 1995
(inception) and commenced operations on that date. theglobe.com was an online
property with registered members and users in the United States and abroad which
allowed its users to personalize their online experience by publishing their own
content and interacting with others having similar interests. However, due to
the decline in the advertising market, the Company was forced to take
cost-reduction and restructuring initiatives, which included closing its
community www.theglobe.com effective August 15, 2001. The Company then began to
aggressively seek buyers for some or all of its remaining online and offline
properties, which consisted primarily of games-related properties. In October
2001, the Company sold all of the assets used in connection with the Games
Domain and Console Domain websites to British Telecommunications plc, and all of
the assets used in connection with the Kids Domain website to Kaboose Inc. In
February 2002, the Company sold all of the assets used in connection with the
Happy Puppy website to Internet Game Distribution, LLC (See Note 3 of notes to
consolidated financial statements - Dispositions).

Effective June 1, 2002, Chairman Michael S. Egan and Director Edward A. Cespedes
became Chief Executive Officer and President of the Company, respectively. As of
December 31, 2002, the Company continues to operate its Computer Games print
magazine and the associated website Computer Games Online (www.cgonline.com), as
well as the games distribution business of Chips & Bits, Inc.
(www.chipsbits.com). The Company may determine to retain one or both businesses
in connection with its future operations.

The Company continues to actively explore a number of strategic alternatives for
its remaining online and offline game properties, including continuing its
operations and using its cash on hand, selling some or all of these properties
and/or entering into new or different lines of business. On November 14, 2002,
the Company acquired certain Voice over the Internet Protocol (VoIP) assets from
an entrepreneur and is currently investigating opportunities related to this
acquisition. In exchange for the assets, the Company issued warrants to acquire
1,750,000 shares of its common stock and an additional 425,000 warrants as part
of an earn-out structure upon the attainment of certain performance targets. In
conjunction with the acquisition, E&C Capital Partners, a privately held
investment vehicle controlled by our Chairman and Chief Executive Officer,
Michael S. Egan and our President, Edward A. Cespedes, entered into a
non-binding letter of intent with theglobe.com to provide new financing in the
amount of $500,000 through the purchase of a new series of preferred securities.
That investment closed on March 28, 2003. (See "Management's Discussion and
Analysis of Financial Condition and Results of Operation - Liquidity and Capital
Resources.")

Concurrently with the closing of the preferred stock investment, certain
affiliates of Michael S. Egan and Edward A. Cespedes entered into a non-binding
letter of intent to loan up to $1 million to the Company pursuant to a
convertible secured loan facility. The loan facility would be convertible into
shares of the Company's common stock at the rate of $.09 per share, which if
fully funded and converted, would result in the issuance of approximately 11.1
million shares. In addition, assuming the loan is fully funded, it is
anticipated that the investor group would be issued a warrant to acquire
approximately 2.2 million shares of theglobe.com Common Stock at an exercise
price of $.15 per share. The convertible debt financing is subject to a number
of closing conditions, including execution of definitive documentation,
satisfactory resolution of certain Company liabilities and other tax and
business considerations. In addition, it is contemplated that the loan facility
will require that certain performance criteria be achieved by the company as a
condition to all or part of the funding. The financing is also subject to
completion of a loan facility and related documentation satisfactory to the
parties. If consummated, the convertible debt financing will result in
substantial dilution of the number of securities of theglobe.com either issued
and outstanding or obtainable upon conversion of the debt or exercise of the
warrant. There can be no assurance, if and when, the financing will be
consummated.

On February 25, 2003 the Company entered into a Loan and Purchase Option
Agreement with a development stage internet related business venture pursuant to
which it agreed to loan the venture up to $160,000 to fund its operating
expenses and obtained the option to acquire all of the outstanding capital stock
of the venture in exchange for, when and if exercised, $40,000 and the issuance
of an aggregate of 2,000,000 unregistered restricted shares of theglobe.com's
common stock (See Note 2 of notes to the consolidated financial statements -
Management's Plans).

As of December 31, 2002, the Company's revenue sources are principally from the
sale of print advertising in its Computer Games magazine; the sale of video
games and related products through Chips & Bits, Inc., its games distribution
business; and the sale of its Computer Games magazine through newsstands and
subscriptions.


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<PAGE>
The Company's December 31, 2002 consolidated financial statements have been
prepared assuming the Company will continue as a going concern. The Company has
suffered recurring losses from operations since inception that raise substantial
doubt about its ability to continue as a going concern. Management and the Board
of Directors are currently exploring a number of strategic alternatives
regarding its remaining assets and the use of its cash on-hand, and is also
continuing to identify and implement internal actions to improve the Company's
liquidity and operations. These alternatives may include selling assets, which
in any such case could result in significant changes in the Company's business,
or entering into new or different lines of business. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

PRODUCTS AND SERVICES

COMPUTER GAMES MAGAZINE. Computer Games Magazine, which the Company acquired in
February 2000, is a highly respected consumer print magazines for gamers.

     -    As a leading consumer print publication for games, Computer Games
          magazine boasts: a reputation for being a reliable, trusted, and
          engaging games magazine; more editorial, tips and cheats than most
          other similar magazines; a highly-educated editorial staff providing
          increased editorial integrity and content; and, broad-based editorial
          coverage, appealing to a wide audience of gamers.

     -    One of the most popular features of Computer Games is a CD ROM
          containing game demos, which comes bundled monthly with the magazine
          in all newsstand editions and a portion of copies mailed to
          subscribers.



COMPUTER GAMES ONLINE. Computer Games Online (www.cdmag.com), which the Company
acquired in February 2000, is the online counterpart to Computer Games magazine.
Computer Games Online is a source of free games news and information for the
sophisticated gamer, featuring news, reviews and previews, along with a powerful
Web-wide search engine.
     -    Features of Computer Games Online include: game industry news;
          truthful, concise reviews; first looks, tips and cheats; multiple
          content links; thousands of archived files; and, easy access to game
          buying.

CHIPS & BITS. Chips & Bits (www.chipsbits.com), which the Company acquired in
February 2000, is a games distribution business that attracts customers in the
United States and worldwide. Chips & Bits covers all the major game platforms
available, including Macintosh, Window-based PCs, Sony PlayStation, Sony
PlayStation2, Microsoft's Xbox, Nintendo 64, Nintendo's GameCube, Nintendo's
Game Boy, and Sega Dreamcast, among others.

VOICE OVER INTERNET PROTOCOL (VOIP). On November 12, 2002, theglobe.com
completed the acquisition of certain VoIP assets. In exchange for the assets,
theglobe.com issued 1.75 million warrants to acquire shares of theglobe.com
Common Stock at the price of $.065 per share. The Company also issued 425,000
warrants to acquire shares of theglobe.com Common Stock at the same exercise
price as part of an earn-out structure that will be released upon the attainment
of certain performance targets. The holder of the Warrant is entitled to certain
"piggy-back" registration rights related to the Warrants.

The acquisition will assist theglobe.com in its desire to enter into the
fast-growing VoIP communications markets by providing theglobe.com with a
technology platform from which it will seek to develop and market cost
effective, next generation products and services to both consumers and
enterprises. The Company is in the process of developing a business plan to
enable it to utilize this technology. The Company intends to deliver its voice
communications services offerings through a subsidiary under the brand name
"voiceglo." In addition to further development of the technology, the Company
believes that launching "voiceglo" may require significant additional capital.
Obtaining financing from any unaffiliated third party is very unlikely and any
financing that could be obtained would dilute existing shareholders. The Company
is currently seeking patent protection for certain of the assets acquired, but
there can be no assurance that any such patent will be granted, or that even if
granted, that it will be commercially viable.

ADVERTISING

We continue to attract major advertisers to our Computer Games print magazine,
which is a widely respected consumer print magazine for gamers. In 2002, no
single advertiser accounted for more than 10% of total revenues. For the twelve
months ended December 31, 2002, over 53 clients advertised on our sites and in
our Computer Games magazine. Following a series of cost reduction measures and
restructuring, we currently have an internal advertising sales staff of two (2)
professionals , both of whom are dedicated to selling advertising space in our
Computer Games print magazine. Although these professionals focus on developing
long-term strategic relationships with clients as they sell advertisements in
our Computer Games print magazine and its online counterpart Computer Games
Online, most of our actual advertising contracts are for periods of one to three
months. A significant portion of our sales personnel's compensation is
commission based.

COMPETITION

Competition among games print magazines is high. We compete for advertising and
circulation revenues principally with publishers of other technology and games
magazines with similar editorial content as our magazine. The technology
magazine industry has traditionally been dominated by a small number of large
publishers. We believe that we compete with other technology and games
publications based on the


                                        4
<PAGE>
nature and quality of our magazines' editorial content and the attractive
demographics of our readers. In recent years, demand for online and PC based
games has decreased as non PC based game consoles, including those from Sony
(PlayStation II), Microsoft (X-Box) and Nintendo (Game Boy and GameCube), have
made major product advancements.

In addition to other technology and games magazines, our magazine also competes
for advertising revenues with general-interest magazines and other forms of
media, including broadcast and cable television, radio, newspaper, direct
marketing and electronic media. In competing with general-interest magazines and
other forms of media, we rely on our ability to reach a targeted segment of the
population in a cost-effective manner.

We believe our Chips & Bits games distribution business faces competition from a
variety of competitors, including:

     -    Mall stores such as Gamestop and Electronics Boutique
     -    Discount chains such as Costco, Wal-Mart and Target
     -    Electronics chains such as Best Buy and CompUSA
     -    Office stores such as Staples and Office Depot
     -    Online stores such as EBWorld
     -    Direct online games, which bypass traditional sales venues

The market situation continues to be a challenge for Chips & Bits due to recent
advances in console and online games, which have lower margins and traditionally
less sales loyalty to Chips & Bits. Chips & Bits depends on major releases in
the Personal Computer (PC) market for the majority of sales and profits. The
game industry's focus on X-Box, Playstation II and GameCube has dramatically
reduced the number of major PC releases. Because of the large installed base of
personal computers, we believe PC based games continue to represent a good
longer term market. However, we cannot predict when and if there will be a
turnaround in the PC game market.

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

          -    Games information sites such as Snowball's IGN, ZDnet's Gamespot,
               and CNET's GameCenter; and,
          -    Online games centers, where users can play games such as Uproar,
               Pogo and Terra Lycos' Gamesville.

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

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

We regard substantial elements of our Websites and underlying technology as
proprietary. In addition, we are seeking to develop proprietary technology
through our recent acquisition of certain VoIP assets. We attempt to protect
them by relying on intellectual property laws. We also generally enter into
confidentiality agreements with our employees and consultants and in connection
with our license agreements with third parties. We also seek to control access
to and distribution of our technology, documentation and other proprietary
information. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use our proprietary information without
authorization or to develop similar technology independently. We pursue the
registration of our trademarks in the United States and internationally and we
are currently pursuing patent protection for certain of our VoIP assets.

Effective trademark, service mark, copyright, patent and trade secret protection
may not be available in every country in which our services are made available
through the Internet. Policing unauthorized use of our proprietary information
is difficult. Existing or future trademarks or service marks applied for or
registered by other parties and which are similar to ours may prevent us from
expanding the use of our trademarks and service marks into other areas. (See
"Risk Factors-We rely on intellectual property and proprietary rights.")

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

We are subject to laws and regulations that are applicable to various Internet
activities. There are many legislative and regulatory proposals under
consideration by federal, state, local and foreign governments and agencies,
including matters relating to:

          -    online content;
          -    privacy;
          -    Internet taxation;
          -    liability for information retrieved from or transmitted over the
               Internet;
          -    jurisdiction
          -    domain names; and,


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<PAGE>
          -    internet telephony (VoIP) regulation.

New laws and regulations may increase our costs of compliance and doing
business, decrease the growth in Internet use, decrease the demand for our
services or otherwise have a material adverse effect on our business.

                                 ONLINE CONTENT

General Restrictions on Transmitting Indecent and Obscene Content. Several
federal and state statutes generally prohibit the transmission of indecent or
obscene information and content, including sexually explicit information and
content. The constitutionality of some of these statutes is unclear at this
time. For example, in 1997 the Supreme Court of the United States held that
selected parts of the federal Communications Decency Act of 1996 imposing
criminal penalties for transmitting indecent and patently offensive content were
unconstitutional. Many other provisions of the Communications Decency Act,
however, including those relating to obscenity, remain in effect. For example,
on April 19, 1999, the Supreme Court summarily affirmed a lower court decision
holding that selected parts of the Communications Decency Act imposing criminal
penalties for transmitting indecent comments or images with an intent to annoy
was constitutional, as long as those comments or images were also obscene.

Restrictions on Transmitting Indecent and Obscene Content to Minors. Other
federal and state statutes specifically prohibit transmission of certain content
to minors. The Child Online Protection Act requires websites engaged in the
business of the commercial distribution of material that is deemed to be obscene
or harmful to minors to restrict minors' access to this material. However, the
Child Online Protection Act exempts from liability telecommunications carriers,
Internet service providers and companies involved in the transmission, storage,
retrieval, hosting, formatting or translation of third-party communications
where these companies do not select or alter the third-party material. In 1999,
a federal district court in Pennsylvania entered a preliminary injunction
preventing enforcement of the harmful-to-minors portion of the act. The
provisions of the act relating to obscenity, however, remain in effect. On June
22, 2000, United States Court of Appeals for the Third Circuit affirmed the
lower court ruling. The United States Supreme Court vacated the judgment and
remanded the case to the Third Circuit on May 13, 2002, and the Third Circuit
again affirmed the lower court on March 6, 2003. Another round of appeals is
possible, followed by eventual trial in the lower court. A similar state statute
in New Mexico has been found unconstitutional by the Tenth Circuit Court of
Appeals.

Consumer Fraud and Advertising. Some states have enacted laws or adopted
regulations that expressly or as a matter of judicial interpretation apply
various consumer fraud and false advertising requirements to parties who conduct
business over the Internet. The constitutionality and the enforceability of some
of these statutes is unclear at this time. The Federal Trade Commission has
stated that its rules applying to consumer fraud and false advertising apply to
business conducted over the Internet.

                                     PRIVACY

Various laws and regulations have been enacted or adopted in regard to the
collection, use, and disclosure of personally identifiable information. Any
additional legislation or regulations relating to consumer privacy or the
application or interpretation of existing laws and regulations could affect the
way in which we are allowed to conduct our business, especially those aspects
that contemplate the collection or use of our website visitors' personal
information.

Privacy Legislation. Federal and state legislatures have adopted a number of
laws regulating privacy. The Children's Online Privacy Protection Act (COPPA)
requires websites that collect information from children to comply with certain
requirements. The Gramm-Leach-Bliley (GLB) Act contains provisions that govern
information collection by financial institutions. Because the definition of
"financial institution" is extremely broad under the Act, and regulatory
authorities have yet to bring a substantial number of actions for enforcement,
the precise scope of the regulation cannot be predicted with certainty at this
time.

In addition, numerous bills relating to consumer privacy have been introduced in
Congress. We cannot predict the exact form of any legislation that the Congress
might enact. Accordingly, we cannot assure you that our current practices will
comply with any legislative scheme that Congress ultimately adopts or that we
will not have to make significant changes to comply with such laws.

California has enacted a law, to take effect July 3, 2003, that will require any
company that does business in California to notify customers of any computer
security breach that results in possible access to personal information by an
unauthorized person. The constitutionality of the law, and its cost and effect
on business, have yet to be determined.

FTC Enforcement Activity. The Federal Trade Commission Act prohibits unfair and
deceptive practices in and affecting commerce. The FTC Act authorizes the FTC to
seek injunctive and other relief for violations of the FTC Act, and provides a
basis for government enforcement of fair information practices. In addition, the
FTC has enforcement power over privacy policies under the GLB Act and COPPA.
Failure to comply with a stated privacy policy may constitute a deceptive
practice in some circumstances and the FTC would have authority to pursue the
remedies available under the FTC Act for any violations. Furthermore, in some
circumstances, the FTC may assert that information practices may be inherently
deceptive or unfair, regardless of whether the entity has publicly adopted any
privacy policies.

The FTC has conducted investigations into the privacy practices of companies
that collect information on the Internet. In several instances, the FTC has
entered into consent orders with such companies in regard to their collection
and use of personally identifiable information. On January 22, 2001, the FTC
completed an investigation of the advertising and data collection practices of
DoubleClick, Inc., a leading provider


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of Internet-based advertising services from whom we license our advertising
management system. DoubleClick has advised the FTC that it would make a number
of modifications intended to enhance the effectiveness of its privacy policy.
DoubleClick has also disclosed that it is the subject of inquiries involving the
attorneys general of several states relating to its collection, maintenance and
sharing of information about Internet users and its disclosure about those
practices to users.

Recently, the FTC has indicated that it will investigate and bring complaints
against Internet service providers that fail to provide a sufficient or
advertised level of security for private information. In 2002, the FTC settled
charges against Eli Lilly after an accidental release of information concerning
persons on a mailing list for the medication Prozac; and the FTC settled charges
against Microsoft that alleged Microsoft's Passport service failed to provide
the promised "reasonable security measures" for protecting personal information,
even though no breach had occurred.

We cannot assure you that the FTC's activities, or the activities of other
regulatory authorities, in this area will not adversely affect our ability to
collect demographic and personal information from website visitors, which could
have an adverse effect on our ability to attract advertisers. This could have a
material adverse effect on us.

Voluntary Self-Regulation. Some industry groups and other organizations have
proposed, or are in the process of proposing, various voluntary standards
regarding the treatment of data collected over the Internet. Our website privacy
policies set forth, among other things, the personal information being
collected, how it will be used, and with whom it may be shared. We cannot assure
you that the adoption of voluntary standards will preclude any legislative or
administrative body from taking governmental action regarding Internet privacy.

European Union Directive on Data Protection. At the international level, the
European Union has adopted a directive that requires EU member countries to
impose restrictions on the collection and use of personal data. Among other
provisions, the directive generally requires member countries to prevent the
transfer of personally identifiable data to countries that do not offer adequate
privacy protections. The Directive could, among other things, affect United
States companies that collect information over the Internet from individuals in
EU member countries, and may impose restrictions that are more stringent than
current Internet privacy standards in the United States. In response, the United
States Department of Commerce, in coordination with the European Commission,
developed safe harbor principles that address notice, choice, access, security,
and compliance, among other matters. Organizations that come within the safe
harbor are presumed by the EU to maintain an adequate level of privacy
protection and may receive personal data transfers from EU member countries. A
company that wishes to qualify under the safe harbor must notify the Department
of Commerce, which began maintaining a list of companies that adhere to the safe
harbor principles on November 1, 2000. Relatively few companies have made a
decision to take such action, which is voluntary. We have not elected to qualify
under the safe harbor.

We continue to review our privacy policies and practices in light of the
directive and the safe harbor. We cannot assure you that US and EU activities in
this area will not adversely affect our ability to collect demographic and
personal information from website visitors, which could have an adverse effect
on our ability to attract advertisers. This could have a material adverse effect
on us.

                                INTERNET TAXATION

Governments at the federal, state and local level, and some foreign governments,
have made a number of proposals that would impose additional taxes on the sale
of goods and services and various other Internet activities. In 1998, the
federal Internet Tax Freedom Act (ITFA) was signed into law, placing a
moratorium until October 2001, on state and local taxes on Internet access and
on multiple or discriminatory taxes on electronic commerce. In November 2001 the
moratorium established by the ITFA was extended until November 1, 2003. However,
this moratorium does not apply to existing state or local laws. We cannot assure
you that future laws imposing taxes or other impositions on Internet commerce
would not substantially impair the growth of Internet commerce and as a result
materially adversely affect our business. In addition, we cannot assure you that
foreign countries will not seek to tax Internet transactions.

    LIABILITY FOR INFORMATION RETRIEVED FROM OR TRANSMITTED OVER THE INTERNET

Liability issues relating to information retrieved or transmitted over the
Internet include claims for copyright or trademark infringement, defamation,
unsolicited electronic mail, negligence, trespass, or other claims based on the
nature and content of these materials.

Defamation. The Communications Decency Act of 1996 provides that no provider or
user of an interactive computer service shall be treated as the publisher or
speaker of any information provided by another information content provider.
However, future legislation or court decisions may limit the availability of
this defense in all circumstances in which it currently applies.

Revenue Sharing. We sell products directly to consumers and we also enter into
agreements with commerce and service partners and sponsors under which we are
entitled to receive a share of the revenue from the purchase of goods and
services through direct links from our site. These arrangements may expose us to
additional legal risks, including potential liabilities to consumers by virtue
of our involvement in providing access to these products or services, even if we
do not ourselves provide these products or services. Some of our agreements with
these parties provide that these parties will indemnify us against liabilities.
However, we cannot assure you that this indemnification will be enforceable or
adequate. Our insurance may not cover all potential claims or liabilities to
which we are exposed. Any imposition of liability that is not covered by
insurance could have a material adverse effect on our business.

Unsolicited Commercial E-mail. A number of states have adopted legislation that
prohibits the transmission of unsolicited commercial e-mail.


                                        7
<PAGE>
Most such statutes exempt Internet service providers from liability, but the
scope of such exemptions may vary from jurisdiction to jurisdiction. In
addition, new legislation or strengthened legislation may be passed to combat
unsolicited commercial e-mail. Such legislation could subject us to liability or
have an adverse effect on our business.

Third-party Content. Materials may be downloaded and publicly distributed over
the Internet by the Internet services operated or facilitated by us. The Digital
Millennium Copyright Act exempts Internet service providers from liability for
copyright infringement for materials posted or transmitted by third parties
provided certain requirements are met. Nevertheless, future legislation or
regulations or court decisions may hold us liable for listings and other content
accessible through our website, including through hyperlinks, or through content
and materials posted in our chat rooms or bulletin boards. Liability might arise
from claims alleging that, by directly or indirectly providing hyperlinks to
websites operated by third parties, we are liable for copyright or trademark
infringement or other wrongful actions by these third parties. If any material
on our website contains informational errors, someone might sue us for losses
incurred in reliance on the erroneous information. We attempt to reduce our
exposure to potential liability through, among other things, provisions in
member agreements, user policies, insurance and disclaimers. However, the
enforceability and effectiveness of these measures are uncertain. Future
legislation or regulation in the area of liability for information received from
or transmitted over the Internet could decrease the growth of Internet use.
These factors could decrease the demand for our services. We may also incur
significant costs in investigating and defending against these claims.

                                  JURISDICTION

Due to the global reach of the Internet the governments of various states and
foreign countries have attempted to regulate Internet activity and may assert
that their laws and regulations are applicable to our transmissions or
activities. Our facilities are now located primarily in Florida and Vermont. We
cannot assure you that violations of the laws of other jurisdictions will not be
alleged or charged by state or foreign governments and that these laws will not
be modified, or new laws enacted, in the future. Any actions of this type could
have a material adverse effect on our business.

                                  DOMAIN NAMES

Domain names have been the subject of significant trademark litigation in the
United States and internationally. The current system for registering,
allocating and managing domain names has been the subject of litigation and may
be altered in the future. The regulation of domain names in the United States
and in foreign countries may change. Regulatory bodies are anticipated to
establish additional top-level domains and may appoint additional domain name
registrars or modify the requirements for holding domain names, any or all of
which may dilute the strength of our names. We may not acquire or maintain our
domain names in all of the countries in which our web sites may be accessed, or
for any or all of the top-level domain names that may be introduced.

We have registered several domain names. We cannot assure you that third parties
will not bring claims for infringement, dilution or cybersquatting against us
for the use of these names. Moreover, because domain names derive value from the
individual's ability to remember the names, we cannot assure you that our domain
names will not lose their value if, for example, users begin to rely on
mechanisms other than domain names to access online resources. We cannot assure
you that our domain names will not lose their value, or that we will not have to
obtain entirely new domain names in addition to or in place of our current
domain names.

                      INTERNET TELEPHONY (VOIP) REGULATION

Although we have not yet launched such services, aided by our recent acquisition
of certain VoIP technology, we are currently developing and intend to enter into
the VoIP services business. The use of the Internet and private IP networks to
provide voice communications services is a relatively recent market development.
Although the provision of such services is currently permitted by United States
federal law and largely unregulated within the United States, several foreign
governments have adopted laws and/or regulations that could restrict or prohibit
the provision of voice communications services over the Internet or private IP
networks. In the United States, the Federal Communications Commission (FCC) has
so far declined to conclude that IP telephony services constitute
telecommunications services but has indicated that it would undertake a
subsequent examination of the question whether certain forms of phone-to-phone
Internet telephony are information services or telecommunications services. The
FCC has indicated that in the future it would consider the extent to which
phone-to-phone-Internet telephony providers could be considered
"telecommunications carriers" such that they could be subject to the regulations
governing traditional telephone companies such as the imposition of access
charges. To date the FCC has determined that providers of Internet telephony
services should not be required to pay interstate access charges, this decision
may be reconsidered in the future. We cannot predict what regulations, if any
the FCC will impose.

Although Internet telephony and VoIP services are presently largely unregulated
by the state governments, such state governments and their regulatory
authorities may assert jurisdiction over the provision of intrastate IP
communications services where they believe that their telecommunications
regulations are broad enough to cover regulation of IP services. Various state
regulatory authorities have initiated proceedings to examine the regulatory
status of Internet telephony services, and in several cases rulings have been
obtained to the effect that the use of the Internet to provide certain
intrastate services does not exempt an entity from paying intrastate access
charges in the jurisdictions in question. As state governments, courts, and
regulatory authorities continue to examine the regulatory status of Internet
telephony services, they could render decisions or adopt regulations affecting
providers of Internet telephony services or requiring such providers to pay
intrastate access charges or to make contributions to universal service funding.
Should the FCC determine to regulate IP services, states may decide to follow
the FCC's lead and impose additional obligations as well.


                                        8
<PAGE>
The regulatory treatment of IP communications outside the United States varies
significantly from country to country. Some countries currently impose little or
no regulation on Internet telephony services, as in the United States. Other
countries, including those in which the governments prohibit or limit
competition for traditional voice telephony services, generally do not permit
Internet telephony services or strictly limit the terms under which those
services may be provided. Still other countries regulate Internet telephony
services like traditional voice telephony services, requiring Internet telephony
companies to make various telecommunications service contributions and pay other
taxes.

More aggressive regulation of Internet telephony providers and VoIP services may
adversely affect our proposed VoIP business operations, and ultimately our
financial condition, operating results and future prospects.

EMPLOYEES

As of December 31, 2002, we had approximately 21 full-time employees. Our future
success depends, in part, on our ability to continue to attract, retain and
motivate highly qualified technical and management personnel. Competition for
these persons is intense. From time to time, we also employ independent
contractors to support our research and development, marketing, sales and
support and administrative organizations. Our employees are not represented by
any collective bargaining unit and we have never experienced a work stoppage. We
believe that our relations with our employees are good.

In conjunction with our November 2002 acquisition of certain VoIP assets, the
Company has entered into an employment agreement with Brian Fowler whereby Mr.
Fowler will serve as Chief Technical Officer of theglobe.com. Per the Agreement,
Mr. Fowler receives a base salary of $125,000 per annum and is subject to
significant non-compete provisions. The term of the employment agreement is
annual with renewal options.

ITEM 2. PROPERTIES

Effective August 1, 2002, we terminated our lease at our temporary office
facility in New York City and relocated the Company's corporate offices to
temporary space in Fort Lauderdale, Florida. We maintain approximately 9,500
square feet of office space in two separate locations in Vermont in connection
with our Computer Games magazine and Chips & Bits, Inc. operations. We own one
property and the other is a lease which expires in September 2005.

ITEM 3. LEGAL PROCEEDINGS

On and after August 3, 2001 and as of the date of this filing, the Company is
aware that six putative shareholder class action lawsuits were filed against the
Company, certain of its current and former officers and directors, and several
investment banks that were the underwriters of the Company's initial public
offering. The lawsuits were filed in the United States District Court for the
Southern District of New York. The lawsuits purport to be class actions filed on
behalf of purchasers of the stock of the Company during the period from November
12, 1998 through December 6, 2000. Plaintiffs allege that the underwriter
defendants agreed to allocate stock in the Company's initial public offering to
certain investors in exchange for excessive and undisclosed commissions and
agreements by those investors to make additional purchases of stock in the
aftermarket at pre-determined prices. Plaintiffs allege that the Prospectus for
the Company's initial public offering was false and misleading and in violation
of the securities laws because it did not disclose these arrangements. On
December 5, 2001, an amended complaint was filed in one of the actions, alleging
the same conduct described above in connection with both the Company's November
23, 1998 initial public offering and its May 19, 1999 secondary offering. The
actions seek damages in an unspecified amount. On February 19, 2003, a motion to
dismiss all claims against the Company was denied by the Court. The Company and
its current and former officers and directors intend to vigorously defend the
actions. The complaints have been consolidated into a single action, entitled
Kofsky v. theglobe.com, inc. et al., Case No. 01 Civ. 7247. Due to the inherent
uncertainties of litigation, we cannot accurately predict the ultimate outcome
of the litigation. Any unfavorable outcome of this litigation could have a
material adverse impact on our business, financial condition and results of
operations.

