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                     SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON, D.C. 20549

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

                                 FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999       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)

              120 BROADWAY
           NEW YORK, NEW YORK                             10271
(Address of principal executive offices)               (Zip Code)

                               (212) 894-3600
            (Registrant's telephone number, including area code)

      SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                  Common Stock, par value $.001 per share

                      Preferred Stock Purchase Rights

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

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

Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,
and  will  not be  contained,  to the best of  registrant's  knowledge,  in
definitive  proxy or information  statements  incorporated  by reference in
Part III of this Form 10-K or any amendment to this Form 10-K [X].

The number of shares  outstanding of the Registrant's  Common Stock,  $.001
par value (the "Common Stock") as of March 20, 2000 was 30,461,575.

Aggregate market value of the voting Common Stock held by non-affiliates of
the   registrant   as  of  the  close  of  business  on  March  20,   2000:
$156,059,000.*

                    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  2000,  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.

     *    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.


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<PAGE>


                             THEGLOBE.COM, INC.

                      1999 ANNUAL REPORT ON FORM 10-K

                             TABLE OF CONTENTS



PART I

Item 1.     Business.........................................................1
Item 2.     Properties......................................................18
Item 3.     Legal Proceedings...............................................18
Item 4.     Submission of Matters to a Vote of Security Holders.............18


PART II

Item 5.     Market for Registrant's Common Equity and Related
            Stockholder Matters.............................................19
Item 6.     Selected Consolidated Financial Data............................21
Item 7.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations.......................................23
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk......46
Item 8.     Consolidated Financial Statements and Supplementary Data........47
Item 9.     Changes in and Disagreements with Accountants and
            Accounting and Financial Disclosure.............................68


PART III

Item 10.    Directors and Executive Officers of the Registrant..............69
Item 11.    Executive Compensation..........................................69
Item 12.    Security Ownership of Certain Beneficial Owners and
            Management......................................................69
Item 13.    Certain Relationships and Related Transactions..................69


PART IV

Item 14.    Exhibits, Financial Statement Schedules and Reports on Form
            8-K.............................................................70


SIGNATURES..................................................................73


<PAGE>


                                   PART I

ITEM 1.   BUSINESS

OVERVIEW

     theglobe.com  ("theglobe"  or  "the  Company")  is one of the  world's
leading online properties with over 3.6 million  registered  members in the
United States and abroad. We specialize in delivering "community", which we
define as bringing  people  together  around shared topics of interest.  We
deliver  "community"  through  four  different  streams:  (1) our  flagship
website,  www.theglobe.com,  which  features  the  Company's  best-of-breed
community  products-globeClubs and uPublish!, both of which enable users to
personalize  their online experience by interacting with other users around
similar interests;  (2) distribution of "customized community solutions" to
strategic partners who desire to include community in their Web properties;
(3) the small  business  sector through  providing web hosting  services to
businesses  and  professional  webmasters;  and (4) a world  leading  games
information  network.  Our games information  network includes  HappyPuppy,
GamesDomain,  KidsDomain,  ConsoleDomain,  Chips & Bits,  Inc. and Strategy
Plus, Inc. (the "Games  Network").  In December 1999, our online properties
had  4.7  million  unique  visitors  and a reach  of  7.2% of the  Internet
according to Media Metrix. Since our inception in May 1995, enhancements to
our core  infrastructure  capabilities,  products and services,  as well as
strategic  partnerships  and  acquisitions  have  enabled us to  experience
growth in our user base, reach and revenues.

     Our primary revenue source is the sale of advertising, with additional
revenues   generated  through  the  development  and  sale  of  promotional
sponsorship placements within our websites, the sale of merchandise through
our online  store,  electronic  commerce  revenue  shares  and, to a lesser
extent,  membership service fees for the sale of enhanced services. Some of
our  prominent  advertisers  include  America  Online,  Microsoft,   Intel,
Coca-Cola,   American   Express,   Disney,   AT&T  and   Hewlett   Packard.
Additionally,  we have created strategic  partnerships with Sportsline.com,
Inc.,   AOL-UK,   Excite-UK,   Time   Warner's   Road  Runner,   Alloy.com,
DirectHit.com,  Deja.com  and  OneMain.com  to  distribute  our  customized
community solutions.

BUSINESS STRATEGY

     Our  goal  is to be  the  Internet's  leading  provider  of  community
solutions.  Our business  focuses on  generating  revenue  through  selling
targeted online advertising and promotional  sponsorships on our network of
online properties, e-commerce and direct marketing efforts.

     We seek to attain our goal through the following key strategies:

     Develop our  best-of-breed  community  solutions and games information
content. We create compelling services and games information content by:

     o    enabling members and partners to customize their online community
          experiences through the use of our community solutions;

     o    developing loyalty programs to reward members for increased usage
          and referrals;

     o    improving  customer  support to better  service  our  members and
          partners;

     o    integrating new  communication  functionality  into our uPublish!
          and globeClubs products;

     o    expanding the suite of personal  publishing and website  building
          tools;

     o    continually  monitoring our users'  activity and eliciting  their
          feedback to create future enhancements; and

     o    developing  cutting-edge editorial coverage of computer and video
          games.

     Distribute  our  customized  community  solutions  to  three  types of
customers.  Aggregating  online  communities  will benefit our customers as
follows:

     o    our community partners gain an opportunity to host vibrant online
          communities,  which enhance the  experience  of their users,  and
          promote increased user traffic and loyalty; and


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     o    our advertising  clients and e-commerce  customers gain access to
          large  unduplicated,  targeted  audiences  to whom  they can sell
          their products and services.

     We target  three  basic  customer  segments  for  distribution  of our
customized community solutions and games information content:

     o    BUSINESS TO  CONSUMER  DIRECT.  Consumer  direct  represents  our
          traditional  customers to whom we offer community  solutions that
          assist in finding and  communicating  with people around  similar
          interests on theglobe.com,  our flagship website,  and throughout
          our world leading Games Network.

     o    BUSINESS TO BUSINESS.  Our consumer  indirect segment extends our
          community solutions and Games Network to include the audiences of
          web   properties  of  our  strategic   partners.   Through  these
          relationships, our partners take advantage of the strength of our
          community  tools to retain  users and to promote  increased  site
          usage by enabling  consumers to find and communicate  with people
          around similar topics of interest. The users from these aggregate
          communities create critical mass of highly targeted audiences for
          our partners, end users and advertising customers.

          A  significant   focus  of  our  company  in  2000  will  be  the
          distribution  of our  customized  community  solutions  and Games
          Network to additional  strategic partners.  Our service offerings
          consist of the development, hosting and maintenance of co-branded
          community  solutions for consumer Web  properties.  We host these
          community  micro-sites  on our central  operating  system,  which
          enables us to aggregate  members and community  discussions  from
          each of our partners' community sites and makes those discussions
          available for real-time or delayed interaction on other community
          networks.

          We offer  integrated  solutions  for  clubs,  message  boards and
          homepage  building.  We also  provide an array of  operating  and
          support  services  to  our  partners,  including  community  site
          hosting and  maintenance,  direct  customer  support and end-user
          support.  We have  designed  our central  operating  system to be
          reliable  and to handle  rapid  growth  in  customer  and  member
          activity.  Our central technology enables us to rapidly develop a
          partners'  community  site in a relatively  short period of time.
          Hosting and  maintaining  our  partners'  community  sites on our
          system  significantly  reduces  our  partners  need to  invest in
          additional   hardware   and   software   or  devote   significant
          engineering  or support  resources to develop and maintain  their
          sites.

          These distribution  partnerships increase our audience, which, in
          turn,  significantly  increases  our  ability  to  sell  targeted
          advertising to our clients.

     o    BUSINESS TO SMALL BUSINESS.  Through our WebJump.com property, we
          offer small business websites hosting services and the ability to
          enhance   their   websites  with  our  leading   publishing   and
          communication applications

PRODUCTS AND SERVICES

     globeClubs. globeClubs is a network of web and e-mail based clubs that
allows  users  to  interact   around  very  specific  topics  of  interest.
globeClubs  also lends  itself to groups who want to use it as a publishing
tool.  There are two ways for our users to  participate in our e-mail based
club service:  (1) the user explores a comprehensive  list of current clubs
(categorized  in 13  categories  and  over  4,000  subcategories)  joins an
existing  group or (2) the user starts a new e-mail club and invites  other
members to  discuss or debate  topics  that are not  currently  part of the
globeClubs list.

     The following  represents a partial list of features  included  within
the globeClubs service:

     o    LIVE CHAT HELP DESK.  Technical and general  support is available
          seven  days a week  to  answer  any

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          question a user may have regarding the globeClubs service;

     o    OWNER'S  RESOURCE  CENTER.  We have  developed the Leaders Lounge
          Club,  a place  where  club  owners  can learn  from  experienced
          members on what it takes to make a club successful.  In addition,
          members have access to our community staff, a forum message board
          and a chat room;

     o    CLUB STATISTICS.  Each club publishes up-to-date  statistics that
          allow club  members to view a  comprehensive  display of a club's
          status (including information regarding member totals, the number
          of   messages,   frequency   of  member   postings   and  content
          popularity);

     o    HTML.  Club  members  and  owners  can put up  photos,  text  and
          graphics on a club main page;

     o    PROMOTION TOOLS. We provide pre-made banners that members can put
          on their homepages to promote their clubs;

     o    ADVANCED SEARCH. Allows members to search for topics, clubs, club
          owners, discussion language and age groups;

     o    PROFILES.  Enables  users to develop  profiles  about  themselves
          describing appearances,  hobbies, likes and dislikes,  photos and
          links to their favorite websites;

     o    PRIVACY. A club can remain hidden from the general public,  where
          only club members will find it; and

     o    SUBSCRIPTION  SETTINGS.  Members  can change  where they  receive
          messages  posted to a club.  There are 3 ways to  subscribe  to a
          club: Individually (one at a time sent to your email address), by
          digest  (multiple  posts  collected  in one  e-mail)  or Web only
          (viewing messages on our website).

     uPublish!  uPublish!  is a full service website building solution with
templates, features and functionality from which to choose. We offer a rich
picture gallery (from  PictureNow!) and features such as roving chat, audio
chat, headlines,  audio messages, and globeClubs information,  coupled with
an intuitive  design that caters to both the homepage  building veteran and
the new user.  Users create a wide range of both full sites and  individual
pages with a superior  tool set and 25 megabytes  of disk space  available.
Additionally,  detailed  help screens are  available  to users  through the
entire homepage or website building process. A user may employ uPublish! in
two ways:  (1) a user may build a  homepage  or  website  of his or her own
filled with personally chosen content or (2) a user may interact with other
users of uPublish! on an existing homepage or website via various audio and
text tools.

     The  following  represents  a partial  list of features  available  to
homepage and website builders:

     o    TEXT. Type in specific messages within uPublish!;

     o    PICTURES:  Upload  photos or choose from the  multitude of photos
          available in our uPublish! photo gallery;

     o    CLIP ART: A complete gallery of clip art is available;

     o    BULLETED LISTS:  Create a bulleted list of information to include
          about a given subject, such as listing statistics,  facts, quotes
          or any other relevant information;

     o    ROVING CHAT: Add a feature to their site, enabling people who are
          simultaneously browsing the site to communicate with one another;

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     o    CONTACT INFORMATION: Add demographic information about themselves
          to allow other users to reach them;

     o    COUNTER:  Add a counter  (in analog or  digital  format) to their
          site to see how many people have visited;

     o    DATES:  Add a list of  important  dates to their site,  such as a
          schedule of games or playoff dates;

     o    EMAIL  LINK:  Set up a link to allow  others to send them  email,
          with their email address already embedded inside;

     o    GUESTBOOK:  This allows visitors to post messages to the owner of
          a homepage or website via signing a guestbook;

     o    HEADLINES: Add a variety of content feeds to their site;

     o    SITE  LINKS:  Add a  section  of  specific  links to their  pages
          including other websites;

     o    LIVE VOICE  CHAT:  Add a live voice chat room to their  websites.
          Visitors can talk to the site builder or to each other via HearMe
          technology. This function can also be executed as text chat;

     o    MY CLUBS: Add links to the globeClubs to which they belong;

     o    POLL: Create their own poll, with up to four possible  responses.
          Statistics  are  shown  to  allow  users  to see  vote  split  in
          percentages;

     o    GIFT REGISTRY  INFORMATION:  Add information about the gifts they
          would  like to  receive,  as well as the stores at which they are
          registered;

     o    SEARCH:  Add the  ability  to  search  their  site or  other  Web
          properties for additional information;

     o    SELL YOUR  PERSONAL  DIGITAL  CONTENT:  Sell  their  own  digital
          content right on their sites, done in partnership with WAVE;

     o    CALENDAR: Add their personal schedule to their sites;

     o    PROMOTION:  A number of promotional  tools can be added to member
          homepages  and websites.  These include  joining a free ad banner
          exchange  network,  submitting  pages or  sites  to major  search
          engines,  categorizing  one's page or site for  promotion  within
          theglobe community and emailing friends and family once a page or
          site has been created;

     o    HTML: If users prefer to write their own HTML,  they are provided
          with an online editor to assist them through the process; and

     o    FILES:  uPublish!  offers  homepage  and website  builders a file
          manager to manage all files that are created. Files can be viewed
          on both the directory and subdirectory levels.

BUSINESS TO BUSINESS RELATIONSHIPS

     We have a number of strategic  distribution  relationships  to provide
partners  with our  customized  community  solutions.  These  relationships
provide us with a  cost-effective  method of  aggregating  critical mass in
highly  targeted  audiences  without  incurring  significant  marketing  or
infrastructure  costs.  Some of our premier

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partners include, but are not limited to, the following:

     o    Sportsline.com,  Inc. We develop and operate  community  services
          for CBS Sportsline, a leader in global Internet sports media.

     o    Time  Warner's  Road  Runner.  Road Runner is one of the nation's
          leading  providers of high speed online  service.  We provide our
          Games  Network  and  message  boards  to  Road  Runner's  650,000
          subscribers.

     o    Excite  UK.  GamesDomain,  a games  publication  within the Games
          Network,  provides  comprehensive  games  information  content to
          Excite UK, one of the UK's leading web portals.

     o    OneMain.com. OneMain.com, an Internet Service Provider in smaller
          metropolitan markets and rural communities, offers our co-branded
          customized  community  solutions  to  its  approximately  600,000
          subscribers.

     o    Alloy.com.  This website  focuses on teen  community and commerce
          and will feature  uPublish!,  our website and  homepage  building
          solution.

     o    DirectHit.com.  A search technology provider owned by Ask Jeeves,
          DirectHit.com will offer our globeClubs service through text link
          to its users.

     o    AOL UK.  We  provide  game  downloads  to AOL UK's  approximately
          600,000 members.

     o    Chaitime.com.  Chaitime.com, a South Asian online community, will
          offer a private label  version of uPublish!  and  globeClubs,  as
          well as our message boards functionality, to its users.

     o    Deja.com.  Deja.com,  a  consumer  decision-making  decision  Web
          property,  and we agree to cross  distribute  and  promote one of
          each  others  core   services,   Deja  Ratings  and   globeClubs,
          respectively.

               In addition to our  agreements to  distribute  our community
solutions to strategic  partners,  we have various strategic  relationships
with  certain  entities  to  provide  content  on our  site.  Some of these
partners include HotJobs.com,  Reuters news service,  CBS Marketwatch,  Dr.
Koop.com, Isyndicate, Mortgage IT and E!Online.

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<PAGE>

ADVERTISING CUSTOMERS

     We had  over  4.7  million  unique  users  and a reach  of 7.2% of the
Internet according to the December 1999 Media Metrix report.  Additionally,
we have over 3.6 million registered members in the United States and abroad
with an  additional  600,000  registered  members  related  to our  Webjump
property.  We have attracted mass market consumer product companies as well
as technology-related businesses to advertise on our sites. We believe that
our core community and Games Network, as well as our numerous  distribution
partners,  make us well  positioned  to  capture a portion  of the  growing
number of consumer product and service companies advertising online.

