<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003 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-B  (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-KSB or any amendment to this Form 10-KSB [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]

Registrant's  revenues  for the  fiscal  year  ended  December  31,  2003 were $
6,580,452.

The number of shares  outstanding of the  Registrant's  Common Stock,  $.001 par
value (the "Common Stock") as of March 24, 2004 was 131,990,349.

Aggregate market value of the voting Common Stock held by  non-affiliates of the
registrant as of the close of business on March 24, 2004: $68,114,123.

*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 2004
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.
                        2003 ANNUAL REPORT ON FORM 10-KSB


                                TABLE OF CONTENTS


PART I

Item  1.     Business .....................................................   2
Item  2.     Properties ...................................................   8
Item  3.     Legal Proceedings ............................................   8
Item  4.     Submission of Matters to a Vote of Security Holders ..........   9

PART II

Item  5.     Market for Common Equity, Related Stockholder Matters and Small
             Business Issuer Purchases of Equity Securities ...............  10
Item  6.     Management's Discussion and Analysis or Plan of Operation ....  12
Item  7.     Consolidated Financial Statements and Supplementary Data .....  32
Item  8.     Changes in and Disagreements with Accountants on Accounting and
             Financial Disclosure .........................................  33
Item  8A.    Controls and Procedures. .....................................  33

PART III

Item   9.    Directors, Executive Officers, Promoters and Control Persons;
             Compliance with Section 16(a) of the Exchange Act ............  34
Item  10.    Executive Compensation .......................................  34
Item  11.    Security Ownership of Certain Beneficial Owners and
             Management and Related Stockholder Matters ...................  34
Item  12.    Certain Relationships and Related Transactions ...............  34
Item  13.    Exhibits and Reports on Form 8-K .............................  34
Item  14.    Principal Accountant Fees and Services .......................  37


SIGNATURES ................................................................  39

<PAGE>


FORWARD LOOKING STATEMENTS

This Form 10-KSB,  including  without  limitation  Management's  Discussion  and
Analysis or Plan of Operation,  contains "forward-looking statements" within the
meaning of Section  27A of the  Securities  Act of 1933 and  Section  21E of the
Securities  Exchange  Act  of  1934.  These  forward-looking  statements  can be
identified  by  the  use  of   predictive,   future-tense   or   forward-looking
terminology, such as "believes," "anticipates," "expects," "estimates," "plans,"
"may,"  "intends,"  "will," or similar  terms.  Investors are cautioned that any
forward-looking  statements are not guarantees of future performance and involve
significant  risks  and  uncertainties,  and  that  actual  results  may  differ
materially from those projected in the forward-looking statements as a result of
various factors described under "Risk Factors" and elsewhere in this report. The
following  discussion  should be read together 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 II, Item 6 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. Originally,  theglobe.com was
an online  community with registered  members and users in the United States and
abroad.  That  product  gave  users the  freedom  to  personalize  their  online
experience by publishing their own content and by interacting with others having
similar interests.  However,  due to the deterioration of the online advertising
market,  the Company was forced to restructure  and ceased the operations of its
online community on August 15, 2001. The Company then sold most of its remaining
online and offline properties, but continued 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.chipsbit.com). The Company continues to operate those businesses today.

On June 1, 2002, Chairman Michael S. Egan and Director Edward A. Cespedes became
Chief Executive Officer and President of the Company, respectively.

On November 14, 2002, the Company acquired certain Voice over Internet  Protocol
("VoIP") assets from Brian Fowler (now Chief Technology  Officer of the Company)
and is now aggressively pursuing opportunities related to this acquisition under
the brand name,  voiceglo.  In  exchange  for the  assets,  the  Company  issued
warrants  to  acquire  1,750,000  shares of its Common  Stock and an  additional
425,000 warrants as part of an earn-out structure upon the attainment of certain
performance targets. The earn-out performance targets were not achieved and the
425,000 earn-out warrants expired on December 31, 2003.

On May 28, 2003, the Company acquired Direct Partner Telecom,  Inc.  ("DPT"),  a
company engaged in VoIP telephony  services in exchange for 1,375,000  shares of
the  Company's  Common  Stock and the  issuance of  warrants to acquire  500,000
shares of the  Company's  Common  Stock.  The  transaction  included an earn-out
arrangement  whereby the former shareholders of DPT may earn additional warrants
to acquire up to 2,750,000  shares of the Company's  Common Stock at an exercise
price of $0.72 per share upon the attainment of certain  performance  targets by
DPT over  approximately  a three year period  following the date of acquisition.
DPT was a  specialized  international  facilities-based  communications  carrier
providing VoIP communications services to emerging countries.  DPT was formed in
2002 to  leverage  its  management's  international  relationships  and  network
operations  experience in the deployment of  international  voice and multimedia
networks.  DPT  is a  licensed  facilities-based  carrier  headquartered  in Ft.
Lauderdale,  Florida with switching  facilities in New York, New York and Miami,
Florida. The DPT network provides "next generation"  packet-based  telephony and
value added data  services to carriers and  businesses  in the United States and
Internationally.

The Company acquired all of the physical assets and intellectual property of DPT
and  originally  planned to continue to operate the company as a subsidiary  and
engage in the  provision of VoIP  services to other  telephony  businesses  on a
wholesale  transactional basis. In the first quarter of 2004 the Company decided
to suspend further wholesale  telephony  business in DPT and to dedicate the DPT
physical and intellectual  assets to its developing retail VoIP business,  which
is conducted under the name "voiceglo".  As a result, the Company wrote down the
goodwill  associated  with the  purchase  of DPT and  intends  to  employ  these
physical assets in the build out of the VoIP network.

In March 2004, theglobe.com,  inc. completed a private offering of 333,816 units
(the  "Units") for a purchase  price of $85 per Unit (the  "Private  Offering").
Each Unit  consisted of 100 shares of the  Company's  Common  Stock,  $0.001 par
value (the  "Common  Stock"),  and  warrants  to acquire 50 shares of the Common
Stock (the "Warrants").  The Warrants are exercisable for a period of five years
commencing  60 days after the initial  closing at an initial  exercise  price of
$0.001 per share.  The aggregate  number of shares of Common Stock issued in the
Private  Offering  was  33,381,647  shares  for an  aggregate  consideration  of
$28,374,400,  or  approximately  $0.57 per share  assuming  the  exercise of the
16,690,824  Warrants.  The Private Offering was directed solely to investors who
are  sophisticated  and accredited  within the meaning of applicable  securities
laws,  most of whom were not  affiliates  with the  Company.  The purpose of the
Private  Offering  was to  raise  funds  for  use  primarily  in  the  Company's
developing  voiceglo  business,  including the  deployment of networks,  website
development,  marketing,  and capital  infrastructure  expenditures  and working
capital.  Proceeds may also be used in connection with theglobe's other existing
or future business  operations.  (See  "Management's  Discussion and Analysis or
Plan of Operation - Liquidity and Capital Resources").

As of December 31, 2003, the Company's revenue sources were principally from the
sale of print  advertising  in its Computer  Games  magazine;  the sale of video
games and related products  through Chips & Bits,  Inc., its games  distribution
business;  and the sale of its Computer  Games magazine  through  newsstands and
subscriptions.  Management's  intent,  going forward,  is to devote  substantial
monetary,  management  and human  resources  to the  Company's  "voiceglo"  VoIP
business.

                                       2
<PAGE>

                            OUR PRODUCTS AND SERVICES

As of December 31,  2003,  we managed two primary  lines of  business.  One line
consists of our  historical  network of three wholly-owned  businesses,  each of
which  specializes in the games  business by delivering  games  information  and
selling games in the United States and abroad.  These  businesses are: our print
publication   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.

The  second  line  of  business,  VoIP  telephony  services,  includes  voiceglo
Holdings, Inc., a wholly-owned subsidiary of theglobe.com that offers VoIP-based
phone service to anyone with an Internet  connection  anywhere in the world. The
term "VoIP" refers to a category of hardware and software that enables people to
use the Internet as the transmission medium for telephone calls.

"VOICEGLO" AND OUR VOICE OVER INTERNET PROTOCOL ("VoIP") BUSINESS.

Overview.  The use of the Internet to provide voice  communications  services is
becoming  more  prevalent as new providers  enter the market and the  technology
becomes more accepted.  According to Insight Research,  VoIP-based services will
grow  from  $13.0  billion  in 2002 to  nearly  $197.0  billion  in  2007.  VoIP
technology  translates voice into data packets,  transmits the packets over data
networks and reconverts them into voice at their destination. Unlike traditional
telephone  networks,  VoIP  does not  require  dedicated  circuits  to  complete
telephone  calls.  Instead,  VoIP  networks can be shared by multiple  users for
voice,  data and video  simultaneously.  These types of data  networks  are more
efficient than  dedicated  circuit  networks  because they are not restricted by
"one-call, one-line" limitations of traditional telephone networks. Accordingly,
improved  efficiency  creates cost savings that can be passed on to the consumer
in the form of lower rates.

Development  of our VoIP  Business.  We entered the VoIP  business by  acquiring
certain  software  assets from Brian Fowler on November  14,  2002.  Today those
assets  serve as the  foundation  of the  products we offer and market under the
brand name, "voiceglo."

On May 28, 2003, the Company  acquired DPT, a company  engaged in VoIP wholesale
telephony  services.  At  the  time  we  acquired  DPT,  it  was  a  specialized
international  facilities-based  communications carrier providing wholesale VoIP
communications  services to emerging countries. In the first quarter of 2004, we
decided to suspend  DPT's  wholesale  business and dedicate the DPT physical and
intellectual assets to our retail VoIP business, "voiceglo".

                                       3
<PAGE>

During the third  quarter  of 2003,  the  Company  launched  its first  suite of
consumer and business  level VoIP services.  These services allow  consumers and
enterprises  to  communicate  using VoIP  technology  for  dramatically  reduced
pricing compared to traditional telephony networks.  The services also offer all
traditional  telephony  features such as voicemail,  caller ID, call forwarding,
and call waiting for no additional cost to the consumer,  as well as incremental
services  that are not  currently  supported  by the public  switched  telephone
network  ("PSTN")  like the ability to use numbers  remotely  and voice to email
services.

The Company now offers VoIP services, on a retail basis, to individual consumers
and small businesses and currently offers two primary types of services:

      o     Browser-Based  - a full  functioning  telephone  that resides on the
            computer  desktop and also includes a web-based  solution.  The only
            system  requirements are a browser and an Internet  connection.  The
            Company is seeking a patent to protect its position.

      o     SIP Based Soft Phone - a traditional phone line replacement service.
            Requires  a  voiceglo  adapter,  a  regular  phone  and an  Internet
            connection.  The  service  works on  broadband,  dial-up  and  wi-fi
            Internet  connections and can be used with a USB phone directly over
            a user's computer if desired.

The browser-based product is marketed under the name "GloPhone":

o     Users  acquire the  GloPhone by  downloading  a simple  "plug-in" to their
      browsers.  The download is a simple process and once it's  completed,  the
      user's browser is enabled for voice  communications;

o     Users choose their GloPhone  service from a variety of packages offered as
      part of the download  process and are enabled with a working United States
      telephone number;

o     GloPhone users speak free to other GloPhone users;

o     The GloPhone is used by either  utilizing the  computer's  microphone  and
      speakers or using an external device, such as a USB phone; and

o     GloPhone users can use their service when traveling  through the "GloPhone
      express" web-based application.

The home and business  replacement products are marketed as different "packages"
under the voiceglo brand:

o     The home and business replacement products are meant to "replace" existing
      traditional phone service with voiceglo's service;

o     User's can  purchase a voiceglo  adapter  that  allows use of  traditional
      telephone handsets with the voiceglo service;

o     All  voiceglo  packages  include full feature sets such as caller ID, call
      waiting, etc.; and

o     voiceglo users speak free to other voiceglo users.

Sales and Marketing.  The Company is currently  developing its product sales and
distribution  strategy. The Company may market its services over a wide range of
distribution  channels that may include:  television  infomercials,  print media
advertising and Internet  advertising and structured customer referral programs.
The Company is currently  selling  some of its services  through both direct and
indirect sales channels  (value-added  resellers).

Development of our Network and Carrier  Relationships;  Equipment Suppliers.  In
order to offer our services we have invested substantial time, capital and other
resources on the development of the voiceglo  network.  The voiceglo  network is
comprised of switching  hardware and  software,  servers,  billing and inventory
systems, and telecommunication  carrier services. We own and operate VoIP switch
equipment in Miami and New York, and  interconnect  these  switches  utilizing a
leased transport  network through  numerous carrier  agreements with third party
providers.  Through these carrier relationships we are able to carry the traffic
of our customers  over the Internet and interact  with the PSTN. In general,  we
enter into from one to five year  agreements  with these  carriers  pursuant  to
which, in exchange for allocating and dedicating availability on their networks,
we undertake to provide minimum usage of these networks. The greater the minimum
usage, the lower our per minute charge for such usage, assuming full utilization
of  such  minutes.  Given  the  recent  introduction  of  our  voiceglo  service
offerings,  our minimum  commitments  under these carrier  agreements  presently
greatly  exceed our actual  usage.  These  Carrier  relationships  also  provide
voiceglo with a leased network for telephone  numbers,  or "footprint",  in more
than 100 area codes in  approximately  34 states.  The network also provides for
both domestic and  international  call  termination.  Although  other sources of
supply are  available,  to assure a reliable  source of supply for our  voiceglo
offering,  we have entered  into  contracts  with two  principal  suppliers  for
telephony  handsets  and  adapters  related to our VoIP  services.  Handsets  or
adapters  allow our customers to more easily use their  computers as telephones.
Pursuant  to our  agreement  with the  handset  supplier  we have  committed  to
purchase,  subject to satisfaction of certain  performance  criteria relating to
the  handsets,  a  substantial  number  of  handsets  by the  end of  2004.  See
"Management's  Discussion  and  Analysis or Plan of  Operation  - Liquidity  and
Capital Resources".


                                       4
<PAGE>



Research and Development

Internet telephony is a technical service offering. As a technology,  basic VoIP
service,  although  complex,  is  well-understood  and has been  adapted by many
companies that are selling basic services to consumers and businesses worldwide.
voiceglo,  however,  believes that in order to be competitive and  differentiate
itself among its peers, it must continuously  upgrade its service  offering.  To
that end, the Company is engaged in a program of continuous  development  of its
products.  Since  the  initial  launch  of its VoIP  service,  the  Company  has
introduced a number of new features  which have increased the  functionality  of
the products.  Several major upgrades to the Company's offerings are anticipated
in 2004.


OUR COMPUTER GAMES BUSINESS

         COMPUTER  GAMES  MAGAZINE.  Computer Games Magazine is a consumer print
magazine for gamers.

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

      -     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)  is the
online counterpart to Computer Games magazine. Computer Games Online is a source
of free  computer  games  news  and  information  for the  sophisticated  gamer,
featuring  news,  reviews and previews,  along with a powerful  Web-wide  search
engine.

      -     Features of Computer  Games  Online  include:  game  industry  news;
            truthful,  concise reviews;  first looks,  tips and hints;  multiple
            content links; thousands of archived files; and, easy access to game
            buying.

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

Advertising.  We continue to attract  major  advertisers  to our Computer  Games
print magazine,  which is a widely respected consumer print magazine for gamers.
In 2003, no single advertiser accounted for more than 10% of total revenues. For
the twelve  months ended  December 31, 2003,  over 40 clients  advertised 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,  most of our actual advertising contracts are
for periods of one to three months.  All  compensation to our sales personnel is
commission based.

In 2003 we hired an  entertainment  editor  based in Los  Angeles  to develop an
entertainment  publication that will be delivered within Computer Games magazine
starting in Spring, 2004. The new magazine,  NowPlaying, will cover movies, DVD,
television, music, games, comics and anime, and is designed to fulfill the wider
pop culture interests of our current readers and to attract a more diverse group
of advertisers;  autos,  television,  telecommunications and film to name a few.
Additional sales staff needs are anticipated to be minimal.


                                   COMPETITION

Telephony Business

The  telecommunications  industry has  experienced  a great deal of  instability
during the past several years.  During the 1990s,  forecasts of very high levels
of future demand  brought a  significant  number of new entrants and new capital
investments  into the industry.  New global  carriers were joined by many of the
largest  traditional  carriers  and built large  global or regional  networks to
compete with the global  wholesalers.  However,  in the last three years many of
the new global carriers and many industry  participants have either gone through
bankruptcy  or no longer exist.  The networks  were built  primarily to meet the
expected  explosion in bandwidth  demand from data, with specific  emphasis upon
Internet applications. Those forecasts have not materialized, telecommunications
capacity  now far  exceeds  actual  demand,  and the  resulting  marketplace  is
characterized  by fierce price  competition as traditional  and next  generation
carriers  compete to secure  market  share.  Resulting  lower prices have eroded
margins  and have kept many  carriers  from  attaining  positive  cash flow from
operations.

During the past several years, a number of companies  have  introduced  services
that make Internet  telephony or voice  services over the Internet  available to
businesses  and consumers.  All major  telecommunications  companies,  including
entities  like  AT&T,  Sprint  and  MCI,  as  well  as  iBasis,   Net2Phone  and
deltathree.com, compete or can compete directly with us.


                                       5
<PAGE>

Our  competitors  can be divided into  domestic  competitors  and  international
competitors.  The  international  market is highly  localized.  In markets where
telecommunications  have been fully  deregulated,  the competition  continues to
increase.  In newly deregulated  markets even new entrants to the VoIP space can
rapidly capture  significant market share.  Competitors in these markets include
both  government-owned  and  incumbent  phone  companies,  as well  as  emerging
competitive  carriers.  The principle  competitive  factors in this  marketplace
include: price, quality of service, distribution, customer service, reliability,
network  capacity,  and brand  recognition.  The long distance market in the US,
against whom the Company  competes,  is highly  competitive.  There are numerous
competitors  in the pure  play  VoIP  space  and we  expect  to face  continuing
competition  from these  existing,  as well as new,  competitors.  The principle
competitive  factors in the marketplace  include those identified above, as well
as enhanced communications  services. Our competitors include such VoIP services
companies such as Net2Phone, Skype, Vonage, Go2Call and DeltaThree.


Many of our competitors  have  substantially  greater  financial,  technical and
marketing resources, larger customer bases, longer operating histories,  greater
brand  recognition and more  established  relationships  in the industry than we
have.  As a  result,  certain  of these  competitors  may be able to adopt  more
aggressive  pricing  policies  which may hinder our  ability to market our voice
services.  We believe that our key competitive  advantages are a function of our
continuing research and development, including our two method patents pending:

      o     Linking  a  telephone  number  to an IP  address,  allowing  anyone,
            anywhere  in the  world to dial a  traditional  telephone  number to
            originate a call to the distinct IP address of a voiceglo  customer;
            and

      o     Browser to telephone interface, which turns any browser into a voice
            enabled  communications  device and includes many features  commonly
            available from traditional telephone service providers.

There can be no assurance  that we will be  successful  in our efforts to patent
this technology.

Computer Games Business

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 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.


                  INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

We regard  substantial  elements of our Websites and  underlying  technology  as
proprietary.  In  addition,  we have  developed  in our  VoIP  business  certain
technologies  which we  believe  are  proprietary  and are  seeking  to  develop
additional propriety  technology.  We attempt to protect these assets 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 technology, including certain
technology related to our linkage of a telephone number to an IP address and our
browser to telephone interface.

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.
Enforcing  our  patent  rights  could  result in costly  litigation.  Our patent
applications  could be rejected or any patents  granted could be  invalidated in
litigation.  Should  this  happen,  we  would  lose  a  significant  competitive
advantage.  Additionally,  our competitors or others could be awarded patents on
technologies and business processes that could require us to significantly alter
our technology,  change our business  processes or pay  substantial  license and
royalty  fees.  (See  "Risk   Factors-We  rely  on  intellectual   property  and
proprietary rights.")


                  GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

In General

We are subject to laws and regulations  that are applicable to various  Internet
activities.  There are an increasing number of federal, state, local and foreign
laws  and  regulations  pertaining  to  the  Internet  and   telecommunications,
including  internet telephony (VoIP). 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


                                       6
<PAGE>

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.

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.

Internet Telephony (VoIP) Regulation

The use of the Internet and private IP networks to provide voice  communications
services over the Internet 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 (rather than information services). The FCC held a forum on VoIP issues
on December 1, 2003, which included regulatory  classification  issues. On March
10, 2004,  the FCC released  guidelines  and questions  upon which it is seeking
public comment to determine what regulation,  if any, will govern companies that
provided  VoIP  services.  Specifically,  the FCC has  expressed an intention to
further  examine the question of whether  certain forms of  phone-to-phone  VOIP
services are information services or  telecommunications  services.  The two are
treated differently in several respects, with certain information services being
regulated  to a  lesser  degree.  The  FCC  has  noted  that  certain  forms  of
phone-to-phone  VOIP  services  bear  many of the same  characteristics  as more
traditional voice telecommunications  services and lack the characteristics that
would  render  them  information  services.  The  FCC  has  indicated  that  the
mechanisms  for  contributing  to  the  Universal  Service  Fund,  issues  as to
applicability  of access  charges and other  matters will be  considered in that
context. The FCC had previously opened a proceeding in response to a petition by
AT&T which seeks a declaration to preclude local exchange carriers from imposing
access  charges  on certain  AT&T  phone-to-phone  IP  services  asserted  to be
provided  over the  Internet.  The FCC has recently  ruled that so called "pure"
VoIP services which flow entirely over the Internet and never  interconnect with
the public switched telephone network,  such as a computer to computer call, are
not telecommunications  services subject to regulation.  The ruling specifically
does not  address  whether  traditional  phone  regulations  might apply to VoIP
services  (like those offered by voiceglo) to end users that  interconnect  with
the traditional telephone system.

If the FCC or any state determines to regulate VoIP, they may impose surcharges,
taxes, licensing or additional regulations upon providers of Internet telephony.
These surcharges could include access charges payable to local exchange carriers
to carry and terminate  traffic,  contributions to the universal service fund or
other  charges.   Regulations   requiring  compliance  with  the  Communications
Assistance for Law Enforcement  Act, or provision of enhanced 911 services could
also place a  significant  financial  burden on us. The  imposition  of any such
additional fees, charges, taxes, licenses and regulations on VoIP services could
materially  increase  our costs  and may  reduce or  eliminate  the  competitive
pricing advantage we seek to enjoy. We 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.

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 VoIP business  operations,  and  ultimately  our financial
condition, operating results and future prospects.