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

No matters were submitted to our stockholders for a vote during the three months
ended December 31, 2002.


                                        9
<PAGE>
                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

MARKET INFORMATION

The shares of our Common Stock were delisted from the NASDAQ national market in
April 2001 and now 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 closing sales prices of our
common stock for the periods indicated as reported by the NASDAQ stock market
(prior to April 2001) and the over-the-counter market (the electronic bulletin
board) (after April 2001):


                                   2002          2001
                               ------------  ------------
                               High    Low   High    Low
                               -----  -----  -----  -----
               Fourth Quarter  $0.17  $0.05  $0.08  $0.03
               Third Quarter   $0.12  $0.01  $0.23  $0.01
               Second Quarter  $0.08  $0.04  $0.34  $0.13
               First Quarter   $0.09  $0.03  $0.88  $0.05



The market price of our Common Stock is highly volatile and fluctuates in
response to a wide variety of factors. (See "Risk Factors-Our stock price is
volatile.")

HOLDERS OF COMMON STOCK

We had approximately 467 holders of record of Common Stock as of March 18, 2003.
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.

RECENT SALES OF UNREGISTERED SECURITIES

In connection with the acquisition of certain VoIP assets, on November 14, 2002,
the Company issued 1.75 million warrants to acquire shares of theglobe.com's
Common Stock at the price of $.065 per share. The Company also issued 425,000
warrants to acquire shares of theglobe.com Common Stock at the same exercise
price as part of an earn-out structure that will be released upon the attainment
of certain performance targets. The warrants were issued to a total of two
individuals. The warrants (including the 425,000 warrants to the extent earned)
are exercisable until November 14, 2003. Warrant holders are entitled to certain
"piggy-back" registration rights related to the warrants. The Company relied
upon the exemption afforded by section 4(2) of the Securities Act of 1933 in
issuing the warrants without registration.


                                       10
<PAGE>
SECURITIES OFFERED UNDER EQUITY COMPENSATION PLANS

<TABLE>
<CAPTION>
                    Number of securities to be    Weighted-average exercise
                      issued upon exercise of       price of outstanding     Number of securities remaining
                   outstanding options, warrants    options, warrants and    available for future issuance
Plan category               and rights                     rights            under equity compensation plan
-----------------  -----------------------------  -------------------------  ------------------------------
<S>                <C>                            <C>                        <C>
Equity
Compensation
plans approved by
security holders                         796,440                       4.55                       5,535,560
-----------------  -----------------------------  -------------------------  ------------------------------
Equity
Compensation
plans not
approved by
security holders                       5,175,000                       0.02                               -
-----------------  -----------------------------  -------------------------  ------------------------------
Total                                  5,971,440                       0.63                       5,535,560
-----------------  -----------------------------  -------------------------  ------------------------------
</TABLE>

Equity compensation plans not approved by security holders includes the
following:

          -    425,000 shares of common stock of theglobe.com, inc., par value
               $.001 per share (the "Common Stock"), issued to Charles Peck
               pursuant to the Non-Qualified Stock Option Agreement dated June
               1, 2002 at an exercise price of $0.035 per share. These stock
               options vested immediately and have a life of ten years from date
               of grant.
          -    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 M. Segaul 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.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data with respect to our consolidated
balance sheets as of December 31, 2002 and 2001 and the related consolidated
statements of operations for the years ended December 31, 2002, 2001, and 2000
have been derived from our audited consolidated financial statements which are
included herein and 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 suffered recurring losses from operations since
inception that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to this matter are also described in Note
2. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty. The selected consolidated
financial data with respect to our consolidated balance sheets as of December
31, 2000, 1999, and 1998 and the related consolidated statements of operations
for the years ended December 31, 1999 and 1998 have been derived from our
audited consolidated financial statements, which are not included herein. The
following selected consolidated financial data should be read in conjunction
with the consolidated financial statements and the notes thereto and the
information contained in Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."


                                       11
<PAGE>
<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------------
                                           2002        2001       2000       1999       1998
                                         ---------  ----------  ---------  ---------  --------
<S>                                      <C>        <C>         <C>        <C>        <C>
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENTS OF
  OPERATIONS DATA:
Revenues. . . . . . . . . . . . . . . .  $  9,667   $ 16,074   $  29,862   $ 18,641   $ 5,510
Cost of revenues. . . . . . . . . . . .     5,563     12,145      19,080      8,548     2,136
                                         ---------  ----------  ---------  ---------  --------
Gross profit. . . . . . . . . . . . . .     4,104      3,929      10,782     10,093     3,374
Operating expenses:
  Sales and marketing . . . . . . . . .     3,523      9,755      23,917     19,352     9,402
  Product development . . . . . . . . .       653      3,811      10,242     10,488     2,633
  General and administrative. . . . . .     2,869      6,596      13,173     12,165     6,828
  Restructuring and impairment
   charges. . . . . . . . . . . . . . .         -     17,091      41,348         -          -
  Non-recurring charges . . . . . . . .         -          -           -         -      1,370
  Amortization of goodwill and
   intangible assets                            -      8,469      27,236     20,460         -
                                         ---------  ----------  ---------  ---------  --------
Total operating expenses. . . . . . . .     7,045     45,722     115,916     62,465    20,233
                                         ---------  ----------  ---------  ---------  --------
Loss from operations. . . . . . . . . .    (2,941)   (41,793)   (105,134)   (52,372)  (16,859)
Gain on early retirement of debt .  . .         -          -           -      1,356         -
Other income, net . . . . . . . . . . .       338      1,189       1,536      1,705       892
                                         ---------  ----------  ---------  ---------  --------
Loss before provision for income taxes.    ( 2,603)   (40,604)   (103,598)   (49,311) (15,967)
Provision for income taxes. . . . . . .        12         16         268        290        79
                                         ---------  ----------  ---------  ---------  --------
Net loss. . . . . . . . . . . . . . . .  $ (2,615)  $(40,620)  $(103,866)  $(49,601) $(16,046)
                                         =========  ==========  =========  =========  ========

Basic and diluted net loss per
  Share(1) (2). . . . . . . . . . . . .  $  (0.09)  $  (1.34)  $   (3.43)  $  (2.00) $  (3.37)
                                         =========  ==========  =========  =========  ========
Weighted average shares outstanding
used in basic and diluted per share
calculation (1) . . . . . . . . . . . .    30,382     30,382      30,286     24,777     4,762
                                         =========  ==========  =========  =========  ========
</TABLE>

(1)  Weighted  average  shares  outstanding  do  not  include  any  common stock
     equivalents  because  the inclusion of those common stock equivalents would
     have  been anti-dilutive. See the consolidated financial statements and the
     related  notes  appearing elsewhere in this Form 10-K for the determination
     of  shares  used  in  computing  basic  and  diluted  net  loss  per share.

(2)  In 1999, gain on early retirement of debt was presented as an extraordinary
     item;  the  Company  has reclassified this gain in accordance with SFAS No.
     145.


                                       12
<PAGE>
<TABLE>
<CAPTION>
                                                      DECEMBER 31,
                                      ------------------------------------------
                                       2002    2001     2000     1999     1998
                                      ------  -------  -------  -------  -------
<S>                                   <C>     <C>      <C>      <C>      <C>
                                                     (in thousands)
CONSOLIDATED BALANCE SHEETS DATA:
Cash and cash equivalents and short-
  term investments . . . . . . . . .  $  725  $2,614   $16,346  $55,875  $30,149
Working capital. . . . . . . . . . .     532   3,012    13,568   52,965   27,009
Total assets . . . . . . . . . . . .   3,047   5,973    54,531  138,843   38,130
Long term debt . . . . . . . . . . .      88       -         -        -        -
Capital lease obligations, excluding
  current installments . . . . . . .       -       -       382    2,201    2,006
Total stockholders' equity . . . . .     823   3,262    43,946  126,909   30,301
</TABLE>



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS


OVERVIEW

Throughout 2000 and 2001, and to a lesser extent, in 2002, the Company embarked
on a significant restructuring of its businesses operations, selling off many of
its businesses and closing others. As of December 31, 2002, we were a network of
three wholly owned properties, each of which specializes in the games business
by delivering games information and selling games in the United States and
abroad. These properties are: our print publication Computer Games Magazine; our
Computer Games Online website (www.cgonline.com), which is the online
counterpart to Computer Games Magazine; and our Chips & Bits, Inc.
(www.chipsbits.com) games distribution company. Management of the Company
continues to actively explore a number of strategic alternatives for its
remaining online and offline game properties, including continuing its existing
operations and using its cash on hand, selling some or all of these properties
and/or entering into new or different lines of business.

Our revenues are derived principally from the sale of print advertisements under
short-term contracts in our games information magazine Computer Games, which we
acquired in February 2000; through the sale of video games and related products
through our games distribution business Chips & Bits, Inc.; through the sale of
our games information magazine through newsstands and subscriptions; and through
limited sale of online advertisements.

Set forth below is a summary of certain significant corporate actions taken by
the Company in the last three fiscal years as it has sought to effectuate its
restructuring and implement its business plans. In December 1999, we acquired
the web hosting assets of Webjump.com, a web hosting property that primarily
focused on small businesses. The total purchase price for this transaction was
$13.0 million and was primarily comprised of 1.1 million shares of Common Stock.
An additional $12.5 million, payable in newly issued shares of Common Stock, was
contingent based upon the attainment of certain performance targets measured as
of November 30, 2000. Management determined that such targets were not achieved
as of the measurement date, however, on February 14, 2001 the former shareholder
group filed a law suit against us claiming that they were entitled to $9.5
million related to the above mentioned targets. That lawsuit was settled by the
Company for payment of $175,000 in August 2001.

In February 2000, we acquired Chips & Bits, Inc. and Strategy Plus, Inc.,
providers of online and offline entertainment content focused towards game
enthusiasts. The total purchase price for this transaction was approximately
$15.3 million and was comprised, in part, of 1.9 million newly issued shares of
Common Stock. An additional $1.25 million, payable in newly issued shares of
Common Stock, was contingent on the attainment of certain performance targets by
Chips & Bits, Inc. and Strategy Plus, Inc. During August 2001, the Company
settled the contingency resulting in no additional consideration being paid to
the former shareholders.

In 2001, due to the decline in the advertising market, the Company was forced to
take cost-reduction and restructuring initiatives, which included closing its
community www.theglobe.com effective August 15, 2001. The Company then began to
aggressively seek buyers for some or all of its remaining online and offline
properties, which consisted primarily of games-related properties. In October
2001, the Company sold all of the assets used in connection with the Games
Domain and Console Domain websites to British Telecommunications plc, and all of
the assets used in connection with the Kids Domain website to Kaboose Inc.

On February 27, 2002, the Company sold to Internet Game Distribution, LLC all of
the assets used in connection with the Happy Puppy website. The total
consideration received was $135,000. The Company received $67,500 immediately,
and $67,500 to be held in escrow until


                                       13
<PAGE>
the Company transferred all assets used in connection with the Happy Puppy
website. On May 6, 2002, $67,500 was released to the Company. The Company
recognized a gain on the sale of $134,500, in the first quarter 2002.

Effective June 1, 2002, Chairman Michael S. Egan and Director Edward A. Cespedes
became Chief Executive Officer and President of the Company, respectively. In
August 2002, the Company's corporate offices located at 2 Penn Plaza, Suite
1500, New York, New York, 10121 were closed and relocated to: 110 East Broward
Boulevard, Suite 1400, Fort Lauderdale, Florida 33301. The Company's corporate
mailing address is: P.O. Box 029006, Fort Lauderdale, Florida 33302.

Effective July 10, 2002, we launched various direct marketing initiatives
through a newly createddivision called tglo direct. The subsidiary markets
products such as safe e-mail lists, e-books, lead generation tools and other
products to entrepreneurs that wish to enter into new web-based businesses or
promote their existing businesses. Most of the products are subscription-based,
with prices ranging from approximately $11.00 per year to approximately $69.95
per year. This operation is in "beta" launch and accounted for only $4,000 of
revenue in 2002. The Company is investigating ways to increase the level of this
business.

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

On November 14, 2002, we acquired certain VoIP assets. We issued 1.75 million
warrants to acquire shares of our Common Stock in conjunction with the closing
of this acquisition. The Company also issued 425,000 warrants to acquire shares
of Common Stock as part of an earn-out structure. These warrants are held in
escrow by the Company and will only be released upon attainment of certain
performance targets. In conjunction with the acquisition, E&C Capital Partners,
a privately held investment vehicle controlled by our Chairman and Chief
Executive Officer, Michael S. Egan and our President, Edward A. Cespedes,
entered into a letter of intent with theglobe.com to provide new financing in
the amount of $500,000 through the purchase of a new series of preferred
securities. This investment was consummated on March 28, 2003.

On February 25, 2003, the Company entered into a Loan and Purchase Option
Agreement with a development stage internet related business venture pursuant to
which it agreed to loan the venture up to $160,000 to fund its operating
expenses and obtained the option to acquire all of the outstanding capital stock
of the venture in exchange for, when and if exercised, $40,000 and the issuance
of an aggregate of 2,000,000 unregistered restricted shares of theglobe.com's
common stock (See Note 2 of notes to the consolidated financial statements -
Management's Plans).

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

Revenues. Our revenues were derived principally from the sale of print
advertisements under short-term contracts in our games information magazine
Computer Games, which was acquired in February 2000; through the sale of video
games and related products through games distribution business Chips & Bits,
Inc.; and through the sale of our games information magazine through newsstands
and subscriptions.

Revenues decreased to $9.7 million for the year ended December 31, 2002 as
compared to $16.1 million for the year ended December 31, 2001. Advertising
revenues for the year ended December 31, 2002 were $3.1 million, which
represented 32% of total revenues. Advertising revenues for the year ended
December 31, 2001 were $6.4 million, which represented 40% of total revenues.
The decrease in advertising revenues was primarily attributable to continued
industry-wide decreases in the online advertising market, which are expected to
continue, and to a dramatic reduction in the Company's sales force as part of
the August 2001 cost reduction and restructuring initiatives, which included
closing of www.theglobe.com website business. We had no advertising revenue from
our online properties for the year ended December 31, 2002, compared to $2.9
million for the year ended December 31, 2001. Advertising revenue from our games
magazine accounted for $3.1 million and $3.5 million, of the total advertising
revenues for the years ended December 31, 2002 and December 31, 2001,
respectively. Sales of our games information magazine through newsstands and
subscriptions accounted for $3.5 million, or 36%, and $4.6 million, or 29%, of
total revenues for the years ended December 31, 2002 and December 31, 2001,
respectively. The decrease is due to negative industry trends. Barter
advertising revenues represented 1% of total revenues for the year ended
December 31, 2002 and 1% of total revenues for the year ended December 31, 2001.

Sales of merchandise through our online store accounted for 31% of total
revenues for the year ended December 31, 2002, or $3.1 million, as compared to
31% for the year ended December 31, 2001, or $5.1 million. The decrease was
partially attributable to advances in console and online games, which
traditionally have less sales loyalty to our online store, and to a dramatic
reduction in the number of major PC games releases, on which our online store
relies for the majority of sales and profits.

Cost of Revenues. Cost of revenues consists primarily of Internet connection
charges, staff and related costs of operations personnel, depreciation and
maintenance costs of website equipment, printing costs of our games magazine and
the costs of merchandise sold and shipping fees in connection with our online
store. Gross margins were 42% and 24% for the years ended December 31, 2002 and
December 31, 2001, respectively. The year-to-year increase in gross margins was
primarily attributable a higher concentration of revenue derived from
subscriptions and newsstand sales of the magazine, which has higher gross
margins.

Sales and Marketing. Sales and marketing expenses consist primarily of salaries
and related expenses of sales and marketing personnel, commissions, advertising
and marketing costs, public relations expenses, promotional activities and
barter expenses. Sales and marketing


                                       14
<PAGE>
expenses were $3.5 million for the year ended December 31, 2002 as compared to
$9.8 million for the year ended December 31, 2001. The year-to-year decrease in
sales and marketing expense was attributable to reduced personnel costs and
decreased advertising costs. As of December 31, 2002, we have an internal
advertising sales staff of two (2) professionals, both of whom are dedicated to
selling advertising space in our Computer Games print magazine, and to a lesser
extent on our Computer Games Online website, which is the online counterpart to
Computer Games magazine. In August 2001 we were forced to lay off almost all our
national sales staff due to the continued decline in the advertising market.

Product Development. Product development expenses include salaries and related
personnel costs, expenses incurred in connection with the development of,
testing of and upgrades to our websites and community management tools, and
editorial and content costs. Product development expenses decreased to $0.7
million for the year ended December 31, 2002, as compared to $3.8 million for
the year ended December 31, 2001. The year-to-year decrease was related to our
restructuring and cost containment initiatives. In August 2001, we were forced
to lay off almost all our product development staff due to the continued decline
in the business.

General and Administrative Expenses. General and administrative expenses consist
primarily of salaries and related personnel costs for general corporate
functions including finance, human resources, legal and facilities, outside
legal and professional fees, directors and officers insurance, bad debt expenses
and general corporate overhead costs. In the second quarter of 2002, severance
benefits of $699,833 were recorded and paid. This amount includes $625,000 paid
on May 31, 2002 to our former Chief Executive Officer, Charles Peck, reflecting
the terms of his severance package. Additionally, options to purchase 425,000
shares of the Company's common stock at an exercise price of $0.035 per share
were granted to Mr. Peck on May 6, 2002, valued at $13,500, also reflecting the
terms of his severance package. These options immediately vested upon grant and
have a life of ten years. General and administrative expenses were $2.9 million
for the year ended December 31, 2002 as compared to $6.6 million for the year
ended December 31, 2001. The year-to-year decrease was primarily attributable to
decreased salaries and personnel costs as a result of our 2001 restructuring and
cost containment initiatives. In August 2001, we were forced to lay off almost
all our general and administration staff due to the continued decline in the
business.

Restructuring and Impairment Charges. For the years ended December 31, 2002, and
December 31, 2001, the Company recorded restructuring and impairment charges of
$0.0 million and $17.1 million, respectively. Restructuring charges for 2001
related to workforce reductions and impairment charges resulting from
management's ongoing business review and impairment analysis of long-lived
assets. ( See "Restructuring and Impairment Charges - Year ended December 31,
2001.")

Amortization of Goodwill and Intangible Assets. Amortization expense was $0 for
the year ended December 31, 2002, compared to $8.5 million for the year ended
December 31, 2001. The year-to-year decrease in amortization expense was
primarily attributable to the write-down of goodwill and intangibles assets that
occurred in the second quarter of 2001. (See Recent Accounting Pronouncements of
notes to consolidated financial statements, Note 1.) We implemented SFAS No.
142, "Goodwill and Other Intangible Assets" during 2002. Due to the fact that as
of December 31, 2001 all goodwill relating to previous acquisitions had been
expensed in connection with impairment evaluations performed in 2000 and 2001,
the implementation of SFAS No. 142 had no impact on the 2002 consolidated
financial statements.

SFAS 142 was adopted January 1 for 2002. The following table shows the Company's
2002, 2001 and 2000 results, adjusted to exclude amortization related to
goodwill.

<TABLE>
<CAPTION>
                                             Year Ended December 31
                                  --------------------------------------------
                                      2002          2001            2000
                                  ------------  -------------  ---------------
<S>                               <C>           <C>            <C>

Net loss - as reported            $(2,614,661)  $(40,620,026)  $ (103,865,721)
                                  ------------  -------------  ---------------
Add back:
   Goodwill amortization                    -      8,439,174       43,893,747
                                  ------------  -------------  ---------------

Net loss per share - as adjusted  $(2,614,661)  $(32,180,852)  $(  59,971,974)
                                  ============  =============  ===============

Net loss per share - as reported  $     (0.09)  $      (1.34)  $        (3.43)
Add back:
   Goodwill amortization                    -           0.28             1.46
                                  ------------  -------------  ---------------
Net loss per share - as adjusted  $     (0.09)  $      (1.06)  $        (1.97)
                                  ============  =============  ===============
</TABLE>

Although SFAS No. 142 requires disclosure of these amounts to reflect the impact
of adoption on the Company's results for the years ending December 31, 2001 and
2000, had goodwill not been amortized and been added back, the effect would have
resulted in additional impairment charges being recorded in each of the
respective years.

In August 2002, we acquired certain VoIP assets which are intangible. We are
currently developing a business strategy to utilize these assets. When they are
placed in service, they will be amortized over their useful life and evaluated
annually for impairment.

Interest and other income, net. Interest and other income, net primarily
includes interest income from our cash and cash equivalents and short-term
investments, interest expense related to our capital lease obligations and
realized gains and losses from the sale of short-term investments. Interest and
other income, net was $.3 million and $1.2 million for the years ended December
31, 2002 and December 31, 2001, respectively.


                                       15
<PAGE>
The year-to-year decrease was primary attributable to a decrease in income
earned as a result of a lower cash and cash equivalent and short-term investment
balances and the decline in net proceeds from the liquidation of collateral
deposits for buyouts of capitalized leases which occurred in 2001.

Income Taxes. Income taxes were approximately $12,000 for the year ended
December 31, 2002 compared with $16,000 for the year ended December 31, 2001.
Income taxes were based solely on state and local taxes on business and
investment capital. Our effective tax rate differs from the statutory federal
income tax rate, primarily as a result of the uncertainty regarding our ability
to utilize our net operating loss carryforwards. Due to the uncertainty
surrounding the timing or realization of the benefits of our net operating loss
carryforwards in future tax returns, we have placed a 100% valuation allowance
against our deferred tax assets. At December 31, 2002, the Company had net
operating loss carry forwards available for U.S. and foreign tax purposes of
approximately $134 million. These carryforwards expire through 2022. The Tax
Reform Act of 1986 imposes substantial restrictions on the utilization of net
operating losses and tax credits in the event of an "ownership change" of a
corporation. Due to the change in our ownership interests in the third quarter
of 1997 and May 1999, as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), future utilization of our net operating loss carryforwards
prior to the change of ownership will be subject to certain limitations or
annual restrictions. Additionally, any future ownership change could further
limit the ability to use these carryforwards.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

Revenues. Our revenues were derived principally from the sale of print
advertisements under short-term contracts in our games information magazine
Computer Games, which was acquired in February 2000; through the sale of video
games and related products through games distribution business Chips & Bits,
Inc.; through the sale of our games information magazine through newsstands and
subscriptions; and through limited sale of online advertisements principally
under short-term advertising arrangements, averaging one to three months.

Revenues decreased to $16.1 million for the year ended December 31, 2001 as
compared to $29.9 million for the year ended December 31, 2000. Advertising
revenues for the year ended December 31, 2001 were $6.4 million, which
represented 40% of total revenues. Advertising revenues for the year ended
December 31, 2000 were $19.5 million, which represented 65% of total revenues.
The decrease in advertising revenues was primarily attributable to a significant
industry-wide decrease in the online advertising market, which continued through
the full-year 2002, and to a dramatic reduction in the Company's sales force as
part of the August 2001 cost reduction and restructuring initiatives, which
included closing of www.theglobe.com website business. Advertising revenue from
our online properties decreased to $2.9 million for the year ended December 31,
2001, compared to $15.0 million for the year ended December 31, 2000.
Advertising revenue from our games magazine, which was acquired in February
2000, accounted for $3.5 million and $4.5 million, of the total advertising
revenues for the years ended December 31, 2001 and December 31, 2000,
respectively. Sales of our games information magazine through newsstands and
subscriptions accounted for $4.6 million, or 29%, and $3.2 million, or 11%, of
total revenues for the years ended December 31, 2001 and December 31, 2000,
respectively. We acquired our games information magazine in February 2000. Price
increases and significant increases in circulation account for the
year-over-year increase. Barter advertising revenues represented 1% of total
revenues for the year ended December 31, 2001 and 4% of total revenues for the
year ended December 31, 2000.

Sales of merchandise through our online store accounted for 31% of total
revenues for the year ended December 31, 2001, or $5.1 million, as compared to
24% for the year ended December 31, 2000, or $7.2 million. The decrease was
partially attributable to recent advances in console and online games, which
traditionally have less sales loyalty to our online store, and to a dramatic
reduction in the number of major PC games releases, on which our online store
relies for the majority of sales and profits. In order to realign our e-commerce
operations to focus on video games and related products, the Company elected in
April 2000 to shut down its electronic commerce operations in Seattle,
Washington, which it acquired in February 1999 (see Notes 3 and 4 to the
consolidated financial statements).

Cost of Revenues. Cost of revenues consists primarily of Internet connection
charges, staff and related costs of operations personnel, depreciation and
maintenance costs of website equipment, printing costs of our games magazine and
the costs of merchandise sold and shipping fees in connection with our online
store. Gross margins were 24% and 36% for the years ended December 31, 2001 and
December 31, 2000, respectively. The year-to-year decrease in gross margins was
primarily attributable to a higher concentration of electronic commerce and
print advertising sales in our games information magazine, both of which
traditionally result in lower gross margins than online advertising revenues.

Sales and Marketing. Sales and marketing expenses consist primarily of salaries
and related expenses of sales and marketing personnel, commissions, advertising
and marketing costs, public relations expenses, promotional activities and
barter expenses. Sales and marketing expenses were $9.8 million for the year
ended December 31, 2001 as compared to $23.9 million for the year ended December
31, 2000. The year-to-year decrease in sales and marketing expense was
attributable to reduced personnel costs and decreased advertising costs. As of
December 31, 2001, we have an internal advertising sales staff of two (2)
professionals as of December 31, 2001, both of whom are dedicated to selling
advertising space in our Computer Games print magazine, and to a lesser extent
on our Computer Games Online website, which is the online counterpart to
Computer Games magazine. In August 2001, we were forced to lay off almost all
our national sales staff due to the continue decline in the advertising market.
As of December 31, 2001, we had 19 employees employed in our sales and marketing
department.

Product Development. Product development expenses include salaries and related
personnel costs, expenses incurred in connection with the development of,
testing of and upgrades to our websites and community management tools, and
editorial and content costs. Product development expenses decreased to $3.8
million for the year ended December 31, 2001, as compared to $10.5 million for
the year ended


                                       16
<PAGE>
December 31, 2000. The year-to-year decrease was related to our restructuring
and cost containment initiatives. In August 2001, we were forced to lay off
almost all our product development staff due to the continued decline in the
business. As of December 31, 2001, we had 12 employees employed in our product
development department.

General and Administrative Expenses. General and administrative expenses consist
primarily of salaries and related personnel costs for general corporate
functions including finance, human resources, legal and facilities, outside
legal and professional fees, directors and officers insurance, bad debt expenses
and general corporate overhead costs. General and administrative expenses were
$6.6 million for the year ended December 31, 2001 as compared to $13.2 million
for the year ended December 31, 2000. The year-to-year decrease was primarily
attributable to decreased salaries and personnel costs as a result of our
restructuring and cost containment initiatives. In August 2001, we were forced
to lay off almost all our general and administration staff due to the continue
decline in the business. As of December 31, 2001, we had 8 employees employed in
our general and administration department.

Restructuring and Impairment Charges. For the years ended December 31, 2001, and
December 31, 2000, the Company recorded restructuring and impairment charges of
$17.1 million and $41.3 million, respectively. See "Restructuring and Impairment
Charges" below.

Amortization of Goodwill and Intangible Assets. Amortization expense was $8.5
million for the year ended December 31, 2001, compared to $27.2 million for the
year ended December 31, 2000. The year-to-year decrease in amortization expense
was primarily attributable to the write-down of goodwill and intangibles assets
that occurred in the fourth quarter of 2000 and second quarter of 2001.

Interest and other income, net. Interest and other income, net primarily
includes interest income from our cash and cash equivalents and short-term
investments, interest expense related to our capital lease obligations and
realized gains and losses from the sale of short-term investments. Interest and
other income, net were $1.2 million and $1.5 million for the years ended
December 31, 2001 and December 31, 2000, respectively. The year-over-year
decrease was primary attributable to a decrease in income earned as a result of
a lower cash and cash equivalent and short-term investment balance.

Income Taxes. Income taxes were approximately $16,000 for the year ended
December 31, 2001 compared with $268,000 for the year ended December 31, 2000.
Income taxes were based solely on state and local taxes on business and
investment capital. Our effective tax rate differs from the statutory federal
income tax rate, primarily as a result of the uncertainty regarding our ability
to utilize our net operating loss carryforwards. Due to the uncertainty
surrounding the timing or realization of the benefits of our net operating loss
carryforwards in future tax returns, we have placed a 100% valuation allowance
against our otherwise recognizable deferred tax assets. At December 31, 2001,
the Company had net operating loss carry forwards available for U.S. and foreign
tax purposes of approximately $115 million. These carryforwards expire through
2021. The Tax Reform Act of 1986 imposes substantial restrictions on the
utilization of net operating losses and tax credits in the event of an
"ownership change" of a corporation. Due to the change in our ownership
interests in the third quarter of 1997 and May 1999, as defined in the Internal
Revenue Code of 1986, as amended (the "Code"), future utilization of our net
operating loss carryforwards prior to the change of ownership will be subject to
certain limitations or annual restrictions.