     In 1999,  no single  advertiser  accounted  for more than 10% of total
revenues and  approximately  70% of our advertisers were repeat  customers.
For the twelve months ended  December 31, 1999,  approximately  470 clients
advertised on our sites running over 700 individual  advertising campaigns.
Some of our advertising clients include:

     Ameritrade         CNET             Intel              Pepsi
     American Express   Dell Computers   Kellogg's Brands   Sprint
     AOL                Disney           Kodak              Sony
     AT&T               Dunkin' Donuts   Lee Jeans          3Com
     BellSouth          EA Sports        Levi's             US West
     Coca Cola          Hewlett Packard  Microsoft          Warner Brother's
     CNBC               Hilton           Office Depot       Visa

ADVERTISING SALES AND DESIGN

     We  distinguish  ourselves  from our  competition  by creating  unique
advertising and sponsorship  opportunities  designed to build brand loyalty
for our corporate  sponsors by  seamlessly  integrating  their  advertising
messages into our different sites' content,  as well as delivering targeted
messages  to  our  users'  desktop.  By  aggregating  users  around  common
interests,  we increase the ability to target these groups of users through
traditional web based advertising opportunities as well as direct marketing
initiatives that target the user off the web using their e-mail client.

     We can deliver targeted advertising within different vertical areas of
our sites, allowing advertisers to single out and effectively deliver their
messages  to their  targeted  audiences.  We have  the  ability  to  target
specific  demographic  data,  which  include,  but are not limited to, age,
gender, product,  sub-vertical  categorization and country. We believe that
sophisticated  targeting  is a critical  element  for  capturing  worldwide
advertising budgets for the Internet.  Additionally, we have been expanding
the  amount  and  type of  demographic  data we  collect  (all  voluntarily
provided by our users),  which allows us to offer more specific data to our
advertising  clients  for  promotion  of their  products  both  online  and
offline.

     While our competition  generally  provides  banner  advertising as its
primary  advertising  option, we believe that our competitive  advantage to
garnering  significant  advertising  revenue lies in the flexibility of our
advertising  options.  We offer an  assortment  of  advertising  units  and
advertising  programs to ensure that our  customers  meet their  needs.  We
offer clients the following  forms of  advertising,  which can be purchased
individually, in assorted combinations or in pre-defined packages:

     o    Banner advertising            o     Sweepstakes
     o    Five sizes of button          o     Affinity packages for
           advertising                         advertising partners
     o    Text links                    o     Direct marketing and lead
     o    Three sizes of pop-up                generation, if users have
           advertisements                      opted in to these programs
     o    Full page advertisements      o     List  services  for  third
     o    Various sponsorship programs         party direct marketing
                                        o     Market  research for
                                               advertising campaigns

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     We have an  internal  advertising  sales  staff  of  approximately  32
professionals.  These professionals focus on selling  advertisements on our
websites and developing  long-term strategic  relationships with clients. A
significant  portion of our sales  personnel's  compensation  is commission
based. We have sales offices in New York City,  Chicago,  San Francisco and
London and intend to open  additional  sales  offices in  selected  markets
around the world.

MARKETING AND PROMOTIONS

     In 1999, we committed approximately $8.7 million to offline and online
media  advertising.  In November 1999, we launched an extensive  television
advertising campaign to promote two new core products: uPublish!, our state
of the art personal  publishing tool and  globeClubs,  a network of web and
e-mail  based clubs that  allows  users to  interact  around very  specific
topics of  interest.  During  1999,  we used  online and  offline  media to
generate brand awareness and  registrations  for our service.  For the year
ended   December   1999,  we  generated   approximately   1.2  million  new
registrations for our properties. Additionally, we increased our membership
base by over  600,000  members  from  our  acquisition  of  WebJump.com  in
November 1999. Our online marketing efforts were focused on:

     o    generating additional traffic to our sites,

     o    building and defining a desirable online destination in the minds
          of present and potential online consumers, and

     o    creating a strong  and  viable  brand  within  the  Internet  and
          advertising industries.

In 2000, we intend to continue our marketing efforts. The dollars allocated
to marketing will primarily be used to secure distribution  partnerships as
well as to continue to build traffic and our individual website brands.

TECHNOLOGY

     Our strategy is to operate our  business  through the  application  of
existing  technologies.  The various features of our online environment are
implemented using a combination of off-the-shelf  and proprietary  software
components.   Whenever   possible,   we  favor  licensing  and  integrating
"best-of-breed"  technology from industry leaders,  including  Oracle,  Sun
Microsystems and Microsoft. We believe that this component approach is more
manageable,   reliable  and  scalable  than  single-source   solutions.  In
addition, our emphasis on commercial components accelerates our development
time. We believe that this is an advantage in our rapidly evolving market.

     In addition to being scalable, our system has many redundancies, which
benefits us if our systems experience operating  difficulties.  Our servers
are  connected  to the Internet  through a  combination  of links  provided
through  three  separate  carriers:  AppliedTheory,  UUNET and  AT&T.  This
approach to connectivity allows us to continue operations in the event of a
failure in any  carrier.  We plan to  continue  to upgrade  our  systems as
necessary to conform to our business plan. Our system allows us to roll out
upgrades incrementally on an as-needed basis.

     To efficiently manage our systems,  we have developed highly automated
methods of monitoring  the  performance  of each system  component.  If any
subsystem  fails, the failed subsystem is taken out of service and requests
are  distributed  among the  remaining  operational  systems.  We have also
developed tools to perform routine  management tasks such as log processing
and content updates in an automated,  remote-controlled fashion. We believe
that our  investment  in  automation  lessens  the need for the  additional
personnel  that would  otherwise  be  required  to support the system as it
grows.

     Our data  processing  systems  and  servers are hosted at the New York
Teleport in Staten Island, New York under a three year lease with Telehouse
International   Corporation.   The  New  York  Teleport  facility  provides
security,  electricity and premises for our systems.  The facility has four
independent  diesel  generators  designed to provide power to these systems
within  seconds of a power surge.  If required,  the diesel  generators can
supply the data center's  power for several days.  Telehouse  International
Corporation   does  not  guarantee   that  our  Internet   access  will  be
uninterrupted, error-free or secure.

     We maintain  additional  server  equipment  at Exodus  Communications,
Inc.'s facility in Seattle, Washington.  Exodus provides and manages power,
environmentals and connectivity to the Internet through multiple links on a
24  hour-a-day,  seven days per week basis.  Exodus does not guarantee that
our Internet

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access will be uninterrupted, error-free or secure.

COMPETITION

     Competition among  community-focused  sites is growing rapidly, as new
companies  continue to enter the market and existing  companies continue to
layer  community  applications  onto their sites. We expect that the market
will continue to evolve  rapidly,  and the rate of product  innovations and
new product introductions will remain high.

     Barriers to entry are relatively insubstantial and we face competitive
pressures from many companies,  both in the United States and abroad.  With
the  abundance  of  companies  operating  in  this  market,  consumers  and
advertisers have a wide selection of community  services to choose from. In
order  to  remain   competitive  for  consumers  and  the  advertising  and
e-commerce  revenue  each user  represents,  we must  maintain a  concerted
effort to continually  develop new offerings,  refine our core products and
enter into successful distribution agreements.

     We  believe  that in order to attract  new users and  retain  existing
ones, we need to:

     o    Educate  users  and  other  Web  properties  on the  benefits  of
          community, specifically theglobe.com community;

     o    Maintain functional, intuitively-designed websites;

     o    Foster our brand image in the marketplace;

     o    Offer our users  best-of-breed  services both developed  in-house
          and via third-party relationships;

     o    Maintain  a broad  demographic  focus,  with a wide  content  and
          service appeal to the largest possible audience; and

     o    Maintain  a sizable,  vibrant  audience,  enabling  users to find
          other  users with  similar  interests  (thereby  increasing  each
          user's likelihood to participate in theglobe.com community.)

     As an outsourced community solutions provider, we compete for business
relationships with software and service firms such as PeopleLink, Urbanite,
Homepage.com and TalkCity.

     As a leading  community  destination  site,  we compete  for users and
advertisers with:

     o    Stand-alone  online discussion  services and web-based clubs such
          as Egroups, Ecircles, Deja.com and TalkCity;

     o    Stand-alone  online publishing and homepage hosting sites such as
          Homestead, FortuneCity and NetTaxi; and

     o    Multi-focused  media  sites  offering  either  one or both of the
          above services,  such as Yahoo!,  Lycos,  NBCi,  Microsoft's MSN,
          America Online and Disney's Go Network.

     As one of the largest  games  information  properties  on the Web, our
Games Network competes for users and advertisers with:

     o    Games  information  sites and communities 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 Lycos' Gamesville.

     As a leading community for children,  our KidsDomain site competes for
users and advertisers with

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<PAGE>

children-focused  communities  and sites such as  Nick.com  and  Children's
Television Workshop.

     As a  business-to-business  web hosting service,  our Webjump property
competes with:

     o    Other free business hosting  services such as Go2Net's  Hypermart
          and FreeYellow; and

     o    Fee-based  business  hosting services such as AT&T Small Business
          Hosting and Yahoo's SimpleNet.

     Many of our  existing  competitors,  as well as a number of  potential
competitors, may have the following advantages:

     o    Longer operating histories in the Internet market;

     o    Larger market presence;

     o    Larger customer bases; and

     o    Greater financial, technical, and marketing resources.

     In addition,  many companies involved in the community services market
may be acquired by,  receive  investments  from,  or enter into  commercial
relationships with larger, well-established and well-financed companies. In
the past year,  Xoom.com  entered into a strategic  relationship  with NBC,
Yahoo!  completed its  acquisition  of Geocities,  and Egroups  merged with
ONEList.  These acquisitions and alliances may pose competitive  advantages
for our competitors  through combined marketing efforts,  increased capital
and combined  user bases.  As a result of this highly  competitive  market,
these consolidations and strategic ventures may continue in the future.

     We  believe  that  the  number  of  Internet   businesses  relying  on
advertising  revenue  will  continue to grow,  as will the total  amount of
advertising  conducted  on the Web. We believe  that in order to garner the
greatest share of advertising expenditures, we must continue to:

     o    Maintain brand visibility in the advertisement buying community;

     o    Attract a high volume of traffic to our sites;

     o    Cover a  broad  range  of  topics  with  our  sites'  information
          content;

     o    Appeal to a wide-ranging demographic;

     o    Offer  advertisers  the  ability to  precisely  target our highly
          segmental audience;

     o    Accurately  determine the most profitable and  competitive  price
          points for our various advertising packages; and

     o    Prove to advertisers  the efficacy of advertising to our targeted
          audience.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

     We regard substantial  elements of our site and underlying  technology
as  proprietary.  We  attempt to  protect  them by relying on  intellectual
property laws. We also generally enter into confidentiality agreements with
our employees and consultants and in connection with our license agreements
with third parties.  We also seek to control access to and  distribution of
our technology,  documentation and other proprietary  information.  Despite
these  precautions,  it may be  possible  for a  third  party  to  copy  or
otherwise obtain and use our proprietary  information without authorization
or to develop similar technology independently.

     We pursue the  registration of our trademarks in the United States and
internationally. Our efforts include:

     o    The  registration of a United States  trademark for  THEGLOBE.COM
          and THEGLOBE (logo);

     o    The filing of United States  trademark  applications  for BUILD A
          WORLD AROUND YOU, GLOBECLUBS, SHOP.THEGLOBE.COM and TGLO;

     o    The  registration  of  THEGLOBE  (logo)  in the  European  Union,
          Israel, New Zealand and Norway; and

                                     9
<PAGE>

     o    The  filing of  trademark  applications  for  THEGLOBE  (logo) in
          Australia,  Brazil,  Canada,  China,  Hong Kong,  Japan,  Russian
          Federation, Singapore, South Africa, Switzerland and Taiwan.

     Additionally,  Attitude  Network  has filed  applications  to register
HAPPY PUPPY (logo) and KIDS DOMAIN (logo) in the United States, Canada, and
the European Union.  Attitude Network has registered GD GAMES DOMAIN (logo)
in the United  Kingdom and has applied to register  GAMES DOMAIN  (logo) in
Canada, China and the European Union.

     theglobe.com  is  implementing  a patent  strategy  designed to create
barriers  to entry to  potential  competitors.  We have  filed a number  of
patent  applications  with the  United  States  Patent &  Trademark  Office
covering  various  aspects of the  business and are working with our patent
counsel on additional patents for inclusion in our patent portfolio.  While
our strategy is meant to create effective barriers to entry for others into
our markets,  the scope of our patents will not be  determined  until final
action is taken by the United States Patent & Trademark Office.

     Effective trademark,  service mark, copyright, patent and trade secret
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.  Existing  or  future
trademarks  or service marks applied for or registered by other parties and
which are  similar  to ours may  prevent us from  expanding  the use of our
trademarks and service marks into other areas.  See "Risk  Factors--We rely
on intellectual property and proprietary rights."

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

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

     o    online content;

     o    online gambling;

     o    Internet privacy;

     o    Internet taxation;

     o    access charges;

     o    liability for information  retrieved from or transmitted over the
          Internet;

     o    unsolicited commercial email messages;

     o    domain names; and

     o    jurisdiction.

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

     ONLINE CONTENT

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

                                    10
<PAGE>

     Restrictions on  Transmitting  Indecent and Obscene Content to Minors.
Other federal and state  statutes  specifically  prohibit  transmission  of
certain  content to minors.  The Child Online  Protection Act, which became
effective in November,  1998,  requires websites engaged in the business of
the  commercial  distribution  of material  that is deemed to be obscene or
harmful to minors to restrict minors' access to this material. However, the
Child  Online  Protection  Act exempts  from  liability  telecommunications
carriers,   Internet  service  providers  and  companies  involved  in  the
transmission,  storage,  retrieval,  hosting,  formatting or translation of
third-party communications where these companies do not select or alter the
third-party  material.  On February 1, 1999,  a federal  district  court in
Pennsylvania entered a preliminary injunction preventing enforcement of the
harmful-to-minors portion of the act. The provisions of the act relating to
obscenity,  however,  remain  in  effect.  On April 2,  1999,  the  Justice
Department  appealed  the federal  district  court's  decision to the Third
Circuit  Court of  Appeals.  The Third  Circuit has not yet handed down its
decision in this case. A similar state statute in New Mexico has been found
unconstitutional by the Tenth Circuit of Appeals.

     Content Filters.  Congress,  selected states, and some  municipalities
have proposed, or are currently  considering,  mandating the use of content
filters  in public  libraries  and  schools to  restrict  access to certain
materials available through the Internet.  In Loudoun County,  Virginia,  a
content  filter policy was adopted by the county  library board in 1997 and
was later found to be  unconstitutional  by a federal  district court.  The
adoption  of content  filters in public  libraries  and  schools may render
certain  parts of our websites  inaccessible  to end users,  affecting  our
advertising revenues.

     Consumer Fraud and  Advertising.  Some states,  including New York and
California, have enacted laws or adopted regulations that expressly or as a
matter of judicial  interpretation  apply various  consumer fraud and false
advertising requirements to parties who conduct business over the Internet.
The  constitutionality  and the enforceability of some of these statutes is
unclear at this time.

     GAMBLING

     The U.S.  Department of Justice and some state Attorneys  General have
intensified their efforts in taking action against  businesses that operate
Internet gambling  activities.  In the current Congress,  a bill is pending
that,  if  enacted,  would  prohibit  placing  or  receiving  a bet via the
Internet  in any state.  Even in the  absence of new  legislation  directed
specifically  at  Internet-based  gambling,   existing  federal  and  state
statutes  criminalize  some  gambling  activities.  In June 1999, a federal
commission  ordered to study the  economic  and social  effects of gambling
issued a report  recommending  a broad ban on  Internet  gambling.  In July
1999, a New York Supreme Court held that state  gambling laws applied to an
offshore  Internet casino whose computer  servers were located and licensed
in Antigua.  Online gambling advertisers accounted for under ten percent of
our advertising revenues in 1999.