Certain Other Regulation Affecting the Internet

In the United States,  Congress has recently adopted  legislation that regulates
certain  aspects of the Internet,  including  online  content,  user privacy and
taxation. In addition, Congress and other federal entities are considering other
legislative and regulatory  proposals that would further  regulate the Internet.
Congress  has, for  example,  considered  legislation  on a wide range of issues
including Internet spamming,  database privacy, gambling,  pornography and child
protection,  Internet fraud, privacy and digital signatures. Various states have
adopted  and  are  considering  Internet-related  legislation.   Increased  U.S.


                                       7
<PAGE>

regulation  of  the  Internet  may  slow  its  growth,   particularly  if  other
governments  follow suit, which may negatively impact the cost of doing business
over the  Internet  and  materially  adversely  affect our  business,  financial
condition, results of operations and future prospects. Legislation has also been
proposed that would clarify the regulatory  status of VoIP service.  The Company
has no way of knowing whether  legislation will pass or what form it might take.
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 websites may be accessed,  or
for any or all of the top-level domain names that may be introduced.

Internationally, the European Union has also enacted several directives relating
to the Internet.  The European Union has, for example,  adopted a directive that
imposes  restrictions  on the  collection  and use of personal  data.  Under the
directive,  citizens of the European Union are guaranteed rights to access their
data,  rights to know where the data originated,  rights to have inaccurate data
rectified,  rights to recourse in the event of unlawful processing and rights to
withhold permission to use their data for direct marketing. The directive could,
among other things,  affect U.S. companies that collect or transmit  information
over the Internet from  individuals in European  Union member  states,  and will
impose  restrictions  that are more  stringent  than  current  Internet  privacy
standards in the U.S. In particular,  companies with offices located in European
Union  countries  will not be allowed to send personal  information to countries
that do not maintain adequate standards of privacy.


EMPLOYEES

As of December 31, 2003, we had approximately 42 active 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  network  operations,  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.


ITEM 2. PROPERTIES

Our corporate  headquarters  is located in Fort  Lauderdale,  Florida,  where we
lease  approximately  15,000 square feet of office space from a company which is
controlled  by our  Chairman.  We maintain  approximately  9,500  square feet of
office  space in two  separate  locations  in  Vermont  in  connection  with the
operations  of our Computer  Games  magazine  and Chips & Bits,  Inc. We own one
property and the other is a lease which expires in September 2005. Additionally,
we have obtained  collocation  space in secure  telecommunications  data centers
located in Florida, Georgia and New York which is used to house certain Internet
routing and computer equipment.

ITEM 3. LEGAL PROCEEDINGS

On and  after  August 3, 2001 and as of the date of this  filing,  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 November 23, 1998 initial public offering
and its May 19, 1999 secondary  offering.  The lawsuits were filed in the United
States  District  Court for the Southern  District of New York.  The  complaints
against  the  Company  have  been  consolidated  into  a  single  action  and  a
Consolidated Amended Complaint,  which is now the operative complaint, was filed
on April 19, 2002.

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

The action is being  coordinated with  approximately  300 other nearly identical
actions filed against other  companies.  On July 15, 2002,  the Company moved to
dismiss all claims against it and the Individual Defendants. On October 9, 2002,
the Court dismissed the Individual  Defendants  from the case without  prejudice
based on  stipulations  of dismissal  filed by the plaintiffs and the Individual
Defendants.  On February  19,  2003,  the Court denied the motion to dismiss the
complaint  against  the  Company.  The  Company  has  approved a  Memorandum  of
Understanding  ("MOU")  and  related  agreements  which set forth the terms of a
settlement between the Company, the plaintiff class and the vast majority of the
other  approximately  300  issuer  defendants.   Among  other  provisions,   the
settlement contemplated by the MOU provides for a release of the Company and the
individual defendants for the conduct alleged in the action to be wrongful.  The
Company would agree to undertake certain responsibilities, including agreeing to
assign away, not assert,  or release  certain  potential  claims the Company may
have against its  underwriters.  It is anticipated that any potential  financial
obligation  of the  Company to  plaintiffs  pursuant to the terms of the MOU and
related agreements will be covered by existing insurance. Therefore, the Company
does not expect that the settlement will involve any payment by the Company. The
MOU and related  agreements are subject to a number of contingencies,  including
the  negotiation  of a settlement  agreement  and its approval by the Court.  We
cannot opine as to whether or when a settlement  will occur or be finalized and,


                                       8
<PAGE>

consequently,  are unable at this time to  determine  whether the outcome of the
litigation will have a material impact on our results of operations or financial
condition in any future period.

On  July  3,  2003,  an  action  was  commenced  against  one of  the  Company's
subsidiaries,  Direct  Partner  Telecom,  Inc.  ("DPT").  Global  Communications
Consulting Corp. v. Michelle Nelson,  Jason White,  VLAN, Inc.,  Geoffrey Amend,
James Magruder,  Direct Partner Telecom,  Inc., et al. was filed in the Superior
Court of New Jersey,  Monmouth County, and removed to the United States District
Court for the  District of New Jersey on September  16,  2003.  Plaintiff is the
former employer of Michelle Nelson, a consultant of DPT.  Plaintiff alleges that
while  Nelson  was its  employee,  she  provided  plaintiff's  confidential  and
proprietary  trade  secret  information,   to  among  others,  DPT  and  certain
employees,  and diverted  corporate  opportunities from plaintiff to DPT and the
other named defendants. Plaintiff asserts claims against Nelson including breach
of fiduciary duty, breach of the duty of loyalty and tortious  interference with
contract.  Plaintiff  also asserts  claims against Nelson and DPT, among others,
for contractual  interference,  tortious  interference with prospective economic
advantage and  misappropriation  of proprietary  information  and trade secrets.
Plaintiff  seeks  injunctive  relief  and  damages  in  an  unspecified  amount,
including punitive damages.

The Answer to the Complaint, with counterclaims, was served on October 20, 2003,
denying  plaintiff's  allegations  of  improper  and  unlawful  conduct in their
entirety.  The parties  have  recently  reached an amicable  resolution  of this
matter, including a mutual release of all claims. We anticipate that the release
agreement  will be finalized and a Stipulation  of Dismissal  will be filed with
the Court by the end of April 2004.

The Company is  currently a party to certain  other legal  proceedings,  claims,
disputes and litigation  arising in the ordinary  course of business,  including
those noted above. The Company  currently  believes that the ultimate outcome of
these other  proceedings,  individually  and in the  aggregate,  will not have a
material  adverse  affect  on  the  Company's  financial  position,  results  of
operations  or  cash  flows.  However,   because  of  the  nature  and  inherent
uncertainties of litigation, should the outcome of these actions be unfavorable,
the Company's  business,  financial  condition,  results of operations  and cash
flows could be materially and adversely affected.

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, 2003.


                                       9
<PAGE>



PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASES OF EQUITY SECURITIES

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 bid prices of our common
stock for the periods indicated as reported by the over-the-counter  market (the
electronic  bulletin board). The quotations below reflect  inter-dealer  prices,
without retail  mark-up,  mark-down or commission  and may not represent  actual
transactions:

                                      2003          2002
                                  ------------  ------------
                                  High    Low   High    Low
                                  -----  -----  -----  -----
                  Fourth Quarter  $2.12  $1.30  $0.17  $0.05
                  Third Quarter   $1.97  $1.12  $0.10  $0.015
                  Second Quarter  $2.56  $0.13  $0.07  $0.03
                  First Quarter   $0.20  $0.06  $0.07  $0.025


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 667 holders of record of Common Stock as of March 24, 2004.
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.


                                       10
<PAGE>

SECURITIES OFFERED UNDER EQUITY COMPENSATION PLANS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                     Number of securities to be
                       issued upon exercise of     Weighted-average exercise   Number of securities remaining
                    outstanding options, warrants     price of outstanding      available for future issuance
   Plan category             and rights           options, warrants and rights under equity compensation plans
--------------------------------------------------------------------------------------------------------------
<S>                         <C>                          <C>                              <C>
      Equity
Compensation plans
    approved by
 security holders           4,421,810                    $  1.55                          400,177
--------------------------------------------------------------------------------------------------------------
      Equity
Compensation plans
  not approved by
 security holders           5,521,000                    $  0.05                          959,000
--------------------------------------------------------------------------------------------------------------
       Total
                            9,942,810                    $  0.72                       1,359,177
--------------------------------------------------------------------------------------------------------------
</TABLE>

Equity  compensation  plans not  approved  by  security  holders  consist of the
following:

      o     230,000  shares of Common  Stock of  theglobe.com,  inc.,  par value
            $0.001  per  share  ,  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.

      o     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.

      o     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.

      o     500,000  shares of Common  Stock of  theglobe.com,  inc.,  issued to
            Robin  M.  Lebowitz  pursuant  to  the  Non-Qualified  Stock  Option
            Agreement  dated  August 12, 2002 at an exercise  price of $0.02 per
            share. These stock options vested immediately and have a life of ten
            years from date of grant.

      o     500,000  shares of Common  Stock of  theglobe.com,  inc.,  issued to
            Kellie Smythe pursuant to the  Non-Qualified  Stock Option Agreement
            dated July 17, 2003 at an exercise price of $0.20 per share. 125,000
            of these  stock  options  vested  immediately  with the  balance  of
            375,000  vesting  quarterly  on a pro-rata  basis over three  years.
            These stock options have a life of ten years from date of grant. Ms.
            Smythe  terminated  her  employment  with   theglobe.com   effective
            February  10, 2004 and has 90 days from that date to exercise any of
            her vested options.

      o     The Company's 2003 Amended and Restated  Non-Qualified  Stock Option
            Plan  (the  "2003  Plan").  The  purpose  of  the  2003  Plan  is to
            strengthen  theglobe.com,  inc. by providing an incentive to certain
            employees and consultants (or in certain circumstances,  individuals
            who are the principals of certain consultants) of the Company or any
            subsidiary of the Company,  with a view toward  encouraging  them to
            devote their  abilities and industry to the success of the Company's
            business  enterprise.  The 2003 Plan is  administered by a Committee
            appointed by the Board to administer  the Plan,  which has the power
            to determine  those  eligible  individuals  to whom options shall be
            granted  under the 2003 Plan and the  number of such  options  to be
            granted and to prescribe the terms and conditions (which need not be
            identical)  of each such option,  including  the exercise  price per
            share subject to each option and vesting schedule of options granted
            thereunder,  and make any amendment or modification to any agreement
            consistent  with the terms of the 2003 Plan.  The maximum  number of
            shares  that may be made the  subject of options  granted  under the
            2003 Plan is 1,000,000 and no option may have a term in excess of 10
            years.  Options to acquire an aggregate  of 41,000  shares of Common
            Stock have been  issued to  various  independent  sales  agents at a
            weighted average exercise price of $1.54. These stock options vested
            immediately and have a life of ten years from date of grant.


                                       11
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS  OR PLAN OF OPERATION

                         OVERVIEW AND PLAN OF OPERATION

OVERVIEW

During 2000 and 2001, the Company  restructured its business operations and sold
off or closed most of its  businesses.  As of December 31, 2003,  we managed two
primary lines of business.  One line consists of our historical network of three
wholly owned  businesses,  each of which  specializes  in the games  business by
delivering games  information and selling games in the United States and abroad.
These  businesses  are:  our print  publication  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.

The second line of business,  voice over Internet  protocol  ("VoIP")  telephony
services,  includes  voiceglo  Holdings,  Inc.,  a  wholly-owned  subsidiary  of
theglobe.com  that offers VoIP  web-based,  home and business  phone  service to
anyone  anywhere in the world.  The term "VoIP" refers to a category of hardware
and software that enables people to use the Internet as the transmission  medium
for telephone calls.

At the current time, our revenues are derived principally from the sale of print
advertisements  under  short-term  contracts in our games  information  magazine
Computer Games, through the sale of video games and related products through our
games  distribution  business Chips & Bits, Inc.;  through the sale of our games
information  magazine through newsstands and subscriptions;  and through limited
sale of online  advertisements.  Given their recent  launch,  our voiceglo  VoIP
products and services have yet to produce any significant revenue.


                              RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002

NET  REVENUE.  Our  revenue  sources  were  principally  from  the sale of print
advertisements  under  short-term  contracts in our games  information  magazine
Computer Games;  the sale of video games and related  products through our games
distribution  business  Chips & Bits,  Inc.;  the sale of our games  information
magazine through  newsstands and  subscriptions;  and the sale of VoIP telephony
services  (primarily  from our  wholesale  VoIP  services  and not our  recently
launched voiceglo retail VoIP services).

Net  revenue  totaled  $6.6  million  for the year ended  December  31,  2003 as
compared to $9.7 million for the year ended  December 31, 2002. The $3.1 million
decline in total net revenue was primarily attributable to decreases in magazine
sales,  electronic  commerce  revenue and  advertising,  partially offset by net
revenue generated by our VoIP telephony services division.

Advertising revenue from the sale of print  advertisements in our games magazine
was $2.6 million,  or 39%, of total net revenue for the year ended  December 31,
2003,  versus  $3.1  million,  or 32%,  of total net revenue for the prior year.
Barter  advertising  revenue  represented  approximately  2% and 1% of total net
revenue for the years ended December 31, 2003 and 2002, respectively.

Net revenue  attributable to the sale of our games information magazine was $2.0
million,  or 31%,  of total net  revenue  for the 2003 year as  compared to $3.5
million,  or 36%, of total net revenue in 2002.  The decline in net revenue from
the sale of our games  magazine as compared to the previous  year was  primarily
the result of a decrease in the circulation base of our games magazine. As rates
for  print  advertising  charged  to  advertisers  are  driven  largely  by  the
circulation of the publication, the decline in the circulation base of our games
magazine has also contributed to the decrease in our advertising revenue.

Electronic  commerce and other net revenue is principally  comprised of sales of
video games and related  products through Chips & Bits, Inc. Sales of our online
store  accounted  for $1.5  million,  or 22%,  of total net revenue for the year
ended  December  31,  2003 as  compared  to $3.1  million,  or 32%, of total net
revenue for 2002. The $1.6 million decrease was primarily the result of advances
in and releases of console and online games, which traditionally have less sales
loyalty to our online store, coupled with the continued decline in the number of
major PC game  releases,  on which our online  store  relies for the majority of
sales. In addition,  an increasing  number of major retailers have increased the
selection of video games offered by both their  traditional  "bricks and mortar"
locations and their online commerce sites resulting in increased competition.

Net revenue  from  telephony  services  totaled  $0.5 million for the year ended
December 31, 2003. As part of the Company's strategy to enter the VoIP business,
the  Company   acquired  DPT  on  May  28,  2003,  an   international   licensed
telecommunications   carrier   engaged   in   the   purchase   and   resale   of
telecommunications  services over the Internet.  Telephony  services net revenue
generated by DPT during 2003  represented  approximately  89% of total telephony
services net revenue and was derived  principally  from the charges to customers
for international call completion based on the volume of minutes utilized.  As a
result of  management's  decision  during  the first  quarter of 2004 to suspend
DPT's wholesale  business and dedicate the DPT physical and intellectual  assets
to its retail VoIP business,  net revenue derived from the wholesale business of
DPT is not expected to represent a significant  component of telephony  services
net  revenue in the near term.  Net  revenue  attributable  to the launch of the
Company's  voiceglo  products  represented  the  remaining  11%  of  total  2003
telephony services net revenue. Although the Company launched its basic suite of
VoIP  offerings on a "national"  basis  during the fourth  quarter of 2003,  the


                                       12
<PAGE>

Company has continued to focus significant  resources on further  development of
its voiceglo  product line,  most  recently  evidenced by the 2004 first quarter
launch of its "GloPhone" product line. In addition, the Company has continued to
formulate  its  marketing  strategy  and  distribution  network for its voiceglo
products.

COST OF PRODUCTS AND PUBLICATIONS  SOLD. Cost of products and publications  sold
related to our games division consists  primarily of printing costs of our games
magazine,  Internet  connection charges,  personnel costs,  maintenance costs of
website  equipment  and the  costs  of  merchandise  sold and  shipping  fees in
connection with our online store.  Cost of products and publications sold by our
games division totaled approximately $3.1 million and $5.6 million for the years
ended  December  31,  2003 and  2002,  respectively.  The  gross  margin  of the
Company's  games division  approximated  48% in 2003 as compared to 42% in 2002.
The overall improvement in the gross margin of the games division as compared to
the prior year resulted from the increase in advertising revenue as a percentage
of total net revenue,  coupled with an improvement in the gross profit margin of
Chips & Bits.  The  remaining  $0.2  million of cost of  products  sold for 2003
consisted  primarily  of  customer  equipment  costs  related to the sale of the
Company's voiceglo service launched during mid-August 2003.

DATA  COMMUNICATIONS,  TELECOM AND NETWORK  OPERATIONS.  This  expense  category
relates to the  Company's  entry  into the VoIP  business  in 2003 and  includes
termination  and circuit  costs  related to the  Company's  wholesale  telephony
services  business  marketed by DPT and the Company's retail telephony  services
business marketed under the voiceglo brand name.  Personnel and consulting costs
incurred in support of the  Company's  Internet  telecommunications  network are
also included in this expense category. Data communications, telecom and network
operations  expenses  are  expected  to  increase  in the future as the  Company
further   expands   its   data   communications    network   and   expands   its
telecommunications  carrier  relationships  in order  to  support  its  voiceglo
product line.

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 $3.3 million for the year
ended  December 31, 2003 as compared to $3.5 million for the year ended December
31, 2002. A decline of $1.6 million in sales and marketing  expenses incurred by
the Company's  games division was partially  offset by $1.4 million of sales and
marketing expenses of the VoIP telephony services division.  Sales and marketing
expenses of the games division  represented  approximately  31% and 36% of total
net revenue attributable to the games division's  operations for the years ended
December  31,  2003 and 2002,  respectively.  The 38%  reduction  in net revenue
generated  by  the  Company's  games  division  as  compared  to  2002  and  the
corresponding  decreases  in agency  subscription  expense,  were the  principal
factors  contributing  to the  decrease in sales and  marketing  expenses of the
games division.  Costs incurred in staffing  internally,  the identification and
continuing  development of a potential independent sales network and advertising
the voiceglo  product line were the principal  components of sales and marketing
expenses  of the VoIP  telephony  services  operations  during  the  year  ended
December 31, 2003.

PRODUCT  DEVELOPMENT.  Product development expenses include salaries and related
personnel  costs,  expenses  incurred in  connection  with website  development,
testing and upgrades;  editorial and content  costs;  and costs  incurred in the
development  of our voiceglo  branded  products.  Product  development  expenses
increased to $0.9 million for the year ended  December 31, 2003,  as compared to
$0.7 million for the year ended December 31, 2002. The increase was  principally
attributable  to  personnel  costs  and  consulting  expenses  relating  to  the
development  of  our  VoIP  telephony  products  and  services,   which  totaled
approximately $0.3 million during 2003.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses consist
primarily  of  salaries  and  related  personnel  costs  for  general  corporate
functions including finance,  human resources and facilities,  outside legal and
professional  fees,  directors  and officers  insurance,  bad debt  expenses and
general corporate overhead costs. General and administrative  expenses were $5.3
million for the year ended  December 31,  2003,  as compared to $2.8 million for
the year ended  December 31, 2002.  Increases  in  headcount  and the  resulting
personnel  expenses,  as well  as  other  general  and  administrative  expenses
directly  attributable  to the  Company's new line of business,  VoIP  telephony
services,  were major factors contributing to the $2.5 million increase in total
general and administrative expenses. Other expense categories which increased as
compared to 2002  largely as a result of the  Company's  entrance  into the VoIP
business, included legal fees, other professional fees and facilities costs.

AMORTIZATION OF INTANGIBLE  ASSETS.  Amortization  expense of approximately $0.1
million  recorded during 2003  represented  the  amortization of the non-compete
agreement  recorded  in  connection  with the  acquisition  of DPT  prior to its
write-off at year-end and  amortization  of capitalized  patent costs related to
our voiceglo products.

IMPAIRMENT  CHARGE.  During the first  quarter of 2004,  the Company  decided to
suspend  DPT's  wholesale  business and decided to dedicate the DPT physical and
intellectual  assets to its retail VoIP business,  which is conducted  under the
name of  "voiceglo".  As a result,  management  reviewed the  long-lived  assets
associated  with  the  wholesale  VoIP  business  for  impairment.  Goodwill  of
approximately  $0.6  million  and the  unamortized  balance  of the  non-compete
intangible asset of  approximately  $0.3 million recorded in connection with the
May 2003 acquisition of DPT were written off and recorded as an impairment loss.
No impairment charges were recorded during 2002.

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

<PAGE>

warrant was recorded as a discount to the face value of the Convertible Notes to
be  amortized  to  interest  expense  over  the term of the  Convertible  Notes.
Discount  amortization  of  approximately  $0.2 million was included in interest
expense, net, during the year ended December 31, 2003.

OTHER EXPENSE,  NET.  Other  expense,  net, of $0.4 million was reported for the
year ended December 31, 2003.  Other expense in 2003 includes  reserves  against
the  amounts  loaned by the  Company to a  development  stage  Internet  related
business venture totaling $0.5 million.

INCOME TAXES.  No tax benefit was recorded for the year ended  December 31, 2003
as we recorded a 100%  valuation  allowance  against our otherwise  recognizable
deferred tax assets due to the  uncertainty  surrounding  the timing or ultimate
realization  of the benefits of our net operating loss  carryforwards  in future
periods.  The income tax provision recorded for the year ended December 31, 2002
was 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.  As of December 31, 2003, the Company had net
operating  loss  carryforwards  available  for U.S.  and foreign tax purposes of
approximately  $144 million.  These  carryforwards  expire through 2023. 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 August 1997 and May
1999 and the  Company's  recently  completed  private  offering  in  March  2004
(together with the exercise and  conversion of various  securities in connection
with such private offering), as defined in the Internal Revenue Code of 1986, as
amended,   the  Company  may  have  substantially   limited  or  eliminated  the
availability of its net operating loss carryforwards.  There can be no assurance
that  the  Company  will be able  to  avail  itself  of any net  operating  loss
carryforwards..

                         LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW ITEMS. As of December 31, 2003, we had  approximately  $1.1 million in
cash and cash  equivalents  as compared to $0.7 million as of December 31, 2002.
Net cash used in operating  activities was $6.9 million and $2.0 million for the
years  ended  December  31,  2003 and  2002,  respectively.  The  year-over-year
increase in net cash used in operating  activities  resulted  primarily  from an
increase in our net operating losses, partially offset by the impact of non-cash
charges  and gains  recorded  in 2003 and 2002.  The most  significant  of these
non-cash charges during 2003 included the non-cash  interest expense recorded as
a  result  of  the  beneficial  conversion  feature  of  the  $1.75  million  in
Convertible Notes and associated  warrants,  as well as the non-cash  impairment
charge  related  to the  write-off  of  goodwill  and a  non-compete  intangible
recorded as a result of the acquisition of DPT.