RESTRUCTURING AND IMPAIRMENT CHARGES.

Year ended December 31, 2001

In the second quarter of 2001, we announced cost-reduction initiatives. These
initiatives included the elimination of 59 positions, or 31% of our workforce.
The severance benefits of $470,000 were paid in the second quarter of 2001.
Additionally, we closed our San Francisco office in May 2001 and an additional
$54,000 security deposit was relinquished as settlement to terminate the
remaining lease obligation.

In the second quarter of 2001, we recorded impairment charges of $4.5 million
related to the servers and computers used for serving and hosting our former
properties, www.webjump.com and www.theglobe.com, as a result of management's
ongoing business review and impairment analysis performed under its existing
policy regarding impairment of long-lived assets.

In the third quarter of 2001, we continued our cost cutting measures. We
eliminated 60 additional positions, or 58% of our workforce. As a result,
severance benefits of $1.0 million were paid in the third quarter of 2001.

Additionally, we terminated our lease at 120 Broadway in New York and relocated
our operations to a significantly smaller temporary facility in New York, in
September 2001. In August 2002 we relocated our executive offices to Ft.
Lauderdale, Florida. We also decided to shut down our www.theglobe.com and
www.webjump.com websites effective August 15, 2001. The servers located in a
facility in Staten Island, New York were in use through August 31, 2001. We
discontinued the use of these servers on August 31, 2001 and we are now using
outsourced hosted facilities for our live websites. As a result of these
measures, we recorded net restructuring and impairment charges related to the
fixed assets consisting of computer hardware and software, furniture and
fixtures, communications equipment and leasehold improvements at the two
locations totaling approximately $3.67 million, and miscellaneous net
restructuring credit amounts related to the settlement of prepaid items,
accruals and capital lease obligations totaling approximately $0.26 million.

Further, in the third quarter of 2001, we recorded additional impairment charges
of $4.2 million, of which $3.6 million related to Chips & Bits and Strategy Plus
and $0.6 million related to Attitude Network, Ltd. related to goodwill and other
intangible assets, as a result of management's


                                       17
<PAGE>
ongoing business review and impairment analysis performed under its existing
policy regarding impairment of long-lived assets.

In the fourth quarter of 2001, severance benefits of $0.1 million were paid out
relating to the cost cutting measures initiated in the third quarter 2001. The
company recorded an additional impairment charge of $3.3 million in goodwill
related to Chips & Bits and Strategy Plus as a result of management's ongoing
business review and impairment analysis performed under its existing policy
regarding impairment of long-lived assets.

Where impairment indicators were identified, management determined the amount of
the impairment charge by comparing the carrying values of goodwill and other
long-lived assets to their fair values. Management determines fair value based
on a market approach, which during 2001, mainly included proposals for sale of
its business properties. As a result, during management's quarterly review of
the value and periods of amortization of both goodwill and other long-lived
assets, it was determined that the carrying values of goodwill and certain other
tangible and intangible assets were not fully recoverable.

During 2001, our revaluation of goodwill and intangible assets related to
Attitude Network, Ltd., Strategy Plus, Inc. and Chips & Bits, Inc. and certain
acquired tangible assets such as the servers and computers used for serving and
hosting our various websites was triggered by the continued and prolonged
decline in Internet advertising throughout 2000 and 2001, which significantly
impacted current projected advertising revenue generated from these web-based
properties and downturn in computer games e-commerce business and has resulted
in declines in operating and financial metrics over the past several quarters,
in comparison to the metrics forecasted at the time of their respective
acquisitions.

It was determined that the fair value of goodwill and intangible assets related
to our web-based properties, other businesses and tangible assets were less than
the recorded amount. The methodology used to test for and measure the amount of
the impairment charge related to the intangible assets was based on the same
methodology as used during the initial acquisition valuation of these web-based
properties and other businesses. The impairment related to the tangible assets
was based on the estimated net realizable value of these assets. The impairment
factors evaluated by management may change in subsequent periods, given that our
business operates in a highly volatile business environment. This could result
in material impairment charges in the future.

As of December 31, 2001, the amount remaining in the Company's restructuring
accruals recorded in 2001 and 2000 was $200,000 and $0.

As of December 31, 2001, after giving effect to the fourth quarter of 2000 and
full-year 2001 impairment charges the total remaining amount of goodwill and
other intangible assets, net, is $0 for Attitude Networks, which was acquired in
April 1999, and $0 for Chips & Bits and Strategy Plus, which was acquired in
February 2000. The impairment factors evaluated by management may change in
subsequent periods, given that our business operates in a highly volatile
business environment.

Year ended December 31, 2000

In the second quarter of 2000, we recorded a $15.6 million restructuring charge
as a result of a strategic decision made by management to shut down our
electronic commerce operations in Seattle, Washington in order to realign our
electronic commerce operations to focus on the direct sale of video games and
related products as well as revenue share relationships with third parties who
are interested in reaching our targeted audiences. The $15.6 million charge
incurred primarily related to a $12.8 million write-off of the remaining
goodwill and intangibles associated with our 1999 acquisition of
Factorymall.com, costs associated with the closing of the Seattle operations of
$0.5 million, write-offs related to the disposal of inventory, equipment and
other assets of $1.7 million as well as $0.6 million of employee severance and
related benefits incurred primarily related to the termination of 30 employees.

In the fourth quarter of 2000, we incurred an additional $25.7 million in
restructuring and impairment charges as follows:

     -    We recorded a restructuring charge of $1.8 million, including $398,000
          of non-cash compensation, as a result of strategic decisions made by
          management to increase operational efficiencies, improve margins and
          further reduce expenses. The restructuring charge primarily related to
          a workplace reduction of 26 employees.

     -    In addition, we recorded an impairment charge of $4.3 million in
          connection with our termination of a distribution agreement with
          Sportsline in November 2000.

     -    We also recorded impairment charges of $19.6 million as a result of
          management's ongoing business review and impairment analysis performed
          under its existing policy regarding impairment of long-lived assets.

In 1999, we completed acquisitions of Attitude Network, Ltd. and the web hosting
assets of Webjump.com that were financed principally with shares of our common
stock, and were valued based on the price of our common stock at that time. Our
revaluation was triggered by the continued decline in Internet advertising
throughout 2000, which significantly impacted current projected advertising
revenue generated from these web based properties. In addition, each of these
web based properties have experienced declines in operating and financial
metrics over the past several quarters, primarily due to the continued weak
overall demand of on-line advertising and marketing services, in comparison to
the metrics forecasted at the time of their respective acquisitions. The
impairment analysis considered that these web-based properties were acquired
during 1999 and that the intangible assets recorded at the time of acquisition
was being amortized over useful lives of 2-3 years (3


                                       18
<PAGE>
years for goodwill). As a result, it was determined that the fair value of
Attitude's and Webjump's goodwill and other intangible assets were less than the
recorded amount, therefore, an impairment charge of $13.6 million and $6.0
million, respectively, were recorded. The methodology used to test for and
measure the amount of the impairment charge was based on the same methodology we
used during our initial acquisition valuation of Attitude and Webjump in 1999.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2002, we had approximately $0.7 million in cash and cash
equivalents. Net cash used in operating activities was ($2.0) million, ($16.4)
million, and ($34.7) million for the years ended December 31, 2002, December 31,
2001, and December 31, 2000, respectively. The decrease in net cash used in
operating activities from December 31, 2001 to December 31, 2002 resulted
primarily from a decrease in our net operating losses, exclusive of depreciation
expenses and non-cash charges. This decrease was also attributable to reductions
in accounts receivable, accounts payable, accrued expenses and deferred revenue
offset by an increase in prepaid expenses.

Net cash provided by investing activities was $0.1 million, $7.2 million, and
$13.3 million for the years ended December 31, 2002, December 31, 2001, and
December 31, 2000, respectively. The decreases in net cash provided by investing
activities was primarily attributable to decreases in the proceeds received from
the sale of short-term investments, decreases in the receipt of security
deposits which were partially used to buy out certain capital and operating
lease obligations in 2001 and decreases in proceeds from the sale of property
offset by lower purchases of property and equipment.

Net cash used in financing activities was approximately ($0.01) million, ($1.6)
million, and( $2.0) million for the years ended December 31, 2002, December 31,
2001, and December 31, 2000, respectively. The decrease from December 31, 2001
to December 31, 2002 in net cash used in financing activities was primarily
attributable to capital lease obligations in connection with our 2001
restructuring initiatives.

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

Our capital requirements depend on numerous factors, including market acceptance
of our services, the capital required to maintain our websites, the resources we
devote to marketing and selling our services and our brand promotions and other
factors. We have experienced a substantial decrease in our capital and marketing
expenditures and lease arrangements since last year consistent with the
reduction in our operations and staffing.

We have received a report from our independent accountants, relating to our
December 31, 2002 audited financial statements containing an explanatory
paragraph stating that our recurring losses from operations since inception and
requirement for additional financing raise substantial doubt about our ability
to continue as a going concern. Management and the Board of Directors are
currently exploring a number of strategic alternatives and are also continuing
to identify and implement internal actions to improve the Company's liquidity or
financial performance. These alternatives may include selling assets, which in
any such case could result in significant changes in our business plan, or
entering into new or different lines of business or cessation of certain
business operations or plans to expand our business.

As of December 31, 2002, our sole source of liquidity consisted of $0.7 million
of cash and cash equivalents. Subsequent to December 31, 2002, we committed to
loan $160 thousand to a development stage Internet related company in connection
with our securing an option to acquire such third party, of which $40,000 was
advanced prior to yearend. We may loan additional amounts to such company as
well. Consequently, as of March 25, 2003 our liquidity had diminished to
approximately $0.3 million. Our liquidity will be temporarily enhanced by the
recent investment of $500,000 by an affiliate of the Company as more fully
described below. We currently do not have access to any other sources of
funding, including debt and equity financing facilities. The Company has limited
operating capital and no current access to credit facilities. Our cash needs
remain critical. Management does not believe that our current capital will
sustain operations through the end of the fiscal year. If we are unable to keep
operating costs down, grow revenue, and maintain terms with our creditors, we
may have to try and raise additional funds through asset sales, bank borrowings,
or equity or debt financing. Obtaining financing from an unaffiliated third
party is very unlikely and any financing that could be obtained would dilute
existing shareholders significantly.

On November 14, 2002, E & C Capital Partners, a privately held investment
holding company controlled by Michael S. Egan, our Chairman and CEO and a major
shareholder, and Edward A. Cespedes, our President and a Director, entered into
a non-binding letter of intent with theglobe.com to provide $500,000 of new
financing via the purchase of shares of a new Series F Preferred Stock of
theglobe.com. On March 28, 2003, the parties signed a Preferred Stock Purchase
Agreement and other related documentation pertaining to the investment and
closed on the investment. Pursuant to the Preferred Stock Purchase Agreement, E
& C Capital Partners received 333,333 shares of Series F Preferred Stock
convertible into shares of the Company's Common Stock at a price of $0.03 per
share. The conversion price is subject to adjustment upon the occurrence of
certain events, including downward adjustment on a weighted-average basis in the
event the Company should issue securities at a purchase price below $0.03 per
share. If fully converted, and without regard to the anti-dilutive adjustment
mechanisms applicable to the Series F Preferred Stock, an aggregate of
approximately 16.7 million shares of Common Stock could be issued. The Series F
Preferred Stock has a liquidation preference of $1.50 per share, will pay a
dividend at the rate of 8% per annum and entitles the holder to vote on an "as
converted" basis with the holders of Common Stock. In addition, as part of the
$500,000 investment, E & C Capital Partners received warrants to purchase
approximately 3.3 million shares of theglobe.com Common Stock at an exercise
price of $0.125 per share. The warrant is exercisable at any time on or before
March 28, 2013. E & C Capital Partners is entitled to certain demand
registration rights in


                                       19
<PAGE>
connection with its investment. The Company intends to use the proceeds from the
investment for its general working capital requirements. As a result of the
foregoing investment, the beneficial ownership (which, in accordance with
applicable rules of the Securities and Exchange Commission, assumes the
conversion of the Series F Preferred Stock and the exercise of the foregoing
warrant) of Michael S. Egan increased from approximately 35.1 % to approximately
57.8 %. Accordingly, Mr. Egan would likely be able to exercise significant
influence in, if not control, any matter submitted to a stockholder vote of the
Company.

Concurrently with the closing of the preferred stock investment, certain
affiliates of Michael S. Egan and Edward A. Cespedes entered into a non-binding
letter of intent to loan up to $1 million to the Company pursuant to a
convertible secured loan facility. The loan facility would be convertible into
shares of the Company's common stock at the rate of $.09 per share, which if
fully funded and converted, would result in the issuance of approximately 11.1
million shares. In addition, assuming the loan is fully funded, it is
anticipated that the investor group would be issued a warrant to acquire
approximately 2.2 million shares of theglobe.com Common Stock at an exercise
price of $.15 per share. The convertible debt financing is subject to a number
of closing conditions, including execution of definitive documentation,
satisfactory resolution of certain Company liabilities and other tax and
business considerations. In addition, it is contemplated that the loan facility
will require that certain performance criteria be achieved by the company as a
condition to all or part of the funding. The financing is also subject to
completion of a loan facility and related documentation satisfactory to the
parties. If consummated, the convertible debt financing will result in
substantial dilution of the number of securities of theglobe.com either issued
and outstanding or obtainable upon conversion of the debt or exercise of the
warrant. There can be no assurance, if and when, the financing will be
consummated.

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. The trading volume of our shares
has dramatically declined since the delisting. In addition, we are now subject
to a Rule promulgated by the Securities and Exchange Commission that, if we fail
to meet criteria set forth in such Rule, various practice requirements are
imposed on broker-dealers who sell securities governed by the Rule to persons
other than established customers and accredited investors. For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the purchaser's written consent to the
transactions prior to sale. Consequently, the Rule may have a materially adverse
effect on the ability of broker-dealers to sell the securities, which may
materially affect the ability of shareholders to sell the securities in the
secondary market. Consequently, it has also made it more difficult for us to
raise additional capital, although the Company has had some success in offering
its securities as consideration for the acquisition of various business
opportunities or assets. We will also incur additional costs under state blue
sky laws if we sell equity due to our delisting.

EFFECTS OF INFLATION

Due to relatively low levels of inflation in 2002, 2001 and 2000, inflation has
not had a significant effect on our results of operations since inception.

MANAGEMENT'S DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

REVENUE RECOGNITION

The Company's revenues were derived principally from the sale of print
advertisements under short-term contracts in our games information magazine
Computer Games, through the sale of our games information magazine through
newsstands and subscriptions; from the sale of video games and related products
through our online store Chips & Bits; and through limited sale of online
advertisements principally under short-term advertising arrangements, averaging
one to three months. There is no certainty that events beyond anyone's control
such as economic downturns or significant decreases in print advertisement will
not occur and accordingly, cause significant decreases in revenue.

The Company participates in barter transactions. Barter revenues and expenses
are recorded at the fair market value of services provided or received,
whichever is more readily determinable in the circumstances. Revenue from barter
transactions is recognized as income when advertisements or other products are
delivered by the Company. Barter expense is recognized when the Company's
advertisements are run on other companies' web sites or in their magazines,
which typically occurs within one to six months from the period in which the
related barter revenue is recognized. Barter advertising revenues represented 1%
of total revenues for the year ended December 31, 2002 and 1% of total revenues
for the year ended December 31, 2001.

Advertising. Advertising revenues for the games information magazine are
recognized at the on-sale date of the magazine. Online advertising revenues are
recognized ratably in the period in which the advertisement is displayed,
provided that no significant Company obligations remain


                                       20
<PAGE>
and collection of the resulting receivable is probable. Company obligations
typically include the guarantee of a minimum number of "impressions", defined as
the number of times that an advertisement appears in pages viewed by the users
of the Company's online properties, for a fixed fee. Payments received from
advertisers prior to displaying their advertisements on the Company's sites are
recorded as deferred revenues and are recognized as revenue ratably when the
advertisement is displayed. To the extent minimum guaranteed impressions levels
are not met, the Company defers recognition of the corresponding revenues until
guaranteed levels are achieved. The Company's online advertising revenue
includes the development and sale of sponsorship placements within its web
sites. Development fees related to the sale of sponsorship placements on the
Company's web sites are deferred and recognized ratably as revenue over the term
of the contract.

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

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

VALUATION OF CUSTOMER RECEIVABLES

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

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Nos. 4, 44, and
64, Amendment of SFAS No. 13, and Technical Corrections." SFAS No. 4 required
all gains and losses from the extinguishment of debt to be reported as
extraordinary items and SFAS No. 64 related to the same matter. SFAS No. 145
requires gains and losses from certain debt extinguishment not to be reported as
extraordinary items when the use of debt extinguishment is part of the risk
management strategy. SFAS No. 44 was issued to establish transitional
requirements for motor carriers. Those transitions are completed, therefore SFAS
No. 145 rescinds SFAS No. 44. SFAS No. 145 also amends SFAS No. 13 requiring
sale-leaseback accounting for certain lease modifications. SFAS No. 145 is
effective for fiscal years beginning after May 15, 2002. The provisions relating
to sale-leaseback are effective for transactions after May 15, 2002. The
adoption of SFAS No. 145 is not expected to have a material impact on the
Company's financial position or results of operations. As a result of the
Company's adoption of SFAS No. 145 in 2002, the Company's $ 1.4 million, or
$0.06 per share, gain on early retirement of debt in 1999, which was previously
recorded as an extraordinary item, was required to be reclassified to continuing
operations. (See Item 6 - Selected Consolidated Financial Data for 1999
financial information.)

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force ("EITF") 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The principal difference
between SFAS No. 146 and EITF 94-3 relates to the timing of liability
recognition. Under SFAS No. 146, a liability for a cost associated with an exit
or disposal activity is recognized when the liability is incurred. Under EITF
94-3, a liability for an exit cost was recognized at the date of an entity's
commitment to an exit plan. The provisions of SFAS No. 146 are effective for
exit or disposal activities that are initiated after December 31, 2002. The
adoption of SFAS No. 146 is not expected to have a material impact on the
Company's financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS No. 148 amends SFAS No. 123 as
it relates to the transition by an entity to the fair value method of accounting
for stock-based employee compensation. The provisions of SFAS No. 148 are
effective for financial statements for fiscal years ending after December 15,
2002. The Company has not yet made a decision to change the method of accounting
for stock-based employee compensation.

In January 2003, the FASB issued Interpretation 46, "Consolidation of Variable
Interest Entities" an Interpretation of ARB 51. This statement requires under
certain circumstances consolidation of variable interest entities (primarily
joint ventures and other participating activities). The adoption of this
statement is not expected to have a significant impact on the Company's
financial position or results of operations.


OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2002, 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.


                                       21
<PAGE>
CONTRACTUAL OBLIGATIONS

The following table summarizes, as of December 31, 2002, the timing of future
cash payments due under certain contractual obligations (in thousands):

<TABLE>
<CAPTION>
                                       Payments Due in
                            ------------------------------------------
                                      Less than     1-5     More than
                             Total      1 year     years     5 years
                            --------  ----------  --------  ----------
<S>                         <C>       <C>         <C>       <C>

Long Term Debt              $212,000  $  124,000  $ 88,000  $        0
--------------------------  --------  ----------  --------  ----------
Employment Contract          109,000     109,000         0           0
--------------------------  --------  ----------  --------  ----------
Operating Lease Obligation   123,000      45,000    78,000           0
--------------------------  --------  ----------  --------  ----------
Other Commitments            410,000     410,000         0           0
--------------------------  --------  ----------  --------  ----------

--------------------------  ========  ==========  ========  ==========
      Total                 $854,000  $  688,000  $166,000  $        0
--------------------------  ========  ==========  ========  ==========
</TABLE>


                                       22
<PAGE>
                                  RISK FACTORS

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

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

Due to the significant and prolonged decline in the Internet advertising sector,
the Company elected to close its community web site at "www.theglobe.com" and
its small business web-hosting property at "www.webjump.com" in August 2001. In
addition, the Company is seeking buyers for its games properties in order to
reduce its cash burn and preserve working capital. The Company has already sold
substantially all the assets of (i) Kaleidoscope Networks Limited, the English
subsidiary of Attitude Network Ltd. that operated GamesDomain.com and
GamesDomain.co.uk, (ii) KidsDomain.com and KidsDomain.co.uk, and (iii)
HappyPuppy.com and HappyPuppy.co.uk. In addition, the Company sold the URL of
webjump.com. The Company may try to sell its remaining game properties or shift
its business strategy in the future. The Company may be unable to sell its
remaining games properties quickly, if at all, which would result in continued
depletion of its cash position since the games business currently operates at a
cash loss. The games properties may also lose some of their value while we try
to sell them as we do not have full corporate staff to support these businesses.
In addition, the "theglobe.com" brand continues to lose significant value since
the website "www.theglobe.com" was taken offline August 15, 2001. The closing of
our community site and our small business web-hosting site has also adversely
affect our electronic commerce due to the inability of those web sites after
their closure to refer traffic to the Chips & Bits web site. We cannot assure
you that we will be able to sell all or any of the remaining games business
quickly, if at all, or at any significant price, or that there will be any
return to our equity holders.

WE MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN

We may not be able to operate the remaining business in the event that we cannot
sell the business or enter into another arrangement. We may determine to use our
remaining capital in a different line of business and have committed a
substantial portion of our remaining capital to funding of the operations of a
company upon which we have secured an option to acquire the company. At this
point there are minimal prospects for a meaningful return on investment. As of
December 31, 2002, our sole source of liquidity consisted of $0.7 million of
cash and cash equivalents. We currently do not have access to any other sources
of funding, including debt and equity financing facilities. The Company has
limited operating capital and no current access to credit facilities. If we are
unable to keep operating costs down, grow revenue, and maintain terms with our
creditors, we may have to try and raise additional funds through asset sales,
bank borrowings, or equity or debt financing. Obtaining financing from any
unaffiliated third party is very unlikely and any financing that could be
obtained would probably dilute existing shareholders significantly. We received
a report from our independent accountants, relating to our December 31, 2002
audited financial statements, containing an explanatory paragraph stating that
our recurring losses from operations since inception and requirement for
additional financing raise substantial doubt about our ability to continue as a
going concern.

WE MAY DECIDE TO RETAIN OUR CURRENT OPERATING BUSINESSES AND WE MAY ALSO ENTER
NEW LINES OF BUSINESS WHICH MAY OR MAY NOT BE RELATED TO THE INTERNET.

Our board of directors is reviewing various options for use of our remaining
assets. While we continue to seek buyers for some or all of our remaining
operating businesses, our Board of Directors may decide to retain them.
Regardless of whether we sell our operating businesses, our Board of Directors
may consider entering into additional new or different lines of business,
including non-Internet related lines of business. theglobe.com currently has a
significant net operating loss carry forward that may help to offset federal
income taxes in the future, should the Company achieve profitability. The rules
governing use of the net operating loss carry forward asset are complex and
depend on a variety of factors, including maintaining some continuity of
existing business lines. There is no guarantee that we will be able to maintain
use of the net operating loss carry forward if we choose to enter different
business lines in the future.

OUR ACQUISITIONS, JOINT VENTURES OR STRATEGIC TRANSACTIONS ENTAIL NUMEROUS RISKS
AND UNCERTAINTIES. WE MAY ENTER NEW LINES OF BUSINESS.

On February 24, 2000, we acquired Chips & Bits, Inc., an electronic commerce
retailer that focuses primarily on game enthusiasts' and Strategy Plus, Inc.,
media property that publishes a monthly games magazine and a game enthusiast web
site. Due to the significant and prolonged decline in the Internet advertising
sector, we closed our community web site at "www.theglobe.com" and our small
business web-hosting property at "www.webjump.com" in August 2001. On October
17, 2001, we sold the Games Domain/Console Domain websites. On October 30, 2001,
we sold the Kids Domain web site. On February 27, 2002, we sold the Happy Puppy
website. We also are seeking buyers for the remaining game properties. In
conjunction with our efforts to sell our remaining games properties, we are
considering and evaluating potential business combinations or sales of these
remaining assets. If consummated, any such transaction could result in a change
of control of our company or could otherwise be material to our business or to
your investment in our Common Stock. In addition, as part of the sale of our
games business, we could obtain stock of another company or be the surviving
company in a merger. These transactions may or may not be consummated. If such a
transaction is not consummated, it is unclear how long we will continue to be
able to operate. We have begun to explore entering new business lines, including
VoIP services. We may also enter into new or different lines of business, as
determined by management and our Board of Directors. Our future acquisitions or
joint ventures could result in numerous risks and uncertainties, including:


                                       23
<PAGE>
     -    potentially dilutive issuances of equity securities, which may be
          issued at the time of the transaction or in the future if certain
          tests are met or not met, as the case may be. These securities may be
          freely tradable in the public market or subject to registration rights
          which could require us to publicly register a large amount of Common
          Stock, which could have a material adverse effect on our stock price;
     -    large and immediate write-offs;
     -    significant write-offs if we determine that the business acquisition
          does not fit or perform up to expectations;
     -    the incurrence of debt and contingent liabilities or amortization
          expenses related to goodwill and other intangible assets;
     -    difficulties in the assimilation of operations, personnel,
          technologies, products and information systems of the acquired
          companies;
     -    the risks of entering a new or different line of business;
     -    the risks of entering geographic and business markets in which we have
          no or limited prior experience; and
     -    the risk that the acquired business will not perform as expected.

WE EXPECT TO CONTINUE TO INCUR LOSSES.

We have incurred net losses in each quarter, except the fourth quarter of 2002
where we had net income of $11,000, since our inception and we expect that we
will continue to incur net losses for the foreseeable future. We had net losses
of approximately $2.6 million, $40.7 million, $103.9 million, $49.6 million, and
$16.0 million for the years ended December 31, 2002, 2001, 2000, 1999, and 1998,
respectively. The principal causes of our losses are likely to continue to be:

     -    costs resulting from the operation of our services;
     -    failure to generate sufficient revenue; and
     -    general and administrative expenses.

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

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

Chips & Bits depends on major releases in the Personal Computer (PC) market for
the majority of sales and profits. The game industry's focus on X-Box,
Playstation and GameCube has dramatically reduced the number of major PC
releases, which resulted in significant declines in revenues and gross margins
for Chips & Bits, Inc. Gross margins for Chips & Bits, Inc. were 32% and 22% for
the years ended December 31, 2002 and 2001, respectively. Because of the large
installed base of personal computers, these revenue and gross margin percentages
may fluctuate with changes in the PC game market. However, the Company is unable
to predict when, if ever, there will be a turnaround in the PC game market.

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

     -    Games information sites such as Snowball's IGN, ZDnet's Gamespot, and
          CNET's GameCenter; and
     -    Online games centers, where users can play games such as Uproar, Pogo
          and Terra Lycos' Gamesville.

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

WE HAVE HISTORICALLY RELIED SUBSTANTIALLY ON ONLINE ADVERTISING REVENUES. THE
ONLINE ADVERTISING MARKET HAS SIGNIFICANTLY DECLINED. IN ADDITION, WE HAVE
DRAMATICALLY REDUCED OUR SALES FORCE DOWN TO ONLY TWO (2) SALES PEOPLE
NATIONWIDE.

We historically derived a substantial portion of our revenues from the sale of
advertisements on our web sites and in our magazine Computer Games Magazine. Our
business model and revenues were highly dependent on the amount of traffic on
our sites and our ability to properly monetize this traffic. Due to the August
3, 2001 restructuring, we now have only two (2) sales people and will have
tremendous difficulty maintaining revenues and monetizing traffic to our games
properties. In addition, the editorial content on certain of the game properties
is only being updated periodically, if at all, which may lead to a further
decrease in the number of viewers and which could adversely effect our efforts
to sell these properties. The level of traffic on our sites determines the
amount of online advertising inventory we can sell and the price for which we
can sell our games business. Our ability to generate online advertising revenues
depends, in part, on our ability to create new advertising programs without
diluting the perceived value of our existing programs. Due to the reduction in
headcount, we are unable to create new advertising programs going forward.
Online advertising has dramatically decreased since the middle of 2000, and may
continue to decline, which could continue to have a material effect on the
Company. Many online advertisers have been experiencing financial difficulties
which could materially impact our revenues and our ability to collect our
receivables.


                                       24
<PAGE>
The development of the Internet advertising market has slowed dramatically
during the last two years and if it continues to slow down, our business
performance would continue to be materially adversely affected. Moreover,
measurements of site visitors may not be accurate or trusted by our advertising
customers. There are no uniformly accepted standards for the measurement of
visitors to a web site, and there exists no one accurate measurement for any
given Internet visitor metric. Indeed, different website traffic measurement
firms will tend to arrive at different numbers for the same metric. For any of
the foregoing reasons, we cannot assure you that advertisers will continue to
purchase advertisements on our sites.