     PRIVACY

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

     Children's  Online  Privacy  Protection  Act.  In  October  1998,  the
Children's  Online  Privacy  Protection  Act was signed  into law.  The law
directs the Federal Trade Commission to develop  regulations  governing the
collection  of data from  children  by  commercial  website  operators.  On
October 20, 1999,  the FTC issued its final  regulations.  The  regulations
apply  to  commercial  websites  directed  to,  or that  knowingly  collect
information  from,  children under 13. The rule becomes effective April 21,
2000.

     Under the rule, these websites, with certain exceptions, would have to
obtain parental consent before  collecting,  using, or disclosing  personal
information from children. This consent, with certain exceptions, would

                                    11
<PAGE>

have to be  verifiable.  Verifiable  consent means any  reasonable  effort,
taking into consideration  available technology,  to ensure that parents of
children  from whom  information  is sought  receive  notice of the website
operator's personal information  collection,  use, and disclosure practices
and that authorizes the collection, use, and disclosure of the information.
Certain  less secure  methods of  obtaining  consent such as e-mail will be
permissible for two years and only for internal uses. Information collected
for  disclosure to third  parties will require more secure  methods such as
use of a credit card, toll-free number,  digital signature,  or e-mail that
is sent along with a password or a personal identification number. Websites
must also give parents a choice as to whether their child's information can
be disclosed to third parties, and give parents a chance to prevent further
use or future collection of personal  information from their child. Parents
must  also,  upon  request,  be given a means  of  reviewing  the  personal
information collected from their child.

     The statute  includes a "safe harbor"  program for industry  groups or
others who wish to create self-regulatory  programs to govern participants'
compliance.  The rule  outlines  the process by which  industry  groups and
others  may  obtain  certification  of their  guidelines.  One safe  harbor
application is currently pending before the FTC.

     We currently  require  parental  consent  before  allowing  people who
identify   themselves  as  being  12  or  younger  to  become   members  of
theglobe.com  website and to post any data in our chat rooms,  forums,  and
similar  discussion  groups.  We are reviewing our current parental consent
practices and expect to have a verifiable consent mechanism in place by the
effective date of the rule.

     Gramm-Leach-Bliley  Act. In November 1999, the  Gramm-Leach-Bliley Act
("GLBA") was signed into law. The GLBA contains certain privacy  provisions
which require,  among other things that, entities that qualify as financial
institutions under the act (which potentially may cover entities engaged in
a wide range of businesses) to provide  individuals  with a notice of their
privacy  policies  before  entering  into a  customer  relationship  and to
prohibit  the transfer of certain  information  regarding  individuals  who
obtain a financial  service  from such an entity to an  unaffiliated  third
party, subject to certain exceptions,  unless the individual has been given
the opportunity to opt out of such sharing of their  information.  The FTC,
along with other federal agencies, has proposed rules to implement the GLBA
privacy  provisions.  The FTC proposed  rule has  requested  comment on the
types of  entities  that may be deemed to be  financial  institutions.  The
proposed  rules are expected to become  effective in November 2000. We will
be monitoring this rule making process to determine what impact, if any, it
may have on our business.

     Other  Federal  Privacy  Bills.  Several other privacy bills have been
introduced in the current Congress. We cannot predict the exact form of any
legislation  that the Congress might enact.  Accordingly,  we cannot assure
you that our current practices will comply with any legislative scheme that
Congress  ultimately  adopts  or that we will not have to make  significant
changes to comply with such laws.

     FTC Reports.  In June 1998,  the FTC released a report  analyzing  the
effectiveness of self- regulation as a means of protecting consumer privacy
on the Internet. The report concluded that industry self-regulation had not
been adequate.  The report listed four core information  practices that the
FTC believes must be part of any privacy protection effort: notice, choice,
access and security.  In July 1999, the FTC issued a second report in which
it concluded that legislation to address online privacy was not appropriate
at that time.

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

     The FTC  has  begun  investigations  into  the  privacy  practices  of
companies  that  collect  information  on the  Internet.  For  example,  on
February  12,  1999,  the FTC made  final a consent  order  with one of our
competitors  in  connection  with that  competitor's  online  collection of
personally identifiable data and its subsequent use of that data.

                                    12
<PAGE>

Similarly,  on August 12, 1999,  the FTC entered into a final consent order
with the operator of a website  directed to children and teens that focuses
on issues  relating to money and  investing.  The FTC alleged that the site
falsely represented that personal information  collected from children in a
survey would be maintained  anonymously,  and that the participant would be
sent  an  e-mail  newsletter  as well  as  prizes.  The  FTC's  action  was
predicated on its allegation that the personal  information about the child
and family finances were in fact maintained in an identifiable  manner. The
order prohibits such alleged  misrepresentations in the future and requires
the operator to post a privacy notice on its sites directed toward children
and  obtain  verifiable  parental  consent  before  collecting   personally
identifiable information from children.

     DoubleClick,  Inc. has  disclosed  that the FTC is  investigating  its
advertisement and data collection practices. In 1999, DoubleClick purchased
Abacus Direct Corp., an owner of a database  containing  consumers' offline
catalogue purchasing behavior.  Shortly thereafter,  DoubleClick  announced
its  intention to link the personal  identities  of consumers in the Abacus
database to the other  information  and  anonymous  data it collects  about
Internet users in the ordinary  course of its business.  This  announcement
was opposed by a number of privacy groups, including the Electronic Privacy
Information  Center,  who  petitioned  the FTC to begin  an  investigation.
Although  DoubleClick  has announced that it would refrain from linking the
personal identities with the other information and anonymous data until the
government  and  industry  can  agree on a set of  privacy  standards,  the
investigations are ongoing.

     The  attorneys  general of New York and Michigan  have also  announced
that they are investigating  DoubleClick.  The attorney general of Michigan
has sent a notice  of  intended  action  to  DoubleClick.  That  notice  of
intended action is a formal warning that sometimes precedes the filing of a
formal lawsuit.

     We are  continuing  to review our  privacy  practices  in light of FTC
enforcement  activity.  We cannot  assure you that the FTC's  activities in
this area will not adversely affect our ability to collect  demographic and
personal  information  from members,  which could have an adverse effect on
our  ability to  attract  advertisers.  This could have a material  adverse
effect on us.

     Voluntary   Self-Regulation.    Some   industry   groups   and   other
organizations  have proposed,  or are in the process of proposing,  various
voluntary  standards  regarding  the treatment of data  collected  over the
Internet.  In order to improve user and member  confidence  in our site, we
revised theglobe.com website user agreement and privacy policy and became a
licensee  of the TRUSTe  Privacy  Program.  As a TRUSTe  licensee,  we have
agreed to adhere to certain established privacy principles for theglobe.com
website  as  well  as  to  comply  with  TRUSTe's  oversight  and  consumer
resolution process. theglobe.com website privacy policy now sets forth what
personal information is being collected,  how it will be used, with whom it
will be shared,  who is gathering  the  information,  what options the user
has, what security  procedures  are in place to prevent misuse or loss, and
how users can  correct  information  to control its  dissemination.  We may
choose to join other  organizations  that  require us to comply  with other
privacy  principles.  We may incur expenses in obtaining the endorsement of
these  organizations  or in altering  our  current  policies to comply with
these  privacy  principles.  We  cannot  assure  you that the  adoption  of
voluntary  standards will preclude any legislative or  administrative  body
from taking governmental action regarding Internet privacy.

     European Union Privacy  Directive.  At the  international  level,  the
European  Union adopted a directive  that  requires EU member  countries to
impose  restrictions on the collection and use of personal data,  effective
October 25, 1998. Among other provisions,  the directive generally requires
member countries to prevent the transfer of personally-identifiable data to
countries that do not offer equivalent privacy protections. At present, the
EU has  indicated  that the  United  States  does not  provide  protections
equivalent  to that of the  directive.  The  directive  could,  among other
things,  affect United States  companies that collect  information over the
Internet  from  individuals  in  EU  member   countries,   and  may  impose
restrictions   that  are  more  stringent  than  current  Internet  privacy
standards in the United States.  In response to the directive,  on November
4, 1998,  the U.S.  Department  of Commerce  published for comment a set of
safe  harbor  principles   regarding  privacy   protection  for  personally
identifiable  data.  These  principles  were revised on April 19, 1999. The
Commerce  Department  proposed that organizations that come within the safe
harbor  would  be  presumed  to  maintain  an  adequate  level  of  privacy
protection  and could  continue to receive  personal data transfers from EU
member countries. The draft safe harbor provides for:

                                    13
<PAGE>

     o    notice  regarding  the  organization's  intended  use of personal
          data;

     o    the opportunity for an individual to choose how the  organization
          or a third party will use personal information;

     o    requirements  regarding  the security  and  integrity of personal
          data  and  access  by  an  individual  to  data   regarding  that
          individual; and

     o    mechanisms  for ensuring an  organization's  compliance  with the
          privacy principles.

     The Commerce  Department and the EU are engaged in ongoing discussions
about the application of the directive to United States companies. On March
14, 2000,  the Commerce  Department  and the EU jointly  announced  that an
arrangement  had been reached.  The EU Parliament  and the EU member states
must approve the  arrangement  before it can be  implemented.  The Commerce
Department has urged these entities to approve the arrangement prior to the
June 2000 U.S.-EU  Summit.  We own some websites  operated in the U.K. that
collect  personally  identifiable  data.  We are  continuing  to review our
privacy  policies and  practices in light of the directive and the proposed
safe harbor. We cannot assure you that the U.S. and EU's activities in this
area will not  adversely  affect our  ability to  collect  demographic  and
personal  information  from members,  which could have an adverse affect on
our  ability to  attract  advertisers.  This could have a material  adverse
effect on us.

     INTERNET TAXATION

     United States.  Governments at the federal, state and local level, and
some foreign governments, have made a number of proposals that would impose
additional  taxes on the sale of  goods  and  services  and  various  other
Internet  activities.  In 1998,  the federal  Internet  Tax Freedom Act was
signed into law,  placing a three-year  moratorium on state and local taxes
on Internet  access and on multiple or  discriminatory  taxes on electronic
commerce.  However,  this moratorium  exempts existing state or local laws.
The statute also created a commission,  known as the Advisory Commission on
Electronic Commerce to study several Internet taxation issues. The Advisory
Commission  must  submit its  findings  to Congress no later than April 21,
2000. In addition,  bills have been  introduced in the Senate and the House
proposing  that the  three-year  moratorium  be made  permanent.  We cannot
assure you that future laws imposing taxes or other impositions on Internet
commerce would not substantially impair the growth of Internet commerce and
as a result materially adversely affect our business.

     World Trade Organization.  The Clinton  Administration has stated that
the United States will advocate in the World Trade  Organization  and other
appropriate  international  organizations  that the  Internet be declared a
tariff-free  environment  whenever  it is  used  to  deliver  products  and
services.  In  addition,  the  Clinton  Administration  has stated that the
government should impose no new taxes on Internet commerce, but rather that
taxation should be consistent with established  principles of international
taxation,  should avoid inconsistent  national tax jurisdictions and double
taxation  and should be simple to  administer  and easy to  understand.  On
November 11, 1999, Congress passed a concurrent  resolution urging the U.S.
to seek a global  consensus  supporting  a  moratorium  on  tariffs  and on
special,  multiple and  discriminatory  taxation of  e-commerce.  We cannot
assure  you  that  foreign   countries   will  not  seek  to  tax  Internet
transactions or will show similar support of such a moratorium.

     ACCESS CHARGES

     Several  telecommunications  carriers are supporting regulation of the
Internet  by the  FCC in the  same  manner  that  the FCC  regulates  other
telecommunications  services.  These carriers have alleged that the growing
popularity   and  use  of  the   Internet   has   burdened   the   existing
telecommunications  infrastructure,  resulting  in  interruptions  in phone
service.  Incumbent  local  exchange  telephone  carriers  have in the past
petitioned  the FCC to  regulate  Internet  service  providers  in a manner
similar to long-distance telephone carriers and to impose interstate access
charges  on  Internet  service  providers.  In May 1997,  however,  the FCC
confirmed that Internet  service  providers will continue to be exempt from
interstate  access  charges.  In August 1998,  the Eighth  Circuit Court of
Appeals upheld the FCC's authority to maintain the exemption.

     In  February  1999,  the FCC  adopted an order  concerning  payment by
incumbent local exchange  carriers of reciprocal  compensation  for dial-up
calls to  Internet  service  providers  that obtain  their local  telephone
service from

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<PAGE>

competitive local exchange carriers. The FCC found that Internet traffic is
largely  interstate,  and  therefore  subject  to the  FCC's  jurisdiction,
because end user calls to Internet  service  providers do not  terminate at
the Internet service providers' servers, but continue to Internet locations
that often are outside  the state or country in which the call  originates.
Although  the FCC stated that the order does not require  Internet  service
providers to pay access  charges for calls placed  through their  services,
the order does provide  further  support for a possible,  ultimate  finding
that access  charges must be paid for at least some  categories of Internet
services, such as Internet-based voice telephony.

     If the FCC  were to  withdraw  the  exemption  or  take  other  action
responding   to   telecommunications   carrier   concerns,   the  costs  of
communicating   through  the   Internet   could   increase   substantially,
potentially  slowing the growth in Internet use. This could decrease demand
for our services or increase our cost of doing business.

     LIABILITY  FOR  INFORMATION  RETRIEVED  FROM OR  TRANSMITTED  OVER THE
INTERNET

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

     Copyright.  In October 1998,  the Digital  Millennium  Copyright  Act,
whose Title II  contains  the  Internet  Copyright  Infringement  Liability
Clarification  Act, was signed into law. This statute  provides that, under
some circumstances, a service provider would not be liable for any monetary
relief,  and would be subject to limited  injunctive  relief, for claims of
infringement,  based on copyright  materials  transmitted by users over its
digital  communications  network  or  stored  on its  systems  or under the
control of or connected to its systems.  This statute also  provides  that,
under some  circumstances,  a service  provider would not be liable for any
claim if the service  provider  acted in good faith to remove access to the
infringing  material.  With  respect  to  infringement  caused  by  storing
material on a system or network,  in order to benefit from the  protections
of the act, a service  provider must appoint a designated  agent to receive
notifications of claimed  infringement and must provide  information  about
that  agent to the U.S.  Copyright  Office  and to the public in a publicly
accessible  place on the service.  We have appointed a designated  agent to
receive notifications of claimed infringement on theglobe.com website, have
provided that information to the Copyright Office, and made it available to
the public on the site.

     Defamation.  The  Communications  Decency Act of 1996 provides that no
provider or user of an interactive computer service shall be treated as the
publisher  or speaker of any  information  provided by another  information
content provider.

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

     Materials may be downloaded and publicly distributed over the Internet
by the Internet services operated or facilitated by us. Future  legislation
or regulations or court decisions may hold us liable for listings and other
content accessible through our website, for content and materials posted by
members on their  respective  personal web pages, for hyperlinks from or to
the personal web pages of members, for content and materials transmitted by
members in e-mail clubs,  or through  content and  materials  posted in our
chat rooms or bulletin  boards.  Liability might arise from claims alleging
that, by directly or indirectly  providing  hyperlinks to websites operated
by third parties or by providing  hosting  services for members'  sites, we
are  liable for  copyright  or  trademark  infringement  or other  wrongful
actions by these third  parties.  If any  material on our website  contains
informational errors,  someone might sue us for losses incurred in reliance
on the  erroneous  information.  We  attempt  to  reduce  our  exposure  to
potential  liability  through,  among other  things,  provisions  in member
agreements, user policies, insurance and

                                    15
<PAGE>

disclaimers.   however,  the  enforceability  and  effectiveness  of  these
measures are  uncertain.  Future  legislation  or regulation in the area of
liability for  information  received from or transmitted  over the Internet
could decrease the growth of Internet use. These factors could decrease the
demand  for  our  services.   We  may  also  incur   significant  costs  in
investigating and defending against these claims.