Net cash of $3.2 million was used in investing  activities during the year ended
December 31, 2003. As further described below, the Company incurred $2.4 million
in  capital  expenditures  during  2003,  primarily  within  the VoIP  telephony
services division.  These expenditures  included costs in the development of the
data  communications  network used to support the voiceglo product line, as well
as the Company's historical wholesale VoIP business.  Additionally,  in February
2003, the Company  committed to fund operating  expenses of a development  stage
Internet  venture  at the  Company's  discretion  in the  form of a loan.  As of
December 31, 2003,  approximately $0.5 million had been advanced to the venture.
During 2003,  the Company  invested  approximately  $10.3  million in marketable
securities,  the funds of which were principally  from the proceeds  received in
connection  with  the  issuance  of the  Company's  Series  G  Preferred  Stock.
Approximately  $10.1 million of investments were sold throughout the second half
of 2003 as working capital was required to fund operations. Partially offsetting
these uses of funds in 2003 was the $0.1 million in net cash  acquired  upon the
May 2003 acquisition of DPT. The purchase price of DPT consisted of the issuance
of 1,375,000  shares of the Company's  Common Stock and the issuance of warrants
to acquire 500,000 shares of the Company's Common Stock.  Warrants to acquire an
additional  2,750,000  shares of our  Common  Stock  could be issued if  certain
performance  or other  criteria are  satisfied.  Net cash  provided by investing
activities in 2002 was $0.1 million  principally  resulting from the sale of the
assets of the Happy Puppy website.

Net cash  provided by financing  activities in 2003 totaled  $10.5  million.  As
discussed below and in the notes to the consolidated  financial statements,  the
Company  issued $0.5 million in Series F  Convertible  Preferred  Stock in March
2003;  $1.75 million of Convertible  Notes in May 2003, and  approximately  $8.6
million,  net of  offering  costs,  of Series G Preferred  Stock and  associated
warrants  in July  2003.  Immediately  after  the May  2003  closing  of the DPT
acquisition, the Company paid $0.5 million in cash to the former shareholders of
DPT in  repayment  of certain  loans which they had extended to DPT prior to its
acquisition by theglobe.com.

In order to offer our VoIP  services we have  invested  substantial  capital and
made substantial  commitments related to the development of the voiceglo network
and telephony  handsets and related adapters.  The voiceglo network is comprised
of switching hardware and software,  servers, billing and inventory systems, and
telecommunication  carrier services. We own and operate VoIP switch equipment in
Miami and New York, and interconnect  these switches  utilizing leased transport
network through numerous carrier agreements with third party providers.  Through
these  carrier  relationships  we are able to carry the traffic of our customers
over the Internet and interact with the PSTN.  We generally  enter into from one
to five year agreements  with these carriers  pursuant to which, in exchange for
allocating  and  dedicating  availability  on their  networks,  we  undertake to
provide minimum usage of these networks.  In general,  the larger our commitment
the  lower  our per  minute  cost of  usage of the  network.  Given  the  recent
introduction of our voiceglo service  offerings,  our minimum  commitments under
these carrier agreements presently greatly exceed our actual usage.


                                       14
<PAGE>

Based upon our existing contractual commitments,  we anticipate that our capital
needs for our network  over the next  twelve  months  will be  substantially  as
follows:

      o     Planned  network  hardware  expenditures  for  switching  and server
            equipment are projected to be approximately $1.5 - $2.0 million;

      o     Planned network software expenditures are projected to be
            approximately $300,000; and

      o     Planned carrier transport and interconnection services are projected
            to be approximately $3.5 million.

We have entered into a contract with a supplier for telephony  handsets  related
to our VoIP services. Subject to the supplier's compliance with the terms of the
contract,  we have committed to purchase additional equipment from this supplier
during 2004  totaling  approximately  $3.4 million.  In addition,  we anticipate
acquiring  other  non-network  VoIP  equipment  of  approximately  $1.0  to $2.0
million.  See Note 9, "Commitments and  Contingencies" for further discussion of
the Company's contractual obligations and commitments.

As a result of the  proceeds  raised from our March 2004  private  offering,  as
further  described  below,  management  does not presently  anticipate  that the
Company  will need to raise  additional  funds  within at least the next  twelve
months in order to  implement  its business  plans for its existing  businesses.
However,  there can be no assurance  that the capital  needs of the Company will
not  change,  that we will not enter into  additional  lines of business or that
forecasted expenses will not substantially exceed our expectations. In addition,
our financial  position would be adversely  affected if we became liable for any
substantial penalties relating to our registration obligations under the private
offering. In any of such events, we may be required to raise additional capital.
We currently have no access to credit  facilities with  traditional  third party
lenders  and there can be no  assurance  that we would be able to raise any such
capital.  In addition,  any  financing  that could be obtained (or any shares of
common stock  issued in payment of any  registration  penalties  relating to the
March  2004  private  offering)  would  likely   significantly  dilute  existing
shareholders.

CAPITAL  TRANSACTIONS.  In March 2004,  theglobe.com,  inc.  completed a private
offering of 333,816  units (the  "Units")  for a purchase  price of $85 per Unit
(the  "Private  Offering").  Each Unit  consisted of 100 shares of the Company's
Common Stock, $0.001 par value (the "Common Stock"),  and warrants to acquire 50
shares  of the  Company's  Common  Stock  (the  "Warrants").  The  Warrants  are
exercisable  for a period of five years  commencing  60 days  after the  initial
closing at an initial  exercise price of $0.001 per share.  The aggregate number
of shares of Common Stock issued in the Private  Offering was 33,381,647  shares
for an aggregate consideration of $28,374,400,  or approximately $0.57 per share
assuming the exercise of the 16,690,824 Warrants.  The securities offered in the
Private  Offering were not  registered  under the Securities Act of 1933 and may
not be  offered  or  resold  in the  United  States  absent  registration  or an
applicable exemption from such registration requirements.  Pursuant to the terms
of the  Private  Offering,  the  Company is  contractually  obligated  to file a
registration  statement  relating  to the resale of the  Securities  on or about
April 22, 2004 and to cause such  registration  statement to become effective on
or about July 6, 2004 (or 30 days earlier if such registration  statement is not
reviewed by the Securities and Exchange Commission). In the event the Company is
late in any of its registration obligations,  it will be liable for payment of a
late fee of 5% of the amount  raised in the Private  Offering per month,  not to
exceed 25% in the aggregate.  Any such late fee may be payable in either cash or
additional  shares of Common Stock (valued for such purpose at $0.57 per share),
or any  combination  of the two,  at the  option of the  Company.  Any shares so
issued  would be  included in the  foregoing  registration  statement.  Any such
issuance of shares of our common stock may be substantially dilutive of existing
shareholders  (other than the  investors  in the  Private  Offering to whom such
shares would be issued).  The purpose of the Private Offering was to raise funds
for use primarily in the Company's  developing voiceglo business,  including the
deployment   of   networks,   website   development,   marketing,   and  capital
infrastructure  expenditures and working  capital.  Proceeds may also be used in
connection with the Company's other existing or future business operations.

In connection with the Private Offering, Mr. Egan, our Chairman, Chief Executive
Officer and  principal  stockholder,  together  with certain of his  affiliates,
including E&C Capital  Partners,  converted a $2,000,000 of  Convertible  Bridge
Note,  $1,750,000  of  Secured  Convertible  Notes  and  all  of  the  Company's
outstanding  shares  of  Series F  Preferred  Stock,  and  exercised  all of the
warrants issued in connection with the foregoing  Secured  Convertible Notes and
Series F Preferred Stock,  together with certain warrants issued to Dancing Bear
Investments,  an  affiliate  of Mr. Egan.  As a result of such  conversions  and
exercises,  the Company issued an aggregate of 48,775,909  additional  shares of
Common  Stock.  After  giving  effect to the  33,381,647  shares of Common Stock
issued in the  Private  Offering  (excluding  the  Warrants)  and the  foregoing
conversions  and  exercises,  the Company as of March 24,  2004,  had issued and
outstanding  131,990,349  shares of  Common  Stock and  27,004,384  warrants  to
acquire shares of Common Stock.

On February 2, 2004,  Michael S. Egan and his wife, S. Jacqueline Egan,  entered
into a Note Purchase  Agreement with the Company pursuant to which they acquired
a convertible promissory note due on demand (the "Bridge Note") in the aggregate
principal  amount of $2,000,000.  The Bridge Note was convertible into shares of
the Company's Common Stock. The Bridge Note provided for interest at the rate of
ten percent per annum and was  secured by a pledge of  substantially  all of the
assets of the Company. Such security interest was shared with the holders of the
Company's  $1,750,000  Convertible  Notes  issued on May 22, 2003 to E&C Capital
Partners and certain affiliates of Michael S. Egan. In addition,  the Egans were
issued a warrant to acquire  204,082 shares of  theglobe.com  Common Stock at an
exercise price of $1.22 per share.  The Warrant is exercisable at any time on or
before  February 2, 2009. The exercise  price of the Warrant,  together with the
number of shares for which such Warrant is exercisable, is subject to adjustment
upon the occurrence of certain events.

On July 2, 2003,  theglobe.com,  inc.  completed a private  offering of Series G
Preferred Stock for an aggregate  purchase price of approximately  $8.7 million.
In accordance  with the terms of such  Preferred  stock,  the Series G Preferred
shares  converted  into  common  stock at $0.50 per share  (or an  aggregate  of
approximately  17.4  million  shares)  upon the  filing of an  amendment  to the
Company's  certificate of  incorporation  to increase its  authorized  shares of
Common Stock from 100,000,000  shares to 200,000,000  shares.  Such an amendment
was  filed on July  29,  2003.  Investors  also  received  warrants  to  acquire
approximately  3.5 million shares of common stock.  The warrants are exercisable
for a period of five years at an exercise  price of $1.39 per common share.  The
exercise  price of the warrants,  together with the number of warrants  issuable
upon exercise,  are subject to adjustment upon the occurrence of certain events.
The purpose of the Series G Preferred  Stock offering was to raise funds for use


                                       15
<PAGE>

primarily in the  Company's  VoIP  telephony  services  business,  including the
deployment of networks,  website  development,  marketing,  and limited  capital
infrastructure  expenditures and working  capital.  Pursuant to the terms of the
Series G Offering  the Company is  contractually  obligated,  subject to certain
limitations,  to register the securities upon demand anytime commencing one year
after the sale of the securities.

On May 22,  2003,  E&C Capital  Partners  together  with certain  affiliates  of
Michael  S.  Egan,  entered  into a Note  Purchase  Agreement  with the  Company
pursuant to which they acquired $1,750,000 of Convertible Notes. The Convertible
Notes were convertible into a maximum of approximately  19,444,000 shares of the
Company's  common  stock at a blended rate of $0.09 per share.  The  Convertible
Notes  provided  for  interest  at the rate of ten  percent  per  annum  payable
semi-annually, a one year maturity and were secured by a pledge of substantially
all of the assets of the Company.  Effective October 3, 2003, the holders of the
Convertible  Notes waived the option of receiving  accrued  interest  payable in
shares of the Company's Common Stock.  Additionally,  each of the holders of the
Convertible  Notes agreed to defer  receipt of interest  until June 1, 2004.  In
addition,  E&C Capital Partners was issued a Warrant to acquire 3,888,889 shares
of the  Company's  Common  Stock at an  exercise  price of $0.15 per share.  The
Warrant was exercisable at any time on or before May 22, 2013.

On March 28,  2003,  E&C  Capital  Partners  signed a Preferred  Stock  Purchase
Agreement and other related  documentation  pertaining to a $500,000  investment
via the purchase of shares of a new Series F Preferred Stock of theglobe.com and
closed on the investment.  Pursuant to the Preferred  Stock Purchase  Agreement,
E&C  Capital  Partners  received  333,333  shares  of Series F  Preferred  Stock
convertible  into shares of the  Company's  Common Stock at a price of $0.03 per
share.  The Series F Preferred  Stock had a liquidation  preference of $1.50 per
share,  provided  for  payment  of a  dividend  at the rate of 8% per  annum and
entitled  the  holder to vote on an  "as-converted"  basis  with the  holders of
Common  Stock.  In  addition,  as part of the $500,000  investment,  E&C Capital
Partners  received  warrants  to  purchase  approximately  3,333,333  shares  of
theglobe.com Common Stock at an exercise price of $0.125 per share. The warrants
were  exercisable at any time on or before March 28, 2013 and both the warrants'
exercise price and number were subject to adjustment.

As a result of the  preferential  conversion  features of the Series G Preferred
Stock and the  Series F  Preferred  Stock,  a total of  $8,120,000  in  non-cash
dividends  to  preferred  shareholders  were  recognized  during  the year ended
December 31, 2003.

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.  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 2003 and 2002,  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 revenue and expenses during the reporting
period. Our estimates, judgments and assumptions are continually evaluated based
on  available  information  and  experience.  Because  of the  use of  estimates
inherent in the financial  reporting  process,  actual results could differ from
those estimates.

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

REVENUE RECOGNITION

The  Company's  revenues  were  derived  principally  from  the  sale  of  print
advertisements  under  short-term  contracts in our games  information  magazine
Computer  Games;  through  the sale of our games  information  magazine  through
newsstands and subscriptions;  from the sale of video games and related products
through  our  online  store  Chips & Bits;  and from the sale of VoIP  telephony
services.  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's  games  division  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'  websites or in their
magazines,  which  typically  occurs within one to six months from the period in


                                       16
<PAGE>

which the related  barter  revenue is recognized.  Barter  advertising  revenues
represented  approximately  2% and 1% of consolidated  net revenue for the years
ended December 31, 2003 and 2002, respectively.

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

Magazine Sales. 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.

Electronic  Commerce and Other.  Sales from the online store are  recognized  as
revenue when the product is shipped to the customer. Amounts billed to customers
for  shipping and  handling  charges are  included in net  revenue.  The Company
provides an allowance for returns of merchandise  sold through its online store.
The allowance provided to date has not been significant.

Telephony  Services.  VoIP telephony services revenue represents fees charged to
customers  for voice  services  and is  recognized  based on minutes of customer
usage or as services are  provided.  The Company  records  payments  received in
advance for prepaid  services as deferred revenue until the related services are
provided. Sales of peripheral VoIP telephony equipment are recognized as revenue
when the product is shipped to the  customer.  Amounts  billed to customers  for
shipping and handling charges are included in net revenue.


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.

CAPITALIZATION OF COMPUTER SOFTWARE COSTS

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

INTANGIBLE ASSETS

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

Our policy calls for the assessment of the potential  impairment of goodwill and
other  identifiable  intangibles  whenever  events or changes  in  circumstances
indicate that the carrying value may not be recoverable or at least on an annual
basis.  Some factors we consider  important  which could  trigger an  impairment
review include the following:

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

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

      o     Significant negative industry or economic trends.

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

As a result of  management's  decision  during  the first  quarter  of 2004,  to
suspend the wholesale  business of Direct Partner  Telecom,  Inc. ("DPT") and to
dedicate the DPT physical and  intellectual  assets to its retail VoIP business,
we reviewed the long-lived assets  associated with the Company's  wholesale VoIP
business for impairment.  As a result,  the goodwill and non-compete  intangible
asset  recorded in connection  with the May 2003  acquisition  of Direct Partner
Telecom,  Inc.  were  written  off and  recorded  as an  impairment  loss in the
Company's statement of operations for the year ended December 31, 2003.


                                       17
<PAGE>

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In December  2003, the FASB issued  Interpretation  No. 46R,  "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 Company has
not yet evaluated the impact of this pronouncement on the Company.

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

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

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 adoption of this  statement did not have a significant  impact on the
Company's financial position or results of its operations.

In November 2002, the FASB issued Interpretation 45, "Guarantor's Accounting and
Disclosure  Requirements  for  Guarantees,   Including  Indirect  Guarantees  of
Indebtedness  of Others"  and an  interpretation  of SFAS No. 5, 57, and 107 and
rescission  of  SFAS   Interpretation  No.  34.  This  statement  addresses  the
disclosures  to be made by a  guarantor  in its  interim  and  annual  financial
statements about its obligations  under  guarantees.  This  interpretation  also
clarifies  the  requirements  related to the  recognition  of a  liability  by a
guarantor at the inception of a guarantee for the  obligations the guarantor has
undertaken  in issuing that  guarantee.  The adoption of this  statement did not
have a  significant  impact on the  Company's  financial  position or results of
operations.

In November 2002,  the EITF  addressed the  accounting for revenue  arrangements
with multiple deliverables in Issue 00-21,  "Accounting for Revenue Arrangements
with Multiple Deliverables," ("EITF 00-21"). EITF 00-21 provides guidance on how
the arrangement consideration should be measured, whether the arrangement should
be  divided  into  separate  units  of  accounting,   and  how  the  arrangement
consideration  should be allocated among the separate units of accounting.  EITF
00-21 is  effective  for revenue  arrangements  entered  into in fiscal  periods
beginning  after  June 15,  2003.  The  adoption  of EITF  00-21  did not have a
significant impact on the Company's financial position or results of operations.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities." This statement addresses financial accounting
and reporting for costs  associated with exit or disposal  activities.  SFAS 146
became  effective  in the first  quarter of 2003 and did not have a  significant
impact on the results of operations or financial position of the Company.

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations." The statement addresses  accounting for and reporting  obligations
relating to the retirement of long lived assets by requiring that the fair value
of a liability for an asset retirement obligation be recognized in the period in
which it is incurred  if a  reasonable  estimate of fair value can be made.  The
adoption  of SFAS No.  143 did not have a  material  effect on the  consolidated
financial statements.


OFF-BALANCE SHEET ARRANGEMENTS

As of  December  31,  2003,  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.


                                       18
<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.

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

We have entered into a new business line, Voice over Internet  Protocol ("VoIP")
telephony  services.  In November 2002, we acquired  certain VoIP assets from an
entrepreneur in exchange for 1,750,000 warrants to purchase our common stock. On
May 28, 2003, we acquired Direct Partner Telecom, Inc. ("DPT"), an international
licensed  telecommunications  carrier  engaged  in the  purchase  and  resale of
telecommunication  services over the Internet.  The purchase price  consisted of
1,375,000  shares of theglobe.com  common stock and 500,000 warrants to purchase
theglobe.com  common  stock,  together  with the  ability to earn an  additional
2,750,000  warrants.  We may also enter into new or different lines of business,
as determined by management and our Board of Directors. The acquisitions of VoIP
assets and of DPT, as well as any future  acquisitions  or joint  ventures could
result,  and in some  instances  have resulted  (particularly  as it pertains to
DPT), in numerous risks and uncertainties, including:

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

o     large and immediate write-offs;

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

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

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

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

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

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

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

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

Since our  inception,  we have incurred net losses in each  quarter,  except the
fourth  quarter  of 2002 where we had net income of  approximately  $17,000.  We
expect that we will continue to incur net losses for the foreseeable  future. We
had net losses of approximately $11 million and $2.6 million for the years ended
December 31, 2003 and 2002, respectively. The principal causes of our losses are
likely to continue to be:

o     costs resulting from the operation of our businesses;

o     costs relating to entering new business lines;

o     failure to generate sufficient revenue; and

o     general and administrative expenses.

Although we have  restructured  our  businesses,  we still expect to continue to
incur  losses as we develop our VoIP  telephony  services  business and while we
explore a number of  strategic  alternatives  for our online and  offline  games
properties,  including  continuing  to operate the  properties,  acquisition  or
development of complementary products,  selling some or all of the properties or
other changes to our business.

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

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

o     inadequate network infrastructure;

o     security and authentication concerns;


                                       19
<PAGE>

o     ease of access;

o     inconsistent quality of service;

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

o     bandwidth availability.

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

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

o     increased government regulation;

o     potential governmental taxation of such services; and

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

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

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

o     the identification of market demand for new products;

o     access to sufficient capital to complete our development efforts;

o     product and feature selection;

o     timely implementation of product design and development;

o     product performance;

o     cost-effectiveness of products under development;

o     effective manufacturing processes; and

o     success of promotional efforts.

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

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

The long distance  telephony market and the Internet telephony market are highly
competitive.  There are several  large and numerous  small  competitors,  and we
expect to face continuing  competition based on price and service offerings from
existing  competitors  and new market  entrants  in the  future.  The  principal
competitive factors in our market include price, quality of service,  breadth of
geographic presence, customer service,  reliability,  network size and capacity,
and the availability of enhanced  communications  services. Our competitors will
include major and emerging  telecommunications  carriers in the U.S. and abroad.
Financial  difficulties  in the past  several  years of many  telecommunications
providers are rapidly altering the number,  identity and  competitiveness of the
marketplace.  Many of the  competitors  for our  current  and  planned  voiceglo


                                       20
<PAGE>

service  offerings  and  of  our  subsidiary,   Direct  Partner  Telecom,   have
substantially  greater  financial,  technical  and marketing  resources,  larger
customer bases,  longer operating  histories,  greater name recognition and more
established  relationships in the industry than we have. As a result, certain of
these  competitors may be able to adopt more aggressive  pricing  policies which
could hinder our ability to market our voice services.

During the past several years, a number of companies  have  introduced  services
that make Internet  telephony or voice  services over the Internet  available to
businesses  and consumers.  All major  telecommunications  companies,  including
entities  like AT&T,  Sprint and MCI,  as well as ITXC,  iBasis,  Net2Phone  and
deltathree.com  either  presently or potentially  route traffic to  destinations
worldwide and compete or can compete directly with us. Other Internet  telephony
service  providers  focus on a retail  customer  base and compete with us. These
companies may offer the kinds of voice services we currently  offer or intend to
offer in the future.  In addition,  companies  currently in related markets have
begun to provide  voice over the  Internet  services or adapt their  products to
enable voice over the Internet services. These related companies may potentially
migrate into the Internet  telephony market as direct  competitors.  A number of
cable  operators  have also begun to offer  VoIP  telephony  services  via cable
modems which provide access to the Internet.  These companies,  which tend to be
large  entities  with  substantial  resources,   generally  have  large  budgets
available for research and  development,  and therefore may further  enhance the
quality and acceptance of the transmission of voice over the Internet.

WE MAY FACE INCREASED GOVERNMENT REGULATION, TAXATION AND LEGAL UNCERTAINTIES IN
OUR INDUSTRY, WHICH COULD HARM OUR BUSINESS.