WE NOW RELY SUBSTANTIALLY ON PRINT ADVERTISING REVENUES. THE PRINT ADVERTISING
MARKET HAS SIGNIFICANTLY DECLINED. IN ADDITION, WE HAVE DRAMATICALLY REDUCED OUR
SALES FORCE DOWN TO ONLY TWO (2) SALES PEOPLE NATIONWIDE.

We now derive a substantial portion of our revenues from the sale of
advertisements in our Computer Games print magazine. Our business model and
revenues are highly dependent on the print circulation of our Computer Games
magazine. Due to the August 3, 2001 restructuring, we now have only two (2)
sales people and will have tremendous difficulty maintaining print advertising
revenues within our Computer Games magazine. Print advertising has dramatically
decreased since the middle of 2000 and may continue to decline, which could
continue to have a material effect on the Company. Many print advertisers have
been experiencing financial difficulties which could materially impact our
revenues and our ability to collect our receivables. For these reasons, we
cannot assure you that our current advertisers will continue to purchase
advertisements on our sites.

OUR QUARTERLY OPERATING RESULTS FLUCTUATE AND VARY BY SEASON.

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

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

THE VOICE OVER INTERNET PROTOCOL ("VOIP") MARKET WHICH WE SEEK TO ENTER IS
SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND WE WILL NEED TO DEPEND ON NEW PRODUCT
INTRODUCTION AND INNOVATIONS IN ORDER TO START, MAINTAIN AND GROW OUR BUSINESS

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

     -    the identification of market demand for new products;
     -    access to sufficient capital to complete our development efforts;
     -    product and feature selection;
     -    timely implementation of product design and development;
     -    product performance;
     -    cost-effectiveness of products under development;
     -    effective manufacturing processes; and
     -    success of promotional efforts.

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


                                       25
<PAGE>
WE ARE INVOLVED IN SECURITIES CLASS ACTION LITIGATION.

We are a party to the securities class action litigation described in Note 12 to
the Consolidated Financial Statements - Litigation. The defense of the
litigation may increase our expenses and will occupy management's attention and
resources, and an adverse outcome in this litigation could materially adversely
affect us.

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

Including all warrants, preferred stock, vested options, and all options vesting
within 60 days of March 28, 2003, Michael S. Egan, our Chairman and Chief
Executive Officer, beneficially owns or controls, directly or indirectly,
approximately 33,040,658 shares of our Common Stock, which in the aggregate
represents approximately 57.8 % of the outstanding shares of our Common Stock
(treating as outstanding for this purpose the shares of Common Stock issueable
upon exercise or conversion of the preferred stock, warrants and options to Mr.
Egan). Accordingly, Mr. Egan would likely be able to exercise significant
influence in, if not control, any stockholder vote.

Messrs. Egan and Edward A. Cespedes, both of whom are current Directors of our
company, and Messrs. Paternot and Krizelman, who are former directors of our
company, have entered into a stockholders' agreement with us. As a result of the
stockholders' agreement, Mr. Egan has agreed to vote for up to two nominees of
Messrs. Krizelman and Paternot to the board of directors and Messrs. Krizelman
and Paternot have agreed to vote for the nominees of Mr. Egan to the board,
which will be up to five directors. Consequently, Messrs. Egan, Krizelman and
Paternot will likely be able to elect a majority of our directors. Additionally,
each party other than Mr. Egan has granted an irrevocable proxy with respect to
all matters subject to a stockholder vote to Dancing Bear Investments, Inc., an
entity controlled by Mr. Egan, for any shares held by that party received upon
the exercise of outstanding warrants for 400,000 shares of our Common Stock. The
stockholders' agreement also provides for tag-along and drag-along rights in
connection with any private sale of these securities.

OUR STOCK PRICE IS VOLATILE.

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

     -    sales of any of our games properties;
     -    quarterly variations in our operating results;
     -    competitive announcements;
     -    entrance into new lines of business;
     -    the operating and stock price performance of other companies that
          investors may deem comparable to us; and
     -    news relating to trends in our markets.

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

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

Sales of significant amounts of Common Stock in the public market in the future,
the perception that sales will occur or the registration of such shares could
materially and adversely affect the ability of the market price of the Common
Stock to increase even if our business prospects were to improve. A substantial
majority of our common stock is freely tradable. Also, we may issue additional
shares of our common stock, which could further adversely affect our stock
price.

There are outstanding options to purchase 5,971,440 shares of Common Stock,
which become eligible for sale in the public market from time to time depending
on vesting and the expiration of lock-up agreements. The issuance of these
securities is registered under the Securities Act. In addition, as of March 28,
2003, there are outstanding warrants to purchase up to 9,519,967 shares of our
Common Stock upon exercise, including 425,000 warrants subject to an earnout
arrangement and 3,333,333 warrants relating to the Series F Preferred Stock
issued to E & C Capital Partners. Substantially all of our stockholders holding
restricted securities, including shares issueable upon the exercise of warrants
to purchase our Common Stock, are entitled to registration rights under various
conditions.

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

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


                                       26
<PAGE>
his time. Mr. Egan is also Chairman of ANC Rental Corporation, a spin-off of the
car rental business of AutoNation, Inc.

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

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

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

At our shareholder meeting in June 2002, we received shareholder approval to
amend the charter of the Company to allow between 1 and 9 directors to serve on
the Board of Directors due to the change in the operations of the business.
Three (3) nominees were elected as directors at the Company's 2002 Annual
Stockholders Meeting: Michael Egan, Edward Cespedes, and Robin Segaul Lebowitz.
Effective June 1, 2002, Michael Egan became the Company's Chief Executive
Officer, Edward Cespedes became the Company's President, and Robin Segaul
Lebowitz became the Company's Treasurer and Secretary. Additionally, Ms.
Lebowitz became the Company's Chief Financial Officer effective July 1, 2002.
All of them are employees or stockholders of the Company or affiliates of
Dancing Bear Investments, our largest stockholder.

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

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

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

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

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

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

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

REVENUE IN PRIOR PERIODS IS NOT INDICATIVE OF FUTURE REVENUE

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

WE RELY ON INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS.

We regard substantial elements of our web sites and underlying technology, as
well as certain assets relating to business opportunities we are


                                       27
<PAGE>
investigating, as proprietary and attempt to protect them by relying on
intellectual property laws and restrictions on disclosure. We also generally
enter into confidentiality agreements with our employees and consultants. In
connection with our license agreements with third parties, we generally seek to
control access to and distribution of our technology and other proprietary
information. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use our proprietary information without
authorization or to develop similar technology independently. Thus, we cannot
assure you that the steps taken by us will prevent misappropriation or
infringement of our proprietary information, which could have an adverse effect
on our business. In addition, our competitors may independently develop similar
technology, duplicate our products, or design around our intellectual property
rights.

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

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

     -    be time-consuming;
     -    result in costly litigation;
     -    subject us to significant liability for damages;
     -    result in invalidation of our proprietary rights;
     -    divert management's attention;
     -    cause product release delays; or
     -    require us to redesign our products or require us to enter into
          royalty or licensing agreements that may not be available on terms
          acceptable to us, or at all.

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

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

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

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

WE CHANGED OUR INDEPENDENT AUDITORS.

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


                                       28
<PAGE>
OUR FINANCIAL PERFORMANCE AND SUBSEQUENT REDUCTIONS OF OUR WORKFORCE MAY AFFECT
THE MORALE AND PERFORMANCE OF OUR REMAINING PERSONNEL AND OUR ABILITY TO ENTER
INTO NEW BUSINESS RELATIONSHIPS OR SELL OUR ASSETS.

We have incurred significant net losses since our inception. In an effort to
reduce our cash expenses, we began to implement certain restructuring
initiatives and cost reductions. In October 2000, we reduced our workforce by 26
employees. In April 2001, we further reduced our workforce by 59 employees. On
August 3, 2001, we further reduced our workforce by 60 employees. We have had
further workforce reductions in 2002 and also left positions unfilled when
certain employees have left the Company. As of December 31, 2002, we had
approximately 21 full-time employees. In addition, recent trading levels of our
common stock have basically eliminated the value of the stock options granted to
employees pursuant to our stock option plan. As a result of these factors, our
remaining personnel may seek employment with larger, more stable companies or
companies they perceive to have better prospects. Our failure to retain
qualified employees to fulfill our needs could halt our ability to operate our
games business and have a material adverse affect on our business.

In addition, the publicity we receive in connection with our financial
performance and measures to remedy it may negatively affect our reputation and
our business partners and other market participants' perception of the Company.
If we are unable to maintain our existing relationships, and develop new,
business relationships, our revenues and collections could suffer materially. In
addition, the announcement that we have closed our community web sites and are
looking for buyers for our games properties could have a material adverse effect
on our ability to retain the employees necessary to operate the games business
and generate revenues and subsequently collect them, and to retain the games
business value prior to a sale.

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

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

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

     -    functionality of the web site;
     -    brand recognition;
     -    affinity and loyalty;
     -    broad demographic focus;
     -    open access for visitors;
     -    critical mass of users;
     -    attractiveness of content and services to users; and
     -    pricing and customer service for electronic commerce sales.

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

     -    publishers and distributors of television, radio and print, such as
          CBS, NBC and AOL Time Warner;
     -    electronic commerce web sites, such as Amazon.com; and
     -    other web sites serving game enthusiasts, including Ziff Davis'
          Gamespot and CNET's Gamecenter.

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

     -    longer  operating  histories  in  the  Internet  market,
     -    greater name recognition;
     -    larger customer bases;
     -    significantly greater financial, technical and marketing resources;
          and,
     -    not seeking to sell their businesses.


                                       29
<PAGE>
In addition, there has been significant consolidation in the industry. This
consolidation may continue in the future. We could face increased competition in
the future from traditional media companies, including cable, newspaper,
magazine, television and radio companies. A number of these large traditional
media companies have been active in Internet related activities including the
games space. Those competitors may be able to undertake more extensive marketing
campaigns for their brands and services, adopt more aggressive advertising
pricing policies and make more attractive offers to potential employees,
distribution partners, electronic commerce companies, advertisers, third-party
content providers and acquisition targets. Furthermore, our existing and
potential competitors may develop sites that are equal or superior in quality
to, or that achieve greater market acceptance than, our sites. We cannot assure
you that advertisers may not perceive our competitors' sites as more desirable
than ours.

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

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

OUR LIMITED OPERATING HISTORY MAKES FINANCIAL FORECASTING DIFFICULT.

We have never operated solely as a games business. Accordingly, we have a
limited operating history for you to use in evaluating our prospects and us. Our
prospects should be considered in light of the risks encountered by companies
operating in new and rapidly evolving markets like ours. We may not successfully
address these risks. For example, we may not be able to:

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

Moreover, we are exploring other alternatives, which may make financial
forecasting even more difficult.

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

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

     -    have the effect of delaying, deferring or preventing a change in
          control of our company;
     -    discourage bids of our Common Stock at a premium over the market
          price; or
     -    adversely affect the market price of, and the voting and other rights
          of the holders of, our Common Stock.

We must follow Delaware laws that could have the effect of delaying, deterring
or preventing a change in control of our company. One of these laws prohibits us
from engaging in a business combination with any interested stockholder for a
period of three years from the date the person became an interested stockholder,
unless various conditions are met. In addition, provisions of our charter and
by-laws, and the significant amount of Common Stock held by our current and
former executive officers, directors and affiliates, could together have the
effect of discouraging potential takeover attempts or making it more difficult
for stockholders to change management.

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

Under the Investment Company Act of 1940 (the "1940 Act"), a company meeting the
definition of an "investment company" is subject to various stringent legal
requirements on its operations. A company can become subject to the 1940 Act if,
among other reasons, it owns investment securities with a value exceeding 40
percent of the value of its total assets (excluding government securities and
cash items) on an unconsolidated basis, unless a particular exemption of safe
harbor applies. Although we are not currently subject to the 1940 Act, at some
point in the future due to the ongoing sale of our assets, the percentage of the
Company's assets which consist of investment securities may exceed 40 percent of
the value of its total assets on an unconsolidated basis. Rule 3a-2 of the 1940
Act provides a temporary exemption from registration


                                       30
<PAGE>
under the 1940 Act, for up to one year, for companies that have a bona fide
intent to engage, as soon as reasonably possible, in business other than
investing, reinvesting, owning, holding or trading in securities ("transient
investment companies"). If, due to future sales of our assets or changes in the
value of our existing assets, we become subject to the 1940 Act, we intend to
take all actions that would allow reliance on the one-year exemption for
"transient investment companies", including a resolution by the Board of
Directors that the Company has bona fide intent to engage, as soon as reasonably
possible, in business other than investing, reinvesting, owning, holding or
trading in securities. After the one-year period, we would be required to comply
with the 1940 Act unless our operations and assets result in us no longer
meeting the definition of Investment Company.

WE MAY BE UNSUCCESSFUL IN ESTABLISHING AND MAINTAINING BRAND AWARENESS; BRAND
IDENTITY IS CRITICAL TO US AND OUR ABILITY TO SELL OUR REMAINING ASSETS.

We believe that establishing and maintaining awareness of the brand name of our
wholly owned subsidiaries, including the brand names of all our games properties
("Chips & Bits", "Strategy Plus" and "CGonline.com") is critical to attracting
buyers for these properties and to expanding our member base, the traffic on our
web sites and our advertising and electronic commerce relationships. The closure
of the community web site at "www.theglobe.com", the Company's flagship web
site, adversely affected the public's perception of the Company. If we fail to
promote and maintain our brand or our brand value is diluted, our continuing
games business, operating results, financial condition, and our ability to
attract buyers for these properties could be materially adversely affected. The
importance of brand recognition will increase because low barriers to entry may
result in an increased number of web sites. To promote our brand, we may be
required to continue to increase our financial commitment to creating and
maintaining brand awareness. We may not generate a corresponding increase in
revenues to justify these costs. Additionally, if Internet users, advertisers
and customers do not perceive our games properties to be of high quality, the
value of our brand could be materially diluted.


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

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

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

WE DEPEND ON HIGHLY QUALIFIED TECHNICAL AND MANAGERIAL PERSONNEL.

Our future success also depends on our continuing ability to attract, retain and
motivate highly qualified technical expertise and managerial personnel necessary
to operate our remaining business. We may need to give retention bonuses to
certain employees to keep them, which can be costly to the Company. We may be
unable to attract, assimilate or retain highly qualified technical and
managerial personnel in the future. Wages for managerial and technical employees
are increasing and are expected to continue to increase in the future. We have
from time to time in the past experienced, and could continue to experience in
the future if we need to hire any additional personnel, difficulty in hiring and
retaining highly skilled employees with appropriate qualifications. Furthermore,
we will not be able to effectively offer stock options due to the delisting of
the common stock, low trading volume and cash position of the Company. In
addition, we may have difficulty attracting qualified employees due to the
Company's restructuring, financial position and scaling down of operations.
Also, we may have difficulty attracting qualified employees to work in the
geographically remote location in Vermont of Chips & Bits, Inc. and Strategy
Plus, Inc., the Company's two subsidiaries that contains most of the employees
after August 2001. If we were unable to attract and retain the technical and
managerial personnel necessary to support our business, our business would
likely be materially and adversely affected.

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

Our Chief Executive Officer through May 31, 2002, Chuck Peck, had not had
previous experience managing a public company. The remaining members of our
senior management, other than our Chairman and President, have not had any
previous experience managing a public


                                       31
<PAGE>
company. Only our Chairman has had experience managing a large operating
company. Accordingly, we cannot assure you that:

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

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

Our principal servers are located in New Jersey at a third party outsourced
hosting facility. Our operations depend on the ability to protect our systems
against damage from unexpected events, including fire, power loss, water damage,
telecommunications failures and vandalism. Any disruption in our Internet access
due to the transition or otherwise could have a material adverse effect on us.
In addition, computer viruses, electronic break-ins or other similar disruptive
problems could also materially adversely affect our web sites. Our reputation,
theglobe.com brand and the brands of our subsidiaries and game properties could
be materially and adversely affected by any problems to our sites. We may not
have insurance to adequately compensate us for any losses that may occur due to
any failures or interruptions in our systems. We do not presently have any
secondary off-site systems or a formal disaster recovery plan.

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

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

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

Our market is rapidly evolving. Our remaining business is substantially
dependent upon the continued growth in the use of the Internet, PC and console
games and electronic commerce on the Internet becoming more widespread. Web
usage and electronic commerce growth may be inhibited for a number of reasons,
including:

     -    inadequate network infrastructure;
     -    security and authentication concerns with respect to transmission over
          the Internet of confidential information, including credit card
          numbers, or other personal information;
     -    ease of access;
     -    inconsistent quality of service;
     -    availability of cost-effective, high-speed service; and
     -    bandwidth availability.

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

     -    delays in the development or adoption of new operating and technical
          standards and performance improvements required to handle increased
          levels of activity;
     -    increased government regulation; and
     -    insufficient availability of telecommunications services which could
          result in slower response times and adversely affect usage of the
          Internet.

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

In February 2000, we acquired Chips & Bits, Inc., a direct marketer of video
games and related products over the Internet. However, we have


                                       32
<PAGE>
limited experience in the sale of products online as compared to many of our
competitors and the development of relationships with manufacturers and
suppliers of these products. In addition, the closing of our community site and
our small business web-hosting site may adversely affect our electronic commerce
due to the inability of those web sites after their closure to refer traffic to
the Chips & Bits web site. We also face many uncertainties, which may affect our
ability to generate electronic commerce revenues and profits, including:

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

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

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

INTERNET ADVERTISING HAS NOT PROVEN AS EFFECTIVE AS TRADITIONAL MEDIA.

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

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

The sale of Internet advertising is subject to intense competition that has
resulted in a wide variety of pricing models, rate quotes and advertising
services. For example, advertising rates may be based on the number of user
requests for additional information made by clicking on the advertisement, known
as "click throughs," on the number of times an advertisement is displayed to a
user, known as "impressions," or on the number of times a user completes an
action at an advertiser's web site after clicking through, known as "cost per
action." Our contracts with advertisers typically guarantee the advertiser a
minimum number of impressions. To the extent that minimum impression levels are
not achieved for any reason, including the failure to obtain the expected
traffic, our contracts with advertisers may require us to provide additional
impressions after the contract term, which may adversely affect the availability
of our advertising inventory. In addition, certain long-term contracts with
advertisers may be canceled if response rates or sales generated from our site
are less than advertisers' expectations. This could have a material adverse
effect on us. Online advertisers are increasingly demanding "cost per click" and
"cost per action" advertising campaigns, which require many more page views to
achieve equal revenue, which significantly affects our revenues. If online
advertisers continue to demand those "cost per action" deals, it could
negatively impact our business.

Our revenues and the value of the assets we are seeking to sell could be
materially adversely affected if we are unable to adapt to other pricing models
for Internet advertising if they are adopted. It is difficult to predict which,
if any, pricing models for Internet advertising will emerge as the industry
standard. This makes it difficult to project our future advertising rates and
revenues. Online advertising pricing has been declining. Additionally, it is
possible that Internet access providers may, in the future, act to block or
limit various types of advertising or direct solicitations, whether at their own
behest or at the request of users. Moreover, "filter" software programs that
limit or prevent advertising from being delivered to an Internet user's computer
are available. Widespread adoption of this software could adversely affect the
commercial


                                       33
<PAGE>
viability of Internet advertising. In addition, concerns regarding the privacy
of user data on the Web may reduce the amount of user data collected in the
future, thus reducing our ability to provide targeted advertisements. This may,
in turn, put downward pressure on cost per thousand impressions ("CPM").

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Collection Risks. Our accounts receivables are subject, in the normal course of
business, to collection risks. Although the Company regularly assesses these
risks and has policies and business practices to mitigate the adverse effects of
collection risks, significant losses may result due to the non-payment of
receivables by our advertisers.

Interest Rate Risk. Our return on its investments in cash and cash equivalents
and short-term investments is subject to interest rate risks. We regularly
assess these risks and have established policies and business practices to
manage the market risk of its short-term securities.

Foreign Currency Risk. We transact business in the United Kingdom. Accordingly,
we are subject to exposure from adverse movements in foreign currency exchange
rates. The effect of foreign currency exchange rate fluctuations for 2002 was
not material. We do not use derivative financial instruments to limit our
foreign currency risk exposure.


                                       34
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


================================================================================




                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001




================================================================================


                                       35
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES


                          INDEX TO FINANCIAL STATEMENTS
                          -----------------------------


                                                                          PAGE
                                                                        --------


REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                      F-1-F-2


CONSOLIDATED FINANCIAL STATEMENTS

   Balance Sheets                                                            F-3

   Statements of Operations                                                  F-4

   Statements of Stockholders' Equity and Comprehensive Loss                 F-5

   Statements of Cash Flows                                                F6-F7

   Notes to Financial Statements                                        F-8-F-41


<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
               --------------------------------------------------


Board of Directors and Stockholders
theglobe.com, Inc. and Subsidiaries
Fort Lauderdale, Florida


We  have  audited  the  accompanying consolidated balance sheet of theglobe.com,
Inc.  and  Subsidiaries  as  of  December 31, 2002, and the related consolidated
statements  of operations, stockholders' equity and comprehensive loss, and cash
flows  for  the  year  ended  December  31,  2002.  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  audit.

We  conducted our audit in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audit  provides  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,  2002,  and  the
consolidated results of their operations and their cash flows for the year ended
December  31,  2002, in conformity with accounting principles generally accepted
in  the  United  States  of  America.

The  accompanying  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 suffered recurring losses
from  operations  since inception that raise substantial doubt about its ability
to continue as a going concern.  Management's plans in regard to this matter 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 COHEN & HOLTZ LLP


Fort Lauderdale, Florida
February 21, 2003, except for Note 16,
as to which the date is March 28, 2003


                                      F-1
<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
               --------------------------------------------------


The Board of Directors and Stockholders the globe.com, inc.:

We  have  audited  the  accompanying consolidated balance sheet of theglobe.com,
inc.  and  subsidiaries  as  of  December 31, 2001, and the related consolidated
statements  of operations, stockholders' equity and comprehensive loss, and cash
flows  for  each  of  the  years in the two-year period ended December 31, 2001.
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 auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes 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 financial position of theglobe.com, inc.
and  subsidiaries  as  of  December  31, 2001 and 2000, and the results of their
operations  and  cash  flows  for each of the years in the two-year period ended
December  31,  2001, in conformity with accounting principles generally accepted
in  the  United  States  of  America.

The  accompanying  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 suffered recurring losses
from  operations  since inception that raise substantial doubt about its ability
to continue as a going concern.  Management's plans in regard to this matter are
also  described in Note 2.  The consolidated financial statements do not include
any  adjustments  that  might  result  from  the  outcome  of  this uncertainty.

                                 /S/   KPMG LLP


New York, New York
March 25, 2002


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                                         THEGLOBE.COM, INC. AND SUBSIDIARIES

                                             CONSOLIDATED BALANCE SHEETS

                                              DECEMBER 31, 2002 AND 2001



                                                                                   2002            2001
                                                                              --------------  --------------
<S>                                                                           <C>             <C>
                                            ASSETS
                                            ------
Current Assets:
  Cash and cash equivalents                                                   $     725,422   $   2,563,828
  Short-term investments                                                                  -          50,650
  Accounts receivable, less allowance for doubtful accounts of approximately
    $130,000 and $3,203,000                                                       1,247,390       1,537,892
  Inventory, less allowance for obsolescence of approximately $100,000 and
    $ 64,000                                                                        363,982         532,565
  Prepaid expenses                                                                  331,114       1,037,970
                                                                              --------------  --------------
    Total current assets                                                          2,667,908       5,722,905

Intangible Assets                                                                   164,960               -
Property and Equipment, Net                                                         174,117         242,802
Advance on Loan Commitment                                                           40,000               -
Restricted Investments                                                                    -           7,000
                                                                              --------------  --------------

       Total assets                                                           $   3,046,985   $   5,972,707
                                                                              ==============  ==============


                           LIABILITIES AND STOCKHOLDERS' EQUITY
                           ------------------------------------
Current Liabilities:
  Accounts payable                                                            $   1,395,929   $   1,340,628
  Accrued expenses                                                                  447,189       1,039,236
  Deferred revenue                                                                  169,519         229,476
  Current portion of long-term debt                                                 123,583         101,659
                                                                              --------------  --------------
       Total current liabilities                                                  2,136,220       2,710,999

Long-Term Debt                                                                       87,852               -
                                                                              --------------  --------------
       Total liabilities                                                          2,224,072       2,710,999
                                                                              --------------  --------------

Commitments and Contingencies                                                             -               -
                                                                              --------------  --------------

Stockholders' Equity:
  Preferred stock, $0.001 par value; 3,000,000 shares authorized; no shares
    issued and outstanding                                                                -               -
  Common stock, $0.001 par value; 100,000,000 shares authorized;
    31,081,574 shares issued                                                         31,082          31,082
  Additional paid-in capital                                                    218,310,565     218,255,565
  Treasury stock, 699,281 common shares, at cost                                   (371,458)       (371,458)
  Accumulated other comprehensive loss                                                    -        (120,866)
  Accumulated deficit                                                          (217,147,276)   (214,532,615)
                                                                              --------------  --------------
       Total stockholders' equity                                                   822,913       3,261,708
                                                                              --------------  --------------
       Total liabilities and stockholders' equity                             $   3,046,985   $   5,972,707
                                                                              ==============  ==============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                             THEGLOBE.COM, INC. AND SUBSIDIARIES

                            CONSOLIDATED STATEMENTS OF OPERATIONS

                         YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000



                                                      2002          2001            2000
                                                  ------------  -------------  --------------
<S>                                               <C>           <C>            <C>
Revenues:
  Advertising and other magazine                  $ 6,592,758   $ 10,993,812   $  22,700,170
  Electronic commerce and other                     3,074,327      5,080,581       7,161,799
                                                  ------------  -------------  --------------
                                                    9,667,085     16,074,393      29,861,969

Cost of Revenues                                    5,563,010     12,144,915      19,079,693
                                                  ------------  -------------  --------------

Gross Margin                                        4,104,075      3,929,478      10,782,276
                                                  ------------  -------------  --------------

Operating Expenses:
  Sales and marketing                               3,523,226      9,755,315      23,917,228
  Product development                                 652,997      3,810,876      10,241,792
  General and administrative                        2,868,640      6,596,500      13,173,344
  Restructuring and impairment charges                      -     17,091,343      41,347,738
  Amortization of goodwill and intangible assets            -      8,468,620      27,236,506
                                                  ------------  -------------  --------------
                                                    7,044,863     45,722,654     115,916,608
                                                  ------------  -------------  --------------

Loss from Operations                               (2,940,788)   (41,793,176)   (105,134,332)
                                                  ------------  -------------  --------------

Other Income (Expense):
  Interest and other income                           365,058      1,250,500       2,089,743
  Interest and other expense                          (26,931)       (61,246)       (553,332)
                                                  ------------  -------------  --------------
                                                      338,127      1,189,254       1,536,411
                                                  ------------  -------------  --------------

Loss Before Provision for Income Taxes             (2,602,661)   (40,603,922)   (103,597,921)

Provision for Income Taxes                             12,000         16,104         267,800
                                                  ------------  -------------  --------------
Net Loss                                          $(2,614,661)  $(40,620,026)  $(103,865,721)
                                                  ============  =============  ==============

Basic and Diluted Net Loss Per Share              $     (0.09)  $      (1.34)  $       (3.43)
                                                  ============  =============  ==============

Weighted Average Shares Outstanding                30,382,293     30,382,043      30,286,102
                                                  ============  =============  ==============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                              THEGLOBE.COM, INC. AND SUBSIDIARIES

                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE LOSS



                                                                                                                     Accumulated
                                                 Common Stock          Additional                                       Other
                                           -------------------------    Paid-in        Treasury         Deferred    Comprehensive
                                             Shares        Amount       Capital          Stock        Compensation      Loss
                                           -----------  ------------  ------------  ---------------  --------------  ----------
<S>                                        <C>          <C>           <C>           <C>              <C>             <C>
Balance, December 31, 1999                 27,770,918   $    27,771   $197,307,293  $            -   $    (269,307)  $(109,462)

Year Ended December 31, 2000:
  Net loss                                          -             -              -               -               -           -
  Changes in net unrealized
    loss on securities                              -             -              -               -               -     108,929
  Foreign current translation
    adjustment                                      -             -              -               -               -     (55,149)

  Comprehensive loss                                -             -              -               -               -           -


  Amortization of deferred
    compensation                                    -             -              -               -         269,307           -
  Issuance of common stock
    in connection with exercise
    of stock options                          663,799           664        365,556               -               -           -

  Issuance of common stock
    and options in connection with
    Employee Stock Purchase Plan               41,603            42         64,768               -               -           -
  Issuance of common stock
    and options in connection
    with acquisitions                       1,903,973         1,904     15,063,314               -               -           -
  Common stock issued in
    connection with Sportsline
    distribution agreement                    699,281           699      4,999,301               -               -           -
  Common stock repurchased for
    treasury, 699,281 common shares                 -             -              -        (371,458)              -           -
  Common stock options issued in
    lieu of services rendered                       -             -         57,024               -               -           -
  Acceleration of stock options in
    connection with severance
    arrangements                                    -             -        397,712               -               -           -
                                           -----------  ------------  ------------  ---------------  --------------  ----------