     UNSOLICITED COMMERCIAL ELECTRONIC MAIL

     Some states have  adopted  laws that  address  unsolicited  commercial
e-mail or "spamming."  The federal  government and other states,  including
New York, are considering, or have considered, similar legislation.

     California  has  adopted  a law  permitting  electronic  mail  service
providers to sue parties who initiate  unsolicited  commercial  messages in
violation of its e-mail policy, if the initiator has notice of that policy.
California  also requires  unsolicited  e- mail  advertisements  to include
opt-out  instructions  with a toll-free  telephone number or a valid return
address  in  the  e-mail  and  requires   senders  of  unsolicited   e-mail
advertisements to honor opt-out requests.  California also imposes criminal
penalties  on parties who  knowingly  use  Internet  domain name of another
party to send one or more  messages  where  such  messages  damage or cause
damage to a computer,  computer  system,  or computer  network.  Similarly,
under  Virginia  law,  it  is a  crime  to  send  unsolicited  bulk  e-mail
containing false message headers or to sell software designed to do so, and
civil  penalties  can be imposed for injuries  caused by  unsolicited  bulk
e-mail.  Under Washington law, recipients of unsolicited  commercial e-mail
containing  false headers and  misleading  subject lines can bring lawsuits
seeking damages of up to $500.00.

     A third party  provides our e-mail  service.  Potential  liability for
information  disseminated  through our systems  could lead us to  implement
measures  to reduce our  exposure  to  liability.  This could  require  the
expenditure of substantial  resources and limit the  attractiveness  of our
services. We attempt to reduce our exposure to potential liability through,
among other  things,  provisions  in member  agreements,  user policies and
disclaimers.   However,  the  enforceability  and  effectiveness  of  these
measures are uncertain.

     DOMAIN NAMES

     Domain names have been the subject of significant trademark litigation
in the United States.  The current system for  registering,  allocating and
managing  domain names has been the subject of litigation  and is currently
subject to regulatory reform.

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

     JURISDICTION

     Due to the  global  reach  of the  Internet  it is  possible  that the
governments of other states and foreign countries might attempt to regulate
Internet  activity  and  our  transmissions.  Our  facilities  are  located
primarily in New York,  California,  and Washington.  Additionally,  we own
websites,  which are based in the United  Kingdom  and are  subject to some
regulation under U.K. law. Consequently,  foreign countries may take action
against  us for  violations  of  their  laws.  We  cannot  assure  you that
violations of these laws will not be alleged or charged by state or foreign
governments and that these laws will not be modified,  or new laws enacted,
in the  future.  Any  actions of this type  could  have a material  adverse
effect on our business.

     OTHER

                                    16
<PAGE>

     America   Online  has  disclosed  that  the  Department  of  Labor  is
investigating  the  applicability  of the Fair Labor  Standards  Act to its
Community  Leader program.  AOL's  Community  Leaders perform tasks such as
answering questions from subscribers,  supervising chat rooms and enforcing
community  rules.  AOL has stated that it  believes  its  Community  Leader
program  reflects  industry  practices,  that  its  Community  Leaders  are
volunteers,  not  employees,  and that its actions comply with law. AOL has
also stated that it is  cooperating  with the DOL, but is unable to predict
the outcome of the DOL's investigation.  AOL has also disclosed that former
volunteers have brought a class-action suit against AOL alleging violations
of the FLSA and  comparable  state  statutes.  We have also  implemented  a
community leader program.  We believe that the AOL program differs from our
program in several  significant  respects.  However,  we cannot predict the
outcome of this investigation or lawsuit, or their effect on our business.

     EMPLOYEES

     As of December 31, 1999, we had approximately 220 full-time employees,
including  approximately  35  employees  related  to our  shop.theglobe.com
operations and 40 employees related to our operations of our Games Network.
The 145 employees related to the operations of theglobe.com consisted of 46
employees in sales and marketing,  47 employees in product development,  14
employees in technology and 38 employees in finance and administration. Our
future  success  depends,  in part,  on our ability to continue to attract,
retain and motivate highly  qualified  technical and management  personnel.
Competition for these persons is intense. From time to time, we also employ
independent contractors to support our research and development, marketing,
sales and support and administrative  organizations.  Our employees are not
represented by any collective bargaining unit and we have never experienced
a work stoppage. We believe that our relations with our employees are good.

                                    17
<PAGE>

ITEM 2.   PROPERTIES

     Our headquarters  are located in an  approximately  47,000 square foot
facility  located in New York City,  under a lease which expires in January
2014.  We maintain a sales  office in an  approximately  4,000  square foot
facility in San Francisco,  California,  under a lease that expires in June
2004. We also maintain  approximately 14,100 square feet of office space in
Seattle,  Washington  in connection  with our  e-commerce  operations  that
expires in December 2000. In connection  with our operation of a portion of
our Games  Network,  we  maintain  2,465  square  feet of  office  space in
Birmingham,  England,  under a lease  that  expires in  October  2007.  Our
principal  web  server  equipment  and  operations  are  maintained  by our
personnel at the New York Teleport facility in Staten Island,  New York. We
rent  approximately  2,800  square feet of space under a Data Center  Space
Lease that expires in August 2001. Additional web server equipment relating
to our  electronic  commerce  business is located  with and  maintained  by
Exodus  Communications,  Inc. in Seattle,  Washington.  We believe that its
current facilities are adequate to maintain its current operations.

ITEM 3.   LEGAL PROCEEDINGS

     On July 1, 1999, the Company filed a complaint in Supreme Court of the
State  of  New  York,   County  of  New  York.  The  lawsuit  alleges  that
Stockplayer.com,  Inc.  breached  advertising  service  agreements with the
Company  by  failing  to pay  for  advertising  services  performed  by the
Company. On August 13, 1999, Stockplayer.com, Inc. filed its answer denying
that it breached these  advertising  services  agreements.  The answer also
alleges that the Company breached alleged express and implied warranties in
connection   with   certain   information   provided   by  the  Company  to
Stockplayer.com.  Stockplayer.com  alleges  that it has been  damaged in an
amount  not less  than  $5,000,000.  Based  on our  analysis,  the  Company
believes that these  allegations  are without merit and plans to vigorously
defend these  allegations.  The Company  believes  that it is unlikely that
this  claim  will  have  a  material   adverse   effect  on  the  Company's
consolidated financial condition or results of operations.

     From time to time the Company has been named in other  claims  arising
in the  ordinary  course of  business.  In the opinion of  management,  the
ultimate  disposition  of these  matters  will not have a material  adverse
effect  on  the  Company's  consolidated  financial  position,  results  of
operations or liquidity.

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, 1999.

                                    18
<PAGE>

                                  PART II

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

MARKET INFORMATION

     Our Common  Stock has traded on the NASDAQ  National  Market under the
Symbol "TGLO" since its initial public offering on November 13, 1998. Prior
to that  date,  there  was no  public  market  for our  Common  Stock.  The
following  table sets forth the range of high and low closing  sales prices
of our Common  Stock for the  periods  indicated  as reported by the NASDAQ
stock market:

          Fiscal Quarter Ended                        High     Low
          --------------------                       ------   ------
          December 31, 1999......................... $16.38   $ 8.38
          September 30, 1999........................ $19.31   $10.25
          June 30, 1999............................. $39.47   $12.75
          March 31, 1999............................ $33.53   $15.75

          December 31, 1998 (commencing November
          13, 1998)....................... ......... $31.75   $13.72

     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 353 holders of record of Common Stock as of March
16, 2000.  This does not reflect  persons or entities who 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.  We expect to  reinvest  any future  earnings  in the Company to
finance  growth,  and  therefore  do not  intend  to pay  dividends  in the
foreseeable  future.  Our board of directors  will  determine if we pay any
future dividends.

USE OF PROCEEDS

     On November 13,  1998,  we completed  our initial  public  offering of
approximately  7.0 million  shares of Common  Stock at a price of $4.50 per
share (File No. 333-59751).  We received net proceeds of $27.3 million, net
of $2.0  million in  underwriting  discounts  and $2.0  million in offering
costs.  On May 19, 1999, we completed our secondary  public offering of 3.5
million  shares of Common  Stock at a price of $20.00  per share  (File No.
333-76153).  We received net proceeds of $65.0 million, net of $3.5 million
in underwriting discounts and $1.5 million in offering costs. The number of
shares offered and the per share offering price reflect a two-for-one stock
split we effected on May 14,  1999.  None of the  expenses  incurred in our
initial and secondary public offerings were direct or indirect  payments to
our directors,  officers,  general partners or their associates, to persons
owning ten percent or more of any class of our equity  securities or to our
affiliates.  As of December 31, 1999,  the net proceeds  received  from our
public  offerings  have been  used for  networking  infrastructure  and the
functionality  of our websites and for general  corporate  purposes,  which
include  working  capital,  advertising  costs,  the  leasing of new office
facilities,  the  expansion of our sales and  marketing  capabilities,  our
advertising  campaign  and our brand name  promotions.  We have also used a
portion  of  such  net  proceeds  for  the  acquisition  of   complementary
businesses,  assets, services and

                                    19
<PAGE>

technology.  None of the general corporate expenses incurred were direct or
indirect  payments to our directors,  officers,  general  partners or their
associates,  to  persons  owning  ten  percent  or more of any class of our
equity securities or to our affiliates.

RECENT SALES OF UNREGISTERED SECURITIES

     On November 30, 1999, we issued  1,104,972  shares of our Common Stock
in  connection   with  the   acquisition  of  the  web  hosting  assets  of
Webjump.com.  Additional  shares  of Common  Stock  may be issued  upon the
attainment of certain  performance  goals in 2000.  This  transaction was a
private  placement  exempt  from  the  registration   requirements  of  the
Securities  Act of 1933, as amended,  pursuant to Rule 506 of Regulation D,
promulgated thereunder.

                                    20
<PAGE>

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA

     The  selected   consolidated   financial  data  with  respect  to  our
consolidated  balance  sheets  as of  December  31,  1999  and 1998 and the
related consolidated  statements of operations for the years ended December
31, 1999,  1998 and 1997 have been  derived  from our audited  consolidated
financial statements which are included herein. The selected financial data
with respect to our balance  sheets as of December 31, 1997,  1996 and 1995
the related  statements of operations  for the year ended December 31, 1996
and the period May 1, 1995 (inception)  through December 31, 1995 have been
derived  from our  audited  financial  statements  which  are not  included
herein. The following selected  consolidated  financial data should be read
in conjunction  with the  consolidated  financial  statements and the notes
thereto and the information  contained in Item 7, "Management's  Discussion
and Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
                                                                          MAY 1, 1995
                                                                          (INCEPTION)
                                                                            THROUGH
                                                                            DECEMBER
                                       YEAR ENDED DECEMBER 31,                31,
                            -------------------------------------------     -------
                             1999        1998        1997        1996        1995
                            -------     -------     -------     -------     -------
                                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                         <C>         <C>         <C>         <C>         <C>
CONSOLIDATED STATEMENTS
  OF OPERATIONS DATA:
Revenues................... $18,641     $ 5,510     $   770     $   229     $    27
Cost of revenues...........   8,548       2,136         257         116          13
                            -------     -------     -------     -------     -------
Gross profit...............  10,093       3,374         513         113          14
Operating expenses (3):
  Sales and marketing......  19,352       9,402       1,415         276           1
  Product development......  10,488       2,633         154         120          60
  General and
    administrative.........  12,165       6,828       2,828         489          19
  Non-recurring charge.....      --       1,370          --          --          --
  Amortization of
    goodwill and
    intangible assets......  20,460          --          --          --          --
                            -------     -------     -------     -------     -------
Total operating expenses...  62,465      20,233       4,397         885          80
                            -------     -------     -------     -------     -------
Loss from operations....... (52,372)    (16,859)     (3,884)       (772)        (66)
Other income, net..........   1,705         892         335          22          --
                            -------     -------     -------     -------     -------
Loss before provision
  for income taxes and
  extraordinary item        (50,667)    (15,967)     (3,549)       (750)        (66)
Provision for income
  taxes....................     290          79          36          --          --
                            -------     -------     -------     -------     -------
Loss before
  extraordinary item....... (50,957)    (16,046)     (3,585)       (750)        (66)
Extraordinary item-gain
  on early retirement of
  debt.....................   1,356          --          --          --          --
                            -------     -------     -------     -------     -------
Net loss................... (49,601)   $(16,046)    $(3,585)    $  (750)    $   (66)
                            =======     =======     =======     =======     =======

Basic and diluted net loss
  per share (1) (2):
  Loss before
    extraordinary item..... $ (2.06)   $  (3.37)    $ (1.56)    $ (0.33)    $ (0.03)
  Extraordinary item-gain
  on early retirement of
  debt..................... $  0.06    $     --     $    --     $    --     $    --
                            -------    --------     -------     -------     -------
  Net loss................. $ (2.00)   $  (3.37)    $ (1.56)    $ (0.33)    $ (0.03)
                            =======     =======     =======     =======     =======

Weighted average shares
  outstanding used in
  basic and diluted per
  share calculation
  (1)(2)...................  24,777       4,762       2,294       2,250       2,250
                            =======     =======     =======     =======     =======

</TABLE>
                                    21
<PAGE>
<TABLE>
<CAPTION>
                                                   DECEMBER 31,
                              -------------------------------------------------------
                               1999        1998        1997        1996        1995
                              -------     -------     -------     -------     -------
                                              (DOLLARS IN THOUSANDS)
<S>                           <C>         <C>         <C>         <C>         <C>
CONSOLIDATED BALANCE
 SHEETS DATA:
Cash and cash
  equivalents and short-
  term investments..........  $55,875     $30,149     $18,874     $   757     $   587
Working capital.............   52,965      27,009      17,117         648         575
Total assets................  138,843      38,130      19,462         973         647
Capital lease
  obligations, excluding
  current installments......    2,201       2,006          99          --          --
Total stockholders'
  equity....................  126,909      30,301      17,352         795         632

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

(2)  Weighted average shares outstanding and the basic and diluted net loss
     per common share reflect the  two-for-one  stock split effected by the
     Company on May 14,  1999.  All prior  periods  have been  adjusted  to
     reflect the stock split.

(3)  Certain  reclassifications  have  been made to prior  year's  selected
     consolidated   financial   data  to  conform  to  the  current  year's
     presentation.
</FN>
</TABLE>
                                    22
<PAGE>

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

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

OVERVIEW

     We are one of the  world's  leading  online  properties  with over 3.6
million  registered members in the United States and  abroad. We specialize
in bringing people  together  around shared topics of interest.  We deliver
"community"   through  four  different   streams:   our  flagship  website,
www.theglobe.com, featuring our best-of-breed community products-globeClubs
and uPublish!,  both of which enable our users to personalize  their online
experience  by  interacting  with  other  users  with  similar   interests;
distribution of our customized  community  solutions to strategic  partners
who desire to include  community in their Web properties;  small businesses
looking  to  add  "community"  to  their  websites;  and  a  leading  games
information  network.  Our games information  network includes  HappyPuppy,
GamesDomain,  KidsDomain,  ConsoleDomain,  Chips & Bits,  Inc. and Strategy
Plus,  Inc. Since our inception in May 1995,  significant  developments  to
core  infrastructure  capabilities,  products and  services,  and strategic
partnerships  and  acquisitions  have enabled us to  experience  tremendous
growth in our user base, reach and revenues.