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

Our ability and plans to provide telecommunication  services at attractive rates
arise in large part from the fact VoIP services are not currently subject to the
same  regulation  as  traditional  telephony.  Because  their  services  are not
currently regulated to the same extent as traditional telephony,  VoIP providers
can currently  avoid paying charges that  traditional  telephone  companies must
pay.   Many   traditional   telephone   operators   are   lobbying  the  Federal
Communications  Commission  (FCC) and the states to regulate VoIP on the same or
similar basis as traditional telephone services.  The FCC and several states are
examining  this issue.  The FCC held a forum on VoIP issues on December 1, 2003,
which  included  regulatory  classification  issues.  On March 10, 2004, the FCC
released  guidelines  and questions  upon which it is seeking  public comment to
determine  what  regulation,  if any, will govern  companies  that provided VoIP
services.  Specifically,  the FCC has expressed an intention to further  examine
the  question of whether  certain  forms of  phone-to-phone  VOIP  services  are
information  services  or  telecommunications  services.  The  two  are  treated
differently  in  several  respects,  with  certain  information  services  being
regulated  to a  lesser  degree.  The  FCC  has  noted  that  certain  forms  of
phone-to-phone  VOIP  services  bear  many of the same  characteristics  as more
traditional voice telecommunications  services and lack the characteristics that
would  render  them  information  services.  The  FCC  has  indicated  that  the
mechanisms  for  contributing  to  the  Universal  Service  Fund,  issues  as to
applicability  of access  charges and other  matters will be  considered in that
context. The FCC had previously opened a proceeding in response to a petition by
AT&T which seeks a declaration to preclude local exchange carriers from imposing
access  charges  on certain  AT&T  phone-to-phone  IP  services  asserted  to be
provided  over the  Internet.  The FCC has recently  ruled that so called "pure"
VoIP services which flow entirely over the Internet and never  interconnect with
the public switched telephone network,  such as a computer to computer call, are
not telecommunications  services subject to regulation.  The ruling specifically
does not  address  whether  traditional  phone  regulations  might apply to VoIP
services  (like those offered by voiceglo) to end users that  interconnect  with
the traditional telephone system.

If the FCC or any state determines to regulate VoIP, they may impose surcharges,
taxes or additional  regulations  upon  providers of Internet  telephony.  These
surcharges  could include access charges  payable to local exchange  carriers to
carry and terminate  traffic,  contributions  to the  universal  service fund or
other  charges.   Regulations   requiring  compliance  with  the  Communications
Assistance for Law Enforcement  Act, or provision of enhanced 911 services could
also place a  significant  financial  burden on us. The  imposition  of any such
additional fees, charges, taxes, licenses and regulations on VoIP services could
materially  increase  our costs  and may  reduce or  eliminate  the  competitive
pricing advantage we seek to enjoy.

A number  of state  regulators  have  recently  taken  the  position  that  VoIP
providers  are  telecommunications  providers  and must  register as such within
their states.  VoIP  operators have resisted such  registration  on the position
that VoIP is not, and should not be, subject to such regulations because VoIP is
an information  service,  not a  telecommunication  service. In a recent federal
court decision,  the Minnesota Public Utilities Commission was enjoined in their
attempt  to  enforce  traditional  phone  regulations  against  Vonage,  a  VoIP
provider.  However,  other states are not bound by that  decision and may reject
the VoIP  operator's  position  and may seek to  subject  us to  regulation  and
require us to pay associated charges and taxes. If states are successful in such
regulatory efforts, our business,  financial condition and results of operations
could be materially and adversely affected.


                                       21
<PAGE>

Our ability to offer  services  outside  the U.S.  is also  subject to the local
regulatory environment, which may be complicated and often uncertain. Regulatory
treatment of Internet telephony outside the United States varies from country to
country.

PRICING  PRESSURES  AND  INCREASING  USE  OF  VoIP  TECHNOLOGY  MAY  LESSEN  OUR
COMPETITIVE PRICING ADVANTAGE.

One of the main  competitive  advantages of our current and planned VoIP service
offerings is the ability to provide discounted local and long distance telephony
services by taking  advantage of cost savings achieved by carrying voice traffic
employing  VoIP  technology,  as  compared to  carrying  calls over  traditional
networks.  In recent years, the price of telephone service has fallen. The price
of telephone  service may continue to fall for various  reasons,  including  the
adoption of VoIP technology by other communications carriers. Many carriers have
adopted  pricing  plans  such that the rates  that they  charge  are not  always
substantially  higher  than the rates that VoIP  providers  charge  for  similar
service.  In addition,  other  providers of long distance  services are offering
unlimited or nearly  unlimited  use of some of their  services for  increasingly
lower monthly rates.

WE RELY ON INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS.

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

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 acquired or which we have developed.  However,  effective  intellectual
property  protection may not be available in every country in which our services
are distributed or made available  through the Internet.  Policing  unauthorized
use of our proprietary information is difficult. Legal standards relating to the
validity,  enforceability  and  scope of  protection  of  proprietary  rights in
Internet-related  businesses  are also uncertain and still  evolving.  We cannot
assure you about the future viability or value of any of our proprietary rights.

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

o     be time-consuming;

o     result in significant costs;

o     subject us to significant liability for damages;

o     result in invalidation of our proprietary rights;

o     divert management's attention;

o     cause product release delays; or

o     require us to redesign our products or require us to enter into royalty or
      licensing  agreements that may not be available on terms acceptable to us,
      or at all.

We license from third parties various technologies  incorporated into our 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
websites may be accessed,  or for any or all of the top-level  domain names that


                                       22
<PAGE>

may be introduced.  The relationship between regulations  governing domain names
and laws protecting proprietary rights is unclear. Therefore, we may not be able
to prevent third parties from acquiring  domain names that infringe or otherwise
decrease the value of our trademarks and other proprietary rights.

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

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

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 or
emerging last mile  technologies  such as cable,  digital  subscriber lines, and
wireless local loop,  will not be a viable  alternative  to traditional  circuit
switched telephony unless such networks and technologies can provide reliability
and quality consistent with these standards.

WE ARE UNABLE TO PREDICT THE VOLUME OF USAGE AND OUR CAPACITY NEEDS FOR OUR VOIP
BUSINESS; DISADVANTAGEOUS CONTRACTS WOULD REDUCE OUR OPERATING MARGINS.

We have  entered  into a  number  of,  and may have to  enter  into  additional,
long-term   agreements   (generally   from  one  to  five   years)   for  leased
communications  transmission  capacity  with  various  carriers.  Many of  these
agreements  have  minimum  use  requirements  pursuant  to  which we are able to
negotiate  lower overall per minute usage rates assuming the  utilization of all
of such  minutes.  To the extent  that we have  overestimated  (or in the future
overestimate)  our call volume,  we are  obligated to pay for more  transmission
capacity than we actually use, resulting in costs without corresponding revenue.
Given the recent  introduction  of our  voiceglo  VoIP  service  offerings,  our
minimum  commitments under existing carrier agreements  presently greatly exceed
our actual usage.  Conversely,  in the future,  if we underestimate our capacity
needs, we may be required to obtain  additional  transmission  capacity  through
more  expensive  means or such capacity may not be available.  As a result,  our
margins  could be reduced and our business,  financial  condition and results of
operations could be materially and adversely affected.

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

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

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

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

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

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 24% and 23% for
the years ended December 31, 2003 and 2002,  respectively.  Because of the large
installed base of personal computers, these revenue and gross margin percentages
may fluctuate with changes in the PC game market. However, the Company is unable
to predict when, if ever, there will be a turnaround in the PC game market.

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

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

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


                                       23
<PAGE>

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

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

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

The  development  of the  Internet  advertising  market has slowed  dramatically
during the last three  years and if it  continues  to slow  down,  our  business
performance would continue to be materially adversely affected.

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

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

o     our ability to obtain new customers at a reasonable cost,  retain existing
      customers and encourage repeat purchases;

o     the likelihood that both online and retail purchasing trends may rapidly
      change;

o     the level of product returns;

o     merchandise shipping costs and delivery times;

o     our ability to manage inventory levels;

o     our ability to secure and maintain relationships with vendors;

o     the  possibility  that our vendors may sell their  products  through other
      sites; and

o     intense  competition  for  electronic  commerce  revenues,   resulting  in
      downward pressure on gross margins.

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


                                       24
<PAGE>

REVENUE IN PRIOR PERIODS IS NOT INDICATIVE OF FUTURE REVENUE.

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

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

OUR QUARTERLY OPERATING RESULTS FLUCTUATE AND VARY BY SEASON.

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

o     acquisitions of new businesses or sales of our assets;

o     declines in the number of sales or technical employees;

o     the level of traffic on our websites;

o     the overall demand for Internet telephony services,  Internet  advertising
      and electronic commerce;

o     the  addition  or  loss  of  VoIP  customers,  advertisers  on  our  games
      properties and electronic commerce partners on our websites;

o     overall usage and acceptance of the Internet;

o     seasonal  trends in advertising  and electronic  commerce sales and member
      usage;

o     other costs relating to the maintenance of our operations;

o     the restructuring of our business;

o     failure to  generate  significant  revenues  and profit  margins  from new
      products and services;

o     financial  performance  of other  Internet  companies who advertise on our
      site; and

o     competition from others providing services similar to those of ours.

OUR LIMITED OPERATING HISTORY MAKES FINANCIAL FORECASTING DIFFICULT.

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

o     maintain levels of user traffic on our e-commerce websites;

o     maintain or increase the percentage of our off-line advertising  inventory
      sold;

o     maintain  or increase  both CPM levels and  sponsorship  revenues  for our
      games magazine;

o     adapt to meet changes in our markets and competitive developments;

o     develop or acquire content for our services; and

o     identify, attract, retain and motivate qualified personnel.

Moreover,  we acquired DPT on May 28, 2003, as a result of our decision to enter
the VoIP services  business.  DPT began its  operations in October 2002, and its
limited operating history, as well as our inexperience in the Internet telephony
business will make financial forecasting even more difficult.


                                       25
<PAGE>

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

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

o     our key employees will be able to work together effectively as a team;

o     we will be able to retain the remaining members of our management team;

o     we will be able to hire, train and manage our employee base;

o     our  systems,  procedures  or  controls  will be  adequate  to support our
      operations; and

o     our management  will be able to achieve the rapid  execution  necessary to
      fully exploit the market opportunity for our products and services.

WE DEPEND ON HIGHLY QUALIFIED TECHNICAL AND MANAGERIAL PERSONNEL.

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

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

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

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  Vice  President  of  Finance  and  Director,  Ms.  Robin  Lebowitz  is also
affiliated with Dancing Bear Investments.  She is also an officer or director of
other companies or entities controlled by Mr. Egan and Mr. Cespedes.

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

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

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


                                       26
<PAGE>

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

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

ONLINE CREDIT CARD FRAUD CAN HARM OUR BUSINESS

The sale of our  products and  services  over the Internet  exposes us to credit
card fraud risks. Many of our products and services, including our voiceglo VoIP
services,  can be ordered or established (in the case of new voiceglo  accounts)
over the Internet using a major credit card for payment.  The Company is exposed
to the risk that some of these  credit  card  accounts  are stolen or  otherwise
fraudulently obtained. In general, the Company is not able to recover fraudulent
credit card charges from such accounts.  In addition to the loss of revenue from
such  fraudulent  credit card use,  the  Company  also  remains  liable to third
parties  whose  products  or  services  are  engaged  by the  Company  (such  as
termination  fees  due  telecommunications  providers)  in  connection  with the
services being  provided by the Company.  We attempt to manage these fraud risks
through our internal controls and our monitoring and blocking systems.  If those
efforts  are  not   successful,   fraud  could  cause  our  revenue  to  decline
significantly and our business, financial condition and results of operations to
be materially and adversely affected.

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

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

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

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

The  market  for  users and  Internet  advertising  among  websites  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 websites compete for users. Competitor websites include other games
information  networks and various  other types of websites.  We believe that the
principal competitive factors in attracting users to a site are:

o     functionality of the website;

o     brand recognition;

o     affinity and loyalty;

o     broad demographic focus;


                                       27
<PAGE>

o     open access for visitors;

o     critical mass of users;

o     attractiveness of content and services to users; and

o     pricing and customer service for electronic commerce sales.

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

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

o     electronic commerce websites, such as Amazon.com; and

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

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

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

o     larger customer bases;

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

o     not seeking to sell their businesses.

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

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 websites 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 websites may be sold by the maker of the product directly,  or by
other websites.  Competition among Internet  retailers,  our electronic commerce
partners and product makers may have a material adverse effect on our ability to
generate  revenues  through  electronic  commerce  transactions  or  from  these
electronic commerce partners.

WE ARE INVOLVED IN SECURITIES CLASS ACTION LITIGATION.

We are a party to the securities class action litigation  described in Note 9 to
the Consolidated  Financial  Statements - "Commitments and  Contingencies".  The
defense of the litigation may increase our expenses and will occupy management's
attention  and  resources,  and an  adverse  outcome  in this  litigation  could
materially adversely affect us.

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

 Michael S. Egan, our Chairman and Chief Executive Officer, beneficially owns or
controls, directly or indirectly,  approximately 59 million shares of our Common
Stock as of March 24, 2004, which in the aggregate represents  approximately 43%
of the outstanding  shares of our Common Stock (treating as outstanding for this
purpose the shares of Common Stock  issuable  upon exercise of the options owned
by Mr. Egan or his  affiliates).  Accordingly,  Mr. Egan would likely be able to
exercise significant influence over, if not control, any stockholder vote.

OUR STOCK PRICE IS VOLATILE.

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

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

o     quarterly variations in our operating results;

o     competitive announcements;


                                       28
<PAGE>

o     sales of any of our remaining games properties;

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

o     news relating to trends in our markets.

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

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

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

As  of  December  31,  2003,   there  were   outstanding   options  to  purchase
approximately  9,943,000 shares of Common Stock,  which become eligible for sale
in the public market from time to time  depending on vesting and the  expiration
of lock-up agreements.  The issuance of these securities is registered under the
Securities Act and  consequently,  subject to certain volume  restrictions as to
options owned by executive officers, will be freely tradable. In addition, as of
December  31,  2003,  there  were   outstanding   warrants  to  purchase  up  to
approximately 20,052,000 shares of our Common Stock upon exercise, together with
an additional  2,750,000  shares  issuable upon exercise of warrants  subject to
earn-out  arrangements.  Additionally,  as of December 31, 2003, the outstanding
shares of our Series F Preferred Stock and the $1,750,000  Convertible Notes are
convertible into  approximately  16,667,000  shares and 19,444,000 shares of our
Common  Stock,  respectively.  Substantially  all  of our  stockholders  holding
restricted  securities,  including shares issuable upon the exercise of warrants
to purchase our Common Stock, are entitled to registration  rights under various
conditions.

 In March 2004, theglobe.com, inc. completed a private offering of 333,816 units
(the  "Units") for a purchase  price of $85 per Unit (the  "Private  Offering").
Each Unit consisted of 100 shares of the Company's  common stock and warrants to
acquire  50 shares of the  common  stock  (the  "Warrants").  The  Warrants  are
exercisable  for a period of five years  commencing  60 days  after the  initial
closing at an initial exercise price of $.001 per share. The aggregate number of
shares of common stock issued in the Private  Offering  was  33,381,647  shares,
together  with  Warrants to acquire an aggregate of  16,690,824  shares.  We are
contractually  obligated  to register  the shares of common  stock issued in the
Private Offering as well as the shares of common stock underlying the Warrants.

In  connection  with the March 2004 Private  Offering,  Mr. Egan,  our Chairman,
Chief Executive Officer and principal stockholder,  together with certain of his
affiliates and other parties,  converted a $2,000,000  Convertible Bridge Note ,
an aggregate of $1,750,000 of Secured Convertible Notes and all of the Company's
outstanding  shares  of  Series F  Preferred  Stock,  and  exercised  all of the
warrants issued in connection with the foregoing  Secured  Convertible Notes and
Series F Preferred Stock,  together with certain warrants issued to Dancing Bear
Investments  (an affiliate of Mr.  Egan).  As a result of such  conversions  and
exercises, the Company issued an aggregate of approximately 48.75 million shares
of Common Stock.  After taking into account the  conversions,  exercises and new
investment, as of March 24, 2004, there were outstanding warrants to purchase up
to approximately  24,254,000 shares of our Common Stock upon exercise,  together
with an additional  2,750,000  shares issuable upon exercise of warrants subject
to earn-out arrangements.

WE ARE CONTRACTUALLY  OBLIGATED TO REGISTER CERTAIN  OUTSTANDING  SECURITIES AND
MAY FACE SUBSTANTIAL PENALTIES IF WE FAIL TO DO SO.

 In connection with the March 2004 Private  Offering,  we issued an aggregate of
33,381,647  shares of Common  Stock,  together  with  Warrants  to  acquire  and
additional  16,690,824 shares (the  "Securities").  Pursuant to the terms of the
Private Offering, the Company is contractually  obligated to file a registration
statement  relating to the resale of the  Securities  on or about April 22, 2004
and to cause such registration statement to become effective on or about July 6,
2004 (or 30 days earlier if such  registration  statement is not reviewed by the
Securities and Exchange Commission).  In the event the Company is late in any of
its registration obligations,  it will be liable for payment of a late fee of 5%
of the amount raised in the Private Offering per month, not to exceed 25% in the
aggregate.  Any such late fee may be payable in either cash or additional shares
of Common Stock (valued for such purpose at $0.57 per share), or any combination
of the two, at the option of the Company. Any shares so issued would be included
in the  foregoing  registration  statement.  Any such  issuance of shares of our
common stock may be substantially  dilutive of existing shareholders (other than
the investors in the Private Offering to whom such shares would be issued).

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

The shares of our Common Stock were delisted from the NASDAQ  national market in
April 2001 and are now traded in the over-the-counter market on what is commonly
referred  to as the  electronic  bulletin  board or  "OTCBB".  As a  result,  an
investor may find it more difficult to dispose of or obtain accurate  quotations
as to the market value of the  securities.  The trading volume of our shares has
dramatically declined since the delisting.  In addition, we are now subject to a
Rule  promulgated by the Securities and Exchange  Commission that, if we fail to


                                       29
<PAGE>

meet criteria set forth in such Rule, various practice  requirements are imposed
on broker-dealers who sell securities governed by the Rule to persons other than
established customers and accredited investors. For these types of transactions,
the  broker-dealer  must  make  a  special  suitability  determination  for  the
purchaser and have received the purchaser's  written consent to the transactions
prior to sale.  Consequently,  the Rule may have a materially  adverse effect on
the  ability of  broker-dealers  to sell the  securities,  which may  materially
affect the  ability of  shareholders  to sell the  securities  in the  secondary
market.

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

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

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

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

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

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

Certain Delaware laws could have the effect of delaying, deterring or preventing
a change in control of our company. One of these laws prohibits us from engaging
in a business combination with any interested  stockholder for a period of three
years 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.  In addition, the employment contracts of our
Chairman,  CEO and Vice President of Finance  provide for  substantial  lump sum
payments  ranging from 2 (for the Vice  President)  to 10 times (for each of the
Chairman  and CEO) of their  respective  average  combined  salaries and bonuses
(together with the continuation of various benefits for extended periods) in the
event of their  termination  without cause or a termination of the executive for
"good   reason",   which   is   conclusively   presumed   in  the   event  of  a
"change-in-control" (as such terms are defined in such agreements).

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

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

WE CHANGED OUR INDEPENDENT AUDITORS.

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

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

Due to the significant and prolonged decline in the Internet advertising sector,
the Company elected to close its community website at "www.theglobe.com" and its
small business  web-hosting  property at  "www.webjump.com"  in August 2001. The
Company  has  already  sold  substantially  all the  assets of (i)  Kaleidoscope
Networks Limited,  the English subsidiary of Attitude Network Ltd. that operated
GamesDomain.com and GamesDomain.co.uk, (ii) KidsDomain.com and KidsDomain.co.uk,
and (iii) HappyPuppy.com and HappyPuppy.co.uk. In addition, the Company sold the
URL of  webjump.com.  The  Company is seeking  buyers  for its  remaining  games
properties,  Chips & Bits,  Inc., an electronic  commerce  retailer that focuses
primarily on game  enthusiasts'  and Strategy Plus,  Inc., a media property that
publishes a monthly games magazine and a game  enthusiast  website.  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


                                       30
<PAGE>

staff to  support  these  businesses.  In  addition,  the  "theglobe.com"  brand
continues to lose  significant  value since the website  "www.theglobe.com"  was
taken offline  August 15, 2001.  The closing of our community site and our small
business  web-hosting site has also adversely  affected our electronic  commerce
due to the inability of those  websites  after their closure to refer traffic to
the Chips & Bits website.  We cannot assure you that we will be able to sell all
or any of the remaining games business quickly, if at all, or at any significant
price, or that there will be any return to our equity holders. In addition,  the
Company  currently has a significant  net operating  loss carry forward that may
help to offset  Federal income taxes in the future,  should the Company  achieve
profitability.  The rules  governing use of the net operating loss carry forward
asset are complex and depend on a variety of factors, including maintaining some
continuity of existing  business  lines.  There is no guarantee  that we will be
able to maintain  use of the net  operating  loss carry  forward if we choose to
sell our games properties or enter different business lines in the future.

                                       31
<PAGE>

ITEM 7.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS

                                                                           PAGE
                                                                           ----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                           F-1


CONSOLIDATED FINANCIAL STATEMENTS

   Balance Sheets                                                            F-2

   Statements of Operations                                                  F-3

   Statements of Stockholders' Equity and Comprehensive Income(Loss)         F-4

   Statements of Cash Flows                                                  F-5

   Notes to Financial Statements                                             F-7


                                       32
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
theglobe.com, inc. and Subsidiaries

We have audited the  accompanying  consolidated  balance sheets of theglobe.com,
inc.  and  Subsidiaries  as of  December  31,  2003 and  2002,  and the  related
consolidated  statements of operations,  stockholders'  equity and comprehensive
income (loss),  and cash flows for each of the years ended December 31, 2003 and
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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to  obtain  reasonable  assurance  about  whether  the  consolidated   financial
statements are free of material misstatement.  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
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
theglobe.com,  inc. and  Subsidiaries  as of December 31, 2003 and 2002, and the
consolidated  results of their  operations  and their cash flows for each of the
years ended December 31, 2003 and 2002, in conformity with accounting principles
generally accepted in the United States.