Balance at December 31, 2000               31,079,574        31,080    218,254,968        (371,458)              -     (55,682)

Year Ended December 31, 2001:
  Net loss                                          -             -              -               -               -           -

  Foreign currency translation
    adjustment                                      -             -              -               -               -     (65,834)

  Net unrealized loss on
    securities                                      -             -              -               -               -         650

  Comprehensive loss                                -             -              -               -               -           -


  Issuance of common stock
    in connection with exercise
    of stock options                            2,000             2            597               -               -           -
                                           -----------  ------------  ------------  ---------------  --------------  ----------

Balance, December 31, 2001                 31,081,574        31,082    218,255,565        (371,458)              -    (120,866)

Year Ended December 31, 2002:
  Net loss

  Disposal of Attitude Network-
    translation loss                                -             -              -               -               -     121,516

  Net unrealized gain on
    securities                                      -             -              -               -               -        (650)

  Comprehensive loss                                -             -              -               -               -           -


  Issuance of stock options in
    connection with severance arrangement           -             -         13,000               -               -           -
  Issuance of stock options
    in connection with acquisition                  -             -         42,000               -               -           -
                                           -----------  ------------  ------------  ---------------  --------------  ----------

Balance, December 31, 2002                 31,081,574   $    31,082   $218,310,565  $     (371,458)  $           -   $       -
                                           ===========  ============  ============  ===============  ==============  ==========


                                            Accumulated
                                              Deficit          Total
                                           --------------  --------------
<S>                                        <C>             <C>
Balance, December 31, 1999                 $ (70,046,868)  $ 126,909,427

Year Ended December 31, 2000:
  Net loss                                  (103,865,721)   (103,865,721)
  Changes in net unrealized
    loss on securities                                 -         108,929
  Foreign current translation
    adjustment                                         -         (55,149)
                                                           --------------
  Comprehensive loss                                   -    (103,811,941)
                                                           --------------

  Amortization of deferred
    compensation                                       -         269,307
  Issuance of common stock
    in connection with exercise
    of stock options                                   -         366,220

  Issuance of common stock
    and options in connection with
    Employee Stock Purchase Plan                       -          64,810
  Issuance of common stock
    and options in connection
    with acquisitions                                  -      15,065,218
  Common stock issued in
    connection with Sportsline
    distribution agreement                             -       5,000,000
  Common stock repurchased for
    treasury, 699,281 common shares                    -        (371,458)
  Common stock options issued in
    lieu of services rendered                          -          57,024
  Acceleration of stock options in
    connection with severance
    arrangements                                       -         397,712
                                           --------------  --------------

Balance at December 31, 2000                (173,912,589)     43,946,319

Year Ended December 31, 2001:
  Net loss                                   (40,620,026)    (40,620,026)

  Foreign currency translation
    adjustment                                         -         (65,834)

  Net unrealized loss on
    securities                                         -             650
                                                           --------------
  Comprehensive loss                                   -     (40,685,210)
                                                           --------------

  Issuance of common stock
    in connection with exercise
    of stock options                                   -             599
                                           --------------  --------------

Balance, December 31, 2001                  (214,532,615)      3,261,708

Year Ended December 31, 2002:
  Net loss                                    (2,614,661)     (2,614,661)

  Disposal of Attitude Network-
    translation loss                                   -         121,516

  Net unrealized gain on
    securities                                         -            (650)
                                                           --------------
  Comprehensive loss                                   -      (2,493,795)
                                                           --------------

  Issuance of stock options in
    connection with severance arrangement              -          13,000
  Issuance of stock options
    in connection with acquisition                     -          42,000
                                           --------------  --------------

Balance, December 31, 2002                 $(217,147,276)  $     822,913
                                           ==============  ==============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                          THEGLOBE.COM, INC. AND SUBSIDIARIES

                                         CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                     Year Ended December 31,
                                                                               2002          2001            2000
                                                                           ------------  -------------  --------------
<S>                                                                        <C>           <C>            <C>
Cash Flows from Operating Activities:
  Net loss                                                                 $(2,614,661)  $(40,620,026)  $(103,865,721)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
      Depreciation and amortization                                             88,580     11,164,527      31,372,656
      Options granted in connection with severance arrangement                  13,000              -               -
      Disposal of Attitude Network- translation loss                           121,516              -               -
      Non-cash restructuring and impairment charges                                  -     14,861,821      36,914,147
      Non-cash marketing expenses                                                    -              -       2,313,276
      Gain on sale of Happy Puppy                                             (134,500)             -               -
      Loss on sale of Games Domain and Console Domain                                -         32,398               -
      Gain on sale of Kids Domain                                                    -         (4,839)              -
      Non-cash compensation                                                          -              -         454,736
      Amortization of deferred compensation                                          -              -         269,307
      Loss on disposal of equipment                                                855         62,198               -
      (Gain) loss on sale of short-term securities                                (650)       (70,144)        108,929
      Deferred rent                                                                  -         56,982         113,964
    Changes in operating assets and liabilities, net of acquisitions and
      dispositions:
        Inventory, net                                                         168,583        161,909        (121,048)
        Accounts receivable, net                                               290,502      2,779,081         915,062
        Prepaid and other current assets                                       706,856        426,938        (584,307)
        Accounts payable                                                        55,301     (1,337,051)     (2,583,741)
        Accrued expenses                                                      (592,047)    (3,418,339)       (102,713)
        Deferred revenue                                                       (59,957)      (499,551)        132,980
                                                                           ------------  -------------  --------------
            Net cash used in operating activities                           (1,956,622)   (16,404,096)    (34,662,473)
                                                                           ------------  -------------  --------------

Cash Flows from Investing Activities:
  Purchase of securities                                                             -        (58,638)    (35,076,829)
  Advance on loan commitment                                                   (40,000)             -               -
  Proceeds from sale of securities                                              57,650      3,074,386      51,369,206
  Proceeds from sale of property and equipment                                  11,000        382,944               -
  Purchases of property and equipment                                          (32,250)      (440,689)     (2,871,235)
  Release of security deposits, net                                                  -      3,478,007         172,490
  Proceeds from sale of properties                                             135,000        790,000               -
  Cash paid for acquisitions                                                         -              -        (274,973)
                                                                           ------------  -------------  --------------
            Net cash provided by investing activities                          131,400      7,226,010      13,318,659
                                                                           ------------  -------------  --------------

Cash Flows from Financing Activities:
  Payments of long-term debt                                                   (13,184)      (116,002)         (8,145)
  Payments under capital lease obligations                                           -     (1,447,302)     (2,003,389)
  Proceeds from exercise of common stock options and warrants                        -              -         366,220
  Net proceeds from issuance of common stock                                         -            599          64,810
  Payments for treasury stock                                                        -              -        (371,458)
                                                                           ------------  -------------  --------------
            Net cash used in financing activities                              (13,184)    (1,562,705)     (1,951,962)
                                                                           ------------  -------------  --------------

Net Decrease in Cash and Cash Equivalents                                   (1,838,406)   (10,740,791)    (23,295,776)

Effect of Exchange Rate Changes on Cash and Cash Equivalents                         -        (44,935)         59,332

Cash and Cash Equivalents, Beginning                                         2,563,828     13,349,554      36,585,998
                                                                           ------------  -------------  --------------

Cash and Cash Equivalents, Ending                                          $   725,422   $  2,563,828   $  13,349,554
                                                                           ============  =============  ==============
                                                                                                          (Continued)
</TABLE>

                 See notes to consolidated financial statements.


                                      F-6
<PAGE>
<TABLE>
<CAPTION>
                                   THEGLOBE.COM, INC. AND SUBSIDIARIES

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (Continued)


                                                                              Year Ended December 31,
                                                                            2002      2001       2000
                                                                          --------  --------  -----------
<S>                                                                       <C>       <C>       <C>
Supplemental Disclosure of Cash Flow Information:
  Cash paid during the year for:
    Interest                                                              $ 25,018  $174,111  $   364,316
                                                                          ========  ========  ===========
    Income taxes                                                          $      -  $100,206  $   156,313
                                                                          ========  ========  ===========

Supplemental Disclosure of Non-Cash Transactions:
    Common stock and options issued in connection with business acquired  $      -  $      -  $15,065,218
                                                                          ========  ========  ===========
    Equipment acquired under capital leases                               $      -  $      -  $   132,431
                                                                          ========  ========  ===========
    Debt assumed in purchase of intangible asset                          $122,960  $      -  $         -
                                                                          ========  ========  ===========
    Intangible asset purchased in exchange for warrants                   $ 42,000  $      -  $         -
                                                                          ========  ========  ===========
</TABLE>

                 See notes to consolidated financial statements.


                                      F-7
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2002, 2001 AND 2000



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          DESCRIPTION OF THE COMPANY

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

            As  of  December  31,  2002,  the  Company  continues to operate its
            Computer  Games  print  magazine and the associated website Computer
            Games  Online  (www.cgonline.com), as well as the games distribution
            business of Chips & Bits, Inc. (www.chipsbits.com). In addition, the
            Company  is  continuing  to  actively  explore a number of strategic
            alternatives  for  its remaining online and offline game properties,
            including  continuing operations and using its cash on hand, selling
            some  or  all  of  these  properties  and/or  entering  into  new or
            different  lines  of  business.

            As  of  December  31,  2002,  the  Company's  revenue  sources  are
            principally from the sale of print advertising in its Computer Games
            magazine; the sale of video games and related products through Chips
            &  Bits,  Inc.,  its  games  distribution  business; the sale of its
            Computer  Games  magazine  through newsstands and subscriptions; and
            limited  sales  of  online  advertising.

            On November 14, 2002, the Company acquired certain digital telephony
            assets  and is currently investigating opportunities related to this
            acquisition.

            On  February  25, 2003, the Company entered into a Loan and Purchase
            Option  Agreement with a development stage internet related business
            venture  pursuant  to  which  it  agreed  to  loan the venture up to
            $160,000  to  fund its operating expenses and obtained the option to
            acquire  all  of  the  outstanding  capital  stock of the venture in
            exchange  for, when and if exercised, $40,000 and the issuance of an
            aggregate  of  2,000,000  unregistered  restricted  shares  of
            theglobe.com's  Common  Stock  (See  Note  2).

          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 inter-company balances and
            transactions  have  been  eliminated  in  consolidation.


                                      F-8
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          SHORT-TERM INVESTMENTS

            The  Company  accounts for short-term investments in accordance with
            Statement of Financial Accounting Standards No. 115, "Accounting for
            Certain  Investments  in  Debt  and Equity Securities" ("SFAS 115").
            SFAS  115  establishes the accounting and reporting requirements for
            all  debt  securities  and for investments in equity securities that
            have  readily  determinable  fair  market  value.  All  short-term
            marketable  securities  must  be classified as one of the following:
            held-to-maturity,  available-for-sale  or  trading securities. As of
            December  31,  2002,  there  were  no  short-term investments. As of
            December  31,  2001,  they  were  not  material.

          INVENTORIES

            Inventories, consisting of products available for sale, are recorded
            using  the specific-identification method and valued at the lower of
            cost  or  market  value. The Company's allowance for slow-moving and
            obsolete inventory as of December 31, 2002 and December 30, 2001 was
            approximately  $100,000  and  $64,000,  respectively.

          PROPERTY AND EQUIPMENT

            Property  and  equipment  is  stated  at  cost,  net  of accumulated
            depreciation and amortization. Property and equipment is depreciated
            using  the  straight-line  method over the estimated useful lives of
            the  related  assets,  generally  three to five years for equipment,
            three  years  for software and five to seven years for furniture and
            fixtures.

          GOODWILL AND INTANGIBLE ASSETS

            Goodwill  is  stated  at  cost and evaluated for impairment at least
            annually.  The  Company  will  test  goodwill  for impairment in the
            quarter  containing  the annual anniversary of the acquisition date.
            The Company will perform the impairment test in accordance with SFAS
            142,  "Goodwill  and Other Intangible Assets." SFAS 142 requires the
            fair  value of the reporting unit be compared to the carrying value,
            including  goodwill, as the first step in the impairment test. As of
            December  31,  2002  and  2001,  the  Company  had  no  goodwill.

            Intangible assets include certain digital telephony assets which are
            stated at cost and will be amortized on a straight-line basis over a
            period  of  18  months  once  placed  in service. Management reviews
            intangible  assets  for impairment when circumstances dictate, or at
            least  annually  in  accordance  with  SFAS 144, "Accounting for the
            Impairment  or  Disposal  of  Long-Lived  Assets."


                                      F-9
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          IMPAIRMENT OF LONG-LIVED ASSETS

            Long-lived  assets,  including  property and equipment, goodwill and
            other  intangible assets are reviewed for impairment whenever events
            or  changes in circumstances indicate that the carrying amount of an
            asset  may not be recoverable. If events or changes in circumstances
            indicate  that  the  carrying  amount  of  an  asset  may  not  be
            recoverable,  the  Company  estimates  the  undiscounted future cash
            flows  to  result  from  the  use  of  the  asset  and  its ultimate
            disposition.  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  asset.  Fair  value would generally be determined by
            market  value.  Assets to be disposed of are carried at the lower of
            the  carrying  value  or fair value less costs to sell. In 2001, the
            Company  wrote  off  $10.7 million in net book value of goodwill and
            intangible assets and $5.2 million in net book value of property and
            equipment.  In 2000, the Company wrote off $32.4 million in net book
            value  of  goodwill  and  intangible  assets.

          FAIR VALUE OF FINANCIAL INSTRUMENTS

            The  carrying  amount  of  certain  of  the  Company's  financial
            instruments,  including  cash,  cash  equivalents,  short-term
            investments, accounts receivable, accounts payable, accrued expenses
            and  deferred  revenue, approximate their fair value at December 31,
            2002  and  2001  because  of  their  short  maturities.

          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.

          REVENUE RECOGNITION

            The  Company's  revenues  were  derived principally from the sale of
            print  advertisements  under  short-term  contracts  in  the  games
            information magazine Computer Games, through the sale of video games
            and related products through the games distribution business Chips &
            Bits,  Inc.;  through  the  sale  of  the games information magazine
            through  newsstands  and  subscriptions; and through limited sale of
            online  advertisements  principally  under  short-term  advertising
            arrangements,  averaging  one  to  three  months.


                                      F-10
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          REVENUE RECOGNITION (Continued)

               ADVERTISING AND OTHER MAGAZINE

                  The Company derives revenue through the sale of advertisements
                  in  its  games  information magazine and the sale of its games
                  information  magazine  through  newsstands  and subscriptions.

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

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

                  Online  advertising  revenues  are  recognized  ratably in the
                  period  in which the advertisement is displayed, provided that
                  no  significant  Company  obligations remain and collection of
                  the  resulting  receivable  is  probable.  Company obligations
                  typically  include  the  guarantee  of  a  minimum  number  of
                  "impressions",  defined  as  the  number  of  times  that  an
                  advertisement  appears  in  pages  viewed  by the users of the
                  Company's  online  properties,  for a fixed fee. To the extent
                  minimum guaranteed impressions levels are not met, the Company
                  defers  recognition  of  the  corresponding  revenues  until
                  guaranteed  levels  are  achieved.  The  Company's  online
                  advertising  revenue  includes  the  development  and  sale of
                  sponsorship  placements within its web sites. Development fees
                  related to the sale of sponsorship placements on the Company's
                  web  sites are deferred and recognized ratably as revenue over
                  the  term  of  the  contract.

                  Advertising  revenue from the Company's games magazine for the
                  years ended December 31, 2002, 2001 and 2000 was approximately
                  $3.1  million,  $3.5  million  and $4.5 million, respectively.
                  Sales  of  the  Company's  games  information magazine through
                  newsstands  and subscriptions accounted for approximately $3.5
                  million,  $4.6  million  and $3.2 million of total revenue for
                  the  years  ended  December  31,  2002,  2001,  and  2000,
                  respectively.  Advertising  revenue  from the Company's online
                  properties  for  the  years  ended December 31, 2002, 2001 and
                  2000  was  approximately  $0  million, $2.9 million, and $15.0
                  million,  respectively. Advertising and other magazine revenue
                  accounted for 68%, 40% and 65% of total revenues for the years
                  ended  December  31,  2002,  2001,  and  2000,  respectively.


                                      F-11
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          REVENUE RECOGNITION (Continued)

            The  Company participates in barter transactions whereby the Company
            trades  marketing  data  in  exchange  for  advertisements  in  the
            publications  of  other  companies. In prior years, the Company also
            traded  advertisements  on  its  web  properties  in  exchange  for
            advertisements on Internet sites of other companies. Barter revenues
            and  expenses  are  recorded  at  the  fair market value of services
            provided  or received, whichever is more readily determinable in the
            circumstances.  Revenue  from  barter  transactions is recognized as
            income  when  advertisements  or other products are delivered by the
            Company.  Barter  expense  is  recognized  when  the  Company's
            advertisements  are  run  on  other companies' web sites or in their
            magazines,  which typically occurs within one to six months from the
            period  in  which barter revenue is recognized. Barter revenues were
            approximately  1%,  1%  and 4% of total revenues for the years ended
            December  31,  2002,  2001  and  2000,  respectively.

          ELECTRONIC COMMERCE AND OTHER

            The  Company derives other revenues from the sale of video games and
            related  products  through  its  online  store.

            Sales  from  the  online  store  are  recognized as revenue when the
            product  is  shipped to the customer. Freight out costs are included
            in  net sales and have not been significant in prior years, however,
            represented  approximately  4%  of  revenue  in  2002.  The  Company
            provides  an  allowance  for returns of merchandise sold through its
            online  store.  The  allowance  for returns provided to date has not
            been  significant.

            Sales  through  the  online store accounted for approximately 31% or
            $3.1  million, 31% or $5.1 million, and 24% or $7.2 million of total
            revenues  for  the  years  ended  December 31, 2002, 2001, and 2000,
            respectively.

          ADVERTISING COSTS

            Advertising costs are expensed as incurred and are included in sales
            and  marketing  expense.  Advertising  costs were approximately $0.2
            million,  $5.1 million and $7.9 million for the years ended December
            31,  2002,  2001,  and  2000, respectively. Barter advertising costs
            were  approximately  1%,  1%  and 4% of total revenues for the years
            ended  December  31,  2002,  2001  and  2000,  respectively.


                                      F-12
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          PRODUCT DEVELOPMENT

            Product  development expenses include professional fees, staff costs
            and  related  expenses  associated with the development, testing and
            upgrades to the Company's website as well as expenses related to its
            editorial  content  and  community  management  and support. Product
            development  costs and enhancements to existing products are charged
            to  operations  as  incurred.  The  Company accounts for development
            costs  in accordance with the American Institute of Certified Public
            Accountants' Statement of Position 98-1, "Accounting for the Cost of
            Computer  Software  Developed  or  Obtained  for Internal Use" ("SOP
            98-1").  SOP  98-1  requires all costs related to the development of
            internal  use  software  other  than  those  incurred  during  the
            application  development  stage to be expensed as incurred. SOP 98-1
            also  provides  guidance  on  the  capitalization  of costs incurred
            during  the  application  development  stage  for  computer software
            developed  or  obtained  for  internal  use.

          STOCK-BASED COMPENSATION

            The  Company  follows Statement of Financial Accounting Standard No.
            123,  "Accounting  for Stock-Based Compensation" ("SFAS 123"), which
            permits entities to recognize as expense over the vesting period the
            fair  value  of  all  stock-based  awards  on  the  date  of  grant.
            Alternatively,  SFAS  123  allows  entities to continue to apply the
            provisions  of Accounting Principles Board Opinion No. 25 ("APB 25")
            and  provide  pro forma net earnings (loss) disclosures for employee
            stock  option  grants if the fair-value-based method defined in SFAS
            123  had  been  applied.  Under this method, compensation expense is
            recorded  on  the  date of grant only if the current market price of
            the  underlying  stock  exceeded the exercise price.

            In  December  2002,  the  FASB  issued SFAS No. 148, "Accounting for
            Stock-Based  Compensation  --  Transition  and  Disclosure  --  an
            amendment  of  SFAS  No. 123," which provides alternative methods of
            transition  for a voluntary change to the fair value based method of
            accounting  for stock-based compensation. SFAS No. 148 also requires
            more  prominent  and  more  frequent disclosures in both interim and
            annual  financial  statements  about  the  method  of accounting for
            stock-based  compensation  and  the  effect  of  the  method used on
            reported  results.  We adopted the disclosure provisions of SFAS No.
            148  as  of  December 31, 2002 and continue to apply the measurement
            provisions  of  APB  No.  25.

            Had  the  Company  determined compensation expense based on the fair
            value  at  the  grant date for its stock options issued to employees
            under  SFAS No. 123, the Company's net loss would have been adjusted
            to  the  pro  forma  amounts  indicated  below:

<TABLE>
<CAPTION>
                                            2002          2001            2000
                                        ------------  -------------  --------------
<S>                                     <C>           <C>            <C>
            Net loss - as reported      $(2,615,000)  $(40,620,000)  $(103,866,000)
                                        ============  =============  ==============
            Net loss - pro forma        $(2,714,000)  $(40,537,000)  $(107,876,000)
                                        ============  =============  ==============

            Basic net loss per share -
               as reported              $     (0.09)  $      (1.34)  $       (3.43)
                                        ============  =============  ==============
            Basic net loss per share -
               pro forma                $     (0.10)  $      (1.34)  $       (3.56)
                                        ============  =============  ==============
</TABLE>

            The  per  share weighted-average fair value of stock options granted
            during  2002,  2001,  and  2000  was  $0.02,  $0.32,  and  $1.64,
            respectively,  on  the date of grant using the option-pricing method
            with  the  following  weighted-average  assumptions:

                                                   2002       2001      2000
                                                 ---------  --------  --------
            Risk-free interest rate                  4.78%     3.75%     6.22%
            Expected life                        10 years   4 years   4 years
            Volatility                           135%-160%      130%      130%
            Expected dividend rate                      0         0         0

            The  Company  follows  FASB  Interpretation  No  44, "Accounting for
            Certain  Transactions  Involving  Stock Compensation" ("FIN No. 44")
            which  provides guidance for applying APB Opinion No 25. "Accounting
            for  Stock Issued to Employees." With certain exceptions, FIN No. 44
            applies  prospectively  to  new  awards,  exchanges  of  awards in a
            business  combination,  modifications  to  outstanding  awards  and
            changes  in  grantee  status  on  or after July 1, 2000. The Company
            applied FIN No. 44 to account for its cancellation and reissuance of
            options  (see  Note  4).


                                      F-13
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          NET LOSS PER COMMON SHARE

            The  Company  reports  net  loss per common share in accordance with
            Statement  of Financial Accounting Standard No. 128, "Computation of
            Earnings  Per  Share," ("SFAS 128"). 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 the
            convertible  preferred  stock  (using  the  if-converted method) and
            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.

            Diluted  loss  per  share  has not been presented separately, as the
            outstanding  stock  options,  warrants and contingent stock purchase
            warrants  are  anti-dilutive  for  each  of  the  periods presented.
            Diluted  net  loss per common share for the years ended December 31,
            2002,  2001  and  2000  does  not  include the effects of options to
            purchase 5,971,440, 3,104,349, and 5,114,803 shares of common stock,
            respectively  nor  warrants  to  purchase  6,186,634, 4,011,534, and
            4,011,534  for  each  of  the years then ended. The weighted average
            shares  outstanding  for  the year ended December 31, 2001 have been
            restated  to  remove  treasury  shares  previously  included  in the
            calculation.

          COMPREHENSIVE INCOME (LOSS)

            The  Company  reports comprehensive income (loss) in accordance with
            the  Statement  of Financial Accounting Standard No. 130, "Reporting
            Comprehensive  Income"  ("SFAS  130").  This  statement  establishes
            standards  for  the  reporting  and  display of comprehensive income
            (loss) and its components in a full set of general-purpose financial
            statements.  Comprehensive  income  (loss)  generally represents all
            changes  in  stockholders'  equity  during  the  year  except  those
            resulting  from  investments by, or distributions to, stockholders'.

          USE OF ESTIMATES

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

          CONCENTRATION OF CREDIT RISK

            Financial instruments which subject the Company to concentrations of
            credit risk consist primarily of cash and cash equivalents and trade
            accounts  receivable.


                                      F-14
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          CONCENTRATION OF CREDIT RISK (Continued)

            CASH AND CASH EQUIVALENTS

               From  time  to  time  during  the  year, the Company may have had
               deposits  in  financial  institutions  in excess of the federally
               insured  limits.  At  December  31,  2002,  the  Company has bank
               deposits of approximately $602,000 in excess of federally insured
               limits.  The  Company  maintains  its  cash  with  high  quality
               financial  institutions,  which  the  Company believes limits the
               risks.

            ACCOUNTS RECEIVABLE

               The  Company's customers are primarily concentrated in the United
               States.  The  Company  performs  ongoing  credit  evaluations  of
               customers'  financial  condition,  generally  does  not  require
               collateral  and  establishes  an  allowance for doubtful accounts
               based  upon  factors  surrounding  the  credit risk of customers,
               historical  trends and other information. Concentration of credit
               risk  is  limited due to the Company's large number of customers,
               however  the  Company's  online  advertising client base has been
               until  recently  concentrated among dedicated internet companies.

            SEGMENT REPORTING

               The  Company  applies  the  provisions  of Statement of Financial
               Accounting  Standards  No. 131, "Disclosures About Segments of an
               Enterprise  and  Related  Information"  ("SFAS  131"),  which
               establishes  annual and interim reporting standards for operating
               segments  of a company. SFAS 131 requires disclosures of selected
               segment-related  financial  information  about  products,  major
               customers  and  geographic  areas.  The Company is organized in a
               single  operating  segment  for  purposes  of  making  operating
               decisions and assessing performance. The chief operating decision
               maker  evaluates  performance,  makes  operating  decisions  and
               allocates  resources  based on financial data consistent with the
               presentation in the accompanying condensed consolidated financial
               statements.

               The  Company's revenues have been earned primarily from customers
               in the United States. In addition, all significant operations and
               assets  are  based  in  the  United  States.

            RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

               In  January  2003,  the  FASB  issued  Interpretation  46,
               "Consolidation  of  Variable Interest Entities" an Interpretation
               of  ARB  51.  This statement requires under certain circumstances
               consolidation  of  variable  interest  entities  (primarily joint
               ventures  and  other  participating  activities). The adoption of
               this  statement  is  not expected to have a significant impact on
               the  Company's  financial  position  or  results  of  operations.


                                      F-15
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

            In  December  2002,  the  FASB  issued SFAS No. 148, "Accounting for
            Stock-Based  Compensation - Transition and Disclosure." SFAS No. 148
            amends  SFAS No. 123 as it relates to the transition by an entity to
            the  fair  value  method  of  accounting  for  stock-based  employee
            compensation.  The  provisions  of  SFAS  No.  148 are effective for
            financial  statements  for  fiscal  years  ending after December 15,
            2002.  The  Company has not yet made a decision to change the method
            of  accounting  for  stock-based  employee  compensation.

            In  July  2002,  the FASB issued SFAS No. 146, "Accounting for Costs
            Associated with Exit or Disposal Activities." SFAS No. 146 addresses
            financial accounting and reporting for costs associated with exit or
            disposal  activities  and  nullifies  Emerging  Issues  Task  Force
            ("EITF")  94-3,  "Liability  Recognition  for  Certain  Employee
            Termination  Benefits and Other Costs to Exit an Activity (including
            Certain  Costs  Incurred  in  a  Restructuring)."  The  principal
            difference  between SFAS No. 146 and EITF 94-3 relates to the timing
            of liability recognition. Under SFAS No. 146, a liability for a cost
            associated  with an exit or disposal activity is recognized when the
            liability is incurred. Under EITF 94-3, a liability for an exit cost
            was  recognized  at  the  date  of an entity's commitment to an exit
            plan.  The  provisions  of  SFAS  No.  146 are effective for exit or
            disposal  activities that are initiated after December 31, 2002. The
            adoption  of  SFAS No. 146 is not expected to have a material impact
            on  the  Company's  financial  position  or  results  of operations.

            In  April  2002,  the  FASB issued SFAS No. 145, "Rescission of SFAS
            Nos.  4,  44,  and  64,  Amendment  of  SFAS  No.  13, and Technical
            Corrections."  SFAS  No.  4  required  all gains and losses from the
            extinguishment  of  debt  to  be reported as extraordinary items and
            SFAS  No. 64 related to the same matter. SFAS No. 145 requires gains
            and  losses  from  certain debt extinguishment not to be reported as
            extraordinary  items  when the use of debt extinguishment is part of
            the  risk  management  strategy. SFAS No. 44 was issued to establish
            transitional requirements for motor carriers. Those transactions are
            completed, therefore SFAS No. 145 rescinds SFAS No. 44. SFAS No. 145
            also  amends  SFAS  No.  13  requiring sale-leaseback accounting for
            certain  lease  modifications.  SFAS No. 145 is effective for fiscal
            years  beginning after May 15, 2002. The adoption of SFAS No. 145 is
            not  expected  to  have a material impact on the Company's financial
            position  or  results  of  operations.