     Our primary revenue source is the sale of advertising, with additional
revenues   generated  through  the  development  and  sale  of  promotional
sponsorship placements within our websites, the sale of merchandise through
our online  store,  electronic  commerce  revenue  shares  and, to a lesser
extent, membership service fees for the sale of enhanced services.

     In 1997, we accomplished the following:

     o    moved our headquarters to New York City;

     o    expanded  our  membership  base from  250,000 to almost 1 million
          members;

     o    improved and upgraded our services;

     o    expanded our production staff;

     o    built an internal sales department; and

     o    began  an  active  promotional  campaign  of  theglobe  brand  to
          increase awareness.

     During 1998,  revenues and operating expenses increased  significantly
as we placed a greater  emphasis  on  building  our  advertising  revenues,
sponsorship  revenues  and  memberships  by  expanding  our sales force and
promoting theglobe brand.

     In  November  1998,  we  completed  an  initial  public   offering  of
approximately  7.0 million shares of our Common Stock. The initial offering
price was $4.50 per share which  resulted in net proceeds of $27.3 million,
after  underwriting  discounts  of $2.0  million  and  offering  costs $2.0
million.

     In February, 1999, we acquired  factorymall.com,  an online department
store  doing  business  as  Azazz.com,  which sells a variety of name brand
products  directly to consumers,  for an aggregate  purchase price of $22.8
million.  The consideration  paid, in part,  consisted of approximately 0.7
million shares of newly issued Common Stock. We have  integrated  Azazz.com
into our electronic commerce site, now known as "shop.theglobe.com."

                                    23
<PAGE>

     In April 1999,  we acquired  Attitude  Networks,  Ltd.,  a provider of
online games information  content whose websites include Happy Puppy, Games
Domain and Kids Domain,  three leading websites  serving game  enthusiasts.
The aggregate  purchase  price amounted to $46.8 million and was comprised,
in part, of approximately 1.6 million shares of newly issued Common Stock.

     In May 1999, we completed a secondary  public  offering of 3.5 million
shares of  Common  Stock at an  offering  price of $20.00  per  share.  Net
proceeds amounted to $65.0 million,  after  underwriting  discounts of $3.5
million and offering costs of $1.5 million.

     In December 1999, we acquired the web hosting assets of Webjump.com, a
web hosting property that primarily focuses on small businesses.  The total
purchase  price for this  transaction  was $13.0  million and was primarily
comprised of 1.1 million shares of newly issued Common Stock. An additional
$12.5  million,  payable  in  newly  issued  shares  of  Common  Stock,  is
contingent based upon the attainment of certain  performance  targets on or
before November 2000.

     In February  2000, we acquired  Chips & Bits,  Inc. and Strategy Plus,
Inc., providers of online and offline entertainment content focused towards
game  enthusiasts.  The  total  purchase  price  for this  transaction  was
approximately  $15.3  million and was  comprised,  in part,  of 1.9 million
newly issued shares of Common Stock. An additional  $1.25 million,  payable
in newly issued shares of Common Stock,  is contingent on the attainment of
certain  performance  targets by Chips & Bits, Inc. and Strategy Plus, Inc.
during the fiscal year 2000.

RESULTS OF OPERATIONS

     YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

     Revenues.  To date,  our primary  revenue  source has been the sale of
advertisements on our online properties.  Advertising  revenues constituted
80% and 89% of total  revenues  for the years ended  December  31, 1999 and
1998,  respectively.  We sell a variety of advertising packages to clients,
including  banner  advertisements,  event  sponsorships,  and  targeted and
direct  response  advertisements.  Our  advertising  revenues  are  derived
principally  from  short-term  advertising  arrangements,  averaging one to
three  months.  We  generally  guarantee a minimum  number of  impressions,
defined  as the  number of times  that an  advertisement  appears  in pages
viewed by the users of our online properties,  for a fixed fee. Advertising
revenues are recognized ratably in the period in which the advertisement is
displayed,  provided that no  significant  Company  obligations  remain and
collection of the resulting receivable is probable.

     In addition to advertising  revenues, we derive other revenues through
the development and sale of sponsorship placements within our websites, the
sale of merchandise through our online stores,  electronic commerce revenue
shares and, to a lesser  extent,  membership  service  fees for the sale of
enhanced  services.  We earn  revenue  on  sponsorship  contracts  for fees
relating to the design,  coordination,  and  integration  of the customer's
content and links.  A number of  arrangements  with our premier  electronic
commerce  partners  provide  us with a share of any  sales  resulting  from
direct links from our websites.  To date, revenues from electronic commerce
revenue share arrangements have not been significant.  Memberships fees for
the sale of enhanced services have been insignificant to date.

     Revenues  increased to $18.6  million for the year ended  December 31,
1999 as compared  with $5.5  million for the year ended  December 31, 1998.
Advertising  revenues  for the year  ended  December  31,  1999 were  $15.0
million which represented 80% of total revenues.  Advertising  revenues for
the year ended December 31, 1998 were $4.9 million which represented 89% of
total   revenues.   The  growth  in  advertising   revenues  was  primarily
attributable  to an  increase in the number of  advertisers  as well as the
average  commitment  per  advertiser  and an increase in our traffic on our
websites.  We anticipate that advertising revenues will continue to account
for a substantial  share of our total revenues for the foreseeable  future.
We  experienced  an increase in other  revenue due  primarily  to increased
sales through our online store.  Other  revenues were also derived from the
development  and  sale  of  sponsorship  placements  within  our  websites,
electronic  commerce  revenue  shares and membership  service fees.  Barter
revenues  represented  5% of total revenues for the year ended December 31,
1999 and 2% of total

                                    24
<PAGE>

revenues for the year ended December 31, 1998.

     Cost of  Revenues.  Cost of  revenues  consist  primarily  of Internet
connection charges,  staff costs and related costs of operations personnel,
depreciation  and maintenance  costs of website  equipment and the costs of
merchandise  sold and shipping  fees in  connection  with our online store.
Gross  margins  were 54% and 61% for the years ended  December 31, 1999 and
1998, respectively.  The decrease in the gross margins for the year-to-year
period was primarily  attributable to a higher  concentration of electronic
commerce  sales which  traditionally  results in lower gross  margins  than
advertising revenues.  The absolute dollar increase in cost of revenues was
due to an increase in Internet  connection costs to support the increase in
website traffic, as well as an increase in depreciation  expense related to
increased  equipment  costs,  costs  of  merchandise  and  personnel  costs
required to support the expansion of our sites and services. We expect cost
of revenues to  continue  to  increase  in absolute  dollars as  additional
connectivity  and  staffing  costs will be  required  to support our future
growth and we continue to increase sales through our online store.

     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,
coupons and other  promotional  activities  and barter  expense.  Sales and
marketing expense was $19.4 million for the year ended December 31, 1999 as
compared with $9.4 million for the year ended December 31, 1998. The period
to period  increase  in sales and  marketing  expense was  attributable  to
increased salary and related personnel costs to support our revenue growth,
increased  advertising  costs,  which  included costs  associated  with our
television  advertising  campaign  and  promotional  expenses  required  to
implement  our  branding  and  marketing  strategy.  We  expects  sales and
marketing costs to increase in absolute  dollars due to increased  staffing
costs necessary to support our growth.

     Product Development. Product development expenses include salaries and
related personnel costs,  costs incurred in connection with the development
of, testing of and upgrades to our websites and community  management tools
and editorial and content costs.  Product development expenses increased to
$10.5  million  for the year ended  December  31,  1999 as compared to $2.6
million for the year ended December 31, 1998. The period to period increase
was primarily attributable to increased staffing levels required to support
our websites and to enhance their content and  features.  Additionally,  we
incurred development  expenses related to two new products,  globeClubs and
uPublish!,  which were launched in the fourth quarter of 1999.  Development
costs related to these products were not significant.  Product  development
expenses also  increased as a result of added  features in connection  with
the launch of certain site re-designs and upgrades that occurred at various
intervals  throughout  1999.  We intend to continue  recruiting  and hiring
experienced product development personnel who will maintain and upgrade our
community management tools.

     General  and  Administrative  Expenses.   General  and  administrative
expenses  consist  primarily  of salaries and related  personnel  costs for
general corporate functions,  including finance, human resources, legal and
facilities,  outside  legal and  professional  fees,  bad debt expenses and
general corporate overhead costs. General and administrative  expenses were
$12.2  million for the year ended  December 31, 1999 as compared  with $6.8
million for the year ended  December 31, 1998.  The increase was  primarily
attributed  to  increased  salaries and  personnel  costs  associated  with
building   of  our  basic   infrastructure,   increased   legal  and  other
professional  fees and travel  expenses.  These  increases  were,  in part,
attributable  to our  acquisitions  in 1999.  The  increased  salaries also
reflect the highly  competitive nature of hiring in the new media industry.
General  and   administrative   costs  also  increased  due  to  additional
provisions  for bad  debts and sales tax  expenses,  along  with  increased
public  company  expenses  such  as  directors'  and  officers'   liability
insurance and investor  relations  programs.  We expect to incur additional
general and  administrative  expenses as we hire  additional  personnel and
incur additional costs related to the growth of the business.

     Non-recurring charges. We recorded a non-recurring, non-cash charge of
approximately $1.4 million in the third quarter of 1998. This charge was in
connection  with the transfer of  outstanding  warrants to acquire  450,000
shares of common stock by Dancing Bear Investments, which was our principal
shareholder at the time of the transfer, to some of our officers. There was
no similar charge in 1999.

                                    25
<PAGE>

     Amortization of Goodwill and Intangible Assets.  Amortization  expense
was $20.5  million for the year ended  December 31, 1999 and related to the
acquisitions of shop.theglobe.com in February 1999, Attitude Network,  Ltd.
in April 1999 and the web hosting  assets of  Webjump.com in December 1999.
The gross goodwill and purchased intangibles of approximately $84.0 million
related to these  acquisitions  is being amortized over the expected period
of benefit  ranging  from two to three years  (three  years for  goodwill).
There was no similar charge for the year ended December 31, 1998.

     Other income  (expense).  Other  income  (expense)  includes  interest
income from our cash, cash equivalents and short-term investments, interest
expenses  related to our capital lease  obligations,  amortization  of debt
discounts  and  realized  gains  and  losses  from the  sale of  short-term
investments.  Interest  income was $2.5 million for the year ended December
31, 1999 as compared  with $1.1  million  for the year ended  December  31,
1998. The period to period increase in interest income was  attributable to
increased cash, cash equivalents and short-term  investments resulting from
the net proceeds of our initial and  secondary  public  offerings of Common
Stock.  Interest  expense was $0.8 million for the year ended  December 31,
1999, as compared  with $0.2 million for the year ended  December 31, 1998.
The increase was attributable to increased interest expenses related to the
assumption of additional  capital lease obligations and the amortization of
the debt discount  related to long-term debt assumed in connection with the
acquisition of Attitude Network,  Ltd. The long-term debt was fully re-paid
in October 1999.

     Income  Taxes.  Income  taxes  were $0.3  million  for the year  ended
December 31, 1999 as compared with $0.1 million for the year ended December
31,  1998.  Income  taxes  were  based  solely on state and local  taxes on
business and investment capital.  The period to period increase is a result
of our initial and secondary public offerings which, in turn, increased our
investment  capital.  Our  effective  tax rate differs  from the  statutory
federal income tax rate, primarily as a result of the uncertainty regarding
our ability to utilize our net  operating  loss  carryforwards.  Due to the
uncertainty  surrounding  the timing or  realization of the benefits of our
net operating loss  carryforwards  in future tax returns,  we have placed a
100% valuation  allowance against our otherwise  recognizable  deferred tax
assets.   At  December  31,  1999,  the  Company  had  net  operating  loss
carryforwards  available for U.S. and foreign tax purposes of $69.5 million
and $1.0 million,  respectively.  These carryforwards  expire through 2019.
The  Tax  Reform  Act  of  1986  imposes  substantial  restrictions  on the
utilization  of net  operating  losses  and tax  credits in the event of an
"ownership  change" of a  corporation.  Due to the change in our  ownership
interests in the third quarter of 1997, as defined in the Internal  Revenue
Code of 1986,  as  amended  (the  "Code"),  future  utilization  of our net
operating  loss  carryforwards  prior to the  change of  ownership  will be
subject to certain limitations or annual restrictions.

     Extraordinary  Item-Gain on Early Retirement of Debt.  During 1999, we
recorded  an  extraordinary  gain of $1.4  million as a result of the early
retirement  of  long-term  debt.  In  connection  with the  acquisition  of
Attitude  Network,  Ltd.,  we  assumed a  non-interest  bearing  obligation
("happypuppy  note")  to the  former  owner of the  happypuppy.com  website
("happypuppy").  In October  1999,  in  connection  with the  settlement of
certain  litigation between the former owners of happypuppy and us, we made
a lump sum payment of  approximately  $1.4 million to the former  owners of
happypuppy,  which represented full payment of the happypuppy note. The net
present  value  of the  happypuppy  note at the  time of  payment  was $2.8
million. The extraordinary gain represented the difference between the lump
sum payment and the net present  value of the  happypuppy  note at the time
the payment was tendered.

     YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

     Revenues.  Revenues  increased  to $5.5  million  for the  year  ended
December 31, 1998 as compared to $0.8  million for the year ended  December
31,  1997.  The year to year growth  resulted  from an increase in: (1) the
number of advertisers and the average  commitment per  advertiser,  (2) our
website  traffic,  (3) the number of our sales people and (4) marketing and
advertising  expenditures.  Advertising  revenues were  approximately  $4.9
million, or 89% of total revenues,  for the year ended December 31, 1998 as
compared with $0.6 million,  or 77% of total  revenues,  for the year ended
December 31, 1997.  Other  revenues  were derived from  membership  service
fees,  development fees, electronic commerce revenue shares and sponsorship
placements within our website.  Barter revenues accounted for approximately
2% of total  revenues for the year ended December 31, 1998 as compared with
22% of total revenues for the year ended December 31, 1997.

                                    26
<PAGE>

     Cost of Revenues.  Gross margins were 61% for the year ended  December
31, 1998 as compared  with 45% for the year ended  December 31,  1997.  The
increase  in gross  margin was  primarily  due to an  increase  in revenues
relative to the  increase in cost of revenues.  Cost of revenues  were $2.1
million for the year ended  December 31, 1998 as compared with $0.3 million
for the year ended December 31, 1997. The period to period increase in cost
of revenues was primarily due to an increase in Internet  connection  costs
to support the increase in website traffic,  increased depreciation charges
resulting from increased  equipment  purchases needed to expand and support
our site and increase  salary and personnel  costs  required to support the
expansion of our site and services.  During the fourth  quarter of 1998, we
moved our  website  hosting  functions  to a  separate  facility  in Staten
Island, New York.

     Sales and Marketing  Expenses.  Sales and marketing expenses were $9.4
million for the year ended  December 31, 1998 as compared with $1.4 million
for the year ended  December  31, 1997.  The period to period  increase was
primarily  attributable  to expansion of our online and print  advertising,
public relations and other promotional expenditures and increased sales and
marketing  personnel and related costs  required to implement our marketing
strategy.  Sales and marketing  expenses also  increased as a result of our
decision to shift our  advertising to an internal  sales  department in the
second quarter of 1997.

     Product Development  Expenses.  Product development expenses were $2.6
million for the year ended  December  31, 1998 as compared to $0.2  million
for the year ended December 31, 1997.  The increase in product  development
expenses was primarily  attributable to increased  staffing levels required
to support our website  and to enhance  its content and  features.  Product
development  expenses  also  increased  as a result  of the  launch  of our
website redesign in November 1998.

     General  and  Administrative  Expenses.   General  and  administrative
expenses were $6.8 million for the year ended December 31, 1998 as compared
to $2.8 million for the year ended  December 31, 1997. The period to period
increase  in general  and  administrative  expenses  was  primarily  due to
increased  salaries and related  expenses  associated with our management's
employment  contracts,  hiring of additional  administrative  personnel and
increases in  professional  fees and travel.  The  increased  salaries also
reflect the highly  competitive nature of hiring in the new media industry.
Additionally,  during  1998,  we incurred  certain  costs  associated  with
operating a public company including directors' and officers' insurance and
investor relations costs.