RACHLIN COHEN & HOLTZ LLP

Fort Lauderdale,  Florida February 20, 2004, except for Note 14, as to which the
date is March 24, 2004


                                      F-1
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                               Pro forma            2003              2002
                                                            -------------      -------------      -------------
                             ASSETS                             (Unaudited)
                             ------                              (Note 14)
<S>                                                         <C>                <C>                <C>
Current Assets:
  Cash and cash equivalents                                 $  30,236,000      $   1,061,702      $     725,422
  Marketable securities                                      ============            267,970                 --
  Accounts receivable, less allowance for doubtful
   accounts of approximately $113,000 and $130,000                                   958,487          1,247,390
  Inventory, less reserves of approximately $109,000
   and $100,000                                                                      770,314            363,982
  Prepaid expenses                                                                   550,930            331,114
  Deposits on inventory purchases                                                    820,675                 --
  Other current assets                                                                26,357                 --
                                                                               -------------      -------------
    Total current assets                                                           4,456,435          2,667,908

Intangible assets                                                                    199,020            164,960
Property and equipment, net                                                        2,416,383            174,117
Other assets                                                                         100,240             40,000
                                                                               -------------      -------------

       Total assets                                                            $   7,172,078      $   3,046,985
                                                                               =============      =============


               LIABILITIES AND STOCKHOLDERS' EQUITY
               ------------------------------------
Current Liabilities:
  Accounts payable                                                             $   1,935,142      $   1,395,929
  Accrued expenses and other current liabilities                                     840,376            447,189
  Deferred revenue                                                                   176,591            169,519
  Notes payable and current portion of long-term debt                                    877            123,583
                                                                               -------------      -------------
       Total current liabilities                                                   2,952,986          2,136,220

Long-term debt                                              $     285,000          1,913,610             87,852
Other long-term liabilities                                  ============            124,943                 --
                                                                               -------------      -------------
       Total liabilities                                                           4,991,539          2,224,072
                                                                               -------------      -------------

Stockholders' Equity:
  Preferred stock, $0.001 par value; 3,000,000
    shares authorized; 333,333 shares issued and
    outstanding at December 31, 2003,at liquidation value   $          --            500,000                 --
  Common stock, $0.001 par value; 200,000,000 shares         ============
    authorized; 50,245,574 and 31,081,574 shares issued
    at December 31, 2003 and 2002, respectively
    132,403,130 pro forma (unaudited)                       $     132,403             50,246             31,082
                                                             ============
  Additional paid-in capital                                $ 269,523,000        238,301,862        218,310,565
  Treasury stock, 699,281 common shares, at cost             ============           (371,458)          (371,458)
  Accumulated other comprehensive income                                               1,562                 --
  Accumulated deficit                                                           (236,301,673)      (217,147,276)
                                                                               -------------      -------------
       Total stockholders' equity                           $  32,984,000          2,180,539            822,913
                                                            =============      -------------      -------------
       Total liabilities and stockholders' equity                              $   7,172,078      $   3,046,985
                                                                               =============      =============
</TABLE>

See notes to consolidated financial statements.


                                      F-2
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                              2003             2002
                                                          ------------      ------------
<S>                                                       <C>               <C>
Net Revenue:
  Advertising                                             $  2,555,002      $  3,131,371
  Magazine sales                                             2,014,458         3,461,387
  Electronic commerce and other                              1,462,911         3,074,327
  Telephony services                                           548,081                --
                                                          ------------      ------------
                                                             6,580,452         9,667,085
Operating Expenses:
  Cost of products and publications sold                     3,252,498         5,563,010
  Data communications, telecom and network operations        1,448,840                --
  Sales and marketing                                        3,297,897         3,523,226
  Product development                                          902,415           652,997
  General and administrative                                 5,253,755         2,780,060
  Depreciation                                                 257,560            88,580
  Amortization of intangible assets                             72,182                --
  Impairment charge                                            908,384                --
                                                          ------------      ------------
                                                            15,393,531        12,607,873
                                                          ------------      ------------

Loss from Operations                                        (8,813,079)       (2,940,788)
                                                          ------------      ------------

Other Income (Expense):
  Interest income (expense), net                            (1,777,689)          349,895
  Other expense, net                                          (443,629)          (11,768)
                                                          ------------      ------------
                                                            (2,221,318)          338,127
                                                          ------------      ------------

Loss Before Provision for Income Taxes                     (11,034,397)       (2,602,661)

Provision for Income Taxes                                          --            12,000
                                                          ------------      ------------
Net Loss                                                  $(11,034,397)     $ (2,614,661)
                                                          ============      ============

Basic and Diluted Net Loss Per Common Share               $      (0.49)     $      (0.09)
                                                          ============      ============

Weighted Average Common Shares Outstanding                  38,710,917        30,382,293
                                                          ============      ============
</TABLE>

See notes to consolidated financial statements.


                                      F-3
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                                                                                                  Accumulated
                                                                Common Stock          Additional                     Other
                                           Preferred     --------------------------    Paid-in       Treasury    Comprehensive
                                             Stock          Shares        Amount       Capital         Stock      Income (Loss)
                                          ------------   ------------  ------------  ------------  ------------   ------------
<S>                                       <C>              <C>         <C>           <C>           <C>            <C>
Balance at 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 (loss) on
    securities                                      --             --            --            --            --           (650)

  Comprehensive loss                                --             --            --            --            --             --


  Issuances of stock options:
    Severance arrangement                           --             --            --        13,000            --             --
    Acquisition                                     --             --            --        42,000            --             --
                                          ------------   ------------  ------------  ------------  ------------   ------------

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

Year Ended December 31, 2003:
  Net loss

  Net unrealized gain on
    securities                                      --             --            --            --            --          1,562

  Comprehensive loss                                --             --            --            --            --             --

  Issuances of preferred stock:
    Series F Preferred Stock                   500,000             --            --       500,000            --             --
    Series G Automatically Converting
      Preferred Stock                        7,315,000             --            --     8,945,690            --             --

  Issuances of common stock:
    Conversion of Series G Automatically
      Converting Preferred Stock            (7,315,000)    17,360,000        17,360     7,297,640            --             --
    Acquisition of Direct Partner
      Telecom, Inc.                                 --      1,375,000         1,375       636,625            --             --
    Exercise of stock options                       --        429,000           429       118,166            --             --

  Beneficial conversion feature of
    Convertible Notes                               --             --            --     1,750,000            --             --

  Employee stock-based compensation                 --             --            --       417,567            --             --

  Issuances of stock options
    to non-employees                                --             --            --       225,609            --             --

  Contributed capital in lieu of
    salary by officer                               --             --            --       100,000            --             --
                                          ------------   ------------  ------------  ------------  ------------   ------------

Balance, December 31, 2003                $    500,000     50,245,574  $     50,246  $238,301,862  $   (371,458)  $      1,562
                                          ============   ============  ============  ============  ============   ============
</TABLE>

                                                 Accumulated
                                                    Deficit          Total
                                                 -------------   -------------

Balance at 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 (loss) on
    securities                                              --            (650)
                                                                 -------------
  Comprehensive loss                                        --      (2,493,795)
                                                                 -------------

  Issuances of stock options:
    Severance arrangement                                   --          13,000
    Acquisition                                             --          42,000
                                                 -------------   -------------

Balance, December 31, 2002                        (217,147,276)        822,913

Year Ended December 31, 2003:
  Net loss                                         (11,034,397)    (11,034,397)

  Net unrealized gain on
    securities                                              --           1,562
                                                                 -------------
  Comprehensive loss                                        --     (11,032,835)
                                                                 -------------
  Issuances of preferred stock:
    Series F Preferred Stock                          (500,000)        500,000
    Series G Automatically Converting
      Preferred Stock                               (7,620,000)      8,640,690

  Issuances of common stock:
    Conversion of Series G Automatically
      Converting Preferred Stock                            --              --
    Acquisition of Direct Partner Telecom, Inc.             --         638,000
    Exercise of stock options                               --         118,595

  Beneficial conversion feature of
    Convertible Notes                                       --       1,750,000

  Employee stock-based compensation                         --         417,567

  Issuances of stock options
    to non-employees                                        --         225,609

  Contributed capital in lieu of
    salary by officer                                       --         100,000
                                                 -------------   -------------

Balance, December 31, 2003                       $(236,301,673)  $   2,180,539
                                                 =============   =============


See notes to consolidated financial statements.


                                       F-4


<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                              2003          2002
                                                                         ------------   ------------
<S>                                                                      <C>            <C>
Cash Flows from Operating Activities:
  Net loss                                                               $(11,034,397)  $ (2,614,661)
  Adjustments to reconcile net loss to net cash
    and cash equivalents used in operating activities:
      Depreciation and amortization                                           329,742         88,580
      Provisions for excess and obsolete inventory                            110,126             --
      Provisions for uncollectible accounts receivable                        114,888             --
      Non-cash interest expense                                             1,739,635             --
      Reserve against amounts loaned to Internet venture                      495,000             --
      Employee stock compensation                                             417,567             --
      Compensation related to non-employee stock options                      225,609             --
      Options granted in connection with severance arrangement                     --         13,000
      Non-cash impairment charge                                              908,384             --
      Non-cash compensation                                                   100,000             --
      Loss on disposal or write-off of equipment                               61,072            855
      Foreign exchange loss on Canadian denominated debt                       19,623             --
      Non-cash gain on settlements of liabilities                             (64,207)            --
      Disposal of Attitude Network- translation loss                               --        121,516
      Gain on sale of Happy Puppy                                                  --       (134,500)
      Gain on sale of marketable securities                                        --           (650)

    Changes in operating assets and liabilities, net of acquisition and
      dispositions:
        Accounts receivable, net                                              328,453        290,502
        Inventory, net                                                       (516,458)       168,583
        Prepaid and other current assets                                   (1,058,806)       706,856
        Accounts payable                                                      508,862         55,301
        Accrued expenses and other current liabilities                        253,215       (592,047)
        Deferred revenue                                                        7,072        (59,957)
        Other long-term liabilities                                           122,487             --
                                                                         ------------   ------------
            Net cash and cash equivalents used in operating activities     (6,932,133)    (1,956,622)
                                                                         ------------   ------------

Cash Flows from Investing Activities:
  Purchases of marketable securities                                      (10,345,828)            --
  Proceeds from sales and maturities of marketable securities              10,079,420         57,650
  Cash acquired in acquisition of business                                     60,948             --
  Proceeds from sale of properties                                                 --        135,000
  Purchases of property and equipment                                      (2,424,791)       (32,250)
  Amounts loaned to Internet venture                                         (495,000)       (40,000)
  Patent costs incurred                                                       (62,492)            --
  Payment of security deposits, net                                            (7,600)            --
  Proceeds from sale of property and equipment                                     --         11,000
                                                                         ------------   ------------
            Net cash and cash equivalents provided by (used in)
                investing activities                                       (3,195,343)       131,400
                                                                         ------------   ------------

Cash Flows from Financing Activities:
  Borrowings on notes payable and long-term debt                            1,750,000             --
  Payments on notes payable and long-term debt                               (545,529)       (13,184)
  Proceeds from issuances of preferred stock, net                           9,140,690             --
  Proceeds from exercise of common stock options                              118,595             --
                                                                         ------------   ------------
            Net cash and cash equivalents provided by (used in)
                financing activities                                       10,463,756        (13,184)
                                                                         ------------   ------------

Net Increase (Decrease) in Cash and Cash Equivalents                          336,280     (1,838,406)

Cash and Cash Equivalents, Beginning                                          725,422      2,563,828
                                                                         ------------   ------------

Cash and Cash Equivalents, Ending                                        $  1,061,702   $    725,422
                                                                         ============   ============
                                                                                                     (Continued)

</TABLE>


See notes to consolidated financial statements.


                                      F-5
<PAGE>

                                   THEGLOBE.COM, INC. AND SUBSIDIARIES

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (Continued)

<TABLE>
<CAPTION>
                                                                                    Year Ended December 31,
                                                                                      2003            2002
                                                                                  ------------    ------------
<S>                                                                               <C>             <C>
Supplemental Disclosure of Cash Flow Information:
  Cash paid during the year for:
    Interest                                                                      $     39,819    $     25,018
                                                                                  ============    ============
    Income taxes                                                                  $         --    $         --
                                                                                  ============    ============

Supplemental Disclosure of Non-Cash Transactions:
    Common stock and warrants issued in connection with acquisition
       of Direct Partner Telecom, Inc.                                            $    638,000    $         --
                                                                                  ============    ============
    Conversion of Series G Automatically Converting Preferred
       Stock into Common Stock                                                    $  7,315,000    $         --
                                                                                  ============    ============
    Additional paid-in capital attributable to beneficial conversion features of
       Series F Preferred Stock and $1,750,000 Convertible Notes                  $  2,250,000    $         --
                                                                                  ============    ============
    Preferred dividends recorded as a result of beneficial conversion
       features of preferred stock issued                                         $  8,120,000    $         --
                                                                                  ============    ============
    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-6
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2003 AND 2002

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE COMPANY

theglobe.com, inc. (the "Company" or "theglobe") was incorporated on May 1, 1995
(inception) and commenced operations on that date. Originally,  theglobe.com was
an online  community with registered  members and users in the United States and
abroad.  That  product  gave  users the  freedom  to  personalize  their  online
experience by publishing their own content and by interacting with others having
similar interests.  However,  due to the deterioration of the online advertising
market,  the Company was forced to restructure  and ceased the operations of its
online community on August 15, 2001. The Company then sold most of its remaining
online and offline  properties.  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.

On June 1, 2002, Chairman Michael S. Egan and Director Edward A. Cespedes became
Chief Executive Officer and President of the Company,  respectively. The Company
continues  to operate its  Computer  Games  print  magazine  and the  associated
website  Computer  Games  Online  (www.cgonline.com),   as  well  as  the  games
distribution  business of Chips & Bits,  Inc.  (www.chipsbits.com).  The Company
continues  to  actively  explore  a number  of  strategic  alternatives  for its
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 Internet  Protocol
("VoIP") assets and is now aggressively  pursuing  opportunities related to this
acquisition  under the brand name,  voiceglo.  In exchange  for the assets,  the
Company issued warrants to acquire  1,750,000  shares of its Common Stock and an
additional 425,000 warrants as part of an earn-out structure upon the attainment
of certain  performance  targets.  The  earn-out  performance  targets  were not
achieved and the 425,000 earn-out warrants expired on December 31, 2003.

On May 28, 2003, the Company acquired Direct Partner Telecom,  Inc.  ("DPT"),  a
company engaged in VoIP telephony  services in exchange for 1,375,000  shares of
the  Company's  Common  Stock and the  issuance of  warrants to acquire  500,000
shares of the  Company's  Common  Stock.  The  transaction  included an earn-out
arrangement  whereby the former shareholders of DPT may earn additional warrants
to acquire up to 2,750,000  shares of the Company's  Common Stock at an exercise
price of $0.72 per share upon the attainment of certain  performance  targets by
DPT over  approximately  a three year period  following the date of acquisition.
DPT was a  specialized  international  facilities-based  communications  carrier
providing VoIP communications services to emerging countries.  DPT was formed in
2002 to  leverage  its  management's  international  relationships  and  network
operations  experience in the deployment of  international  voice and multimedia
networks.  DPT  is a  licensed  facilities-based  carrier  headquartered  in Ft.
Lauderdale,  Florida with switching  facilities in New York, New York and Miami,
Florida. The DPT network provides "next generation"  packet-based  telephony and
value added data  services to carriers and  businesses  in the United States and
Internationally.

The Company acquired all of the physical assets and intellectual property of DPT
and  originally  planned to continue to operate the company as a subsidiary  and
engage in the  provision of VoIP  services to other  telephony  businesses  on a
wholesale transactional basis. In the first quarter of 2004, the Company decided
to  suspend  DPT's  wholesale   business  and  dedicate  the  DPT  physical  and
intellectual  assets to its retail VoIP business,  which is conducted  under the
name "voiceglo". As a result, the Company wrote off the goodwill associated with
the purchase of DPT and intends to employ these physical assets in the build out
of the VoIP network.

As of December 31, 2003, the Company's revenue sources were principally from the
sale of print  advertising  in its Computer  Games  magazine;  the sale of video
games and related products  through Chips & Bits,  Inc., its games  distribution
business;  and the sale of its Computer  Games magazine  through  newsstands and
subscriptions.  Management's  intent,  going forward,  is to devote  substantial
monetary,  management  and human  resources  to the  Company's  "voiceglo"  VoIP
business.

                   Profitability and Liquidity Considerations

At December 31, 2003, the Company reflected  stockholders' equity of $2,180,539.
However,  as of December 31,  2003,  the Company had an  accumulated  deficit of
$236,301,673  and had incurred  net losses for each of the years ended  December
31, 2003 and 2002 of $11,034,397  and $2,614,661,  respectively.  Since November
2002, the Company has been expending  significant  resources in connection  with
the  launch  of its VoIP  telephony  business.  In  response  to the  previously
described circumstances, management has the following plans:


                                      F-7
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

                                    Liquidity

As further discussed in Note 14,  "Subsequent  Events," during the first quarter
of 2004,  the  Company  completed a private  offering of common  stock for total
proceeds of approximately  $28,374,400.  The purpose of the private offering was
to raise funds for use primarily in the Company's  developing voiceglo business,
including  the  deployment  of networks,  website  development,  marketing,  and
capital  infrastructure  expenditures and working capital.  Proceeds may also be
used in connection with theglobe's other existing or future business operations.

                                  Profitability

In order to achieve and maintain  profitability the Company believes it needs to
build and sustain a customer  base of a certain  size.  Once it has reached this
size,  revenue  will be  sufficient  to cover  fixed costs  associated  with the
construction   and   maintenance   of  the   telephony   services   network  and
administrative  overhead.  To reach  this  size,  the  Company  must  execute  a
marketing plan which attracts a substantial number of potential customers to the
Company's website. From this number, management believes an estimated percentage
will download the Company's free software. Of that group,  management believes a
percentage will upgrade to a monthly pay-as-you go plan.

The growth needed to maintain  profitability will be a function of the Company's
ability  to manage  customer  churn and to  continue  to  upgrade  the  network.
Customer churn rate should become predictable as the customer  population grows.
Incremental  network  expansion and upgrade  should cost less, on a per customer
basis, then the initial network build out.

                                     Summary

Management  believes  that the  actions  presently  being  taken by the  Company
provide the opportunity for the Company to improve profitability. However, there
can be no assurances that management's plans will be achieved.

(a) PRINCIPLES OF CONSOLIDATION

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

(b) USE OF ESTIMATES

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

(c) CASH AND CASH EQUIVALENTS

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

(d) MARKETABLE SECURITIES

The  Company  accounts  for its  investment  in debt and  equity  securities  in
accordance with Statement of Financial  Accounting  Standards  ("SFAS") No. 115,
"Accounting  for Certain  Investments in Debt and Equity  Securities."  All such
investments  are  classified  as  available-for-sale  as of December  31,  2003.
Available-for-sale  securities  are stated at market value,  which  approximates
fair value, and unrealized  holding gains and losses are excluded from earnings,
net of  applicable  income taxes,  and included as a component of  stockholders'
equity until realized.


                                      F-8
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

The following is a summary of  available-for-sale  securities as of December 31,
2003:

                                               Gross
                                 Cost      Unrealized Gain   Fair Value
                               --------    ---------------   ----------
Preferred Securities           $225,000       $     --        $225,000
U.S. Treasury Bills              41,408          1,562          42,970
                               --------       --------        --------

      Total                    $266,408       $  1,562        $267,970
                               ========       ========        ========

During the year ended December 31, 2003, the Company had no significant realized
gains on sales of  available-for-sale  securities.  The gross unrealized gain of
$1,562 as of December 31, 2003,  has been  included in  stockholders'  equity as
"Accumulated  Other  Comprehensive  Income"  in  the  accompanying  consolidated
balance sheet. The Company had no  available-for-sale  securities as of December
31, 2002.

(e) 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, 2003 and 2002 due to their short maturities.

(f) INVENTORY

Inventories,  consisting  primarily of products available for sale, are recorded
on a first in, first out basis and valued at the lower of cost or market  value.
The Company's reserves for excess and obsolete inventory as of December 31, 2003
and December 31, 2002 were approximately $109,000 and $100,000, respectively.

(g) LONG-LIVED ASSETS

Long-lived  assets,  including  property  and  equipment,   goodwill  and  other
intangible  assets are reviewed for  impairment  annually or 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.

During the first quarter of 2004,  the Company's  management  decided to suspend
DPT's  wholesale  business and to dedicate  the DPT  physical  and  intellectual
assets to its retail  VoIP  business.  As a result,  the  Company  reviewed  the
long-lived  assets  associated  with the wholesale VoIP business for impairment.
Goodwill of $577,134 and the unamortized  balance of the non-compete  intangible
asset of $331,250  recorded in connection  with the May 2003  acquisition of DPT
were  written  off  and  recorded  as an  impairment  loss  in the  accompanying
statement of operations for the year ended  December 31, 2003.  Refer to Note 2,
"Acquisitions and Disposition" for a discussion of the purchase of DPT.

Intangible assets included in the accompanying  consolidated balance sheet as of
December  31, 2003,  are being  amortized  on a  straight-line  basis over their
estimated useful lives or three years.


                                      F-9
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

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, as follows:

                                                     Estimated
                                                   Useful Lives
                                                   -------------
                 Network equipment                     3 years
                 Computer equipment and software       3 years
                 Office equipment                      3 years
                 Furniture and fixtures              3-7 years
                 Leasehold improvements                5 years

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

(h) CONCENTRATION OF CREDIT RISK

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

(i) REVENUE RECOGNITION

ADVERTISING

Advertising  revenue  from  the sale of print  advertisements  under  short-term
contracts in the games information  magazine,  Computer Games, are recognized at
the on-sale date of the magazine.

The Company  participates  in barter  transactions  whereby  the Company  trades
marketing  data in exchange  for  advertisements  in the  publications  of other
companies.  Barter revenue 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 in  other  companies'
magazines,  which  typically  occurs within one to six months from the period in
which barter revenue is recognized.  Barter revenue represented approximately 2%
and 1% of  consolidated  net revenue for the years ended  December  31, 2003 and
2002, respectively.

MAGAZINE SALES

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.

ELECTRONIC COMMERCE AND OTHER

Sales of video games and related  products from the  Company's  online store are
recognized  as revenue  when the  product is  shipped to the  customer.  Amounts
billed to  customers  for  shipping  and  handling  charges are  included in net
revenue.  The Company  provides an  allowance  for returns of  merchandise  sold
through its online store.  The  allowance  for returns  provided to date has not
been significant.

TELEPHONY SERVICES

VoIP telephony  services revenue  represents fees charged to customers for voice
services and is recognized based on minutes of customer usage or as services are
provided.  The Company records payments received in advance for prepaid services
as deferred revenue until the related services are provided. Sales of peripheral


                                      F-10
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

VoIP  telephony  equipment are recognized as revenue when the product is shipped
to the customer  Amounts  billed to customers for shipping and handling  charges
are included in net revenue.