            In  June  2001, the Financial Accounting Standards Board issued SFAS
            No.  141,  "Business  Combinations," and SFAS No. 142, "Goodwill and
            Other  Intangible  Assets."  SFAS No. 141 requires that the purchase
            method of accounting be used for all business combinations. SFAS No.
            141 specifies criteria that intangible assets acquired in a business
            combination  must meet to be recognized and reported separately from
            goodwill.  SFAS No. 142 requires that goodwill and intangible assets
            with  indefinite  useful  lives  no longer be amortized, but instead
            tested  for  impairment  at  least  annually  in accordance with the
            provisions  of  SFAS  No.  142.  SFAS  No.


                                      F-16
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

            142 also requires that intangible assets with estimable useful lives
            be  amortized  over their respective estimated useful lives to their
            estimated residual values, and reviewed for impairment in accordance
            with  SFAS  No.  121,  "Accounting  for the Impairment of Long-Lived
            Assets  and  for  Long-Lived  Assets  to  Be  Disposed  Of,"  and
            subsequently  SFAS  No.  144  after  its  adoption.

            The  Company  adopted  the  provisions of SFAS No. 141 as of July 1,
            2001 and SFAS No. 142 as of January 1, 2002. Goodwill and intangible
            assets  determined  to  have  an  indefinite useful life acquired in
            purchase  business  combinations  completed after June 30, 2001, but
            before  SFAS No. 142 is adopted in full, are not amortized. Goodwill
            and  intangible  assets  acquired in business combinations completed
            before  July  1,  2001  will continue to be amortized and tested for
            impairment  prior  to  the  full  adoption  of  SFAS  No.  142.

            Upon  adoption  of SFAS No. 142, the Company is required to evaluate
            its  existing intangible assets and goodwill that were acquired in a
            purchase  business  combination,  and  to  make  any  necessary
            reclassifications  in order to conform with the new criteria in SFAS
            No.  141 for recognition separate from goodwill. The Company will be
            required  to  reassess  the  useful lives and residual values of all
            intangible  assets  acquired,  and  make  any necessary amortization
            period  adjustments  by  the  end  of the first interim period after
            adoption.  If  an  intangible  asset  is  identified  as  having  an
            indefinite  useful  life,  the  Company will be required to test the
            intangible asset for impairment in accordance with the provisions of
            SFAS No. 142 within the first interim period. Impairment is measured
            as the excess of carrying value over the fair value of an intangible
            asset  with an indefinite life. Any impairment loss will be measured
            as  of  the date of adoption and recognized as the cumulative effect
            of  a  change  in  accounting principle in the first interim period.

            In  connection  with SFAS No. 142's transitional goodwill impairment
            evaluation,  the  statement  requires  the  Company  to  perform  an
            assessment  of  whether  there  is  an  indication  that goodwill is
            impaired  as of the date of adoption. To accomplish this the Company
            must  identify  its reporting units and determine the carrying value
            of  each  reporting  unit  by  assigning the assets and liabilities,
            including  the  existing  goodwill  and  intangible assets, to those
            reporting units as of January 1, 2002. The Company will then have up
            to  six months from the date of adoption to determine the fair value
            of  each  reporting  unit  and  compare  it  to the reporting unit's
            carrying  amount.  To  the extent a reporting unit's carrying amount
            exceeds  its  fair  value,  an  indication exists that the reporting
            unit's  goodwill  may  be  impaired and the Company must perform the
            second  step of the transitional impairment test. The second step is
            required  to be completed as soon as possible, but no later than the
            end  of  the  year of adoption. In the second step, the Company must
            compare  the  implied  fair  value of the reporting unit's goodwill,
            determined  by  allocating the reporting unit's fair value to all of
            it  assets (recognized and unrecognized) and liabilities in a manner
            similar  to  a purchase price allocation in accordance with SFAS No.
            141,  to  its carrying amount, both of which would be measured as of
            the  date  of  adoption.


                                      F-17
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)

          RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

            In August 2001, the Financial Accounting Standards Board issued FASB
            Statement  No.  144,  "Accounting  for the Impairment or Disposal of
            Long-Lived  Assets"  (Statement  144),  which  supersedes  both FASB
            Statement  No.  121,  "Accounting  for  the Impairment of Long-Lived
            Assets  and for Long-Lived Assets to Be Disposed Of" (Statement 121)
            and  the  accounting and reporting provisions of APB Opinion No. 30,
            "Reporting  the  Results  of  Operations-Reporting  the  Effects  of
            Disposal  of a Segment of a Business, and Extraordinary, Unusual and
            Infrequently  Occurring  Events  and Transactions" (Opinion 30), for
            the  disposal  of  a segment of a business (as previously defined in
            that  Opinion).  Statement 144 retains the fundamental provisions in
            Statement  121  for  recognizing  and measuring impairment losses on
            long-lived  assets held for use and long-lived assets to be disposed
            of  by  sale, while also resolving significant implementation issues
            associated  with  Statement 121. For example, Statement 144 provides
            guidance  on  how a long-lived asset that is used as part of a group
            should  be evaluated for impairment, establishes criteria for when a
            long-lived asset is held for sale, and prescribes the accounting for
            a  long-lived  asset  that  will  be disposed of other than by sale.
            Statement  144  retains the basic provisions of Opinion 30 on how to
            present discontinued operations in the income statement but broadens
            that presentation to include a component of an entity (rather than a
            segment  of  a  business).  Unlike  Statement  121,  an  impairment
            assessment  under Statement 144 will never result in a write-down of
            goodwill.  Rather,  goodwill  is  evaluated  for  impairment  under
            Statement  No.  142,  Goodwill  and  Other  Intangible  Assets.

            The  Company  adopted its provisions for the quarter ended March 31,
            2002.  The  adoption of Statement 144 for long-lived assets held for
            use  did  not  have  a  material  impact  on the Company's financial
            statements  because the impairment assessment under Statement 144 is
            largely  unchanged  from  Statement  121.  The  provisions  of  the
            Statement  for  assets held for sale or other disposal generally are
            required  to  be  applied  prospectively  after the adoption date to
            newly  initiated  disposal  activities.

          RECLASSIFICATIONS

            Certain amounts in 2001 and 2000 were reclassified to conform to the
            2002  presentation.


NOTE 2.   GOING CONCERN CONSIDERATIONS

          The Company's December 31, 2002 consolidated financial statements have
          been  prepared  assuming the Company will continue as a going concern.
          The  Company  has  suffered  recurring  losses  from  operations since
          inception,  has  an  accumulated  deficit  as  of December 31, 2002 of
          approximately  $217,200,000  and has disposed of a significant part of
          its  operations.  These  conditions  raise substantial doubt about its
          ability  to  continue  as a going concern. In addition, the Company is
          subject  to  the  following  risks  and  uncertainties.


                                      F-18
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 2.   GOING CONCERN CONSIDERATIONS (Continued)

          LOSS OF NASDAQ LISTING

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

            The  delisting  has made trading the Company's shares more difficult
            for  investors,  potentially  leading  to  further declines in share
            price. It would also make it more difficult for the Company to raise
            additional  capital.  The  Company  will also incur additional costs
            under state blue sky laws if they sell equity instruments due to the
            delisting.

          SALES AND INCOME TAX OBLIGATIONS

            The Company was audited by the State of New York regarding sales tax
            on  certain  bandwidth  for  the  period  1996-2001. The Company has
            reached a tentative settlement for payment of approximately $250,000
            in  additional  taxes,  with  an arrangement for payment over a four
            year period commencing in March 2003. The Company no longer operates
            in  New  York  and  therefore  is  no  longer  subject  to this tax.

            In  addition,  the  Company  was  served a tax lien in the amount of
            $40,000  by  the State of Vermont regarding income taxes dating back
            to the year 2000. This obligation relates to a period prior to Chips
            and Bits acquisition by the Company. Management is investigating the
            source  of  the  claim  and,  if  it  is  determined  to  be a valid
            obligation,  the  Company  intends  to  pay  it  in  full.

            Both liabilities have been recorded in the accompanying consolidated
            financial  statements  and  are  included  in  accrued  expenses.

          MANAGEMENT'S PLANS

            Management  and  the  Board  of  Directors are currently exploring a
            number  of strategic alternatives regarding its remaining assets and
            use  of  its  cash  on  hand and are also continuing to identify and
            implement  internal  actions  to improve the Company's liquidity and
            operations. These alternatives may include selling assets, which, in
            any  case,  could  result  in  significant  changes in the Company's
            business,  or  entering  into  new  or  different lines of business.


                                      F-19
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 2.   GOING CONCERN CONSIDERATIONS (Continued)

          MANAGEMENT'S PLANS (Continued)

            In  addition,  on  November  14,  2002, the Company acquired certain
            digital  telephony intangible assets in exchange for an agreement to
            issue  up  to 2,175,000 warrants to acquire shares of Company common
            stock  and  an  agreement  to  make payments of $4,239 a month, plus
            interest,  for  a  term  of  forty-six  months. The warrants have an
            exercise  price of $0.065 per share and have a life of ten years. Of
            the  2,175,000  warrants,  1,750,000  were  issued immediately, with
            437,000  of those to be held by the Company for settlement of future
            potential  claims.  The remaining 425,000 warrants are subject to an
            earn-out  agreement and will be released when the conditions of that
            agreement,  primarily  performance  targets,  are  satisfied.  The
            1,750,000  warrants  issued  were determined to have a fair value of
            approximately  $42,000  and  were  recorded,  together  with  the
            obligation  to pay the seller approximately $123,000, as the cost of
            the  intangible asset. The remaining 425,000 warrants subject to the
            earn-out  provision  will  be recorded at fair value when and if the
            earn-out  provisions are satisfied. In addition, the Company entered
            into  an  employment  agreement  with  the  Seller.  The  Company is
            currently  developing  a  business  plan for the utilization of this
            asset.

            In  conjunction  with  the  acquisition,  E&C  Capital  Partners,  a
            privately  held  investment  vehicle  controlled by the Chairman and
            Chief  Executive  Officer and the President entered into a Preferred
            Stock  Purchase  Agreement  with the Company to provide financing in
            the amount of $500,000 through the purchase of preferred securities,
            which  provide  for  certain rights and privileges (see Note 16). In
            addition,  certain  officers,  directors  and other related entities
            entered  into  a  nonbinding  letter  of  intent  to loan up to $1.0
            million  to the Company pursuant to a convertible loan facility (see
            Note  16).

            Also,  effective  July 10, 2002, the Company launched various direct
            marketing initiatives through a newly created division, tglo direct.
            The  subsidiary markets products such as safe e-mail lists, e-books,
            lead  generation tools and other products to entrepreneurs that wish
            to  enter  into  new  web-based businesses or promote their existing
            businesses. Most of the products are subscription-based, with prices
            ranging  from  approximately $11.00 per year to approximately $69.95
            per  year.  While  this  operation is currently in "beta" launch and
            accounted  for  only  approximately  $4,000  of revenue in 2002, the
            Company  is  investigating  ways  to  increase  the  level  of  this
            business.

            On  February  25, 2003, the Company entered into a Loan and Purchase
            Option  Agreement with a development stage internet related business
            venture ("target") pursuant to which it agreed to loan the target up
            to  $160,000  to fund its operating expenses and obtained the option
            to  acquire  all  of the outstanding capital stock of the venture in
            exchange  for, when and if exercised, $40,000 and the issuance of an
            aggregate  of  2,000,000  unregistered  restricted  shares  of
            theglobe.com's common stock In addition, the Company is to pay forty
            percent  of  the  pre-tax  income  of the target for the first three
            years  into  an  annual  cash  bonus pool for the benefit of certain
            employees  of  the  target. The purchase option expires the later of
            March  31,  2003.  However,  at  theglobe.com's sole discretion, the
            purchase  option  may  be extended on a month to month basis. If the
            Company  decides  not to exercise the option to purchase, $60,000 of
            the  loan  will  be  forgiven.


                                      F-20
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 2.   GOING CONCERN CONSIDERATIONS (Continued)

          MANAGEMENT'S PLANS (Continued)

            As  of  December  31,  2002, the Company has advanced $40,000 of the
            loan.  The  loan  earns  interest  at  10%.

          SUMMARY

            In  view  of  these  matters, continuation of the Company as a going
            concern is dependent upon the success of the Company's restructuring
            and  management's  ability to develop profitable operations from the
            remaining  products  and  services.  Management  believes  that  the
            actions  presently  being  taken  provide  the  opportunity  for the
            Company  to  continue  as  a going concern. However, there can be no
            assurances  that management will be successful in the implementation
            of  its  plan  or  that  future  operations  will  be  profitable.

            The consolidated financial statements do not include any adjustments
            that  might  result  from  the  outcome  of  this  uncertainty.


NOTE 3.   IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS

          Beginning  in  2000,  primarily  due to declines in the internet based
          advertising  market,  the  Company  has  undertaken  significant
          cost-reduction and restructuring initiatives. In addition, the Company
          had  made  a series of acquisitions which resulted in the recording of
          goodwill, all of which was determined to be impaired. The following is
          a  summary  of  the  results  of  those  initiatives  and  impairment
          evaluations.

          GOODWILL AND INTANGIBLE ASSET IMPAIRMENT

            The  operations  of the Company are currently conducted primarily by
            two  subsidiaries,  Chips  &  Bits,  Inc.  and  Strategy  Plus, Inc.

            On  February  24,  2000, CB Acquisition Corp., a Vermont corporation
            and  a  wholly  owned subsidiary of theglobe.com was merged with and
            into  Chips  &  Bits,  Inc., a Vermont corporation ("Chips & Bits"),
            with Chips & Bits as the surviving corporation. Also on February 24,
            2000, SP Acquisition Corp., a Vermont corporation and a wholly owned
            subsidiary  of theglobe.com, was merged with and into Strategy Plus,
            Inc., a Vermont corporation ("Strategy Plus"), with Strategy Plus as
            the  surviving corporation. As a result of the mergers, both Chips &
            Bits  and  Strategy  Plus  became  wholly  owned subsidiaries of the
            Company.


                                      F-21
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 3.   IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

          GOODWILL AND INTANGIBLE ASSET IMPAIRMENT (Continued)

            The  total  consideration  paid  by  the  Company  for  the  above
            acquisitions  consisted  of 1,903,977 shares of the Company's Common
            Stock,  valued  at  $14.9  million.  The  Company  also  incurred
            acquisition  costs  of  approximately  $0.6  million.  An additional
            payment  of  $1.3 million in newly issued shares of Common Stock was
            contingent  upon  the  attainment  of certain performance targets by
            Chips  &  Bits and Strategy Plus during the 2000 fiscal year. During
            August  2001,  the  Company settled this contingency resulting in no
            additional  consideration  being  paid  to  the former shareholders.

            This  transaction  was  accounted  for  under the purchase method of
            accounting.  The  aggregate purchase price of these transactions was
            $15.5  million.  The  Company  allocated  $1.1  million  to  the net
            tangible assets of Chips & Bits and $1.6 million to the net tangible
            liabilities of Strategy Plus. The historical carrying amounts of the
            net  tangible assets acquired and liabilities assumed by the Company
            approximated their fair market value on the date of acquisition. The
            purchase  price  in  excess  of  the  fair  market  value of the net
            tangible  assets  acquired  and  liabilities  assumed by the Company
            amounted  to  $16.0  million  and  was  allocated  to  goodwill. The
            goodwill  was being amortized using the straight-line method over an
            estimated  useful  life  of 3 years, the expected period of benefit.
            Chips  & Bits and Strategy Plus's results of operations are included
            in  the consolidated statement of operations from February 24, 2000.

            On April 5, 1999, theglobe formed Bucky Acquisition Corp. ("Bucky"),
            a  Delaware  corporation  and a wholly owned subsidiary of theglobe.
            Bucky  was  merged  with and into Attitude Network, Ltd., a Delaware
            corporation  ("Attitude"),  with  Attitude  as  the  surviving
            corporation.  The merger was effective pursuant to the Agreement and
            Plan  of Merger, dated April 5, 1999, which closed on April 9, 1999.
            As a result of the merger, Attitude became a wholly owned subsidiary
            of  theglobe.com.  Attitude's properties published games information
            content  and  included  HappyPuppy,  Kids Domain, Console Domain and
            Games  Domain. This transaction was accounted for under the purchase
            method  of  accounting.

            The consideration paid by theglobe.com in connection with the merger
            consisted  of  1,570,922 newly issued shares of Common Stock, valued
            at  $43.1  million.  In  addition,  options  to  purchase  shares of
            Attitude's  common  stock  were  exchanged  for  options to purchase
            approximately 84,760 shares of Common Stock, valued at $1.9 million.
            Warrants  to purchase shares of Attitude common stock were exchanged
            for  warrants  to  purchase  approximately 46,706 shares of theglobe
            Common  Stock,  valued  at  $1.0  million. The Company also incurred
            expenses  of  approximately  $0.8  million  related  to  the merger.

            The  total  purchase  price  for  this transaction was approximately
            $46.8  million.  Of  this  amount, approximately $0.2 million of the
            purchase  price  was  allocated  to  net  tangible  liabilities. The
            historical  carrying  amounts  of  such  net  tangible  liabilities
            approximated  their fair values. The purchase price in excess of the
            fair  value of the net tangible liabilities assumed in the amount of
            $47.0  million  was  allocated  to goodwill and certain identifiable
            intangible assets which were being amortized using the straight-line
            method over an estimated useful life of 3 years, the expected period
            of  benefit.


                                      F-22
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 3.   IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

          GOODWILL AND INTANGIBLE ASSET IMPAIRMENT (Continued)

            During  2000  and  2001,  the  Company  continually  reevaluated the
            goodwill and other intangible assets associated with these and other
            operating  companies  by  performing  on-going business reviews and,
            based on quantitative and qualitative measures, assessed the need to
            record  impairment  losses  on  long-lived assets used in operations
            when  impairment  indicators  were  present.  These  evaluations  of
            potential  impairment  were  based  on  achievement of business plan
            objectives and milestones of each web based property, the fair value
            of  each  ownership  interest  relative  to  its carrying value, the
            financial  condition  and  prospects  of the web based property, and
            other  relevant factors. The business plan objectives and milestones
            that  were  considered  included,  among  others,  those  related to
            financial  performance,  such  as  achievement  of planned financial
            results  and  completion  of capital raising activities, if any, and
            those  that  are  not  primarily  financial  in  nature, such as the
            launching  or  enhancements  of  a  web  site,  the  hiring  of  key
            employees,  the  number  of people who have registered to be part of
            the associated properties' web community, and the number of visitors
            to  the  associated properties' web site per month. Where impairment
            indicators  were identified, management determined the amount of the
            impairment  charge  by comparing the carrying values of goodwill and
            other  long-lived assets to their fair values. Management determined
            fair  value  based  on a market approach, which includes analysis of
            market  price  multiples  of  companies engaged in lines of business
            similar to the Company. The market price multiples were selected and
            applied  to  the  Company  based on the relative performance, future
            prospects  and  risk  profile  of  the  company in comparison to the
            guideline  companies.  The  methodology used to test for and measure
            the amount of the impairment charge related to the intangible assets
            was  based  on  the  same  methodology  as  used  during the initial
            acquisition  valuation  of  these  web-based  properties  and  other
            businesses.

            It  was  determined  that  the fair value of goodwill and intangible
            assets  related  to  web-based  properties and other businesses were
            less  than  the  recorded  amount.  See Restructuring and Impairment
            Charges  below  for  further details. As of December 31, 2001, after
            giving  effect  to impairment charges, the total remaining amount of
            goodwill  and  other  intangible  assets,  net,  was $0 for Attitude
            Networks and $0 for Chips & Bits and Strategy Plus. In addition, all
            other  goodwill  had  also  been  written  off.

          RESTRUCTURING AND IMPAIRMENT CHARGES

            For  the  years  ended December 31, 2001, and December 31, 2000, the
            Company  recorded  restructuring  and  impairment  charges  of $17.1
            million  and  $41.3  million, respectively. As of December 31, 2002,
            all  of  the  Company's  restructuring liabilities have been paid in
            full.

            YEAR ENDED DECEMBER 31, 2001

               In  the  second  quarter  of  2001,  the  Company  announced
               cost-reduction  initiatives.  These  initiatives  included  the
               elimination  of  59 positions, or 31% of the Company's workforce.
               The  severance  benefits  of  $470,000  were  paid  in the second
               quarter  of  2001.  Additionally,  the  Company  closed  the  San
               Francisco  office  in May 2001 and an additional $54,000 security
               deposit was relinquished as settlement to terminate the remaining
               lease  obligation.


                                      F-23
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 3.   IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

          RESTRUCTURING AND IMPAIRMENT CHARGES (Continued)

            YEAR ENDED DECEMBER 31, 2001 (Continued)

               In  the  second  quarter of 2001, the Company recorded impairment
               charges of $4.5 million related to the servers and computers used
               for  serving  and  hosting the former properties, www.webjump.com
               and  www.theglobe.com,  as  a  result  of  management's  ongoing
               business  review  and  impairment  analysis  performed  under its
               existing  policy  regarding  impairment  of  long-lived  assets.

               In  the third quarter of 2001, the Company continued cost cutting
               measures.  The Company eliminated 60 additional positions, or 58%
               of the workforce. As a result, severance benefits of $1.0 million
               were  paid  in  the  third  quarter  of  2001.

               Additionally, the Company terminated the lease at 120 Broadway in
               New  York and relocated its operations to a significantly smaller
               temporary  facility  in  New  York,  in September 2001. In August
               2002,  the  Company  relocated  their  executive  offices  to Ft.
               Lauderdale,  Florida.  The  Company also decided to shut down the
               www.theglobe.com  and  www.webjump.com  websites effective August
               15, 2001. The servers located in a facility in Staten Island, New
               York  were  in  use  through  August  31,  2001.  The  Company
               discontinued  the  use of these servers on August 31, 2001 and is
               now  using  outsourced hosted facilities for their live websites.
               As  a  result  of  these  measures,  the  Company  recorded  net
               restructuring  and impairment charges related to the fixed assets
               consisting  of  computer  hardware  and  software,  furniture and
               fixtures,  communications equipment and leasehold improvements at
               the  two  locations  totaling  approximately  $3.67  million, and
               miscellaneous  net  restructuring  credit  amounts related to the
               settlement  of  prepaid  items,  accruals  and  capital  lease
               obligations  totaling  approximately  $0.26  million.

               Further,  in  the  third  quarter  of  2001, the Company recorded
               additional  impairment  charges  of  $4.2  million, of which $3.6
               million  related  to  Chips  &  Bits  and  Strategy Plus and $0.6
               million related to Attitude Network, Ltd. related to goodwill and
               other  intangible  assets,  as  a  result of management's ongoing
               business  review  and  impairment  analysis  performed  under its
               existing  policy  regarding  impairment  of  long-lived  assets.

               In the fourth quarter of 2001, severance benefits of $0.1 million
               were  paid out relating to the cost cutting measures initiated in
               the  third  quarter  2001.  The  Company  recorded  an additional
               impairment  charge of $3.3 million in goodwill related to Chips &
               Bits  and  Strategy  Plus  as  a  result  of management's ongoing
               business  review  and  impairment  analysis  performed  under its
               existing  policy  regarding  impairment  of  long-lived  assets.


                                      F-24
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 3.   IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

          RESTRUCTURING AND IMPAIRMENT CHARGES (Continued)

            YEAR ENDED DECEMBER 31, 2001 (Continued)

               Where  impairment  indicators  were  identified,  management
               determined  the  amount of the impairment charge by comparing the
               carrying  values of goodwill and other long-lived assets to their
               fair  values.  Management determines fair value based on a market
               approach,  which  during 2001, mainly included proposals for sale
               of  its  business  properties.  As  a result, during management's
               quarterly review of the value and periods of amortization of both
               goodwill  and other long-lived assets, it was determined that the
               carrying  values  of  goodwill  and  certain  other  tangible and
               intangible  assets  were  not  fully  recoverable.

               During  2001,  the  revaluation of goodwill and intangible assets
               related  to Attitude Network, Ltd., Strategy Plus, Inc. and Chips
               &  Bits,  Inc.  and  certain acquired tangible assets such as the
               servers  and computers used for serving and hosting the Company's
               various  websites  was  triggered  by the continued and prolonged
               decline  in  Internet advertising throughout 2000 and 2001, which
               significantly  impacted  current  projected  advertising  revenue
               generated  from  these  web-based  properties  and  downturn  in
               computer  games  e-commerce business and has resulted in declines
               in  operating  and  financial  metrics  over  the  past  several
               quarters,  in comparison to the metrics forecasted at the time of
               their  respective  acquisitions.

               It  was determined that the fair value of goodwill and intangible
               assets  related  to  the  Company's  web-based  properties, other
               businesses  and  tangible  assets  were  less  than  the recorded
               amount.  The  methodology used to test for and measure the amount
               of  the  impairment  charge  related to the intangible assets was
               based  on  the  same  methodology  as  used  during  the  initial
               acquisition  valuation  of  these  web-based properties and other
               businesses.  The  impairment  related  to the tangible assets was
               based  on the estimated net realizable value of these assets. The
               impairment  factors  evaluated  by  management  may  change  in
               subsequent periods, given that the Company's business operates in
               a  highly  volatile  business  environment.  This could result in
               material  impairment  charges  in  the  future.

               As  of  December  31,  2001,  after  giving  effect to the fourth
               quarter  of 2000 and full-year 2001 impairment charges, the total
               remaining amount of goodwill and other intangible assets, net, is
               $0  for  Attitude Networks, which was acquired in April 1999, and
               $0  for  Chips  &  Bits  and Strategy Plus, which was acquired in
               February 2000. The impairment factors evaluated by management may
               change in subsequent periods, given that the business operates in
               a  highly  volatile  business  environment.


                                      F-25
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 3.   IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

          RESTRUCTURING AND IMPAIRMENT CHARGES (Continued)

            YEAR ENDED DECEMBER 31, 2000

               In  the  second  quarter  of  2000,  the Company recorded a $15.6
               million  restructuring charge as a result of a strategic decision
               made  by  management  to  shut  down  their  electronic  commerce
               operations  in  Seattle,  Washington  in  order  to  realign  the
               electronic  commerce  operations  to  focus on the direct sale of
               video  games  and  related  products,  as  well  as revenue share
               relationships  with  third parties who are interested in reaching
               their  targeted  audiences.  The  $15.6  million  charge incurred
               primarily  related  to a $12.8 million write-off of the remaining
               goodwill  and intangibles associated with the 1999 acquisition of
               Factorymall.com, costs associated with the closing of the Seattle
               operations of $0.5 million, write-offs related to the disposal of
               inventory, equipment and other assets of $1.7 million, as well as
               $0.6  million of employee severance and related benefits incurred
               primarily  related  to  the  termination  of  30  employees.

               In the fourth quarter of 2000, the Company incurred an additional
               $25.7 million in restructuring and impairment charges as follows:

               -    The Company recorded a restructuring charge of $1.8 million,
                    including $398,000 of non-cash compensation, as a result of
                    strategic decisions made by management to increase
                    operational efficiencies, improve margins and further reduce
                    expenses. The restructuring charge primarily related to a
                    workplace reduction of 26 employees.

               -    In addition, the Company recorded an impairment charge of
                    $4.3 million in connection with the termination of a
                    distribution agreement with Sportsline in November 2000.

               -    The Company also recorded impairment charges of $19.6
                    million as a result of management's ongoing business review
                    and impairment analysis performed under its existing policy
                    regarding impairment of long-lived assets.

               In  1999, the Company completed acquisitions of Attitude Network,
               Ltd. and the web hosting assets of Webjump.com that were financed
               principally  with shares of Company common stock, and were valued
               based  on  the  price of the Company's common stock at that time.
               The  Company's revaluation was triggered by the continued decline
               in  Internet  advertising  throughout  2000,  which significantly
               impacted  current  projected  advertising  revenue generated from
               these  web based properties. In addition, each of these web-based
               properties  experienced  declines  in  operating  and  financial
               metrics  over  the  past  several  quarters, primarily due to the
               continued  weak  overall  demand  of  on-line  advertising  and
               marketing  services,  in  comparison to the metrics forecasted at
               the  time  of  their  respective  acquisitions.  The  impairment
               analysis considered that these web-based properties were acquired
               during  1999  and that the intangible assets recorded at the time
               of acquisition was being amortized over useful lives of 2-3 years
               (3  years  for  goodwill).  As  a  result,  it  was


                                      F-26
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 3.   IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

          RESTRUCTURING AND IMPAIRMENT CHARGES (Continued)

            YEAR ENDED DECEMBER 31, 2000 (Continued)

               determined  that  the  fair  value  of  Attitude's  and Webjump's
               goodwill  and other intangible assets were less than the recorded
               amount, therefore, an impairment charge of $13.6 million and $6.0
               million,  respectively,  were  recorded.  The methodology used to
               test  for  and  measure  the  amount of the impairment charge was
               based on the same methodology used during the initial acquisition
               valuation  of  Attitude  and  Webjump  in  1999.