     Non-recurring charges. We recorded a non-recurring, non-cash charge of
approximately $1.4 million in the third quarter of 1998. This charge was in
connection  with the transfer of  outstanding  warrants to acquire  450,000
shares of common stock by Dancing Bear Investments, which was our principal
shareholder at the time of the transfer, to some of our officers. There was
no similar charge in 1997.

     Other Income  (expense).  Other  income  (expense)  includes  interest
income from our cash, cash equivalents and short-term investments, interest
expenses related to our capital lease  obligations,  and realized gains and
losses from sales of  short-term  investments.  Other income  (expense) was
$0.9  million for the year ended  December  31, 1998 as compared  with $0.3
million for the year ended December 31, 1997. The period to period increase
is attributable to increased  interest income resulting from higher average
cash, cash equivalents and short-term investments balances.  These balances
increased as a result of net proceeds  received from the issuance of shares
of our  preferred  stock in the third  quarter of 1997 and the  issuance of
Common Stock in  connection  with our initial  public  offering in November
1998. The increased interest income was offset by increase interest expense
resulting from the assumption of certain capital lease obligations in 1998.

     Income  Taxes.  Income taxes were  approximately  $0.1 million for the
year ended  December  31,  1998 as  compared  to $36,000 for the year ended
December 31, 1997.  Income taxes were based solely on state and local taxes
on business and investment capital. These taxes increased from year to year
due to an  increase  in our  investment  capital.  The  investment  capital
increased as a result of the proceeds  received from our issuance of shares
of preferred  stock in the third quarter of 1997 and our issuance of Common
Stock in connection  with our initial public offering in November 1998. Our
effective  tax rate differs  from the  statutory  federal  income tax rate,
primarily as a result of the  uncertainty  regarding our ability to utilize
net operating loss  carryforwards.  Due to the uncertainty  surrounding the
timing  or   realization   of  the  benefits  of  our  net  operating  loss
carryforwards  in  future  tax  returns,  we have  placed a 100%  valuation
allowance against our deferred tax assets. As of December 31, 1998, we

                                    27
<PAGE>

had  approximately  $29.2 million of federal and state net  operating  loss
carryforwards for tax reporting purposes available to offset future taxable
income.  Our federal net operating loss carryforwards will expire beginning
in 2001 through 2018,  if not utilized.  The Tax Reform Act of 1986 imposes
substantial restrictions on the utilization of net operating losses and tax
credits in the event of an "ownership change" of a corporation.  Due to the
change in our ownership  interests in the third quarter of 1997, as defined
in the Code,  future  utilization of our net operating  loss  carryforwards
will be affected by limitations or annual restrictions.

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 1999,  we had  approximately  $36.6 million in cash
and  cash  equivalents  and  approximately   $19.3  million  in  short-term
investments.  Net cash used in operating activities was approximately $30.1
million,  $13.5  million and $1.9 million for the years ended  December 31,
1999, 1998 and 1997, respectively.  The increase in net operating cash used
for the year ended  December 31, 1999 resulted  primarily from the increase
in  operating  losses for the  period.  Additionally,  the  increase in net
operating cash used was  attributable  to increases in accounts  receivable
and prepaid and other current assets and decreases in accounts  payable and
deferred  revenues.  These  items were  partially  offset by an increase in
accrued compensation.  The increase in net operating cash used for the year
ended  December  31, 1998 was  primarily  attributable  to increases in net
operating losses for the period,  accounts receivable and prepaid and other
current assets as well as a decrease in accrued  compensation.  These items
were  partially  offset by  increases  in  accounts  payable  and  deferred
revenues.

     Net cash (used in) provided by investing  activities was approximately
($25.4)  million,  $9.6  million  and  ($13.2)  million for the years ended
December 31, 1999, 1998 and 1997,  respectively.  Significant components of
net cash used in investing  activities during 1999 related to the purchases
of  short-term  investments  and property and  equipment and the payment of
security deposits in connection with our capital lease  obligations.  These
items  were  partially  offset  by  proceeds  received  from  the  sales of
short-term  securities  and  net  cash  received  in  connection  with  our
acquisitions of factorymall and Attitude Network, Ltd. Net cash provided by
investing  activities  during 1998 was the result of proceeds received from
the sales of  short-term  securities  partially  offset by the purchases of
property and equipment and the payments of security  deposits in connection
with our capital lease obligations.

     Net cash  provided by financing  activities  was  approximately  $62.8
million,  $27.2 million and $20.2 million for the years ended  December 31,
1999,  1998  and  1997,  respectively.   Net  cash  provided  by  financing
activities during 1999 was primarily  attributable to net proceeds received
from our secondary  public  offering of Common Stock and proceeds  received
from the exercise of stock options and warrants. These items were partially
offset by payments of capital lease  obligations  and payments of long-term
debt,  which was assumed in  connection  with our  acquisition  of Attitude
Network,  Ltd. Net cash  provided by financing  activities  during 1998 was
primarily  attributable  to net proceeds  received from our initial  public
offering of Common Stock and proceeds  received  from the exercise of stock
options. These items were partially offset by the payments of capital lease
obligations in 1998.

     As of December 31, 1999, we had obligations  amounting to $4.9 million
in  connection  with  equipment  purchased  under  capital  leases.   These
obligations  are payable at various  intervals  between  2000 and 2003.  We
expect to meet our current  capital lease  obligations  with our cash, cash
equivalents and short-term investments.

     Our capital requirements depend on numerous factors,  including market
acceptance of our services,  the capital required to maintain our websites,
the resources we devote to marketing and selling our services and our brand
promotions and other factors. We have experienced a substantial increase in
our  capital  expenditures  and  lease  arrangements  since  our  inception
consistent  with the growth in our operations  and staffing.  We anticipate
that this will continue for the foreseeable future.  Additionally,  we will
continue to evaluate  possible  investments  in  businesses,  products  and
technologies,  and we plan to expand our sales  force.  We believe that our
current cash, cash equivalents and short-term investments,  which primarily
resulted from our initial and  secondary  public  offerings,  together with
cash  flows  will be  sufficient  to meet our  anticipated  cash  needs for
working capital and capital  expenditures for our existing  business for at
least 12 months. However, we may need to raise additional funds during 2000
to obtain or operate any acquired businesses or joint venture arrangements.
See  "Risk  Factors  -- We may need to raise  additional  funds,  including
through the issuance of debt."

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<PAGE>

IMPACT OF YEAR 2000

     Year 2000  issues  related  to  non-compliant  information  technology
systems or  non-information  technology  systems operated by us or by third
parties may affect us. We have completed our assessment of our internal and
external  third-party  information  technology systems and  non-information
technology  systems and a test of the information  technology  systems that
support our websites.  We have not experienced any Year 2000 related issues
to date with our internal  systems or external third party systems on which
we rely. We do not anticipate any Year 2000 problems.  We have not incurred
any material costs in relation to the evaluation, assessment and testing of
its Year 2000 compliance.

EFFECTS OF INFLATION

     Due to relatively low levels of inflation in 1999, 1998, 1997 and 1996
inflation  has not had a  significant  effect on our results of  operations
since inception.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

     In  June  1998,  the  Financial   Accounting  Standards  Board  issued
Statement  of  Financial  Accounting  Standard  No.  133,  "Accounting  for
Derivative  Instruments and Hedging  Activities" ("SFAS 133"). SFAS No. 133
establishes accounting and reporting standards for derivative  instruments,
including  derivative  instruments  embedded  in other  contracts,  and for
hedging  activities.  SFAS No. 133 is effective for all fiscal  quarters of
fiscal years  beginning  after June 15, 2000.  We have not yet analyzed the
impact of this pronouncement on our consolidated financial statements.

                                    29
<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.

OUR LIMITED OPERATING HISTORY MAKES FINANCIAL FORECASTING DIFFICULT.

     theglobe  was  founded  in May  1995.  Accordingly,  we have a limited
operating  history for you to use in evaluating us and our  prospects.  Our
prospects  should  be  considered  in light  of the  risks  encountered  by
companies  in the  early  stages  of  development,  particularly  companies
operating in new and rapidly evolving markets like the Internet. We may not
successfully address these risks. For example, we may not be able to:

     o    maintain  or  increase  levels of user and member  traffic on our
          websites;

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

     o    maintain or increase both CPM levels and sponsorship revenues;

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

     o    integrate or successfully develop recent acquisitions;

     o    develop or acquire content for our services;

     o    identify, attract, retain and motivate qualified personnel; and

     o    raise sufficient capital to sustain future operations.

REVENUE GROWTH IN PRIOR PERIODS MAY NOT BE INDICATIVE OF FUTURE GROWTH.

     We achieved  significant  revenue  growth  during  1998 and 1999.  Our
limited  operating  history makes  prediction  of future growth  difficult.
Accurate  predictions  of future growth are also  difficult  because of the
rapid  changes in our markets.  Accordingly,  investors  should not rely on
past revenue growth rates as a prediction of future growth.

WE ANTICIPATE  INCREASED OPERATING EXPENSES AND EXPECT TO CONTINUE TO INCUR
LOSSES.

     To date,  we have  not been  profitable,  and we  expect  that we will
continue to incur net losses for the foreseeable  future. We had net losses
of  approximately  $0.8  million,  $3.6  million,  $16.0  million and $49.6
million  for the  years  ended  December  31,  1996,  1997,  1998 and 1999,
respectively.  As of December 31, 1999,  we had an  accumulated  deficit of
approximately $70.0 million.  The principal causes of our losses are likely
to continue to be:

     o    costs resulting from development and enhancement of our services;

     o    amortization expense related to our acquisitions;

     o    increased  sales and  marketing  expenses  necessary  to maintain
          revenue growth and develop brand identity;

     o    growth of our sales force;

     o    expansion of our business facilities and systems  infrastructure;
          and

     o    failure  to  generate   sufficient   revenue  to  compensate  for
          increased costs.

     o    increased general and administrative expenses;

     We will need to generate  significantly  increased revenues to achieve
profitability,  particularly  if we are  unable to adjust our  expenses  in
light of any  earnings  shortfall.  We cannot  assure you that we will ever
achieve or sustain profitability.

                                    30
<PAGE>

OUR QUARTERLY OPERATING RESULTS FLUCTUATE AND VARY BY SEASON.

     Our quarterly  revenues,  expenses and  operating  results have varied
significantly in the past and are likely to vary significantly from quarter
to quarter in the future.  As a result,  quarter to quarter  comparisons of
our revenues and operating results may not be meaningful.  In addition, due
to our limited  operating  history and our new and unproven business model,
we cannot predict our future revenues or results of operations  accurately.
It is likely that in one or more future  quarters,  our  operating  results
will fall below the  expectation of securities  analysts and investors.  If
this occurs,  the trading price of our Common Stock would almost  certainly
be  materially  and  adversely  affected.  The factors which will cause our
quarterly operating results to fluctuate include:

     o    the level of traffic on our website;

     o    the  overall  demand  for  Internet  advertising  and  electronic
          commerce;

     o    the  addition  or loss of  advertisers  and  electronic  commerce
          partners on our website;

     o    overall usage and acceptance of the Internet;

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

     o    capital expenditures and other costs relating to the expansion of
          our operations;

     o    the incurrence of costs relating to acquisitions;

     o    the timing and profitability of acquisitions,  joint ventures and
          strategic alliances; and

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

     We  derive a  substantial  portion  of our  revenues  from the sale of
advertising  under  short-term  contracts.  These contracts  average one to
three months in length. As a result,  our quarterly  revenues and operating
results are, to a significant  extent,  dependent on  advertising  revenues
from  contracts  entered  into  within the  quarter,  and on our ability to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall.  We believe that advertising sales in traditional media, such as
television  and radio,  generally are lower in the first and third calendar
quarters.  If the Internet transitions from an emerging to a more developed
form of media,  these same  patterns  may develop in  Internet  advertising
sales.  Internet  advertising  expenditures  may also  develop a  different
seasonality  pattern.  Traffic  levels  on our site and the  Internet  have
typically  declined  during the summer and  year-end  vacation  and holiday
periods.

     In  addition  to selling  advertising,  an  increasing  portion of our
revenues   may  be  generated   from   electronic   commerce   through  our
shop.theglobe.com  and  Chips  & Bits,  Inc.  subsidiaries.  We  also  have
existing electronic  commerce  arrangements with third parties for the sale
of merchandise on our websites which are terminable upon short notice. As a
result, our revenues from electronic  commerce may fluctuate  significantly
from  period  to period  depending  on the  level of  demand  for  products
featured on our sites and overall competition in the marketplace.

WE DEPEND ON OUR MEMBERS FOR CONTENT AND PROMOTION.

     We depend  substantially  upon  member  involvement  for  content  and
word-of-mouth promotion. Particularly, we depend upon the voluntary efforts
of some highly motivated members who are most active in developing  content
to  attract  other  Internet  users to our site.  This  member  involvement
reduces  the need for us to spend  funds on  content  development  and site
promotion.  However,  we cannot assure you that these members will continue
to  effectively  generate  significant  content  or promote  our site.  Our
business may be materially and adversely affected if our most highly active
members  become  dissatisfied  with  our  services  or  our  focus  on  the
commercialization of those services or for any other reason stop generating
content that effectively promotes our site.

OUR BUSINESS MODEL IS NEW AND UNPROVEN.

     Our business model is new and relatively unproven.  This model depends
upon our  ability to obtain  more than one type of revenue  source by using
our community platform or Games Network. To be successful, we must,

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among other things,  develop and market  products and services that achieve
broad market acceptance by our users,  advertisers and electronic  commerce
vendors. We must continue to develop electronic commerce revenue streams by
marketing  products  directly to users and having users  purchase  products
through  our  site.  We  cannot  assure  you that any  Internet  community,
including our site, will achieve broad market  acceptance and to be able to
generate  significant  electronic commerce revenues.  We also cannot assure
you  that our  business  model  will be  successful,  that it will  sustain
revenue growth or that it will be profitable.

     Additionally, the market for our products and services is new, rapidly
developing and characterized by an increasing number of market entrants. As
is  typical of most new and  rapidly  evolving  markets,  demand and market
acceptance  for  recently  introduced  products  and  services  are  highly
uncertain  and risky.  Moreover,  because  this  market is new and  rapidly
evolving,  we cannot predict our future growth rate, if any. If this market
fails to develop,  develops slower than expected or becomes  saturated with
competitors,  or if our  products  and  services  do not achieve or sustain
market acceptance, our business would be materially and adversely affected.

OUR ACQUISITIONS OR JOINT VENTURES ENTAIL NUMEROUS RISKS AND UNCERTAINTIES.

     As part of our business strategy,  we review acquisition  prospects or
joint ventures that we expect to complement our existing business, increase
our  traffic,  augment  the  distribution  of our  community,  enhance  our
technological capabilities or increase our electronic commerce revenues. On
February 1, 1999, we acquired  shop.theglobe.com,  formerly known as Azazz,
to develop electronic  commerce retailing on our site. On April 9, 1999, we
acquired Attitude Network, Ltd. to add two leading game enthusiast websites
to our  entertainment  theme.  On November  20,  1999,  we acquired the web
hosting assets of Webjump.com to expand our home page hosting services.  On
February 24, 2000, we acquired Chips & Bits,  Inc., an electronic  commerce
retailer  that focuses  primarily on game  enthusiasts  and Strategy  Plus,
Inc., an offline media property that publishes a monthly games magazine. We
consider and evaluate,  from time to time, potential business combinations,
either  involving  potential  investments  in our  Common  Stock  or  other
business  combinations  or  joint  ventures,  or our  acquisition  of other
companies. If consummated, any such transaction could result in a change of
control of our company or could otherwise be material to our business or to
your  investment in our Common Stock.  We are currently in  discussions  or
negotiations for various  transactions of these types, some of which may be
material,   but  we  have  not  reached  any  binding   agreements.   These
transactions  may or may not be  consummated.  Our future  acquisitions  or
joint ventures could result in numerous risks and uncertainties, including:

     o    potentially dilutive issuances of equity securities, which 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  have a  material  adverse  effect on our stock
          price;

     o    large and immediate write-offs;

     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  diversion  of  management's  attention  from other  business
          concerns;

     o    the risks of entering geographic and business markets in which we
          have no or limited prior  experience such as electronic  commerce
          retailing;

     o    the risk that the acquired business will not perform as expected;
          and

     o    risks associated with international expansion.