(j) ADVERTISING COSTS

Advertising  costs  are  expensed  as  incurred  and are  included  in sales and
marketing expense.  Advertising costs were  approximately  $411,000 and $182,000
for the years ended December 31, 2003 and 2002, respectively. Barter advertising
costs were  approximately  2% of total net  revenue  for each of the years ended
December 31, 2003 and 2002.

(k) PRODUCT DEVELOPMENT

Product  development  expenses  include  salaries and related  personnel  costs;
expenses incurred in connection with website development,  testing and upgrades;
editorial and content costs;  and costs incurred in the  development of our VoIP
products  offered  under  the  voiceglo  brand.  Product  development  costs and
enhancements to existing products are charged to operations as incurred.

(l) STOCK-BASED COMPENSATION

The Company follows SFAS No. 123,  "Accounting  for  Stock-Based  Compensation",
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 as 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.  The Company
adopted the  disclosure  provisions  of SFAS No. 148 as of December 31, 2002 and
continues 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:

                                    2003              2002
                               -------------     -------------
Net loss - as reported         $ (11,034,397)    $  (2,614,661)
                               =============     =============
Net loss - pro forma           $ (12,438,000)    $  (2,714,000)
                               =============     =============

Basic net loss per share -
   as reported                 $       (0.49)    $       (0.09)
                               =============     =============
Basic net loss per share -
   pro forma                   $       (0.53)    $       (0.09)
                               =============     =============


                                      F-11
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

The per share  weighted-average  fair value of stock options granted during 2003
on a total of 3,907,450 options whose exercise price equaled the market price of
the stock on the grant date was $0.82.  In addition,  500,000 stock options were
granted in 2003 with an exercise  price  below the market  price of the stock on
the grant date and a per share  weighted-average  fair  value of $1.49.  The per
share weighted-average fair value of stock options granted during 2002 was $0.02
on the date of grant.  Fair values of stock  options were  calculated  using the
option-pricing method with the following weighted-average assumptions:


                                       2003       2002
                                     ---------  --------
Risk-free interest rate                  3.00%     4.78%
Expected life                         5 years   10 years
Volatility                                160%  135%-160%
Expected dividend rate                      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. 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.

(m)  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.

(n)  NET LOSS PER COMMON SHARE

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

During the year ended December 31, 2003,  the Company  issued equity  securities
with common stock conversion  features which were  immediately  convertible into
common  stock.  As further  discussed  in Note 7,  "Stockholders'  Equity",  the
Company  accounted for the issuance of these  securities in accordance with EITF
98-5, "Accounting for Convertible Securities with Beneficial Conversion Features
or Contingently Adjustable Conversion Ratios," which resulted in the recognition
of non-cash preferred  dividends totaling  $8,120,000 at the respective dates of
the  securities'  issuance.  Net loss  applicable  to  common  stockholders  was
calculated as follows for the years ended December 31, 2003 and 2002:

                                                2003                  2002
                                          ---------------      ----------------
   Net loss                               $   (11,034,397)     $     (2,614,661)
   Beneficial conversion features of
      preferred stock and warrants             (8,120,000)                   --
                                          ---------------      ----------------
   Net loss applicable to common
      stockholders                        $   (19,154,397)     $     (2,614,661)
                                          ================     =================


                                      F-12
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

Due to the Company's net losses, the effect of potentially  dilutive  securities
or common stock  equivalents  that could be issued was excluded from the diluted
net loss per common share  calculation  due to the  anti-dilutive  effect.  Such
potentially  dilutive  securities and common stock equivalents  consisted of the
following for the years ended December 31:
                                                          2003           2002
                                                       ----------     ----------
            Options to purchase common stock            9,943,000      5,971,000
            Common shares issuable upon conversion
                of Series F Preferred Stock            16,667,000             --
            Common shares issuable upon conversion
                of Convertible Notes                   19,444,000             --
            Common shares issuable upon exercise
                of Warrants                            22,802,000      6,187,000
                                                       ----------     ----------
            Total                                      68,856,000     12,158,000
                                                       ==========     ==========

Refer to Note 14, "Subsequent Events," for a discussion of the conversion of the
Series F Preferred Stock and the Convertible  Notes and the exercise of warrants
during the first quarter of 2004.

(o) COMPREHENSIVE INCOME (LOSS)

The Company reports  comprehensive income (loss) in accordance with the SFAS No.
130, "Reporting  Comprehensive  Income".  Comprehensive  income (loss) generally
represents  all changes in  stockholders'  equity  during the year except  those
resulting from investments by, or distributions to, stockholders. As of December
31, 2003, the Company's  accumulated other comprehensive  income included in the
accompanying  consolidated  balance  sheet  totaled  $1,562.  The Company had no
accumulated other comprehensive income or loss as of December 31, 2002.


(p) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2003, the FASB issued Interpretation 46R, "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 Company has not yet
evaluated the impact of this pronouncement on the Company.

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

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


                                      F-13
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

In November 2002, the FASB issued Interpretation 45, "Guarantor's Accounting and
Disclosure  Requirements  for  Guarantees,   Including  Indirect  Guarantees  of
Indebtedness  of Others"  and an  interpretation  of SFAS No. 5, 57, and 107 and
rescission  of  SFAS   Interpretation  No.  34.  This  statement  addresses  the
disclosures  to be made by a  guarantor  in its  interim  and  annual  financial
statements about its obligations  under  guarantees.  This  interpretation  also
clarifies  the  requirements  related to the  recognition  of a  liability  by a
guarantor at the inception of a guarantee for the  obligations the guarantor has
undertaken  in issuing that  guarantee.  The adoption of this  statement did not
have a  significant  impact on the  Company's  financial  position or results of
operations.

In November 2002,  the EITF  addressed the  accounting for revenue  arrangements
with multiple deliverables in Issue 00-21,  "Accounting for Revenue Arrangements
with Multiple Deliverables," ("EITF 00-21"). EITF 00-21 provides guidance on how
the arrangement consideration should be measured, whether the arrangement should
be  divided  into  separate  units  of  accounting,   and  how  the  arrangement
consideration  should be allocated among the separate units of accounting.  EITF
00-21 is  effective  for revenue  arrangements  entered  into in fiscal  periods
beginning  after  June 15,  2003.  The  adoption  of EITF  00-21  did not have a
significant impact on the Company's financial position or results of operations.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities." This statement addresses financial accounting
and reporting for costs  associated with exit or disposal  activities.  SFAS 146
became  effective  in the first  quarter of 2003 and did not have a  significant
impact on the results of operations or financial position of the Company.

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations." The statement addresses  accounting for and reporting  obligations
relating to the retirement of long lived assets by requiring that the fair value
of a liability for an asset retirement obligation be recognized in the period in
which it is incurred  if a  reasonable  estimate of fair value can be made.  The
adoption  of SFAS No.  143 did not have a  material  effect on the  consolidated
financial statements.

(q) RECLASSIFICATIONS

Certain amounts in 2002 were reclassified to conform to the 2003 presentation.


NOTE 2. ACQUISITIONS AND DISPOSITION

Acquisition of Direct Partner Telecom, Inc.

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

The total purchase price of DPT was allocated as follows:

            Cash                          $  61,000
            Accounts receivable             155,000
            Fixed assets                    196,000
            Non-compete agreement           375,000
            Goodwill                        577,000
            Assumed debt to former
                shareholders               (600,000)
            Other assumed liabilities      (126,000)
                                          ---------
                                          $ 638,000
                                          =========


                                      F-14
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 2. ACQUISITIONS AND DISPOSITION
(Continued)

As part of the DPT acquisition  transaction,  the former Chief Executive Officer
of  DPT  agreed  to  an  employment   agreement   with  a  one-year  term  which
automatically  renews for an additional  year.  The  employment  agreement  also
contains  non-compete  provisions  during  the term of the  agreement  and for a
period of three years following termination of the agreement, as specified.  The
$375,000  value assigned to the  non-compete  agreement was to be amortized on a
straight-line  basis  over 5  years.  Amortization  expense  of the  non-compete
agreement totaled $43,750 in 2003.

As discussed in Note 1, as a result of decisions  made during the first  quarter
of 2004, the Company performed a review of its long-lived assets for impairment,
which resulted in the write-off of the goodwill and the  unamortized  balance of
the  non-compete  agreement  arising from the  acquisition  of DPT which totaled
$908,384.

The following unaudited pro forma condensed  consolidated  results of operations
for the years ended December 31, 2003 and 2002 assumes the acquisition  occurred
as of October 1, 2002,  the date which DPT began  operations.  The unaudited pro
forma information is not necessarily  indicative of the results of operations of
the combined  company had these events  occurred at the beginning of the periods
presented, nor is it necessarily indicative of future results.

    Year ended December 31,                            2003            2002
                                                   ------------    ------------
    Revenue                                        $  7,372,000    $ 10,192,000
    Net Loss                                        (11,116,000)     (2,860,000)

    Basic and diluted net loss per common share    $      (0.50)   $      (0.09)


Loan and Purchase Option Agreement

On February 25,  2003,  theglobe.com  entered  into a Loan and  Purchase  Option
Agreement with a development stage Internet related business venture pursuant to
which  it  agreed  to  fund,  in the form of a loan,  at the  discretion  of the
Company, the venture's operating expenses and obtained the option to acquire all
of the  outstanding  capital  stock of the venture in exchange  for, when and if
exercised,  $40,000  in cash  and the  issuance  of an  aggregate  of  2,000,000
unregistered  restricted shares of  theglobe.com's  Common Stock (the "Option").
The Loan is secured by a lien on the assets of the  venture.  Effective  January
23, 2004,  the Loan and  Purchase  Option  Agreement  was amended and an amended
promissory note was signed  extending the maturity date of the Loan to March 31,
2004.  The  Option  is  exercisable  at  anytime  on or  before  ten days  after
theglobe.com's  receipt of notice  relating  to the award of a certain  contract
currently  being  pursued by the  venture.  In the event of the  exercise of the
Option,  (i) the  existing  CEO and CFO of the venture have agreed to enter into
employment  agreements  whereby  each would agree to remain in the employ of the
venture  for a period  of two  years  following  the  closing  of the  Option in
exchange for base compensation plus participation in a bonus pool based upon the
pre-tax  income of the venture  and (ii) the  2,000,000  shares of  theglobe.com
Common Stock issued upon such exercise will be entitled to certain  "piggy-back"
registration  rights.  If the Option is not  exercised,  then  theglobe.com  has
agreed,  subject to certain  exceptions,  to forgive repayment of $60,000 of the
amount  loaned.  As of December  31, 2003,  $535,000  has been  advanced to this
venture.  Due to the  uncertainty of  collectibility  of the Loan, as it is to a
development stage business, the Company has set up a reserve for all of the Loan
except the $40,000  attributable to the acquisition  should the Company exercise
the Option. The amount of the reserve, $495,000 was included in other expense in
the  accompanying  statement of operations  for the twelve months ended December
31, 2003.

Acquisition of VoIP Assets

On  November  14,  2002,  the  Company  acquired  certain  VoIP  assets  from an
entrepreneur. In exchange for the assets, the Company issued warrants to acquire
1,750,000 shares of its common stock and an additional  425,000 warrants as part
of an earn-out arrangement upon the attainment of certain performance targets by
December  31,  2003.  None of the  performance  targets had been  attained as of
December  31, 2003,  resulting in the  forfeiture  of the 425,000  warrants.  In
conjunction  with the  acquisition,  E&C  Capital  Partners,  a  privately  held
investment  holding company owned by our Chairman and Chief  Executive  Officer,
Michael  S.  Egan,  and  our  President,  Edward  A.  Cespedes,  entered  into a
non-binding  letter of intent with  theglobe.com to provide new financing in the
amount of $500,000  through the purchase of Series F Preferred  Stock.  Refer to
Note 7, "Stockholders' Equity," for further details.


                                      F-15
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 2. ACQUISITIONS AND DISPOSITION
(Continued)

Disposition of Website

On February 27, 2002, the Company sold all of the assets used in connection with
the Happy Puppy website for $135,000,  resulting in the recognition of a gain on
the sale of $134,500.  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.

NOTE 3. INTANGIBLE ASSETS

The components of intangible assets were as follows:

<TABLE>
<CAPTION>
                                     December 31, 2003               December 31, 2002
                               ----------------------------   ----------------------------
                               Gross Carrying   Accumulated   Gross Carrying   Accumulated
                                   Amount      Amortization        Amount     Amortization
                                ------------   ------------   ------------     ------------
<S>                             <C>            <C>            <C>              <C>
Amortized Intangible Assets:
   Digital Telephony            $    227,452   $     28,432   $    164,960     $         --
                                ============   ============   ============     ============
</TABLE>

Digital  telephony assets include certain VoIP assets which were recorded at the
value  assigned to the  warrants to acquire  1,750,000  shares of the  Company's
Common Stock issued in connection with the acquisition of the assets on November
14, 2002 and patent application costs incurred to-date.

Intangible  asset  amortization  expense  totaled  $72,182  for the  year  ended
December 31, 2003,  including $43,750 of amortization related to the non-compete
agreement  recorded in connection  with the  acquisition of DPT. As discussed in
Note  1(g),  the  Company  wrote-off  the  $331,250  unamortized  balance of the
non-compete agreement as of December 31, 2003. There was no amortization expense
for intangible assets during the year ended December 31, 2002. Annual intangible
asset  amortization  expense is  projected  to be $75,818  each year in 2004 and
2005; and $47,384 in 2006.


NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2003 and 2002,
respectively:

                                          2003            2002
                                       ----------     ----------
Network equipment and software         $1,712,537     $       --
Computer equipment                        679,597        523,829
Capitalized software costs                690,602         89,452
Land and building                         181,110        181,110
Furniture and fixtures                    149,714        141,493
Leasehold improvements                      9,402             --
                                       ----------     ----------
                                        3,422,962        935,884
Less: Accumulated depreciation and
        amortization                    1,006,579        761,767
                                       ----------     ----------
                                       $2,416,383     $  174,117
                                       ==========     ==========


                                      F-16
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)
NOTE 5.  DEBT

Debt consists of the following:

<TABLE>
<CAPTION>
                                                                             December 31,
                                                                     -------------------------
                                                                        2003           2002
                                                                     ----------     ----------
<C>                                                                  <C>            <C>
10% Convertible Notes; interest and principal due May 2004           $1,750,000     $       --

Promissory notes issued in connection with the acquisition
   of DPT; interest and principal due May 2005;
   interest at prime rate (4% at December 31, 2003)                     100,000             --

Mortgage note payable; interest payable monthly at 9%;
  principal due May 2004                                                 82,612         91,202

Related party obligations payable in Canadian dollars;  due in
  monthly  installments of principal and interest  approximating
  $3,300 through September 2006; interest at prime plus 2-3%            102,916        120,233
                                                                     ----------     ----------
                                                                      2,035,528        211,435
  Less: unamortized debt discount                                       121,041             --
  Less: short-term portion                                                  877        123,583
                                                                     ----------     ----------

  Long-term portion                                                  $1,913,610     $   87,852
                                                                     ==========     ==========
</TABLE>

On May 22,  2003,  E&C Capital  Partners  together  with certain  affiliates  of
Michael  S.  Egan,  entered  into a Note  Purchase  Agreement  with the  Company
pursuant to which they acquired  convertible  promissory notes (the "Convertible
Notes") in the aggregate  principal amount of $1,750,000.  The Convertible Notes
are convertible at anytime into a maximum of approximately  19,444,000 shares of
the Company's Common Stock at a blended rate of $0.09 per share. The Convertible
Notes have a one year maturity date,  which may be extended at the option of the
holders of the  Convertible  Notes for periods  aggregating  two years,  and are
secured  by a pledge of  substantially  all of the  assets of the  Company.  The
Convertible  Notes bear  interest at the rate of ten percent per annum,  payable
semi-annually.  Effective  October 3, 2003, the holders of the Convertible Notes
waived the right to receive accrued  interest payable in shares of the Company's
Common Stock.  Additionally,  each of the holders of the  Convertible  Notes has
agreed to defer receipt of interest until June 1, 2004.  Additional  interest at
ten percent per annum accrues on any interest amounts deferred.  The outstanding
balance of the Convertible  Notes as of December 31, 2003, has been reflected as
long-term debt in the accompanying consolidated balance sheet as a result of the
conversion of the  Convertible  Notes into the  Company's  Common Stock in March
2004.

In  addition,  E&C Capital  Partners  was issued a warrant  (the  "Warrant")  to
acquire  3,888,889  shares of the Company's Common Stock at an exercise price of
$0.15 per share.  The  Warrant is  exercisable  at any time on or before May 22,
2013.  An  allocation  of  the  proceeds  received  from  the  issuance  of  the
Convertible  Notes was made  between  the debt  instruments  and the  Warrant by
determining  the pro-rata  share of the proceeds for each by comparing  the fair
value of each  security  issued to the total fair  value.  The fair value of the
Warrant was  determined  using the Black  Scholes  model.  The fair value of the
Convertible  Notes was  determined  by  measuring  the fair  value of the common
shares on an  "as-converted"  basis. As a result,  $290,500 was allocated to the
Warrant and  recorded as a discount  on the debt issued and  additional  paid in
capital. The value of the beneficial conversion feature of the Convertible Notes
was  calculated by comparing the fair value of the  underlying  common shares of
the Convertible  Notes on the date of issuance based on the closing price of our
Common Stock as reflected on the OTCBB to the "effective" conversion price. This
resulted  in a  preferential  conversion  discount,  limited  to the  previously
discounted value of the Convertible Notes, of $1,459,500,  which was recorded as
interest expense in the accompanying consolidated statement of operations as the
Convertible Notes were immediately convertible into common shares.

Reference  should be made to Note 14,  "Subsequent  Events," for a discussion of
the  conversion  of the  Convertible  Notes and the  exercise of the  associated
Warrant during the first quarter of 2004.

Effective  May 31,  2003,  the maturity  date of the  mortgage  note payable was
extended to May 31, 2004.  The extension  also required the payment of $8,590 of
the principal outstanding.


                                      F-17
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 5. DEBT
                                  (Continued)

Repayment  of  debt  is  due  as  follows:

                  Year ending December 31:
                            2004                            $   1,871,918
                            2005                                  139,306
                            2006                                   24,304
                                                            -------------
                                                            $   2,035,528
                                                            =============

NOTE 6. INCOME TAXES

The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets and  deferred tax  liabilities  at December 31, 2003,
and 2002 are presented below.

                                              2003               2002
                                          ------------      ------------
Deferred tax assets (liabilities):
   Net operating loss carryforwards       $ 57,642,000      $ 53,820,000
   Allowance for doubtful accounts             244,000            53,000
   Issuance of warrants                        982,000           725,000
   Depreciation and amortization              (230,000)          124,000
   Other                                       123,000            58,000
                                          ------------      ------------
      Total gross deferred tax assets       58,761,000        54,780,000
Less: valuation allowance                  (58,761,000)      (54,780,000)
                                          ------------      ------------
      Total net deferred tax assets       $         --      $         --
                                          ============      ============

Because of the Company's lack of earnings  history,  the net deferred tax assets
have been fully offset by a 100% valuation  allowance.  The valuation  allowance
for net deferred tax assets was $58.8  million and $54.8  million as of December
31, 2003 and 2002, respectively. The net change in the total valuation allowance
was $4.0  million and $(.1)  million for the years ended  December  31, 2003 and
2002, respectively.

In assessing  the  realizability  of deferred tax assets,  management  considers
whether it is more likely than not that some  portion or all of the deferred tax
assets will not be realized.  The ultimate  realization  of deferred tax assets,
which consist of tax benefits  primarily from net operating loss  carryforwards,
is dependent  upon the generation of future taxable income during the periods in
which those temporary  differences become deductible.  Management  considers the
scheduled reversal of deferred tax liabilities,  projected future taxable income
and tax planning  strategies in making this  assessment.  Of the total valuation
allowance of $58.8 million, subsequently recognized tax benefits, if any, in the
amount of $6.4 million will be applied directly to contributed capital.

At December 31, 2003, the Company had net operating loss carryforwards available
for  U.S.  and  foreign  tax  purposes  of  approximately  $144  million.  These
carryforwards expire through 2023.

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 and the Company's  private  offering
completed in March 2004  (together  with the exercise and  conversion of various
securities  in  connection  with the  private  offering),  the  Company may have
substantially  limited or eliminated the  availability of its net operating loss
carryforwards.  There  can be no  assurance  that  the  Company  will be able to
utilize any of its net operating loss carryforwards.


                                      F-18
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7. STOCKHOLDERS' EQUITY

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

At the time of the issuance of the Series G Preferred  Stock,  an  allocation of
proceeds  received  was made  between the  preferred  shares and the  associated
warrants.  The  allocation  was made by  determining  the pro-rata  share of the
proceeds for each by  comparing  the fair value of each  security  issued to the
total fair value.  The fair value of the warrants was determined using the Black
Scholes model.  The fair value of the Series G Preferred Stock was determined by
measuring the fair value of the common shares on an  "as-converted"  basis. As a
result, $1,365,000 was allocated to the warrants sold. In addition, the value of
the  preferential  conversion  was calculated by comparing the fair value of the
underlying  common  shares based on the closing  price of the  Company's  Common
Stock as  reflected  on the  OTCBB on the date of  issuance  to the  "effective"
conversion price. This resulted in a preferential conversion discount related to
the preferred shares and the associated  warrants,  limited to the proceeds from
the sale, of $7,315,000 and $305,000,  respectively, which have been recorded as
dividends to the preferred  stockholders  in July 2003, as the preferred  shares
and  associated  warrants were  immediately  convertible  into common shares and
warrants to acquire common shares.

As more fully discussed in Note 5, "Debt",  on May 22, 2003,  Convertible  Notes
totaling  $1,750,000 were issued to E&C Capital  Partners  together with certain
affiliates of Michael S. Egan. The Convertible  Notes are convertible at anytime
into a maximum of approximately  19,444,000 shares of the Company's common stock
at a blended  rate of $0.09 per share.  In  addition,  E&C Capital  Partners was
issued a warrant to acquire 3,888,889 shares of the Company's common stock at an
exercise price of $0.15 per share.  The warrant is exercisable at any time on or
before May 22, 2013.