          SPORTSLINE.COM, INC. DISTRIBUTION AGREEMENT

               In  February  2000, the Company entered into a strategic two-year
               partnership with Sportsline.com, Inc. ("Sportsline"), whereby the
               Company  became the exclusive developer and operator of community
               solutions on the Sportsline web site ("Sportsline Agreement"). In
               accordance  with  the  Sportsline  Agreement, Sportsline received
               $5.0  million, paid in the Company's Common Stock and the Company
               received  the  exclusive  right to sell advertising, sponsorships
               and non-sports related e-commerce within the Sportsline community
               area.  The total shares of Common Stock issued in connection with
               the  Sportsline Agreement were 699,281 valued at $7.15 per share.
               The  Company  recorded  the  initial  $5.0  million  payment  in
               connection with this firmly committed executory contract in other
               assets  and  began  amortizing the amount under the straight-line
               method  over  the  two  year  contractual  term of the Sportsline
               Agreement  which  commenced  upon  Sportsline's  launch  of  the
               Company's  community  solutions  on  its  web site in April 2000.

               In connection with the $5 million payment, the Company guaranteed
               that  if  Sportsline  elected  to  sell any of its 699,281 shares
               during defined selling periods and Sportsline's net proceeds from
               the  sale  of these shares was less than the original issue price
               of  $7.15  per  share,  the  Company  would  be  required  to pay
               Sportsline  the  difference.  However,  the  total  guarantee was
               limited to $2,450,000 payable in cash and/or the Company's Common
               Stock  at  the  Company's  option.  The  Company  was required to
               provide a $1.5 million security deposit for its obligation to pay
               the  guarantee.

               As  of  June  30,  2000, the Company recorded an additional $2.45
               million  in  other  assets  and  additional  paid-in  capital  in
               connection with this guarantee payment based upon the fair market
               value of the Company's Common Stock at June 30, 2000. This amount
               was  being  amortized over the remaining contractual terms of the
               agreement  and  was  being  adjusted  accordingly at each interim
               balance  sheet  date for fluctuations in the fair market value of
               the  Company's  Common  Stock.


                                      F-27
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 3.   IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

          SPORTSLINE.COM, INC. DISTRIBUTION AGREEMENT (Continued)

            On  November  1,  2000,  theglobe.com and Sportsline terminated this
            agreement,  whereby  theglobe.com  agreed  to  settle  its guarantee
            payment  by  releasing  the  $1.5  million  security deposit held in
            escrow.  As  a  result  of  the termination, the Company recorded an
            impairment  charge  in  the  fourth  quarter  of 2000 of $4,311,724,
            representing  the write-off of the remaining unamortized initial and
            guarantee  payments  of  $5,261,724  in  the  aggregate,  the
            relinquishment  of the security deposit of $1,500,000, offset by the
            $2,450,000  guarantee  liability  originally  recorded as additional
            paid-in  capital,  as the Company originally intended to satisfy any
            potential  guarantee  payments  under  this  agreement  through  the
            issuance  of  Common  Stock.  The total amount of amortization costs
            recorded  during  2000  in connection with the Sportsline Agreement,
            excluding  the  $4,311,724  impairment charge, was $2,188,276. These
            costs  are  included  within  sales  and marketing. In addition, the
            Company  also  agreed to purchase the 699,281 shares of Common Stock
            held by Sportsline for $371,458 based upon the closing trading price
            on  that  date,  or $0.531 per share. This transaction was accounted
            for  as  treasury  stock  within  stockholders'  equity.

          DISPOSITIONS

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

            On October 17, 2001, the Company sold to British Telecommunications,
            plc  all  of the assets used in connection with the Games Domain and
            Console  Domain  web sites. The total consideration for the purchase
            was  $715,000  consisting of: $420,000 paid upon contract completion
            and  two  installment  payments  of  $147,500,  each  of  which were
            received in 2002. In 2001, the Company recognized a loss on the sale
            of  the  Games  Domain  and  Console  Domain assets of approximately
            $32,000.  The  December  31,  2001  consolidated balance sheet had a
            $358,293 receivable from British Telecommunications, PLC included in
            prepaid  expenses,  which  was  collected  in  2002.

            On  October  30,  2001,  the  Company  sold  to  the  management  of
            Kaboose.com,  Inc.  all  of  the  assets used in connection with the
            KidsDomain.com  web  site  for  $75,000.  As  a  result, the Company
            recognized a gain on the sale of Kids Domain assets of approximately
            $5,000.

            In  August  2001,  the  Company  sold  the  www.webjump.com  URL for
                                                        ---------------
            $20,000, of which the entire amount represents gain on sale of other
            assets.


                                      F-28
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 4.   STOCK OPTION REPRICING

          On  May  31,  2000,  the  Company  offered to substantially all of its
          employees,  excluding  executive  officers and the Board of Directors,
          the  right to cancel certain outstanding stock options and receive new
          options  with  an exercise price equal to the then current fair market
          value  of  the stock. Options to purchase a total of approximately 1.1
          million  shares,  approximately  20%  of  outstanding  options,  were
          canceled  and  approximately  856,000  new  options were granted at an
          exercise  price  of  $1.594  per share, which was based on the closing
          price  of  the Company's Common Stock on May 31, 2000. The new options
          vest  at  the  same  rate  that  they would have vested under previous
          option  plans.  The  Company  is  accounting for these re-priced stock
          options  using  variable  accounting in accordance with FIN No. 44. In
          addition,  as a result of options which were granted within six months
          of  the  cancellations,  an  additional  244,000  options also require
          variable accounting in accordance with FIN No. 44. For the years ended
          December  31,  2002  and  2001,  there has been no compensation charge
          relating  to  these  re-pricing  due  to  the decrease in value of the
          Common  Stock  price.  As  of December 31, 2002, 32,240 options remain
          outstanding.  The  Company cannot estimate the impact of FIN No. 44 on
          its  future  results  of  operations as the charge is dependent on the
          future  market  price  of  the Company's Common Stock, which cannot be
          predicted  with  any  degree of certainty. Depending upon movements in
          the  market  value  of  the  Company's  Common  Stock, this accounting
          treatment  may  result in significant non-cash compensation charges in
          future  periods.


NOTE 5.   INTANGIBLE ASSETS

          The component of amortizable intangible assets as of December 31, 2002
          is  as  follows:

                                                   Gross Carrying    Accumulated
                                                       Amount       Amortization
                                                   ---------------  ------------
          Balance at December 31, 2002:
             Digital Telephony                     $       164,960  $          -
                                                   ===============  ============

          There  were  no  intangible  assets  as  of  December  31,  2001.

          There  was  no  amortization  expense for intangible assets during the
          year  ended  December 31, 2002. Estimated amortization expense for the
          two  succeeding  fiscal  years  is  as  follows:

          2003                                                          $110,000
          2004                                                            64,960


                                      F-29
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 5.   INTANGIBLE ASSETS (Continued)

          SFAS 142 was adopted January 1 for 2002. The following table shows the
          Company's  2002,  2001  and  2000  results,  adjusted  to  exclude
          amortization  related  to  goodwill.

<TABLE>
<CAPTION>
                                                          Year Ended December 31
                                              --------------------------------------------
                                                  2002          2001            2000
                                              ------------  -------------  ---------------
<S>                                           <C>           <C>            <C>

            Net loss - as reported            $(2,614,661)  $(40,620,026)  $ (103,865,721)
                                              ------------  -------------  ---------------
            Add back:
               Goodwill amortization                    -      8,439,174       43,893,747
                                              ------------  -------------  ---------------

            Net loss per share - as adjusted  $(2,614,661)  $(32,180,852)  $(  59,971,974)
                                              ============  =============  ===============

            Net loss per share - as reported  $     (0.09)  $      (1.34)  $        (3.43)
            Add back:
               Goodwill amortization                    -           0.28             1.46
                                              ------------  -------------  ---------------
            Net loss per share - as adjusted  $     (0.09)  $      (1.06)  $        (1.97)
                                              ============  =============  ===============
</TABLE>

          Although  SFAS No. 142 requires disclosure of these amounts to reflect
          the  impact  of adoption on the Company's results for the years ending
          December  31,  2001 and 2000, had goodwill not been amortized and been
          added  back,  the  effect would have resulted in additional impairment
          charges  being  recorded  in  each  of  the  respective  years.


NOTE 6.   PROPERTY AND EQUIPMENT

          Property and equipment consisted of the following at December 31, 2002
          and  2001,  respectively:

                                                              2002      2001
                                                            --------  --------
            Computer equipment and software                 $613,000  $588,000
            Land and building                                181,000   181,000
            Furniture and fixtures                           142,000   130,000
                                                            --------  --------
                                                             936,000   899,000
            Less accumulated depreciation and amortization   762,000   656,000
                                                            --------  --------
                                                            $174,000  $243,000
                                                            ========  ========


                                      F-30
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 7.   LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                                 2002
                                                                                             -------------
<S>                                                                                          <C>
            Mortgage note payable due in monthly installments of interest only; interest at
            9%; principal due May 2003.                                                      $      91,202

            Related party obligations payable due in monthly installments of $4,239 plus
            interest at prime plus 2-3%, final installment due September 2006.                     120,233
                                                                                             -------------
                                                                                                   211,435
            Less short-term portion                                                                123,583
                                                                                             -------------

            Long-term portion                                                                $      87,852
                                                                                             =============

          Repayment  of  long-term  debt  is  due  as  follows:

            Year ending December 31:
               2003                                                                          $     123,583
               2004                                                                                 32,408
               2005                                                                                 32,408
               2006                                                                                 23,036
                                                                                             -------------
                                                                                             $     211,435
                                                                                             =============
</TABLE>

NOTE 8.   INCOME TAXES

          Income  taxes for the years ended December 31, 2002, 2001 and 2000 are
          based  solely  on  current  state  and  local  taxes  on  business and
          investment  capital.

          The tax effects of temporary differences that give rise to significant
          portions  of  the  deferred tax assets and deferred tax liabilities at
          December  31,  2002,  and  2001  are  presented  below.

<TABLE>
<CAPTION>
                                                          2002                  2001
                                                   -------------------  --------------------
<S>                                                <C>                  <C>
            Deferred tax assets:
               Net operating loss carryforwards    $       53,820,000   $        52,974,000
               Allowance for doubtful accounts                 53,000             1,069,000
               Issuance of warrants                           725,000               813,000
               Other                                          182,000                     -
                                                   -------------------  --------------------
                  Total gross deferred tax assets          54,780,000            54,856,000
            Less valuation allowance                      (54,780,000)          (54,856,000)
                                                   -------------------  --------------------
                  Total net deferred tax assets    $                -   $                 -
                                                   ===================  ====================
</TABLE>

          Because  of  the  Company's lack of earnings history, the deferred tax
          assets  have  been  fully  offset  by  a 100% valuation allowance. The
          valuation  allowance  for  deferred  tax  assets was $54.8 million and
          $54.9  million as of December 31, 2002 and 2001, respectively. The net
          change  in  the  total  valuation allowance was $(.1) million and $4.3
          million  for the years ended December 31, 2002 and 2001, respectively.


                                      F-31
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 8.   INCOME TAXES (Continued)

          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  $54.8  million, subsequently
          recognized tax benefits, if any, in the amount of $5.8 million will be
          applied  directly  to  contributed  capital.

          At December 31, 2002, the Company had net operating loss carryforwards
          available  for  US  and  foreign  tax  purposes  of approximately $134
          million.  These  carryforwards  expire  through  2022.

          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. As a
          result  of  ownership  changes,  which occurred in August 1997 and May
          1999,  the  Company's  operating tax loss carryforwards and tax credit
          carryforwards  are  subject  to  these  limitations.


NOTE 9.   STOCKHOLDERS' EQUITY

          Certain  holders  of  Common  Stock  are  subject  to  substantial
          restrictions  on  the transfer or sale of shares and also have certain
          'piggyback'  and  demand  registration  rights  which,  with  certain
          exceptions,  require  the  Company  to  make all reasonable efforts to
          include  within  any  of the Company's registration statements to sell
          such securities any shares that have been requested to be so included.

          In  August 1997, the Company authorized and issued 51 shares of Series
          D  Preferred  Stock  for  an  aggregate  cash amount of $20,000,000 in
          connection  with  the investment by Dancing Bear Investments, Inc., an
          entity  controlled by the Chairman, which holds a majority interest in
          the Company. These shares constituted 51% of the fully diluted capital
          stock  of the Company at the time of exercise, as defined. In addition
          to  the  Series D Preferred Stock, Dancing Bear Investments, Inc. also
          received warrants which provided the right to purchase up to 10 shares
          of  Series E Preferred Stock ("Series E Warrants") representing 10% of
          the fully diluted capital stock of the Company at the time of exercise
          for  an aggregate purchase price of $5,882,353, if exercised in total.

          The number of common shares that the outstanding Series E Warrants are
          convertible  into  upon  exercise  became  fixed  as  a  result of the
          consummation of the initial public offering at 4,046,018 shares. These
          warrants are immediately exercisable at approximately $1.45 per share.
          In  May  1999, 100,000 shares of the Series E Warrants were exercised.
          As  of  December  31,  2002,  3,946,018  warrants  remain outstanding.


                                      F-32
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 10.  STOCK OPTION PLAN

          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, the Board of Directors
          may  issue  incentive  stock  options or nonqualified stock options to
          purchase  up  to  1,582,000 common shares, as amended. Incentive stock
          options  must  be  granted  at  the fair market value of the Company's
          Common  Stock  at  the  date  the  option  is  issued.

          In  July  1998, the Company's 1998 Stock Option Plan (the "1998 Plan")
          was adopted by the Board of Directors and approved by the stockholders
          of  the  Company.  The  1998 Plan authorized the issuance of 2,400,000
          shares  of Common Stock, subject to adjustment as provided in the 1998
          Plan.  In March 1999, the Board of Directors authorized an increase in
          the  number  of  shares reserved for issuance under the 1998 Plan from
          2,400,000 to 3,400,000. This increase was subsequently approved by the
          Company's  stockholders  in  June 1999. The 1998 Plan 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. 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. Options
          granted  under  the  Broad Based Plan and the 2000 Plan expire after a
          ten  year  period.

          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.


                                      F-33
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 10.  STOCK OPTION PLAN (Continued)

          In July 2000, the Company granted options to purchase 1,250,000 shares
          of  Common  Stock  to  the  Company's  new  Chief Executive Officer in
          connection with his employment. These options had an exercise price of
          $1.94  per  share and had various vesting terms ranging from immediate
          to  ten  years.  Certain  options  had  automatic  accelerated vesting
          provisions  in  which  the  options would vest if the Company's Common
          Stock  share  price  reached  certain  thresholds.  These options were
          granted  pursuant  to  individual nonqualified stock option agreements
          between  the  CEO and the Company and not pursuant to any of the plans
          described  above.  These  options expired unexercised in May 2002 when
          the  CEO's  employment  terminated.

          During  2000,  the Company recorded approximately $398,000 of non-cash
          compensation expense in connection with the acceleration of vesting of
          options  to  purchase  210,000  shares  of  Common Stock pursuant to a
          severance  agreement  with  a former executive officer of the Company.
          The  charge  represents  the  difference between the original exercise
          price  of the option grants and the fair value of the Company's Common
          Stock  on  the  date of termination. This non-cash compensation charge
          was  included as part of severance costs in connection with the fourth
          quarter  of  2000  restructuring  charges.

          On  May  6,  2002, pursuant to the terms of his severance package, the
          former  CEO  was granted options to purchase 425,000 shares of Company
          common  stock  at  an  exercise  price of $.035 per share (the closing
          price  on  May  6,  2002).  These options were granted pursuant to his
          severance  agreement and not pursuant to any of the plans above. These
          options  immediately  vested  upon grant and have a life of ten years.

          On  June 20, 2002, the three directors were granted 7,500 options each
          to  purchase  shares  of  Company Common Stock at an exercise price of
          $0.04  per  share  (the closing price on June 20, 2002). These options
          vest  over  a  period  of four years and are exercisable for 10 years.

          On  August  12,  2002,  options  to  purchase  4,875,000 shares of the
          Company's  Common  Stock  at an exercise price of $0.02 per share (the
          closing  price  on  August  12, 2002) were granted to employees. These
          options immediately vested upon grant and have a life of ten years. Of
          these options, 4,750,000 were granted to officers and directors of the
          Company.  These  options  were  granted  pursuant  to  individual
          nonqualified  stock  option  agreements and not pursuant to any of the
          plans  above.

          On  November  13,  2002,  options  to  purchase  25,000  shares of the
          Company's  Common  Stock  at an exercise price of $0.11 per share (the
          closing price on November 13, 2002) were granted to an employee. These
          options  immediately  vested  upon grant and have a life of ten years.

          The  Company  applies  APB  Opinion No. 25 in accounting for grants to
          employees  pursuant  to  stock  option  plans  and,  accordingly,
          compensation cost of $0, $0, and $62,570 has been recognized for stock
          options granted to employees below fair market value in 2002, 2001 and
          2000,  respectively,  in  the  accompanying  consolidated  financial
          statements.  Compensation  cost  recognized  in  connection with stock
          options  granted  in  lieu  of  services rendered to non-employees was
          $13,000,  $0 and $263,761 for the years ended December 31, 2002, 2001,
          and  2000,  respectively.  There  were  no  stock  options  granted to
          non-employees,  other  than  directors,  during  2001.


                                      F-34
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 10.  STOCK OPTION PLAN (Continued)

          Stock  option  activity  during  the  periods indicated is as follows:

<TABLE>
<CAPTION>
                                                                               Weighted
                                                     Options     Options        Average
                                                     Vested      Granted    Exercise Price
                                                    ---------  -----------  ---------------
<S>                                     <C>        <C>          <C>
            Outstanding at December 31, 1999                    4,301,887   $          8.06
            Granted                                             4,143,182              2.21
            Exercised                                            (663,799)             0.53
            Canceled                                           (2,666,467)             9.42
                                                               -----------
            Outstanding at December 31, 2000        2,352,574   5,114,803              3.59
                                                    =========
            Granted                                               340,000              0.32
            Exercised                                              (2,000)             0.20
            Canceled                                2,073,874  (2,348,454)             2.18
                                                    =========  -----------
            Outstanding at December 31, 2001                    3,104,349              5.77
            Granted                                             5,347,500              0.02
            Exercised                                                   -
            Canceled                                           (2,480,409)             3.31
                                                               -----------
            Outstanding at December 31, 2002        5,870,749   5,971,440              0.63
                                                    =========  ===========  ===============
            Options available at December 31, 2002              4,259,547
                                                               ===========
</TABLE>


                                      F-35
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 10.  STOCK OPTION PLAN (Continued)

<TABLE>
<CAPTION>
                                       Options Outstanding     Options Vested
                                       -------------------  --------------------
                                       Weighted  Weighted              Weighted
                            Number     Average    Average    Number     Average
            Range         Outstanding    Life      Price     Vested      Price
            ------------  -----------  --------  ---------  ---------  ---------
<S>                       <C>          <C>       <C>        <C>        <C>
            .020-$.020      4,875,000      10.0  $    0.02  4,875,000  $    0.02
            .035-.035         425,000      10.0       0.04    425,000       0.04
            .040-.040          22,500       9.5       0.04      2,814       0.04
            .050-.110          50,000       4.5       0.08     31,251       0.10
            .230-.230          15,000       8.5       0.23      4,952       0.23
            .530-.530          66,200       7.8       0.53     33,094       0.53
            .780-.780           2,000       7.8       0.78      1,000       0.78
            1.59-1.59          32,240       7.2       1.59     23,080       1.59
            1.67-2.50          31,000       7.6       2.40     22,058       2.42
            4.50-4.50         287,298       7.8       4.50    287,298       4.50
            4.95-6.69          45,202       6.4       5.91     45,202       5.91
            15.75-15.75       120,000       6.0      15.75    120,000      15.75
                          -----------                       ---------
                            5,971,440                       5,870,749
                          ===========                       =========
</TABLE>


NOTE 11.  EMPLOYEE STOCK PURCHASE PLAN

          The Company's Employee Stock Purchase Plan ("ESPP") was adopted by the
          Board  of  Directors in February 1999 and subsequently approved by the
          Company's  stockholders  in  June  1999.  The  ESPP  provides eligible
          employees  of  the Company the opportunity to apply a portion of their
          compensation  to  the  purchase  of  shares  of  the  Company at a 15%
          discount. The Company has reserved 400,000 authorized shares of Common
          Stock  for  issuance  under  the ESPP. The Company no longer offers an
          ESPP.


NOTE 12.  COMMITMENTS AND CONTINGENCIES

          SEVERANCE AGREEMENT

            In  the  second quarter of 2002, severance benefits of $699,833 were
            recorded  and  paid.  In connection with his termination, the former
            Chief  Executive  Officer  was  paid  $625,000  on  May  31,  2002,
            reflecting the terms of his severance package. Additionally, options
            to  purchase  425,000  shares  of  the  Company's Common Stock at an
            exercise  price  of  $0.035  per  share (the closing price on May 6,
            2002)  valued  at  $13,000  (calculated  using  Black-Scholes)  were
            granted  on  May 6, 2002, also reflecting the terms of his severance
            package. These options immediately vested upon grant and have a life
            of  ten  years.

          OPERATING AND CAPITAL LEASES

            The  Company  does not have any material non-cancelable operating or
            capital  leases  as  of  December  31,  2002.


                                      F-36
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 12.  COMMITMENTS AND CONTINGENCIES (Continued)

          EMPLOYMENT AGREEMENT

            In conjunction with the November 2002 acquisition of certain digital
            telephony  intangible  assets,  the  Company  has  entered  into  an
            employment  agreement with the Seller whereby he will serve as Chief
            Technical  Officer of theglobe.com. Per the Agreement, he receives a
            base  salary  of  $125,000  per  annum and is subject to significant
            non-compete  provisions.  The  term  of  the employment agreement is
            annual with renewal options and contains a severance provision which
            provides  base  salary  for  the longer of the remaining term of the
            first  year  of  the  agreement  or  six  months.

          TERMINATION OF 401(K) PLAN

            During  November  2002,  the  Company  terminated  the  401k  plan.

          LITIGATION

            On  or  after  August 3, 2001 and as of the date of this report, the
            Company is aware that six putative shareholder class action lawsuits
            were  filed  against  the Company, certain of its current and former
            officers  and  directors, and several investment banks that were the
            underwriters  of the Company's initial public offering. The lawsuits
            were  filed  in  the  United  States District Court for the Southern
            District of New York. The lawsuits purport to be class actions filed
            on  behalf  of the purchasers of the stock of the Company during the
            period  from  November 12, 1998 through December 6, 2000. Plaintiffs
            allege  that  the underwriter defendants agreed to allocate stock in
            the  Company's  initial  public  offering  to  certain  investors in
            exchange for excessive and undisclosed commissions and agreements by
            those  investors  to  make  additional  purchases  of  stock  in the
            aftermarket  at  pre-determined  prices.  Plaintiffs allege that the
            Prospectus  for  the Company's initial public offering was false and
            misleading  and  in  violation of the securities laws because it did
            not  disclose  these  arrangements.  On December 5, 2001, an amended
            complaint was filed in one of the actions, alleging the same conduct
            described  above  in connection with both the Company's November 23,
            1998  initial  public  offering  and  its  May  19,  1999  secondary
            offering.  The  actions  seek  damages  in an unspecified amount. On
            February  19,  2003,  a  motion  to  dismiss  all claims against the
            Company  was  denied  by  the Court. The Company and its current and
            former  officers  and  directors  intend  to  vigorously  defend the
            actions. The complaints have been consolidated into a single action.
            Due  to  the  inherent  uncertainties  of  litigation,  we  cannot
            accurately  predict  the  ultimate  outcome  of  the litigation. Any
            unfavorable outcome of this litigation could have a material adverse
            impact  on  our  business,  financial  condition  and  results  of
            operations.


NOTE 13.  RELATED PARTY TRANSACTIONS

            Certain  directors  of  the  Company  also  serve  as  officers  and
            directors  of  Dancing  Bear  Investments,  Inc.  Dancing  Bear is a
            stockholder of the company and an entity controlled by our Chairman.


                                      F-37
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 13.  RELATED PARTY TRANSACTIONS (Continued)

            In  1998,  the  Company entered into an electronic commerce contract
            with  AutoNation,  Inc.  ("AutoNation"), (formerly doing business as
            Republic  Industries),  an  entity affiliated with a Director of the
            Company,  pursuant  to  which  the  Company granted a right of first
            negotiation  with  respect  to  the  exclusive right to engage in or
            conduct  an  automotive  "clubsite"  on  theglobe  website  through
            AutoNation.  Additionally, AutoNation agreed to purchase advertising
            from  the Company for a three-year period at a price, which adjusted
            to  match  any  more  favorable  advertising price quoted to a third
            party  by  the  Company,  excluding  certain  short-term advertising
            rates.  For  the years ended December 31, 2001 and 2000, the Company
            recognized  revenue  of $0.2 million and $0.3 million, respectively,
            in  connection with the AutoNation agreement. For 2002, the contract
            had  expired  and  the  Company  recognized  no  revenue.

            The  Company  believes  that the terms of the foregoing arrangements
            are  on  comparable  terms  as  if  they  were  entered  into  with
            unaffiliated  third  parties.

            STOCKHOLDERS' AGREEMENT

               In  1997,  the  Chairman, the former Co-Chief Executive Officers,
               two  Directors  of the Company and Dancing Bear Investments, Inc.
               (an  entity  controlled  by  the  Chairman)  entered  into  a
               Stockholders'  Agreement (the "Stockholders' Agreement") pursuant
               to  which  the  Chairman  and  Dancing  Bear Investments, Inc. or
               certain entities controlled by the Chairman and certain permitted
               transferees (the "Chairman Group") will agree to vote for certain
               nominees  of  the  former  Co-Chief Executive Officers or certain
               entities controlled by the former Co-Chief Executive Officers and
               certain  permitted  transferees  (the  "Former Co-Chief Executive
               Officer  Groups")  to  the  Board  of  Directors  and  the Former
               Co-Chief  Executive  Officer  Groups  will  agree to vote for the
               Chairman  Group's nominees to the Board, who will represent up to
               five members of the Board. Additionally, pursuant to the terms of
               the  Stockholders'  Agreement,  the  former  Co-Chief  Executive
               Officer  and  the two Directors have granted an irrevocable proxy
               to Dancing Bear Investments, Inc. with respect to any shares that
               may  be  acquired by them pursuant to the exercise of outstanding
               Warrants transferred to each of them by Dancing Bear Investments,
               Inc. Such shares will be voted by Dancing Bear Investments, Inc.,
               which  is  controlled  by  the Chairman, and will be subject to a
               right of first refusal in favor of Dancing Bear Investments, Inc.
               upon  certain private transfers. The Stockholders' Agreement also
               provides  that if the Chairman Group sells shares of Common Stock
               and  Warrants  representing  25%  or  more  of  the  Company's
               outstanding  Common Stock (including the Warrants) in any private
               sale  after  the Offerings, the Former Co-Chief Executive Officer
               Groups  and  the two Directors of the Company will be required to
               sell  up  to  the same percentage of their shares as the Chairman
               Group  sells. If either the Chairman Group sells shares of Common
               Stock  or  Warrants  representing  25%  or  more of the Company's
               outstanding  Common  Stock (including the Warrants) or the Former
               Co-Chief  Executive  Officer  Groups  sell  shares  or  Warrants
               representing 7% or more of the shares and Warrants of the Company
               in  any private sale after the Offerings, each other party to the
               Stockholders'  Agreement,  including  entities controlled by them
               and their permitted transferees, may, at their option, sell up to
               the  same  percentage  of  their  shares.