WE MAY BE UNSUCCESSFUL  IN DEVELOPING  BRAND  AWARENESS;  BRAND IDENTITY IS
CRITICAL TO US.

     We  believe   that   establishing   and   maintaining   awareness   of
"theglobe.com"  brand  name,  and  the  brand  name  of  our  wholly  owned
subsidiaries,  is critical to attracting and expanding our member base, the
traffic  on our  websites  and  our  advertising  and  electronic  commerce
relationships. If we fail to promote and maintain our brand or

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our brand value is diluted,  our business,  operating results and financial
condition could be materially  adversely affected.  The importance of brand
recognition  will increase because low barriers to entry continue to result
in an  increased  number of  websites.  To  promote  our  brand,  we may be
required to continue to increase our  financial  commitment to creating and
maintaining brand awareness.  We may not generate a corresponding  increase
in  revenues  to justify  these  costs.  Additionally,  if  members,  other
Internet  users,  advertisers  and  customers do not perceive our community
experience or Games  Network to be of high quality,  or if we introduce new
services  or  enter  into new  business  ventures  that  are not  favorably
received  by these  parties,  the  value of our brand  could be  materially
diluted.

WE RELY SUBSTANTIALLY ON ADVERTISING REVENUES.

     We  derive a  substantial  portion  of our  revenues  from the sale of
advertisements  on our  website.  We  expect to  continue  to do so for the
foreseeable  future.  For the years ended December 31, 1999, 1998 and 1997,
advertising  revenues  represented 80%, 89% and 77%,  respectively,  of our
total revenues. Our business model and revenues are highly dependent on the
amount of traffic on our sites and our  ability to properly  monetize  this
traffic.  The  level  of  traffic  on our site  determines  the  amount  of
advertising  inventory  we can sell.  Our ability to  generate  significant
advertising  revenues  depends,  in part,  on our  ability  to  create  new
advertising  programs  without diluting the perceived value of our existing
programs. Our ability to generate advertising revenues will also depend, in
part, on the following:

     o    advertisers'  acceptance  of the  Internet as an  attractive  and
          sustainable medium;

     o    advertisers'  willingness to pay for  advertising on the Internet
          at current rates;

     o    the  development  of a large  base of users of our  products  and
          services;

     o    our level of traffic;

     o    the effective  development of website content that attracts users
          having demographic characteristics attractive to advertisers; and

     o    price competition among websites.

     We cannot  assure you that the market for  Internet  advertising  will
continue  to emerge  or become  sustainable.  If the  Internet  advertising
market develops slower than we expect,  our business  performance  would be
materially adversely affected.  To date,  substantially all our advertising
contracts have been for terms averaging one to three months in length, with
relatively  few  longer  term  advertising  contracts.   Additionally,  our
advertising  customers may object to the placement of their  advertisements
on some  members'  personal  homepages,  the  content  of which  they  deem
undesirable.  For any of the foregoing  reasons,  we cannot assure you that
our current  advertisers  will continue to purchase  advertisements  on our
site.  We  also  compete  with  traditional  advertising  media,  including
television,  radio,  cable and  print,  for a share of  advertisers'  total
advertising  budgets.  This results in significant pricing pressures on our
advertising rates, which could have a material adverse effect on us.

     A  significant  portion of our  revenues  are  derived  from  Internet
companies  that are early stage  entities.  These entities are dependant on
additional  financing in order to survive. For companies such as these, the
risk of default on  outstanding  indebtedness  to us may be higher  than we
anticipate.

WE RELY ON THIRD  PARTIES OVER WHOM WE HAVE  LIMITED  CONTROL TO MANAGE THE
PLACEMENT OF ADVERTISING ON OUR WEBSITE.

     The  process  of  managing  advertising  within a large,  high-traffic
website such as ours is an  increasingly  important  and complex  task.  We
license our advertising  management system from DoubleClick,  Inc. under an
agreement expiring in October 2000. DoubleClick may terminate the agreement
upon 30 days'  notice if (1) we breach  the  agreement  or (2)  DoubleClick
reasonably determines that we have used their advertising management system
in  a  manner  that  could  damage  their   technology  or  which  reflects
unfavorably  on  DoubleClick's  reputation.  No assurance can be given that
DoubleClick  would  not  terminate  the  agreement.   Any  termination  and
replacement  of  DoubleClick's  service could disrupt our ability to manage
our advertising operations.  Additionally,  we have entered into a contract
with Engage  Technologies,  Inc. for the license of proprietary software to
manage the

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<PAGE>

placement  of  advertisements  on  our  website.  This  software  has  been
implemented  and our  relationship  under  the  contract  has not yet  been
material.  There can be no assurance  that this software  will  effectively
manage the placement of  advertisements on our website and that errors will
not  occur.  For  example,  Doubleclick  informed  us in June 1999 that its
method of reporting the numbers of unique visitors to the theglobe  website
was  not   accurate.   We  cannot   assure   you  that  there  will  be  no
miscalculations   of  such  or  other   measurements  in  the  future.  Any
miscalculations  or other problems with reporting these  measurements could
have a material  adverse  effect on our  business,  financial  condition or
stock price.

     To  the  extent  that  we  encounter   system   failures  or  material
difficulties in the operation of our advertising management systems, we may

     o    be unable  to  deliver  banner  advertisements  and  sponsorships
          through our site; and

     o    be required to provide additional  impressions to our advertisers
          after the contract term.

     Our  obligations  to provide  additional  impressions  would  displace
saleable advertising inventory. This would reduce revenues and could have a
material adverse effect on us.

WE DEPEND SUBSTANTIALLY ON OUR KEY PERSONNEL.

     Our performance is substantially dependent on the continued service of
our senior  management and key technical  personnel,  all of whom have only
worked together for a short time. In particular, our success depends on the
continued efforts of our senior  management team,  especially our founders,
our President and our Chief Financial  Officer.  We do not carry key person
life insurance on any of our personnel.  The loss of the services of any of
our executive  officers or other key employees would likely have a material
adverse effect on our business.  Additionally,  we are currently  searching
for a new Chief  Executive  Officer.  There is no guarantee that we will be
successful in hiring a new Chief Executive Officer.

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 and managerial  personnel.
Our business  plan  requires us to increase our employee base over the next
12 months.  Competition for employees in our industry is intense. 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 we expect to
continue to  experience  in the future,  difficulty in hiring and retaining
highly skilled  employees  with  appropriate  qualifications.  Furthermore,
there is no  guarantee  that  our  stock  option  plan  will be  considered
attractive  by industry  standards.  If we are unable to attract and retain
the technical and managerial  personnel  necessary to support the growth of
our  business,  our  business  would  likely be  materially  and  adversely
affected.

WE  MAY  NOT  EFFECTIVELY   MANAGE  OUR  GROWTH;  OUR  MANAGEMENT  TEAM  IS
INEXPERIENCED IN THE MANAGEMENT OF A LARGE PUBLIC COMPANY.

     Our recent growth has placed significant strains on our resources.  To
manage our future  growth,  we must  continue to implement  and improve our
operational systems and expand and train our employee base. Some of our key
employees  were  hired  during  1998,  including  our  President  and Chief
Operating  Officer,  who joined us in August  1998 and our Chief  Financial
Officer,  who  joined  us in  July  1998.  In  addition,  our  Director  of
Advertising   Sales,   General  Counsel,   General  Manager,   Director  of
Communications  and Director of Human  Resources each have been with us for
less than three  years.  Furthermore,  the  members of our  current  senior
management,  other than the Chairman,  have not had any previous experience
managing a public company or a large  operating  company.  Accordingly,  we
cannot assure you that:

     o    we will  be  able to  effectively  manage  the  expansion  of our
          operations;

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<PAGE>

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

     o    we will be able to hire,  train and manage our  growing  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.

     Our  inability  to manage  growth  effectively  could  have a material
adverse effect on our business.

OUR  CHAIRMAN  AND VICE  PRESIDENT  OF  CORPORATE  DEVELOPMENT  HAVE  OTHER
INTERESTS AND TIME COMMITMENTS;  WE HAVE CONFLICTS OF INTEREST WITH SOME OF
OUR DIRECTORS.

     Because our Chairman and our Vice  President of Corporate  Development
are officers or employees of other  companies,  we will have to compete for
their  time.  Michael  S.  Egan is our  Chairman.  Mr.  Egan  serves as the
Chairman of our board of directors and as an executive officer with primary
responsibility   for   day-to-day    strategic   planning   and   financing
arrangements.  Mr. Egan also is the  controlling  investor of Dancing  Bear
Investments,  an  entity  controlled  by Mr.  Egan,  which  is our  largest
stockholder.  Edward  A.  Cespedes  is  our  Vice  President  of  Corporate
Development   with  primary   responsibility   for  corporate   development
opportunities including mergers and acquisitions.  Mr. Cespedes also serves
as a  Managing  Director  of Dancing  Bear  Investments.  Messrs.  Egan and
Cespedes  have not  committed  to devote any specific  percentage  of their
business  time  with  us.   Accordingly,   we  compete  with  Dancing  Bear
Investments  and Messr.  Egan's other related  entities for their time. Mr.
Egan was named Chairman of ANC Rental  Corporation,  a proposed spin-off of
the car rental business of AutoNation, Inc.

     We currently have revenue  agreements with entities  controlled by Mr.
Egan and by H. Wayne Huizenga, one of our directors.  These agreements were
not the result of arm's-length negotiations,  but we believe that the terms
of these  agreements  are on comparable  terms as if they were entered into
with  unaffiliated  third  parties.   The  revenues  recognized  from  such
agreements  represented  less than 4% and 3% of total revenue for the years
ended  December 31, 1999 and 1998.  Due to their  relationships  with their
related entities, Messrs. Egan, Cespedes and Huizenga will have an inherent
conflict of interest in making any decision related to transactions between
their  related   entities  and  us.  We  intend  to  review  related  party
transactions in the future on a case-by-case basis.

WE MAY NOT BE ABLE TO KEEP UP WITH RAPID TECHNOLOGICAL AND OTHER CHANGES.

     The markets in which we compete are characterized by:

     o    rapidly changing technology;

     o    evolving industry standards;

     o    frequent new service and product announcements, introductions and
          enhancements; and

     o    changing consumer demands.

     We may not be able to keep up with these rapid  changes.  In addition,
these market  characteristics  are heightened by the emerging nature of the
Internet and the  apparent  need of companies  from varying  industries  to
offer Internet-based products and services. As a result, our future success
depends  on our  ability  to adapt to  rapidly  changing  technologies  and
standards.  We will  also  need to  continually  improve  the  performance,
features  and  reliability  of our  services  in  response  to  competitive
services and product offerings and the evolving demands of the marketplace.
In  addition,  the  widespread  adoption  of new  Internet,  networking  or
telecommunications   technologies  or  other  technological  changes  could
require us to incur  substantial  expenditures  to modify our  services  or
infrastructure and could fundamentally affect the nature of our business.

WE HAVE CAPACITY CONSTRAINT AND SYSTEM DEVELOPMENT RISKS.

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<PAGE>

     A key  element of our  strategy  is to  generate a high volume of user
traffic.   Our  ability  to  attract  advertisers  and  to  achieve  market
acceptance  of  our  products  and  services  and  our  reputation   depend
significantly upon the performance of our network infrastructure, including
our servers, hardware and software. Any system failure,  including network,
software or hardware failure, that causes an interruption in our service or
a decrease in responsiveness of our website could result in reduced traffic
and reduced  revenue,  and could impair our  reputation.  Our websites must
accommodate  a high  volume  of  traffic  and  deliver  frequently  updated
information. Our websites have in the past and may in the future experience
slower response times for a variety of reasons,  including  system failures
and an increase in the volume of user traffic on our websites. Accordingly,
we face risks related to our ability to accommodate  our expected  customer
levels while maintaining superior performance. In addition, slower response
time may damage our  reputation  and result in fewer  users at our sites or
users  spending less time at our sites.  This would  decrease the amount of
inventory  available for sale to advertisers.  Accordingly,  any failure of
our servers and  networking  systems to handle current or higher volumes of
traffic at sufficient  response times would have a material  adverse effect
on our business.

     In the fourth  quarter of 1998 and the first quarter of 1999, we moved
our principal  servers to the New York Teleport  facility in Staten Island,
New York under a lease with Telehouse International Corporation of America.
We  maintain  computer  hardware,   servers  and  operations   relating  to
shop.theglobe.com  in  Seattle,  Washington  which  are  hosted  by  Exodus
Communications,  Inc.  Although  Exodus provides  comprehensive  facilities
management  services,  including  human  and  technical  monitoring  of all
production  servers  24  hours-per-day,  seven  days-per-week,  they do not
guarantee  that our Internet  access will be  uninterrupted,  error-free or
secure. Our operations depend on the ability to protect our systems against
damage from unexpected  events,  including fire,  power loss, water damage,
telecommunications  failures and vandalism.  Any disruption in our Internet
access could have a material  adverse  effect on us. In addition,  computer
viruses,  electronic  break-ins or other similar disruptive  problems could
also materially adversely affect our websites. Our reputation, theglobe.com
brand and the brands of our subsidiaries  could be materially and adversely
affected  by any  problems to our sites.  Our  insurance  policies  may not
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.

     In addition,  our users depend on Internet service  providers,  online
service  providers and other website  operators for access to our websites.
Many of them have  experienced  significant  outages in the past, and could
experience  outages,  delays and other  difficulties due to system failures
unrelated to our systems.  Moreover, the Internet infrastructure may not be
able to  support  continued  growth in its use.  Furthermore,  we depend on
hardware  suppliers  for  prompt  delivery,  installation  and  service  of
equipment used to deliver our products and services.  Any of these problems
could materially adversely affect our business.

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

     Consumer  and  supplier   confidence   in  our  websites   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  policies carry low coverage limits,
which 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.

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

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<PAGE>

SIGNIFICANTLY.

     The market for members,  users and Internet advertising among websites
is  new  and  rapidly   evolving.   Competition  for  members,   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 increase in the
future  which  could  have a  material  adverse  effect on us. All types of
websites compete for users. Competitor websites include community sites and
games  information  network,  as well as  "gateway"  or "portal"  sites 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    member affinity and loyalty;

     o    broad demographic focus;

     o    open access for visitors;

     o    critical mass of users, particularly for community-type sites;

     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    other online  community  websites,  such as GeoCities,  which was
          acquired by Yahoo!; Tripod and AngelFire,  subsidiaries of Lycos;
          and Xoom.com which was acquired by NBC;

     o    search engines and other  Internet  "portal"  companies,  such as
          Excite@Home,  InfoSeek,  which was  acquired  by the Walt  Disney
          Company, Lycos and Yahoo!;

     o    online content websites, such as CNET, ESPN.com and ZDNet.com;

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

     o    general purpose consumer online services,  such as America Online
          and Microsoft Network;

     o    websites  maintained by Internet service providers,  such as AT&T
          WorldNet, EarthLink and MindSpring;

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

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

     Many  of  our  competitors,  including  other  community  sites,  have
announced  that  they  are  contemplating  developing  Internet  navigation
services and are  attempting to become  "gateway" or "portal" sites through
which  users may  enter  the web.  In the  event  these  companies  develop
successful  "portal" sites, we could lose a substantial portion of our user
traffic.   Furthermore,  many  non-community  sites  have  been  developing
community aspects in their sites.