On March 28, 2003, E&C Capital  Partners entered into a Preferred Stock Purchase
Agreement  with the Company  (the  "Preferred  Stock  Investment"),  whereby 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.  If
fully converted,  and without regard to the anti-dilutive  adjustment mechanisms
applicable  to the Series F  Preferred  Stock,  an  aggregate  of  approximately
16,667,000 shares of Common Stock could be issued.  The Series F Preferred Stock
has a  liquidation  preference of $1.50 per share (and  thereafter  participates
with the  holders  of  Common  Stock  on an  "as-converted"  basis),  will pay a
dividend  at the rate of 8% per  annum  and  entitles  the  holder to vote on an
"as-converted"  basis with the holders of Common Stock. In addition,  as part of
the $500,000  investment,  E&C Capital  Partners  received  warrants to purchase
approximately  3,333,000  shares of the  Company's  Common  Stock at an exercise
price of $0.125 per share. The warrants are 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 proceeds  attributable  to the issuance of the Series F Preferred  Stock and
the  related  warrants  were  allocated  to each  security in the same manner as
described  in the  discussion  of the  Series G  Preferred  Stock.  As a result,
$83,000 was  allocated  to the  warrants  sold.  In  addition,  the value of the
preferential  conversion  was  calculated  by  comparing  the fair  value of the
underlying  common shares on the date of issuance  based on the closing price of
the  Company's  Common  Stock  as  reflected  on the  OTCBB  to the  "effective"
conversion price. This resulted in a preferential  conversion discount,  limited
to the  proceeds  from the  sale,  of  $417,000.  The sum of the two  discounts,
$500,000,  was  recorded as a dividend to the  preferred  stockholders  in March
2003, as the preferred shares were immediately convertible into common shares.

As a result of the  issuance  of the  Series F  Preferred  Stock,  the  Series G
Automatically   Converting  Preferred  Stock,  the  Convertible  Notes  and  the
associated warrants at their respective conversion and exercise prices,  certain
anti-dilution  provisions  applicable  to  previously  outstanding  warrants  to
acquire  approximately  4,103,000  shares of the  Company's  Common  Stock  were
triggered.  Like many  types of  warrants  commonly  issued,  these  outstanding
warrants  to acquire  shares of the  Company's  Common  Stock  include  weighted
average  anti-dilution  provisions  which  result in a lowering of the  exercise
price,  and an  increase  in the number of  warrants  to  acquire  shares of the
Company's Common Stock any time shares of common stock are issued (or options or
other  securities  exercisable or convertible into common stock) for a price per
share  less than the then  exercise  price of the  warrants.  As a result of the
Preferred Stock  Investment and the issuance of the Series G Preferred Stock and
the Convertible Notes, the exercise price was lowered from  approximately  $1.39
to $0.66 per share on these  warrants  and the  number of shares  issuable  upon
exercise was  proportionally  increased from  approximately  4,103,000 shares to
6,836,000  shares.  As of December 31, 2003,  approximately 95% of such warrants
were beneficially owned by Michael S. Egan.


                                      F-19
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)
NOTE 7. STOCKHOLDERS' EQUITY
(Continued)

Certain  holders of Common Stock are subject to substantial  restrictions on the
transfer  or sale of  shares  and also  have  certain  "piggy-back"  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.

Reference  should be made to Note 14,  "Subsequent  Events," for a discussion of
certain  equity  transactions  during the first  quarter of 2004,  including the
conversion of the Series F Preferred  Stock into Common  Stock,  the exercise of
the warrants issued in connection with the Series F Preferred  Stock, as well as
other previously outstanding warrants.

NOTE 8. 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, a total of 1,582,000  common  shares were
reserved for  issuance.  Any incentive  stock options  granted under the Amended
Plan were  required  to be granted  at the fair  market  value of the  Company's
Common Stock at the date the option was issued.

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

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

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

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.

Options were granted during 2003 for 4,407,450  shares of Common Stock, of which
500,000 options were granted pursuant to an individual nonqualified stock option
agreement and not pursuant to any of the plans described  above.  During 2002, a
total of 5,347,500  stock options were granted,  of which 5,175,000 were granted
pursuant to individual nonqualified stock options agreements and not pursuant to
any of the plans described above.

The Company  applies APB Opinion No. 25 in  accounting  for grants to  employees
pursuant to stock option plans and,  accordingly,  compensation cost of $233,750
was recognized for stock options  granted to employees at exercise  prices below
fair market value in 2003.  No stock  options  were  granted to  employees  with
exercise  prices below fair market value during 2002.  In addition,  $152,884 of
stock  compensation  expense was recorded in 2003 as a result of the accelerated
vesting of stock options issued to certain  terminated  employees.  Compensation
cost  recognized  in connection  with stock options  granted in lieu of services
rendered by non-employees  was $225,609 and $13,000 for the years ended December
31, 2003 and 2002, respectively.


                                      F-20
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)
NOTE 8. STOCK OPTION PLAN
(Continued)

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 on that date, 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 required  variable  accounting in accordance  with FIN No. 44. For the year
ended  December  31, 2003,  approximately  $30,933 of  compensation  expense was
recorded  in  connection  with  the  re-priced  stock  options.   There  was  no
compensation  charge  relating to the  re-priced  options  during the year ended
December 31, 2002. As of December 31, 2003,  82,480 options  remain  outstanding
which are being  accounted for in accordance with FIN No. 44. 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.

Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>
                                                                         Weighted
                                            Options        Total          Average
                                             Vested       Options      Exercise Price
                                           ----------    ----------      ----------
<S>                                         <C>           <C>                  <C>
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
                                           ==========
Granted                                                   4,407,450            0.80
Exercised                                                  (429,000)           0.28
Canceled                                                     (7,080)           1.07
                                                         ----------
Outstanding at December 31, 2003            8,475,232     9,942,810      $     0.72
                                           ==========    ==========      ==========

Options available at December 31, 2002                    4,259,547
                                                         ==========
Options available at December 31, 2003                    1,359,177
                                                         ==========
</TABLE>


                                      F-21
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)
NOTE 8. STOCK OPTION PLAN
(Continued)


                            Options Outstanding     Options Vested
                            -------------------  --------------------
                            Weighted  Weighted              Weighted
                 Number     Average    Average    Number     Average
    Range      Outstanding    Life      Price     Vested      Price
-------------  -----------  --------  ---------  ---------  ---------
$ .02 -$ .02     4,875,000       8.6  $    0.02  4,875,000  $    0.02
  .035-  .035      230,000       8.4       0.035   230,000       0.035
  .04 -  .05        47,500       8.2       0.05     20,945       0.05
  .14 -  .14       230,000       9.3       0.14    230,000       0.14
  .20 -  .23       515,000       9.5       0.20    165,218       0.20
  .53 -  .53        53,200       6.9       0.53     37,635       0.53
  .56 -  .56     1,650,000       9.4       0.56  1,650,000       0.56
  .63 -  .80       302,000       9.4       0.66    217,126       0.65
 1.14 - 1.29       408,500       9.7       1.25    183,346       1.25
 1.32 - 1.49       272,500       9.7       1.40    133,125       1.39
 1.50 - 1.52       806,500       9.8       1.50    183,375       1.50
 1.59 - 1.59        34,610       6.2       1.59     32,773       1.59
 1.62 - 2.50        65,500       8.3       1.99     64,189       1.99
 4.50 - 6.69       332,500       4.7       4.69    332,500       4.69
15.75 -15.75       120,000       5.0      15.75    120,000      15.75
               -----------                       ---------
                 9,942,810                       8,475,232
               ===========                       =========

NOTE 9. COMMITMENTS AND CONTINGENCIES

Network Commitments

The  Company  and  its  subsidiaries  are a party  to  various  network  service
agreements  which  provide for specified  services,  including the use of secure
data transmission  facilities,  capacity and other network services. The term of
the agreements typically range from one to five years. Certain of the agreements
contain minimum usage commitments or early cancellation  penalties.  Commitments
under  such  network  service  agreements,  including  estimated  minimum  usage
commitments  for certain  contracts which have not yet fully  commenced,  are as
follows:

                   Year ending December 31:
                            2004                            $ 3,549,000
                            2005                                940,000
                            2006                                911,000
                            2007                                520,000
                            2008                                332,000
                            Thereafter                               --
                                                            -----------
                                                            $ 6,252,000
                                                            ===========

Purchase Obligations

The Company has  contractual  purchase  obligations  to certain of its suppliers
providing for the purchase of certain equipment or services.  As of December 31,
2003, the Company's  unconditional  purchase  obligations totaled  approximately
$3,412,000, which pursuant to the contract are due to be paid during 2004.


                                      F-22
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9. COMMITMENTS AND CONTINGENCIES
(Continued)

Employment Agreements

On August 1, 2003,  the Company  entered  into  employment  agreements  with its
Chairman and Chief  Executive  Officer,  President and Vice President of Finance
(its former Chief  Financial  Officer).  The three  agreements,  which are for a
period of one year and  automatically  extend for one day each day until  either
party notifies the other not to further extend the  employment  period,  provide
for annual base salaries  totaling  $650,000 and annual bonuses based on pre-tax
operating  income,  as defined,  for an annual minimum of $100,000 in total. The
agreements also provide for severance benefits under certain  circumstances,  as
defined,  which in the case of the Chairman and Chief Executive  Officer and the
President,  include  lump-sum  payments  equal  to  ten  times  the  sum  of the
executive's  base salary and the highest  annual bonus earned by the  executive,
and in the case of the Vice  President  of Finance,  include  lump-sum  payments
equal to two times the sum of the executive's base salary and the highest annual
bonus  earned by the  executive.  In addition,  these  severance  benefits  also
require  the Company to maintain  insurance  benefits  for a period of up to ten
years,  in the  case  of the  Chairman  and  Chief  Executive  Officer  and  the
President,  and up to two years,  in the case of the Vice  President of Finance,
substantially equivalent to the insurance benefits existing upon termination.

As discussed in Note 2, "Acquisitions and Disposition",  as part of the May 2003
acquisition  transaction of DPT, its former Chief Executive Officer agreed to an
employment  agreement  with a one-year  term which  automatically  renews for an
additional  year.  Pursuant to the  agreement,  the employee  serves as the Vice
President  of Network  Operations  at a base salary of $125,000  per annum.  The
agreement also contains non-compete  provisions during the term of the agreement
and for a period of three  years  following  termination  of the  agreement,  as
specified.

In conjunction with the November 2002  acquisition of certain digital  telephony
intangible  assets,  the Company  entered into an employment  agreement with the
Seller whereby he serves 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.

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,
further reflecting the terms of his severance package. These options immediately
vested upon grant and have a life of ten years.

Operating Leases

The Company leases facilities under noncancelable operating leases. These leases
generally  contain  renewal  options  and  require  the  Company to pay  certain
executory  costs such as maintenance  and insurance.  Rent expense for the years
ended  December  31, 2003 and 2002 totaled  approximately  $326,000 and $73,000,
respectively.

Effective  September 1, 2003, the Company entered into a sublease  agreement for
office space with a company  controlled by our  Chairman.  The lease term is for
five years with base rent of approximately $284,000 during the first year of the
sublease.  Per the agreement,  base rent increases by approximately  $23,000 per
year thereafter.  Rent expense for the year ended December 31, 2003, as noted in
the preceding  paragraph included  approximately  $106,000 of expense related to
this sublease.

The  approximate  future minimum lease payments  under  noncancelable  operating
leases with initial or remaining terms of one year or more at December 31, 2003,
were as follows:

                       2004                            $     306,000
                       2005                                  315,000
                       2006                                  338,000
                       2007                                  206,000
                       2008                                    1,000
                       Thereafter                                 --
                                                       -------------
                                                       $   1,166,000
                                                       =============


                                      F-23

<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9. COMMITMENTS AND CONTINGENCIES
(Continued)

Termination of 401(K) Plan

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

Letter of Credit

As of December 31, 2003,  the Company had  approximately  $20,000 in outstanding
standby letters of credit used to support inventory purchases.

Litigation

On and  after  August 3, 2001 and as of the date of this  filing,  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 November 23, 1998 initial public offering
and its May 19, 1999 secondary  offering.  The lawsuits were filed in the United
States  District  Court for the Southern  District of New York.  The  complaints
against  the  Company  have  been  consolidated  into  a  single  action  and  a
Consolidated Amended Complaint,  which is now the operative complaint, was filed
on April 19, 2002.

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

The action is being  coordinated with  approximately  300 other nearly identical
actions filed against other  companies.  On July 15, 2002,  the Company moved to
dismiss all claims against it and the Individual Defendants. On October 9, 2002,
the Court dismissed the Individual  Defendants  from the case without  prejudice
based on  stipulations  of dismissal  filed by the plaintiffs and the Individual
Defendants.  On February  19,  2003,  the Court denied the motion to dismiss the
complaint  against  the  Company.  The  Company  has  approved a  Memorandum  of
Understanding  ("MOU")  and  related  agreements  which set forth the terms of a
settlement between the Company, the plaintiff class and the vast majority of the
other  approximately  300  issuer  defendants.   Among  other  provisions,   the
settlement contemplated by the MOU provides for a release of the Company and the
individual defendants for the conduct alleged in the action to be wrongful.  The
Company would agree to undertake certain responsibilities, including agreeing to
assign away, not assert,  or release  certain  potential  claims the Company may
have against its  underwriters.  It is anticipated that any potential  financial
obligation  of the  Company to  plaintiffs  pursuant to the terms of the MOU and
related agreements will be covered by existing insurance. Therefore, the Company
does not expect that the settlement will involve any payment by the Company. The
MOU and related  agreements are subject to a number of contingencies,  including
the  negotiation  of a settlement  agreement  and its approval by the Court.  We
cannot opine as to whether or when a settlement  will occur or be finalized and,
consequently,  are unable at this time to  determine  whether the outcome of the
litigation will have a material impact on our results of operations or financial
condition in any future period.

On  July  3,  2003,  an  action  was  commenced  against  one of  the  Company's
subsidiaries,  Direct  Partner  Telecom,  Inc.  ("DPT").  Global  Communications
Consulting Corp. v. Michelle Nelson,  Jason White,  VLAN, Inc.,  Geoffrey Amend,
James Magruder,  Direct Partner Telecom,  Inc., et al. was filed in the Superior
Court of New Jersey,  Monmouth County, and removed to the United States District
Court for the  District of New Jersey on September  16,  2003.  Plaintiff is the
former employer of Michelle Nelson, a consultant of DPT.  Plaintiff alleges that
while  Nelson  was its  employee,  she  provided  plaintiff's  confidential  and
proprietary  trade  secret  information,   to  among  others,  DPT  and  certain
employees,  and diverted  corporate  opportunities from plaintiff to DPT and the
other named defendants. Plaintiff asserts claims against Nelson including breach
of fiduciary duty, breach of the duty of loyalty and tortious  interference with
contract.  Plaintiff  also asserts  claims against Nelson and DPT, among others,
for contractual  interference,  tortious  interference with prospective economic
advantage and  misappropriation  of proprietary  information  and trade secrets.
Plaintiff  seeks  injunctive  relief  and  damages  in  an  unspecified  amount,
including punitive damages.

The Answer to the Complaint, with counterclaims, was served on October 20, 2003,
denying  plaintiff's  allegations  of  improper  and  unlawful  conduct in their
entirety.  The parties  have  recently  reached an amicable  resolution  of this
matter, including a mutual release of all claims. We anticipate that the release
agreement  will be finalized and a Stipulation  of Dismissal  will be filed with
the Court by the end of April 2004.


                                      F-24

<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9. COMMITMENTS AND CONTINGENCIES
(Continued)

The Company is  currently a party to certain  other legal  proceedings,  claims,
disputes and litigation  arising in the ordinary  course of business,  including
those noted above. The Company  currently  believes that the ultimate outcome of
these other  proceedings,  individually  and in the  aggregate,  will not have a
material  adverse  affect  on  the  Company's  financial  position,  results  of
operations  or  cash  flows.  However,   because  of  the  nature  and  inherent
uncertainties of litigation, should the outcome of these actions be unfavorable,
the Company's  business,  financial  condition,  results of operations  and cash
flows could be materially and adversely affected.

NOTE 10. RELATED PARTY TRANSACTIONS

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

Interest  expense on the $1,750,000  Convertible  Notes due E&C Capital Partners
together with certain affiliates of our Chairman totaled approximately $108,200,
excluding the  amortization of the discount on the Notes,  during the year ended
December 31, 2003.  The interest  remained  unpaid at December 31, 2003, and was
included in accrued expenses in the accompanying consolidated balance sheet.

Several  entities  controlled  by our  Chairman  have  provided  services to the
Company  and  two of its  subsidiaries,  including:  the  lease  of  office  and
warehouse space; and the outsourcing of customer service and warehouse functions
for the Company's VoIP operation. During 2003, a total of approximately $383,000
of expense was recorded related to these services. Approximately $70,000 related
to these  services  was  included  in accounts  payable and accrued  expenses at
December 31, 2003.

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 (an entity controlled by the Chairman) entered into
a Stockholders' Agreement (the "Stockholders'  Agreement") pursuant to which the
Chairman and Dancing  Bear or certain  entities  controlled  by the Chairman and
certain permitted  transferees (the "Chairman Group") agreed 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 agreed to vote for
the  Chairman  Group's  nominees to the Board,  who would  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 granted
an irrevocable proxy to Dancing Bear with respect to any shares acquired by them
pursuant to the exercise of outstanding  Warrants transferred to each of them by
Dancing Bear. Such shares would be voted by Dancing Bear, which is controlled by
the  Chairman,  and would be  subject  to a right of first  refusal  in favor of
Dancing Bear upon certain private  transfers.  The Stockholders'  Agreement also
provided  that if the  Chairman  Group sold shares of Common  Stock and Warrants
representing  25% or more of the Company's  outstanding  Common Stock (including
the Warrants) in any private sale, the Former Co-Chief  Executive Officer Groups
and the two  Directors  of the Company  would be required to sell up to the same
percentage of their shares as the Chairman Group's sales. If either the Chairman
Group sold 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 sold shares or Warrants  representing  7% or
more of the shares and Warrants of the Company in any private  sale,  each other
party to the Stockholders' Agreement,  including entities controlled by them and
their permitted transferees, had the option to sell up to the same percentage of
their  shares.  Effective  March  28,  2003,  the  Stockholders'  Agreement  was
terminated.

NOTE 11.  SEGMENTS AND GEOGRAPHIC INFORMATION

The Company applies the provisions of SFAS No. 131,  "Disclosures About Segments
of an Enterprise and Related Information",  which establishes annual and interim
reporting  standards for operating segments of a company.  SFAS No. 131 requires
disclosures of selected  segment-related  financial  information about products,
major customers and geographic areas. Effective with the May 2003 acquisition of
DPT,  the Company is now  organized  in two  operating  segments for purposes of
making  operation  decisions  and  assessing  performance:  the  computer  games
division and the VoIP telephony services  division.  The computer games division
consists of the  operations of the Company's  Computer  Games print magazine and
the  associated  website  Computer  Games  Online   (www.cgonline.com)  and  the
operations of Chips & Bits,  Inc.,  its games  distribution  business.  The VoIP
telephony   services   division   is   principally   involved  in  the  sale  of
telecommunications   services   over  the  Internet  to   consumers   and  other
telecommunications service providers.


                                      F-25

<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 11.  SEGMENTS AND GEOGRAPHIC INFORMATION
(Continued)

The chief  operating  decision  maker  evaluates  performance,  makes  operating
decisions and allocates resources based on financial data of each segment. Where
appropriate,  the Company charges  specific costs to each segment where they can
be  identified.   Certain  items  are  maintained  at  the  Company's  corporate
headquarters  ("Corporate")  and are not  presently  allocated to the  segments.
Corporate  expenses  primarily include personnel costs related to executives and
certain  support  staff and  professional  fees.  Corporate  assets  principally
consist  of cash,  cash  equivalents  and  marketable  securities.  There are no
intersegment  sales.  The  accounting  policies of the  segments are the same as
those for the Company as a whole.

The  following  table  presents  financial  information  regarding the Company's
different segments for the two years ended December 31, 2003:

                                                   2003          2002
                                                ----------    ----------
    NET REVENUE:
    Computer games and other                  $  6,032,371   $ 9,667,085
    VoIP telephony services                        548,081            --
                                              ------------   -----------
                                              $  6,580,452   $ 9,667,085
                                              ============   ===========

    INCOME (LOSS) FROM OPERATIONS:
    Computer games and other                  $    120,907   $  (411,626)
    VoIP telephony services                     (5,116,437)       (1,196)
    Corporate expenses                          (3,817,549)   (2,527,966)
                                              ------------   -----------
        Loss from operations                    (8,813,079)   (2,940,788)
        Other income (expense), net             (2,221,318)      338,127
                                              ------------   -----------
        Consolidated loss before income tax   $(11,034,397)  $(2,602,661)
                                              ============   ===========

    DEPRECIATION AND AMORTIZATION:
    Computer games and other                  $     62,208   $    85,327
    VoIP telephony services                        258,334            --
    Corporate                                        9,200         3,253
                                              ------------   -----------
                                              $    329,742   $    88,580
                                              ============   ===========

    IDENTIFIABLE ASSETS:
    Computer games and other                  $  1,957,714   $ 2,602,834
    VoIP telephony services                      4,251,082       164,960
    Corporate assets                               963,282       279,191
                                              ------------   -----------
                                              $  7,172,078   $ 3,046,985
                                              ============   ===========

    CAPITAL EXPENDITURES:
    Computer games and other                  $         --   $    32,250
    VoIP telephony services                      2,366,047            --
    Corporate                                       58,744            --
                                              ------------   -----------
                                              $  2,424,791   $    32,250
                                              ============   ===========


                                      F-26

<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 11.  SEGMENTS AND GEOGRAPHIC INFORMATION
(Continued)

The Company's  historical net revenues have been earned primarily from customers
in the United States. In 2003, VoIP telephony services net revenue was primarily
attributable  to the sale of telephony  services  outside of the United  States.
Telephony  services  revenue  derived from  Thailand  represented  approximately
$458,000 or 7% of consolidated net revenue for the year ended December 31, 2003.
In  addition,  all  significant  operations  and  assets are based in the United
States.