                                      F-38
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 14.  VALUATION AND QUALIFYING ACCOUNTS - ALLOWANCE FOR DOUBTFUL ACCOUNTS

<TABLE>
<CAPTION>
                                Balance
                                   At        Additions     Additions                 Balance
                               Beginning      Due To      Charged To                At End Of
            Year Ended,        of Period   Acquisitions     Expense    Deductions     Period
            -----------------  ----------  -------------  -----------  -----------  ----------
<S>                            <C>         <C>            <C>          <C>          <C>
            December 31, 2002  $3,203,295  $           -  $         -  $ 3,074,682  $  128,613
            December 31, 2001  $2,260,324  $           -  $ 1,373,521  $   430,550  $3,203,295
            December 31, 2000  $1,408,092  $     262,426  $ 3,005,746  $ 2,415,940  $2,260,324
</TABLE>


NOTE 15.  QUARTERLY FINANCIAL INFORMATION - (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  Quarter Ended
                                           ----------------------------------------------------------
                                            December 31,    September 30,     June 30,     March 31,
                                                2002            2002            2002         2002
                                           --------------  ---------------  ------------  -----------
<S>                                        <C>             <C>              <C>           <C>

          Revenue                          $   2,464,000   $    2,259,000   $ 2,414,000   $2,530,000
          Cost of revenues                     1,211,000        1,185,000     1,565,000    1,602,000
                                           --------------  ---------------  ------------  -----------
          Gross profit                         1,253,000        1,074,000       849,000      928,000
          Sales and marketing                    707,000          775,000     1,021,000    1,020,000
          Product development                    136,000          139,000       192,000      186,000
          General and administrative             275,000          688,000     1,281,000      625,000
                                           --------------  ---------------  ------------  -----------
          Operating expenses                   1,118,000        1,602,000     2,494,000    1,831,000
                                           --------------  ---------------  ------------  -----------

          Income (loss )from operations          135,000         (528,000)   (1,645,000)    (903,000)
          Other income (loss), net              (107,000)          36,000         9,000      400,000
                                           --------------  ---------------  ------------  -----------
          Income (loss) before provision
             for income taxes                     28,000         (492,000)   (1,636,000)    (503,000)
          Provision (benefit) for income
             taxes                                17,000                -        (3,000)      (2,000)
                                           --------------  ---------------  ------------  -----------

          Net income (loss)                $      11,000   $     (492,000)  $(1,633,000)  $ (501,000)
                                           ==============  ===============  ============  ===========

          Basic and diluted net loss per
             share                         $           -   $        (0.02)  $     (0.05)  $    (0.02)
                                           ==============  ===============  ============  ===========
</TABLE>


                                      F-39
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 15.  QUARTERLY FINANCIAL INFORMATION - (UNAUDITED) (Continued)

<TABLE>
<CAPTION>
                                                                   Quarter Ended
                                           ------------------------------------------------------------
                                            December 31,    September 30,     June 30,      March 31,
                                                2001            2001            2001           2001
                                           --------------  ---------------  -------------  ------------
<S>                                        <C>             <C>              <C>            <C>

          Revenue                          $   3,410,000   $    3,369,000   $  4,548,000   $ 4,747,000
          Cost of revenues                     2,241,000        2,512,000      3,713,000     3,679,000
                                           --------------  ---------------  -------------  ------------
          Gross profit                         1,169,000          857,000        834,000     1,068,000
          Sales and marketing                    960,000        1,768,000      3,233,000     3,794,000
          Product development                    254,000          643,000      1,114,000     1,800,000
          General and administrative             871,000        1,706,000      1,934,000     2,083,000
          Restructuring and impairment
             charges                           3,405,000        8,625,000      5,061,000             -
          Amortization of goodwill and
             intangible assets                   746,000        2,040,000      2,840,000     2,843,000
                                           --------------  ---------------  -------------  ------------
          Operating expenses                   6,236,000       14,782,000     14,182,000    10,520,000
                                           --------------  ---------------  -------------  ------------

          Loss from operations                (5,067,000)     (13,925,000)   (13,349,000)   (9,453,000)
          Other income, net                      291,000           79,000        723,000        96,000
                                           --------------  ---------------  -------------  ------------

          Loss before provision for
             income taxes                     (4,776,000)     (13,847,000)   (12,625,000)   (9,356,000)
          Provision for income taxes                   -           (6,000)       (79,000)     (101,000)
                                           --------------  ---------------  -------------  ------------

          Net loss                            (4,776,000)     (13,841,000)   (12,546,000)   (9,457,000)
                                           --------------  ---------------  -------------  ------------

          Basic and diluted net loss per
             share                         $       (0.15)  $        (0.46)  $      (0.41)  $     (0.31)
                                           ==============  ===============  =============  ============
</TABLE>

          Due to changes in the number of shares outstanding, quarterly loss per
          share  amounts  do  not  necessarily  add to the totals for the years.


NOTE 16.  SUBSEQUENT EVENTS

          On  November  14,  2002,  E  &  C  Capital  Partners, a privately held
          investment  holding  company  controlled by the Chairman and CEO and a
          major  shareholder,  and  the President and a Director, entered into a
          non-binding  letter of intent with theglobe.com to provide $500,000 of
          new  financing  via  the  purchase of shares of new Series F Preferred
          Stock  of  theglobe.com.  On  March  28,  2003,  the  parties signed a
          Preferred  Stock  Purchase  Agreement  and other related documentation
          pertaining to the investment and closed on the investment. Pursuant to
          the  Preferred  Stock  Purchase  Agreement,  E  &  C  Capital Partners
          received  333,333  shares of Series F Preferred Stock convertible into
          shares of the Company's Common Stock at a price of $.03 per share. The
          conversion  price  is  subject  to  adjustment  upon the occurrence of
          certain  events,  including  downward adjustment on a weighted average
          basis  in  the  event  the  Company  should


                                      F-40
<PAGE>
                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)



NOTE 16.  SUBSEQUENT EVENT (Continued)

          issue  securities  at  a purchase price below $.03 per share. If fully
          converted,  and  without  regard  to  the  anti-dilutive  adjustment
          mechanisms applicable to the Series F Preferred Stock, an aggregate of
          approximately 16.7 million shares of Common Stock could be issued. The
          Series  F  Preferred  Stock  has a liquidation preference of $1.50 per
          share,  will  pay  a dividend at the rate of 8% per annum and entitles
          the  holder  to  vote  on  an "as converted" basis with the holders of
          Common  Stock.  In addition, as part of the $500,000 investment, E & C
          Capital  Partners  received  warrants  to  purchase  approximately 3.3
          million  shares  of  theglobe.com Common Stock at an exercise price of
          $0.125  per share. The warrant is exercisable at any time on or before
          March  28,  2013. E & C Capital Partners is entitled to certain demand
          registration  rights  in  connection  with its investment. The Company
          intends  to  use  the  proceeds  from  the  investment for its general
          working  capital  requirements.

          Concurrently  with  the  closing  of  the  preferred stock investment,
          certain  officers, directors and other related entities entered into a
          non-binding  letter  of intent to loan up to $1 million to the Company
          pursuant  to  a  convertible  secured loan facility. The loan facility
          would  be convertible into shares of the Company's common stock at the
          rate  of  $.09  per  share which, if fully funded and converted, would
          result  in  the  issuance  of  approximately  11.1  million shares. In
          addition,  assuming  the  loan is fully funded, it is anticipated that
          the  investor group would be issued a warrant to acquire approximately
          2.2  million  shares of theglobe.com Common Stock at an exercise price
          of  $.15  per  share.  The  convertible debt financing is subject to a
          number  of  closing  conditions,  including  execution  of  definitive
          documentation,  satisfactory resolution of certain Company liabilities
          and  other  tax  and  business  considerations.  In  addition,  it  is
          contemplated  that  the  loan  facility  will  require  that  certain
          performance  criteria be achieved by the Company as a condition to all
          or part of the funding. The financing is also subject to completion of
          a loan facility and related documentation satisfactory to the parties.
          If  consummated,  the  convertible  debt  financing  will  result  in
          substantial  dilution  of  the  number  of  securities of theglobe.com
          either  issued  and  outstanding  or obtainable upon conversion of the
          debt  or  exercise  of  the warrant. There can be no assurance, if and
          when,  the  financing  will  be  consummated.


                                      F-41
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ACCOUNTING AND
FINANCIAL DISCLOSURE


On August 8, 2002, we dismissed our independent public accountants, KPMG LLP
("KPMG"), and engaged Rachlin Cohen & Holtz LLP ("Rachlin Cohen") as our new
independent public accountants. This change was approved by our Board of
Directors.

The audit reports issued by KPMG on our consolidated financial statements as of
and for the years ended December 31, 2001 and December 31, 2000, did not contain
any adverse opinion or a disclaimer of opinion, and were not qualified or
modified, as to uncertainty, audit scope or accounting principles, except as
follows:

     KPMG's report on the consolidated financial statements of theglobe.com,
     inc. and subsidiaries as of and for the years ended December 31, 2001 and
     2000, contained a separate paragraph stating "the Company has suffered
     recurring losses from operations since inception that raise substantial
     doubt about its ability to continue as a going concern. Management's plans
     in regard to this matter are also described in Note 1. The consolidated
     financial statements do not include any adjustments that might result from
     the outcome of this uncertainty."

During our two most recent fiscal years ended December 31, 2001 and December 31,
2000, and the subsequent interim period from January 1, 2002 through our
dismissal of KPMG on August 8, 2002, there were no disagreements with KPMG on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to KPMG's satisfaction, would have caused KPMG to make reference to the subject
matter of the disagreement in connection with its reports on our consolidated
financial statements for such years; and there were no reportable events as
defined in Item 304(a)(1)(v) of Regulation S-K.

The Company furnished KPMG with a copy of its Report on Form 8-K relating to the
foregoing change in accountants and requested KPMG to furnish it with a letter
addressed to the Securities and Exchange Commission ("Commission") stating
whether it agrees with the statements set forth above. A copy of KPMG's letter
to the Commission dated August 13, 2002 was filed as an exhibit on Form 8-K on
August 13, 2002.

During the fiscal years ended December 31, 2001 and December 31, 2000 and
through August 8, 2002, we did not consult with Rachlin Cohen with respect to
the application of accounting principles to a specified transaction, or the type
of audit opinion that might be rendered on our consolidated financial
statements, or any other matters or events described in Item 304(a)(2)(i) and
(ii) of Regulation S-K.


                                       36
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information called for by Part III, Item 10, regarding the Registrant's
directors is included in the our Proxy Statement relating to our annual meeting
of stockholders, and is incorporated herein by reference. The information
appears in the Proxy Statement under the caption "Election of Directors." The
Proxy Statement will be filed within 120 days of December 31, 2002, the
Company's year-end.

ITEM 11. EXECUTIVE COMPENSATION

Information called for by Part III, Item 11, is included in our Proxy Statement
relating to our annual meeting of stockholders, and is incorporated herein by
reference. The information appears in the Proxy Statement under the caption
"Executive Compensation." The Proxy Statement will be filed within 120 days of
December 31, 2002, the Company's year-end.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information called for by Part III, Item 12, is included in our Proxy Statement
relating to the our annual meeting of stockholders, and is incorporated herein
by reference. The information appears in the Proxy Statement under the caption
"Beneficial Ownership of Shares." The Proxy Statement will be filed within 120
days of December 31, 2002, the Company's year-end.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding our relationships and related transactions is available
under "Certain Transactions" in our Proxy Statement relating to our annual
meeting of stockholders, and is incorporated herein by reference. The Proxy
Statement will be filed within 120 days of December 31, 2002, the Company's
year-end.

ITEM 14. 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.

In March 2003, under the supervision and review of our Chief Executive Officer
and Chief Financial Officer, we conducted an evaluation of the effectiveness of
our disclosure controls and procedures. Based on that evaluation, our Chief
Executive Officer and our Chief Financial Officer have concluded that our
disclosure controls and procedures are effective in alerting them in a timely
manner to material information regarding us (including our consolidated
subsidiaries) that is required to be included in our periodic reports to the
SEC.

In addition, there have been no significant changes in our internal controls or
in other factors that could significantly affect those controls since our March
2003 evaluation. We cannot assure you, however, that our system of disclosure
controls and procedures will always achieve its stated goals under all future
conditions, no matter how remote.


                                       37
<PAGE>
                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

     (1)  Financial Statements: See Index to Consolidated Financial Statements
          at Item 8 on page 35 of this report.

     (2)  Financial Statement Schedule: See Notes to Consolidated Financial
          Statements at Item 8 on page 35 of this report.

     (3)  EXHIBITS



<TABLE>
<CAPTION>
<S>     <C>

2.1     Agreement and Plan of Merger dated as of February 1, 1999 by and among theglobe.com, inc., Nirvana Acquisition Corp.,
        Factorymall.com, inc. d/b/a Azazz, and certain selling stockholders thereof (18)

2.2     Agreement and Plan of Merger dated as of April 5, 1999 by and among theglobe.com, inc., Bucky Acquisition Corp., Attitude
        Network, Ltd. and certain shareholders thereof (19)

2.3     Agreement and Plan of Merger dated as of January 13, 2000 by and among theglobe.com, inc., Chips & Bits, Inc., Strategy Plu
        CB Acquisition Corp., SP Acquisition Corp., Yale Brozen and Tina Brozen(11)

3.1     Form of Fourth Amended and Restated Certificate of Incorporation of the Company(3)

3.2     Form of By-Laws of the Company(2)

3.3     Certificate relating to Previously Outstanding Series of Preferred Stock and Relating to the Designation, Preferences and R
        Series F Preferred Stock.

4.1     Second Amended and Restated Investor Rights Agreement among the Company and certain equity holders of the Company, dated as
        of August 13, 1997(2)

4.2     Amendment No.1 to Second Amended and Restated Investor Rights Agreement among the Company and certain equity holders of the
        Company, dated as of August 31, 1998(2)

4.3     Amendment No.2 to Second Amended and Restated Investor Rights Agreement among the Company and certain equity holders of the
        Company, dated April 9, 1999(8)

4.4     Form of Amendment No.3 to the Second Amended and Restated Investor Rights Agreement among the Company and certain equity
        holders of the Company(9)

4.5     Registration Rights Agreement, dated as of September 1, 1998(6).

4.6     Amendment No.1 to Registration Rights Agreement, dated as of April 9, 1999(8)

4.7     Specimen certificate representing shares of Common Stock of the Company(4).

4.8     Amended and Restated Warrant to Acquire Shares of Common Stock(2).

4.9     Form of Rights Agreement, by and between the Company and American Stock Transfer & Trust Company as Rights Agent(3).

4.10    Registration Rights Agreement among the Company and certain equity holders of the Company, dated February 1, 1999, in
        connection with the acquisition of factorymall.com(6).

4.11    Form of Amended and Restated Registration Rights Agreement among the Company and certain equity holders of the Company in
        connection with the acquisition of factorymall.com(8).

4.12    Registration Rights Agreement among the Company and certain shareholders of the Company, dated April 9, 1999, in connectio
        the acquisition of Attitude Network, Ltd(8).

4.13    Registration Rights Agreement among the Company and certain shareholders of the Company, dated November 30, 1999, in
        connection with the acquisition of Webjump.com from Infonent.com, Inc.(12)  .


                                       38
<PAGE>
4.14    Registration Rights Agreement among the Company and certain shareholders of the Company, dated February 24, 1999, in
        connection with the acquisition of Chips & Bits, Inc. and Strategy Plus, Inc.(12)

4.15    Form of Warrant dated November 12, 2002 to acquire shares of Common Stock.(17)

4.16    Form of Warrant dated March 28, 2003 to acquire shares of Common Stock.

9.1     Stockholders' Agreement by and among Dancing Bear Investments, Inc., Michael Egan, Todd V. Krizelman, Stephan J. Paternot,
        Edward A. Cespedes and Rosalie V. Arthur, dated as of February 14, 1999(6).

10.1    Employment Agreement dated June 6, 2000, by and between the Company and Todd V. Krizelman(10), (14).

10.2    Employment Agreement dated June 6, 2000, by and between the Company and Stephan J. Paternot(10), (14).

10.3    Employment Agreement dated July 14, 2000, by and between the Company and Charles Peck(10), (14).

10.4    Form of Indemnification Agreement between the Company and each of its Directors and Executive Officers(1)

10.5    Lease Agreement dated January 12, 1999 between the Company and Broadpine Realty Holding Company, Inc.(6)

10.6    2000 Broad Based Stock Option Plan(13).

10.7    1998 Stock Option Plan, as amended(8).

10.8    1995 Stock Option Plan(1)

10.9    factorymall.com, inc. 1998 Stock Option Plan(7)

10.10   Form of Nonqualified Stock Option Agreement with James McGoodwin, Kevin McKeown and Mark Tucker(7)

10.11   Attitude Network, Ltd. Stock Option Plan(10)

10.12   Employee Stock Purchase Plan(6).

10.13   Technology Purchase Agreement dated November 12, 2002, among theglobe.com, inc., and Brian Fowler(17).

10.14   Employment Agreement dated November 12, 2002, among theglobe.com, inc. and Brian Fowler(17).

10.15   Payment Agreement dated November 12, 2002, among theglobe.com, inc., 1002390 Ontario Inc., and Robert S. Giblett(17).

10.16   Release Agreement dated November 12, 2002, among theglobe.com, inc. and certain other parties named therein(17).

10.17   Preferred Stock Purchase Agreement dated March 28, 2003 between theglobe.com, inc. and E&C Capital Partners, LLLP.

16.     Letter dated August 13, 2002 from KPMG LLP relating to change of independent certified accountants(16).

23.1    Consent of KPMG LLP

99.1    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

99.2    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
</TABLE>

_______________


(b) Reports on Form 8-K

     Form 8-K related to an event dated November 12, 2002, relating to an Item 5
     disclosure of certain digital telephony assets acquired by the Registrant.


                                       39
<PAGE>
1    Incorporated by reference from our registration statement on Form S-1 filed
     July 24, 1998 (Registration No. 333-59751).
2.   Incorporated by reference as Exhibit to 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 S-1/A filed November 15, 1998.
6.   Incorporated by reference from our Form 10-K for the year ended December
     31, 1998 filed March 30, 1999.
7.   Incorporated by reference from our Registration of Form S-8 (No.333-75503),
     filed on April 1, 1999.
8.   Incorporated by reference from our Form S-1 filed April 13, 1999.
9.   Incorporated by reference from our Form S-1/A filed May 3, 1999.
10.  Incorporated by reference from our Form S-1/A filed May 17, 1999.
11.  Incorporated by reference from our report on Form 8-K filed on March 8,
     2000.
12.  Incorporated by reference form our Form 10-K for the year ended December
     31, 1999 filed March 30, 2000.
13.  Incorporated by reference from our Form 10-Q for the quarter ended March
     31, 2000 dated May 15, 2000.
14.  Incorporated by reference from our Form 10-Q for the quarter ended June 30,
     2002 dated August 14, 2000.
15.  Incorporated by reference from our Form 10-K for the year ended December
     31, 2000 filed April 2, 2001.
16.  Incorporated by reference from our Form 8-K filed August 13, 2002.
17.  Incorporated by reference from our Form 8-K filed on November 26, 2002.
18.  Incorporated by reference from our Form 8-K filed on February 16, 1999.
19.  Incorporated by reference from our Form 8-K filed on April 9, 1999.


                                       40
<PAGE>
                                   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.


Dated: March 31, 2003                          theglobe.com, inc.

                                               By /S/ MICHAEL S. EGAN
                                               ----------------------
                                               MICHAEL S. EGAN
                                               CHIEF EXECUTIVE OFFICER



Pursuant  to  the  requirements of the Securities and Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons  on  behalf of the
Registrant  and  in  the  capacities  indicated  this  31st  day  of March 2003.


               /s/ MICHAEL S. EGAN
               ----------------------------------------
               MICHAEL S. EGAN                           Chairman

               /s/ EDWARD A. CESPEDES
               ----------------------------------------
                EDWARD A. CESPEDES                       Director

               /s/ ROBIN SEGAUL LEBOWITZ
               ----------------------------------------
               ROBIN SEGAUL LEBOWITZ                     Director


                                       41
<PAGE>
        CERTIFICATE PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
                           OF CHIEF FINANCIAL OFFICER

I, Robin Segaul Lebowitz, Chief Financial Officer of theglobe.com, certify that:

1.  I  have  reviewed  this  annual  report  on  Form  10-K  of  theglobe.com.

2.  Based  on  my  knowledge,  this  annual  report  does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the periods presented in this annual report; and

4.  The  registrant's  other  certifying  officers  and  I  am  responsible  for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

a.  designed  such  disclosure  controls  and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  annual  report  is  being  prepared;

b.  evaluated  the  effectiveness  of  the  registrant's disclosure controls and
procedures  as  of a date within 90 days prior to the filing date of this annual
report  (the  "Evaluation  Date");  and

c.  presented  in  this annual report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on  our  evaluation as of the
Evaluation  Date;  and

5. The registrant's other certifying officers and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
the  registrant's  board  of  directors  (or  person  performing  the equivalent
function):

a.  all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect  the  registrant's  ability  to record, process,
summarize  and  report  financial  data and have identified for the registrant's
auditors  any  material  weaknesses  in  internal  controls;  and

b.  any  fraud,  whether  or  not  material,  that  involves management or other
employees who have a significant role in the registrant's internal controls; and

6.  The  registrant's  other  certifying  officers  and I have indicated in this
annual  report whether or not there are significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.

Date: March 31, 2003
--------------------

/s/ Robin Segaul Lebowitz
------------------------------
Name: Robin Segaul Lebowitz
Title: Chief Financial Officer


                                       42
<PAGE>
        CERTIFICATE PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002
                           OF CHIEF EXECUTIVE OFFICER

I,  Michael  S.  Egan,  Chief  Executive  Officer of theglobe.com, certify that:

1.  I  have  reviewed  this  annual  report  on  Form  10-K  of  theglobe.com.

2.  Based  on  my  knowledge,  this  annual  report  does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;  and

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

4.  The  registrant's  other  certifying  officers  and  I  am  responsible  for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  we  have:

a.  designed  such  disclosure  controls  and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  annual  report  is  being  prepared;

b.  evaluated  the  effectiveness  of  the  registrant's disclosure controls and
procedures  as  of a date within 90 days prior to the filing date of this annual
report  (the  "Evaluation  Date");  and

c.  presented  in  this annual report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on  our  evaluation as of the
Evaluation  Date;  and

5. The registrant's other certifying officers and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
the  registrant's  board  of  directors  (or  person  performing  the equivalent
function):

a.  all significant deficiencies in the design or operation of internal controls
which  could  adversely  affect  the  registrant's  ability  to record, process,
summarize  and  report  financial  data and have identified for the registrant's
auditors  any  material  weaknesses  in  internal  controls;  and

b.  any  fraud,  whether  or  not  material,  that  involves management or other
employees who have a significant role in the registrant's internal controls; and

6.  The  registrant's  other  certifying  officers  and I have indicated in this
annual  report whether or not there are significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.

Date: March 31, 2003

/s/ Michael S. Egan
------------------------------
Name: Michael S. Egan
Title: Chief Executive Officer


                                       43
<PAGE>
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
NO.     ITEM
<S>     <C>

2.1     Agreement and Plan of Merger dated as of February 1, 1999 by and among theglobe.com, inc., Nirvana Acquisition Corp.,
        Factorymall.com, inc. d/b/a Azazz, and certain selling stockholders thereof (18)

2.2     Agreement and Plan of Merger dated as of April 5, 1999 by and among theglobe.com, inc., Bucky Acquisition Corp., Attitude
        Network, Ltd. and certain shareholders thereof (19)

2.3     Agreement and Plan of Merger dated as of January 13, 2000 by and among theglobe.com, inc., Chips & Bits, Inc., Strategy Plu
        CB Acquisition Corp., SP Acquisition Corp., Yale Brozen and Tina Brozen(11)

3.1     Form of Fourth Amended and Restated Certificate of Incorporation of the Company(3)

3.2     Form of By-Laws of the Company(2)

3.3     Certificate relating to Previously Outstanding Series of Preferred Stock and Relating to the Designation, Preferences and R
        Series F Preferred Stock.

4.1     Second Amended and Restated Investor Rights Agreement among the Company and certain equity holders of the Company, dated as
        of August 13, 1997(2)

4.2     Amendment No.1 to Second Amended and Restated Investor Rights Agreement among the Company and certain equity holders of the
        Company, dated as of August 31, 1998(2)

4.3     Amendment No.2 to Second Amended and Restated Investor Rights Agreement among the Company and certain equity holders of the
        Company, dated April 9, 1999(8)

4.4     Form of Amendment No.3 to the Second Amended and Restated Investor Rights Agreement among the Company and certain equity
        holders of the Company(9)

4.5     Registration Rights Agreement, dated as of September 1, 1998(6).

4.6     Amendment No.1 to Registration Rights Agreement, dated as of April 9, 1999(8)

4.7     Specimen certificate representing shares of Common Stock of the Company(4).

4.8     Amended and Restated Warrant to Acquire Shares of Common Stock(2).

4.9     Form of Rights Agreement, by and between the Company and American Stock Transfer & Trust Company as Rights Agent(3).

4.10    Registration Rights Agreement among the Company and certain equity holders of the Company, dated February 1, 1999, in
        connection with the acquisition of factorymall.com(6).

4.11    Form of Amended and Restated Registration Rights Agreement among the Company and certain equity holders of the Company in
        connection with the acquisition of factorymall.com(8).

4.12    Registration Rights Agreement among the Company and certain shareholders of the Company, dated April 9, 1999, in connection
        the acquisition of Attitude Network, Ltd(8).

4.13    Registration Rights Agreement among the Company and certain shareholders of the Company, dated November 30, 1999, in
        connection with the acquisition of Webjump.com from Infonent.com, Inc.(12)  .

4.14    Registration Rights Agreement among the Company and certain shareholders of the Company, dated February 24, 1999, in
        connection with the acquisition of Chips & Bits, Inc. and Strategy Plus, Inc.(12)

4.15    Form of Warrant dated November 12, 2002 to acquire shares of Common Stock.(17)

4.16    Form of Warrant dated March 28, 2003 to acquire shares of Common Stock.

9.1     Stockholders' Agreement by and among Dancing Bear Investments, Inc., Michael Egan, Todd V. Krizelman, Stephan J. Paternot,
        Edward A. Cespedes and Rosalie V. Arthur, dated as of February 14, 1999(6).


                                       44
<PAGE>
10.1    Employment Agreement dated June 6, 2000, by and between the Company and Todd V. Krizelman(10), (14).

10.2    Employment Agreement dated June 6, 2000, by and between the Company and Stephan J. Paternot(10), (14).

10.3    Employment Agreement dated July 14, 2000, by and between the Company and Charles Peck(10), (14).

10.4    Form of Indemnification Agreement between the Company and each of its Directors and Executive Officers(1)

10.5    Lease Agreement dated January 12, 1999 between the Company and Broadpine Realty Holding Company, Inc.(6)

10.6    2000 Broad Based Stock Option Plan(13).

10.7    1998 Stock Option Plan, as amended(8).

10.8    1995 Stock Option Plan(1)

10.9    factorymall.com, inc. 1998 Stock Option Plan(7)

10.10   Form of Nonqualified Stock Option Agreement with James McGoodwin, Kevin McKeown and Mark Tucker(7)

10.11   Attitude Network, Ltd. Stock Option Plan(10)

10.12   Employee Stock Purchase Plan(6).

10.13   Technology Purchase Agreement dated November 12, 2002, among theglobe.com, inc., and Brian Fowler(17).

10.14   Employment Agreement dated November 12, 2002, among theglobe.com, inc. and Brian Fowler(17).

10.15   Payment Agreement dated November 12, 2002, among theglobe.com, inc., 1002390 Ontario Inc., and Robert S. Giblett(17).

10.16   Release Agreement dated November 12, 2002, among theglobe.com, inc. and certain other parties named therein(17).

10.17   Preferred Stock Purchase Agreement dated March 28, 2003 between theglobe.com, inc. and E&C Capital Partners, LLLP.

16.     Letter dated August 13, 2002 from KPMG LLP relating to change of independent certified accountants(16).

23.1    Consent of KPMG LLP

99.1    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

99.2    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
</TABLE>

_______________


(b) Reports on Form 8-K

     Form 8-K related to an event dated November 12, 2002, relating to an Item 5
     disclosure of certain digital telephony assets acquired by the Registrant.


                                       45
<PAGE>
1    Incorporated by reference from our registration statement on Form S-1 filed
     July 24, 1998 (Registration No. 333-59751).
2.   Incorporated by reference as Exhibit to 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 S-1/A filed November 15, 1998.
6.   Incorporated by reference from our Form 10-K for the year ended December
     31, 1998 filed March 30, 1999.
7.   Incorporated by reference from our Registration of Form S-8 (No.333-75503),
     filed on April 1, 1999.
8.   Incorporated by reference from our Form S-1 filed April 13, 1999.
9.   Incorporated by reference from our Form S-1/A filed May 3, 1999.
10.  Incorporated by reference from our Form S-1/A filed May 17, 1999.
11.  Incorporated by reference from our report on Form 8-K filed on March 8,
     2000.
12.  Incorporated by reference form our Form 10-K for the year ended December
     31, 1999 filed March 30, 2000.
13.  Incorporated by reference from our Form 10-Q for the quarter ended March
     31, 2000 dated May 15, 2000.
14.  Incorporated by reference from our Form 10-Q for the quarter ended June 30,
     2002 dated August 14, 2000.
15.  Incorporated by reference from our Form 10-K for the year ended December
     31, 2000 filed April 2, 2001.
16.  Incorporated by reference from our Form 8-K filed August 13, 2002.
17.  Incorporated by reference from our Form 8-K filed on November 26, 2002.
18.  Incorporated by reference from our Form 8-K filed on February 16, 1999.
19.  Incorporated by reference from our Form 8-K filed on April 9, 1999.


                                       46
<PAGE>