NOTE 12. 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, 2003  $  128,613  $          --  $   114,888  $  (130,515) $  112,986
December 31, 2002  $3,203,295  $          --  $        --  $(3,074,682) $  128,613
</TABLE>


NOTE 13. SUMMARY OF QUARTERLY FINANCIAL INFORMATION - (UNAUDITED)

<TABLE>
<CAPTION>
                                                        Quarter Ended
                                 ----------------------------------------------------------
                                  December 31,    September 30,     June 30,     March 31,
                                      2003            2003            2003         2003
                                 --------------  ---------------  ------------  -----------
<S>                              <C>             <C>              <C>           <C>
Net revenue                      $   1,748,840   $    1,717,462   $ 1,455,800   $1,658,350
Operating expenses                   6,495,874        4,045,997     2,649,885    2,201,775
Loss from operations                (4,747,034)      (2,328,535)   (1,194,085)    (543,425)
Net loss                            (5,077,665)      (2,517,614)   (2,757,371)    (681,747)
Net loss applicable to common
   stockholders                     (5,077,665)     (10,137,614)   (2,757,371)  (1,181,747)

Basic and diluted net loss per
   share                         $       (0.10)  $        (0.23)  $     (0.09)  $    (0.04)
</TABLE>

Net loss  applicable  to  common  stockholders  for the 2003  quarterly  periods
includes the preferred dividend impact of the beneficial  conversion features of
the preferred stock and warrants issued.

<TABLE>
<CAPTION>
                                                         Quarter Ended
                                 ------------------------------------------------------------
                                  December 31,    September 30,     June 30,      March 31,
                                      2002            2002            2002           2002
                                 --------------  ---------------  -------------  ------------
<S>                              <C>             <C>              <C>            <C>
Net revenue                      $   2,464,009   $    2,259,263   $  2,413,790   $ 2,530,023
Operating expenses                   2,327,465        2,786,906      4,059,624     3,433,878
Income (loss) from operations          136,544         (527,643)    (1,645,834)     (903,855)
Net income (loss)                       16,922         (492,046)    (1,633,429)     (506,108)
Net loss applicable to common
    stockholders                        16,922         (492,046)    (1,633,429)     (506,108)

Basic and diluted net loss per
   share                         $          --   $        (0.02)  $      (0.05)  $     (0.02)

</TABLE>


                                      F-27
<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 14. SUBSEQUENT EVENTS

On February 2, 2004,  our Chairman and Chief  Executive  Officer and his spouse,
entered into a Note Purchase  Agreement with the Company  pursuant to which they
acquired  a demand  convertible  promissory  note  (the  "Bridge  Note")  in the
aggregate  principal amount of $2,000,000.  The Bridge Note was convertible into
shares of the Company's  Common Stock.  The Bridge Note provided for interest at
the rate of ten percent  per annum and was secured by a pledge of  substantially
all of the assets of the  Company.  Such  security  interest was shared with the
holders of the  Company's  $1,750,000  Convertible  Notes  issued to E&C Capital
Partners and certain affiliates of our Chairman and Chief Executive Officer.  In
addition,  the Chairman and Chief Executive Officer and his spouse were issued a
warrant to acquire  204,082 shares of the Company's  Common Stock at an exercise
price of $1.22 per share.  The Warrant is  exercisable  at any time on or before
February 2, 2009. The exercise price of the Warrant, together with the number of
shares for which such Warrant is exercisable,  is subject to adjustment upon the
occurrence of certain events.

In March 2004,  theglobe.com  completed a private offering of 333,816 units (the
"Units") for a purchase  price of $85 per Unit (the  "Private  Offering").  Each
Unit  consisted of 100 shares of the Company's  Common  Stock,  $0.001 par value
(the "Common Stock"),  and warrants to acquire 50 shares of the Company's Common
Stock (the "Warrants").  The Warrants are exercisable for a period of five years
commencing  60 days after the initial  closing at an initial  exercise  price of
$0.001 per share.  The aggregate  number of shares of Common Stock issued in the
Private  Offering  was  33,381,647  shares  for an  aggregate  consideration  of
$28,374,400,  or  approximately  $0.57 per share  assuming  the  exercise of the
16,690,824 Warrants.

The Private Offering was directed solely to investors who are  sophisticated and
accredited  within the meaning of applicable  securities laws, most of whom were
not  affiliates  with the  Company.  The purpose of the Private  Offering was to
raise funds for use primarily in the  Company's  developing  voiceglo  business,
including the deployment of networks, website development, marketing and capital
infrastructure  expenditures and working  capital.  Proceeds may also be used in
connection with theglobe's other existing or future business operations.

Halpern Capital,  Inc., acted as placement agent for the Private  Offering,  and
was paid a commission of $1.2 million and issued a warrant to acquire  1,000,000
shares of Common Stock at $0.001 per share.

The securities  offered were not registered under the Securities Act of 1933 and
may not be offered  or resold in the United  States  absent  registration  or an
applicable exemption from such registration requirements.  Pursuant to the terms
of the  Private  Offering,  the  Company is  contractually  obligated  to file a
registration  statement  relating  to the resale of the  Securities  on or about
April 22, 2004 and to cause such  registration  statement to become effective on
or about July 6, 2004 (or 30 days earlier if such registration  statement is not
reviewed by the Securities and Exchange Commission). In the event the Company is
late in any of its registration obligations,  it will be liable for payment of a
late fee of 5% of the amount  raised in the Private  Offering per month,  not to
exceed 25% in the aggregate.  Any such late fee may be payable in either cash or
additional  shares of Common Stock (valued for such purpose at $0.57 per share),
or any  combination  of the two,  at the  option of the  Company.  Any shares so
issued would be included in the foregoing registration statement.

In connection with the Private  Offering,  Michael S. Egan, our Chairman,  Chief
Executive  Officer  and  principal  stockholder,  together  with  certain of his
affiliates, including E&C Capital Partners, converted the $2,000,000 Convertible
Bridge Note,  $1,750,000 of Secured  Convertible  Notes and all of the Company's
outstanding  shares of Series F Preferred  Stock, and exercised (on a "cashless"
basis) all of the  warrants  issued in  connection  with the  foregoing  Secured
Convertible  Notes and Series F Preferred Stock,  together with certain warrants
issued to Dancing Bear  Investments,  an  affiliate of Mr. Egan.  As a result of
such  conversions  and exercises,  the Company issued an aggregate of 48,775,909
additional shares of Common Stock.  After giving effect to the 33,381,647 shares
of Common Stock issued in the Private Offering  (excluding the Warrants) and the
foregoing conversions and exercises,  the Company, at March 24, 2004, had issued
and  outstanding  131,990,349  shares of Common  Stock  (including  exercises of
options in the first  quarter)  and  27,004,384  warrants  to acquire  shares of
Common Stock.


                                      F-28

<PAGE>

                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 14. SUBSEQUENT EVENTS
(Continued)

Proforma (Unaudited)

Included  with the  accompanying  consolidated  balance  sheets  is a pro  forma
presentation  of the effects on certain  balance sheet  accounts at December 31,
2003 if the two previously  described financing  transactions had taken place on
December 31, 2003. A summary of the pro forma adjustments follows:

Gross proceeds:
   Bridge note                             $   2,000,000
   Private offering                           28,374,000
                                           -------------
                                              30,374,000
   Commission paid                            (1,200,000)
                                           -------------
   Net proceeds                            $  29,174,000
                                           =============
<TABLE>
<CAPTION>
                                                       Pro Forma
                                    Historical        Adjustments            Pro forma
                                    ----------        -----------          -------------
<S>                               <C>                 <C>                   <C>
Cash and cash equivalents         $  1,062,000        $29,174,000  (a)      $ 30,236,000
Long-term debt                       1,914,000         (1,750,000) (b) ]         285,000
                                                          121,000  (c) ]
Preferred stock                        500,000           (500,000) (d)                --
Common stock                            50,246             82,157  (e)           132,403
Additional paid-in capital        $238,302,000       $ 31,221,000  (f)      $269,523,000
</TABLE>

(a)  Net cash proceeds received after December 31, 2003
(b)  Conversion of secured convertible notes
(c)  Unamortized beneficial conversion feature of secured convertible notes
(d)  Conversion of Series F Preferred Stock
(e)  Par value  (.001) of  33,381,647  shares  issued in  Private  Offering  and
     48,775,909 shares in connection with conversions and exercises as discussed
     above
(f)  Balance of additional paid-in capital

            Series F Preferred Stock                      500,000
            Secured convertible notes                   1,750,000
            Unamortized discount                         (121,000)
            Bridge note                                 2,000,000
            Private offering, net of commission        27,174,000
                                                       ----------
                                                       31,303,000
            Allocated to common stock                     (82,157)
                                                       ----------
                                                       31,221,000
                                                       ==========


                                      F-29

<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 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  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 and as an  exhibit  on Form  10-K for the  fiscal  year  ended
December 31, 2002 filed on March 31, 2003.

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.

ITEM 8A. 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 2004,  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 as of December 31, 2003.  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
2004 evaluation.  There were also no significant changes in our internal control
over financial  reporting  that occurred  during the fourth quarter of 2003 that
has  materially  affected,  or is reasonably  likely to materially  affect,  our
internal control over financial reporting.  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.


                                       33
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

The Company has adopted a Code of Ethics  applicable to its officers,  including
its  principal  executive  officer,   principal  financial  officer,   principal
accounting  officer  or  controller  and any other  persons  performing  similar
functions.  The Code of Ethics will be provided free of charge by the Company to
interested  parties upon  request.  Except as provided  above,  the  information
called for by Part III, Item 9, regarding the Registrant's directors 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  "Election of  Directors."  The Proxy  Statement will be filed
within 120 days of December 31, 2003, the Company's year-end.

ITEM 10. EXECUTIVE COMPENSATION

Information  called for by Part III, Item 10, 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, 2003, the Company's year-end.

ITEM 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

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
"Beneficial  Ownership of Shares." The Proxy  Statement will be filed within 120
days of December 31, 2003, the Company's year-end.

ITEM 12. 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,  2003,  the  Company's
year-end.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS

NO.   ITEM

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 (14).

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 (15).

2.3   Agreement  and Plan of Merger  dated as of January  13,  2000 by and among
      theglobe.com,  inc.,  Chips & Bits,  Inc.,  Strategy  Plus CB  Acquisition
      Corp., SP Acquisition Corp., Yale Brozen and Tina Brozen(9).

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(21).

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(7).

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(8).


                                       34
<PAGE>

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(7).

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(7).

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(7).

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.(10).

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.(10).

4.15  Form of  Warrant  dated  November  12,  2002 to  acquire  shares of Common
      Stock.(13).

4.16 Form of Warrant  dated  March 28,  2003 to acquire  shares of Common  Stock
     (21).

4.17  Form of Warrant  dated May 22, 2003 to acquire an  aggregate  of 3,888,889
      shares of theglobe.com Common Stock (17).

4.18   Form of Convertible Promissory Note (17).

4.19  Form of Warrant  dated May 28,  2003 to acquire  an  aggregate  of 500,000
      shares of theglobe.com Common Stock (17).

4.20  Form of Warrant dated July 2, 2003 to acquire  securities of theglobe.com,
      inc. (18).

4.21  Certificate Relating to the Designation,  Preferences and Rights of Series
      G Preferred Stock (18).

4.22  Form of Warrant dated March 5, 2004 to acquire securities of theglobe.com,
      inc. (20).

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

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

10.3  2000 Broad Based Stock Option Plan(11).

10.4  1998 Stock Option Plan, as amended(7).

10.5  1995 Stock Option Plan(1).

10.6  Employee Stock Purchase Plan(6).

10.7  Technology Purchase Agreement dated November 12, 2002, among theglobe.com,
      inc., and Brian Fowler(13).

10.8  Employment Agreement dated November 12, 2002, among theglobe.com, inc. and
      Brian Fowler(13).

10.9  Payment  Agreement  dated  November 12, 2002,  among  theglobe.com,  inc.,
      1002390 Ontario Inc., and Robert S. Giblett(13).

10.10 Release  Agreement dated November 12, 2002, among  theglobe.com,  inc. and
      certain other parties named therein(13).


                                       35
<PAGE>

10.11 Preferred   Stock  Purchase   Agreement   dated  March  28,  2003  between
      theglobe.com, inc. and E&C Capital Partners, LLLP.(21).

10.12 Loan and Purchase Option Agreement dated February 25, 2003 (20).*

10.13 Amended and Restated Promissory Note (20).*

10.14 Form of Stock Purchase Agreement (20).*

10.15 Note Purchase Agreement dated May 22, 2003 between theglobe.com,  inc. and
      E&C Capital Partners, LLLP and certain other investors named therein (17).

10.16 Agreement  and plan of Merger  dated May 23,  2003  between  theglobe.com,
      inc.,  DPT  Acquisition,  Inc.,  Direct  Partner  Telecom,  Inc.,  and the
      shareholders thereof (17).

10.17 Employment  Agreement  dated May 28, 2003 between  theglobe.com  and James
      Magruder (17).

10.18 Form of  Subscription  Agreement  relating  to the  purchase  of  Units of
      securities of theglobe.com, inc. (18).

10.19 Employment Agreement dated August 1, 2003 between  theglobe.com,  inc. and
      Michael S. Egan (19).

10.20 Employment Agreement dated August 1, 2003 between  theglobe.com,  inc. and
      Edward A. Cespedes (19).

10.21 Employment Agreement dated August 1, 2003 between  theglobe.com,  inc. and
      Robin Segaul Lebowitz (19).

10.22 Amended & Restated  Non-Qualified  Stock Option Agreement  effective as of
      August 12, 2002 between theglobe.com, inc. and Michael S. Egan (19).

10.23 Amended & Restated  Non-Qualified  Stock Option Agreement  effective as of
      August 12, 2002 between theglobe.com, inc. and Edward A. Cespedes (19).

10.24 Amended & Restated  Non-Qualified  Stock Option Agreement  effective as of
      August 12, 2002 between theglobe.com, inc. and Robin Segaul Lebowitz (19).

10.25 Non-Qualified  Stock  Option  Agreement  dated as of July 17, 2003 between
      theglobe.com, inc. and Kellie L. Smythe (19).

10.26 2003 Sales Representatives Stock Option Plan (19).

10.27 Securities  Purchase  and  Registration  Agreement  dated  March  2,  2004
      relating to the purchase of Units of securities of theglobe.com, inc.

10.28 Amendment  to  the  Service  Order  Agreement  Terms  and Conditions dated
      July 30, 2003,  and October 24, 2003 between XO  Communications,  Inc. and
      Direct Partner Telecom, Inc., including XO Services Terms and Conditions.*

10.29 Agreement  dated  August  7, 2003 by and  between  Promotion  and  Display
      Technology, Ltd. and theglobe.com, inc. *

10.30 Broad Capacity  Services  Agreement  dated October 17, 2003 by and between
      Direct Partner Telecom, Inc. and Progress Telecom Corporation.*

16.   Letter  dated  August  13,  2002  from  KPMG LLP  relating  to  change  of
      independent certified accountants (12).

23.1  Consent of Rachlin Cohen & Holtz LLP.

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

31.2  Certificate of the Chief Financial  Officer Pursuant to Section 302 of the
      Sarbanes-Oxley act of 2002.

32.1  Certification of the Chief Executive Officer Pursuant To 18 U.S.C. Section
      1350 As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.

32.2  Certification of the Chief Financial Officer Pursuant To 18 U.S.C. Section
      1350 As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.


                                       36
<PAGE>

(b)   Reports on Form 8-K

No Reports on Form 8-K were filed during the three months ended during  December
31, 2003.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information  called for by Part III, Item 14, is included 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,
2003, the Company's year-end.


                                       37
<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 Form S-1 filed April 13, 1999.

8.    Incorporated by reference from our Form S-1/A filed May 3, 1999.

9.    Incorporated  by  reference  from our report on Form 8-K filed on March 8,
      2000.

10.   Incorporated  by reference  from our Form 10-K for the year ended December
      31, 1999 filed March 30, 2000.

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

12.   Incorporated by reference from our Form 8-K filed August 13, 2002.

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

14.   Incorporated by reference from our Form 8-K filed on February 16, 1999.

15.   Incorporated by reference from our Form 8-K filed on April 23, 1999.

16.   Incorporated by reference from our Form 8-K filed on March 3, 2003.

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

18.   Incorporated by reference from our Form 8-K filed on July 11, 2003.

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

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

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

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


                                       38
<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 30, 2004                  theglobe.com, inc.

                                        By /S/ MICHAEL S. EGAN
                                        ----------------------------
                                        MICHAEL S. EGAN
                                        CHIEF EXECUTIVE OFFICER
                                       (PRINCIPAL EXECUTIVE OFFICER)



                                        By /S/ GARRETT PETTINGELL
                                        ----------------------------
                                        GARRETT PETTINGELL
                                        CHIEF FINANCIAL OFFICER
                                       (PRINCIPAL FINANCIAL OFFICER
                                       AND PRINCIPAL ACCOUNTING 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 30th day of March 2004.




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

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

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



                                       39
<PAGE>

                                  EXHIBIT INDEX


NO. ITEM

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 (14).

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 (15).

2.3   Agreement  and Plan of Merger  dated as of January  13,  2000 by and among
      theglobe.com,  inc.,  Chips & Bits,  Inc.,  Strategy  Plus CB  Acquisition
      Corp., SP Acquisition Corp., Yale Brozen and Tina Brozen(9).

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 (21).

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(7).

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(8).

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(7).

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(7).

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(7).

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.(10) .

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.(10).

4.15  Form of  Warrant  dated  November  12,  2002 to  acquire  shares of Common
      Stock.(13).

4.16 Form of Warrant  dated  March 28,  2003 to acquire  shares of Common  Stock
     (21).

4.17  Form of Warrant  dated May 22, 2003 to acquire an  aggregate  of 3,888,889
      shares of theglobe.com Common Stock (17).


                                       40
<PAGE>

4.18  Form of Convertible Promissory Note (17).

4.19  Form of Warrant  dated May 28,  2003 to acquire  an  aggregate  of 500,000
      shares of theglobe.com Common Stock (17).

4.20  Form of Warrant dated July 2, 2003 to acquire  securities of theglobe.com,
      inc. (18).

4.21  Certificate Relating to the Designation,  Preferences and Rights of Series
      G Preferred Stock (18).

4.22  Form of Warrant dated March 5, 2004 to acquire securities of theglobe.com,
      inc. (20).

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

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

10.3  2000 Broad Based Stock Option Plan(11).

10.4  1998 Stock Option Plan, as amended(7).

10.5  1995 Stock Option Plan(1).

10.6  Employee Stock Purchase Plan(6).

10.7  Technology Purchase Agreement dated November 12, 2002, among theglobe.com,
      inc., and Brian Fowler(13).

10.8  Employment Agreement dated November 12, 2002, among theglobe.com, inc. and
      Brian Fowler(13).

10.9  Payment  Agreement  dated  November 12, 2002,  among  theglobe.com,  inc.,
      1002390 Ontario Inc., and Robert S. Giblett(13).

10.10 Release  Agreement dated November 12, 2002, among  theglobe.com,  inc. and
      certain other parties named therein(13).

10.11 Preferred   Stock  Purchase   Agreement   dated  March  28,  2003  between
      theglobe.com, inc. and E&C Capital Partners, LLLP. (21).

10.12 Loan and Purchase Option Agreement dated February 25, 2003 (20).*

10.13 Amended and Restated Promissory Note (20).*

10.14 Form of Stock Purchase Agreement (20).*

10.15 Note Purchase Agreement dated May 22, 2003 between theglobe.com,  inc. and
      E&C Capital Partners, LLLP and certain other investors named therein (17).

10.16 Agreement  and plan of Merger  dated May 23,  2003  between  theglobe.com,
      inc.,  DPT  Acquisition,  Inc.,  Direct  Partner  Telecom,  Inc.,  and the
      shareholders thereof (17).

10.17 Employment  Agreement  dated May 28, 2003 between  theglobe.com  and James
      Magruder (17).

10.18 Form of  Subscription  Agreement  relating  to the  purchase  of  Units of
      securities of theglobe.com, inc. (18).

10.19 Employment Agreement dated August 1, 2003 between  theglobe.com,  inc. and
      Michael S. Egan (19).

10.20 Employment Agreement dated August 1, 2003 between  theglobe.com,  inc. and
      Edward A. Cespedes (19).

10.21 Employment Agreement dated August 1, 2003 between  theglobe.com,  inc. and
      Robin Segaul Lebowitz (19).

10.22 Amended & Restated  Non-Qualified  Stock Option Agreement  effective as of
      August 12, 2002 between theglobe.com, inc. and Michael S. Egan (19).

10.23 Amended & Restated  Non-Qualified  Stock Option Agreement  effective as of
      August 12, 2002 between theglobe.com, inc. and Edward A. Cespedes (19).

10.24 Amended & Restated  Non-Qualified  Stock Option Agreement  effective as of
      August 12, 2002 between theglobe.com, inc. and Robin Segaul Lebowitz (19).


                                       41
<PAGE>

10.25 Non-Qualified  Stock  Option  Agreement  dated as of July 17, 2003 between
      theglobe.com, inc. and Kellie L. Smythe (19).

10.26 2003 Sales Representatives Stock Option Plan (19).

10.27 Securities  Purchase  and  Registration  Agreement  dated  March  2,  2004
      relating to the purchase of Units of securities of theglobe.com, inc.

10.28 Amendment  to the  Service  Order  Agreement  Terms and  Conditions  dated
      July 30, 2003,  and October 24, 2003 between XO  Communications,  Inc. and
      Direct Partner Telecom, Inc., including XO Services Terms and Conditions.*

10.29 Agreement  dated  August  7, 2003 by and  between  Promotion  and  Display
      Technology, Ltd. and theglobe.com, inc. *

10.30 Broad Capacity  Services  Agreement  dated October 17, 2003 by and between
      Direct Partner Telecom, Inc. and Progress Telecom Corporation.*


16.   Letter  dated  August  13,  2002  from  KPMG LLP  relating  to  change  of
      independent certified accountants(12).

23.1  Consent of Rachlin Cohen & Holtz LLP.

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

31.2  Certificate of the Chief Financial  Officer Pursuant to Section 302 of the
      Sarbanes-Oxley act of 2002.

32.1  Certification of the Chief Executive Officer Pursuant To 18 U.S.C. Section
      1350 As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.

32.2  Certification of the Chief Financial Officer Pursuant To 18 U.S.C. Section
      1350 As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.


                                       42
<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 Form S-1 filed April 13, 1999.

8.    Incorporated by reference from our Form S-1/A filed May 3, 1999.

9.    Incorporated  by  reference  from our report on Form 8-K filed on March 8,
      2000.

10.   Incorporated  by reference  from our Form 10-K for the year ended December
      31, 1999 filed March 30, 2000.

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

12.   Incorporated by reference from our Form 8-K filed August 13, 2002.

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

14.   Incorporated by reference from our Form 8-K filed on February 16, 1999.

15.   Incorporated by reference from our Form 8-K filed on April 23, 1999.

16.   Incorporated by reference from our Form 8-K filed on March 3, 2003.

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

18.   Incorporated by reference from our Form 8-K filed on July 11, 2003.

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

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

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

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

                                       43