     Many of our existing and potential  competitors,  including  companies
operating  web  directories  and  search  engines,  and  traditional  media
companies, have the following advantages:

     o    longer operating histories in the Internet market,

     o    greater name recognition;

     o    larger customer bases; and

     o    significantly   greater   financial,   technical   and  marketing
          resources

     In  addition,  providers  of Internet  tools and  services,  including
community-type sites, may be acquired by,

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<PAGE>

receive investments from, or enter into other commercial relationships with
larger, well-established and well-financed companies, such as Microsoft and
America  Online.  For example,  Excite merged with At Home,  America Online
acquired  Netscape and Xoom.com and  Snap.com  completed a  transaction  in
which NBC merged  some of its online  assets  with these  entities  to form
NBCi. In addition,  there has been other  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,  including Walt Disney
Co., CBS and NBC, have been active in Internet  related  activities.  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.

     To compete with other websites, we have developed and will continue to
develop  and  introduce  new  features  and  functions,  such as  increased
capabilities  for user  personalization  and  interactivity.  We also  have
developed and will continue to introduce new products and services, such as
"community  tools" and new content  targeted for specific  user groups with
particular demographic and geographic  characteristics.  These improvements
will require us to spend  significant funds and may require the development
or licensing  of  increasingly  complex  technologies.  Enhancements  of or
improvements to our websites may contain undetected programming errors that
require significant design  modifications,  resulting in a loss of customer
confidence  and user support and a decrease in the value of our brand name.
Our failure to  effectively  develop and produce new  features,  functions,
products  and  services  could  affect our  ability  to compete  with other
websites. This could have a material adverse effect on us.

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

     Additionally,  the  electronic  commerce  market  is new  and  rapidly
evolving,  and we expect competition among electronic commerce merchants 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 narrow in the future. Many of the
products  that we  sell on our  website  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 DEPEND ON THE CONTINUED  GROWTH IN THE USE AND  COMMERCIAL  VIABILITY OF
THE WEB.

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

     o    inadequate network infrastructure;

     o    security and authentication concerns with respect to transmission
          over the Internet of confidential

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          information,  including  credit card numbers,  or other  personal
          information;

     o    ease of access;

     o    inconsistent quality of service;

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

     o    bandwidth availability.

     If the Internet  develops as a  commercial  medium more slowly than we
expect, it will materially adversely affect our business.  Additionally, if
web usage grows, the Internet infrastructure may not be able to support the
demands placed on it by this growth or its  performance and reliability may
decline.  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 website,  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; and

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

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

     In February 1999, we acquired  shop.theglobe.com  and in February 2000
we acquired Chips & Bits, Inc. Both of these entities are direct  marketers
of products over the Internet.  However,  we have limited experience in the
sale of products  online compared to our competitors and the development of
relationships with  manufacturers and suppliers of these products.  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.

     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, 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  negatively  impacted.  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

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<PAGE>

exposure to liability  claims.  However,  these limitations may not prevent
all  potential   claims.   Liability  claims  could  require  us  to  spend
significant time and money in litigation or to pay significant  damages. As
a result, any claims, whether or not successful, could seriously damage our
reputation and our business.

INTERNET ADVERTISING MAY NOT PROVE AS EFFECTIVE AS TRADITIONAL MEDIA.

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

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

     The sale of  Internet  advertising  is subject to intense  competition
that has  resulted  in a wide  variety of pricing  models,  rate quotes and
advertising  services.  For example,  advertising rates may be based on the
number of user requests for additional  information made by clicking on the
advertisement,  known as  "click  throughs,"  or on the  number of times an
advertisement is displayed to a user, known as "impressions." Our contracts
with  advertisers  typically  guarantee the  advertiser a minimum number of
impressions.  To the extent that minimum impression levels are not achieved
for any reason,  including the failure to obtain the expected traffic,  our
contracts with advertisers may require us to provide additional impressions
after the contract term, which may adversely affect the availability of our
advertising  inventory.  In  addition,  certain  long-term  contracts  with
advertisers  may be canceled if response rates or sales  generated from our
site are less than  advertisers  expectations.  This  could have a material
adverse effect on us.

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

WE DEPEND ON THIRD PARTIES TO INCREASE  TRAFFIC ON OUR SITES AND TO PROVIDE
SOFTWARE AND PRODUCTS.

     We are dependent on various  websites that provide direct links to our
sites. These websites may not attract  significant  numbers of users and we
may not  receive  a  significant  number of  additional  users  from  these
relationships.  We also enter into agreements with advertisers,  electronic
commerce  marketers  or  other  third-party  websites  that  require  us to
exclusively  feature  these  parties in  particular  areas or on particular
pages of our sites.

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These  exclusivity  agreements  may limit our  ability  to enter into other
relationships.  Our agreements with third party sites do not require future
minimum  commitments to use our services or provide access to our sites and
may be terminated at the  convenience of the other party.  Moreover,  we do
not have  agreements  with a majority of the websites that provide links to
our site. These sites may terminate their links at any time. Many companies
we may pursue for strategic  relationships offer competing  services.  As a
result,  these  competitors  may  be  reluctant  to  enter  into  strategic
relationships with us. Our business could be materially  adversely affected
if we do not establish and maintain strategic relationships on commercially
reasonable terms or if any of our strategic  relationships do not result in
increased traffic on our websites.

     Additionally,  we cannot  assure you that we will be able to  maintain
relationships  with third  parties that supply us with software or products
that are crucial to our success, or that these software or products will be
able to  sustain  any  third-party  claims or  rights  against  their  use.
Furthermore,  we cannot assure you that the software,  services or products
of those companies that provide access or links to our services or products
will achieve  market  acceptance or  commercial  success.  Accordingly,  we
cannot assure you that our existing  relationships will result in sustained
business  partnerships,  successful  service  or product  offerings  or the
generation of significant revenues for us.

WE MAY NEED TO RAISE ADDITIONAL FUNDS,  INCLUDING,  BUT NOT LIMITED TO, THE
ISSUANCE OF DEBT.

     We believe that the net proceeds from our secondary offering, together
with our current cash and cash equivalents and short-term investments, will
be sufficient to meet our  anticipated  cash needs for working  capital and
capital  expenditures for our existing business for the next twelve months.
However,  we may need to raise additional funds in the future to acquire or
operate  any  additional  businesses,  products  or  technologies  or joint
venture  arrangements.  We  expect  that we  will  continue  to  experience
negative operating cash flows for the foreseeable future as a result of our
operating  losses and  infrastructure  needs.  Accordingly,  we may need to
raise additional funds in a timely manner in order to:

     o    fund our anticipated expansion;

     o    develop new or enhanced services or products;

     o    respond to competitive pressures;

     o    acquire complementary products, businesses or technologies; and

     o    enter into joint ventures.

     If we raise  additional  funds  through  the  issuance  of  equity  or
convertible debt securities,  the percentage  ownership of our stockholders
will be reduced.  Stockholders may experience additional dilution and these
securities  may have  rights  senior to those of the  holders of our Common
Stock. We do not have any contractual  restrictions on our ability to incur
debt.  Any  indebtedness   could  contain   covenants  which  restrict  our
operations.  We  cannot  assure  you  that  additional  financing  will  be
available on terms  favorable  to us, or at all. If adequate  funds are not
available or are not available on acceptable  terms,  our business could be
materially adversely effected. See "Management's Discussion and Analysis of
Financial  Condition  and  Results  of  Operations--Liquidity  and  Capital
Resources."

WE RELY ON INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS.

     We  regard  substantial   elements  of  our  websites  and  underlying
technology  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 a material adverse effect on our business.  In
addition,  our competitors may  independently  develop similar  technology,
duplicate our products or design around our intellectual property rights.

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<PAGE>

     We pursue the  registration of our trademarks in the United States and
internationally. In addition, we have filed a number of patent applications
with the United  States  Patent  Office.  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.  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 or our members of their intellectual property
rights.  See Note 10 of the  consolidated  financial  statements and "Legal
Proceedings"  under  Item 3 in Part I in this  Form  10-K.  Any  litigation
claims or counterclaims could impair our business because they could:

     o    be time-consuming;

     o    result in costly litigation;

     o    subject us to significant liability for damages;

     o    result in invalidation of our proprietary rights;

     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.  As we continue to introduce new services that  incorporate  new
technologies,  we may be required  to license  additional  technology  from
others.  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.

     We  have   registered   several   Internet   domain  names   including
"theglobe.com,"    "shop.theglobe.com,"    "globelists.com,"    "tglo.com,"
"azazz.com,"    "happypuppy.com,    "    "realmx.com,"    "kidsdomain.com,"
"gamesdomain.com,"  "webjump.com" and "cdmag.com." 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 may be introduced.  The  relationship  between  regulations  governing
domain names and laws protecting proprietary rights is unclear.  Therefore,
we may not be able to prevent  third  parties from  acquiring  domain names
that infringe or otherwise  decrease the value of our  trademarks and other
proprietary rights.

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

     There are an increasing  number of federal,  state,  local and foreign
laws and regulations  pertaining to the Internet.  In addition, a number of
federal,  state, local and foreign legislative and regulatory proposals are
under

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<PAGE>

consideration.  Laws or  regulations  may be  adopted  with  respect to the
Internet   relating  to  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  effect our business 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, may impose
additional burdens on electronic  commerce or may alter how we do business.
This could decrease the demand for our 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,  results  of
operations and financial condition.

     There are certain  various  issues being  discussed by the  accounting
profession  and the Securities  and Exchange  Commission  that would affect
Internet companies accounting policies with regards to revenue recognition,
barter  transactions,  impression  guarantees as they relate to advertising
contracts,  coupon and promotional expenses and customer acquisition costs.
While  these  discussions  remain in the  preliminary  stages as of now, we
cannot predict the impact that certain  proposed  changes would have on our
results of operations, our financial condition or our stock price.

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, 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 members on their personal web pages or by users in our chat rooms
or on our bulletin boards.

     Additionally,  we offer e-mail service,  which a third party provides.
The  e-mail  service  may  expose  us to  potential  liabilities  or claims
resulting from unsolicited e-mail, lost or misdirected messages, fraudulent
use of e-mail or delays in e-mail  service.  We also enter into  agreements
with commerce  partners and sponsors under which we are entitled to receive
a share of any  revenue  from the  purchase of goods and  services  through
direct links from our sites.  After the  shop.theglobe.com  acquisition  in
February  1999, we also began selling  products  directly to consumers.  We
increase our electronic  commerce  capabilities  through our acquisition of
Chips & Bits,  Inc. Those  arrangements  may expose us to additional  legal
risks,  regulations by local,  state,  federal and foreign  authorities and
potential liabilities to consumers of these products and services,  even if
we do not ourselves  provide these  products or services.  We cannot assure
you that any  indemnification  that may be  provided to us in some of these
agreements with these parties will be adequate. Even if these claims do not
result in our liability,  we could incur significant costs in investigating
and defending against these claims.  The imposition of potential  liability
for  information  carried on or  disseminated  through  our  systems  could
require us to implement measures to reduce our exposure to liability. Those
measures may require the expenditure of substantial resources and limit the
attractiveness of our services.  Additionally,  our insurance  policies may
not cover all potential liabilities to which we are exposed.

WE MAY HAVE TROUBLE EXPANDING INTERNATIONALLY.

     A part of our  strategy is to expand into  foreign  markets.  In April
1999, we acquired Attitude Network,  Ltd., which operates Games Domain.com,
Kids  Domain.com  and  Console   Domain.com  through  a  wholly-owned  U.K.
subsidiary. We have not previously operated internationally.  Additionally,
we may not be completely  familiar with U.K. law and its  ramifications  on
our business.  There can be no assurance that the Internet or our community
model will become widely accepted for  advertising and electronic  commerce
in any  international  markets.  To  expand  overseas  we intend to seek to
acquire  additional  websites  and enter into  relationships  with  foreign
business partners.

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<PAGE>

This strategy contains risks, including:

     o    we may experience difficulty in managing international operations
          because  of   distance,   as  well  as  language   and   cultural
          differences;

     o    we or our future foreign  business  associates may not be able to
          successfully market and operate our services in foreign markets;

     o    because  of  substantial  anticipated  competition,  it  will  be
          necessary  to  implement   our  business   strategy   quickly  in
          international  markets  to  obtain  a  significant  share  of the
          market; and

     o    we do not have the content or services necessary to substantially
          expand our operations in many foreign markets.

     We will  unlikely be able to  significantly  penetrate  these  markets
unless we gain the relevant  content,  either through  partnerships,  other
business  arrangements or possibly  acquisitions with  content-providers in
these  markets.  There are also  risks  inherent  in doing  business  on an
international level, including:

     o    unexpected changes in regulatory requirements;

     o    trade barriers;

     o    difficulties in staffing and managing foreign operations;

     o    fluctuations in currency  exchange rates and the  introduction of
          the euro;

     o    longer payment cycles in general;

     o    problems in collecting accounts receivable;

     o    difficulty in enforcing contracts;

     o    political and economic instability;

     o    seasonal  reductions in business  activity in certain other parts
          of the world; and

     o    potentially adverse tax consequences.

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

     Michael S. Egan, our Chairman, beneficially owns or controls, directly
or indirectly,  9,844,606 shares of our Common Stock which in the aggregate
represents approximately 28% of the outstanding shares of our Common Stock.
Todd V. Krizelman and Stephen J. Paternot, our Co-Chief Executive Officers,
together,  beneficially own 12% of the outstanding  shares of Common Stock.
Accordingly,  Mr.  Egan  would  likely  be  able  to  exercise  significant
influence in any stockholder  vote,  particularly if Messrs.  Krizelman and
Paternot support his position. Yale and Christina Brozen, the former owners
of  Chips  &  Bits,  Inc.  and  Strategy  Plus,   Inc.,   beneficially  own
approximately  6% of the  outstanding  shares of Common Stock as tenants in
the entirety.

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

THE YEAR 2000 ISSUE MAY AFFECT OUR OPERATIONS.

     Year 2000 issues related to non-compliant information technology

                                    44
<PAGE>

systems or  non-information  technology  systems operated by us or by third
parties may affect us. We have completed our assessment of our internal and
external  third-party  information  technology systems and  non-information
technology  systems and a test of the information  technology  systems that
support our websites.  We have not experienced any Year 2000 related issues
to date with our internal  systems or external third party systems on which
we rely. We do not anticipate  any Year 2000  problems,  although we cannot
assure you that this will be the case.  We have not  incurred  any material
costs in  relation  to the  evaluation  and  assessment  of its  Year  2000
compliance.   See  "Management's   Discussion  and  Analysis  of  Financial
Condition and Results of Operations--Impact of the Year 2000."

     A failure could prevent us from operating our business,  prevent users
from  accessing  our  websites,  or  change  the  behavior  of  advertising
customers or persons  accessing our  websites.  We believe that the primary
business  risks,  in the  event of a  failure,  would  include,  but not be
limited to:

     o    lost advertising revenues;

     o    increased operating costs;

     o    loss of customers or persons accessing our websites;

     o    other business interruptions of a material nature; and

     o    claims  of   mismanagement,   misrepresentation,   or  breach  of
          contract.

     Any of  these  risks  could  have a  material  adverse  effect  on our
business.

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    quarterly variations in our operating results;

     o    competitive announcements;

     o    changes in financial estimates by securities analysts;

     o    failure to meet analysts estimates;

     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.  In  the  past,
following  periods  of  volatility  in  the  market  price  of a  company's
securities,  securities  class action  litigation has often been instituted
against a company.  Litigation,  if instituted,  whether or not successful,
could result in substantial costs and a diversion of management's attention
and resources, which would have a material adverse effect on our business.

THE SALE OF  SHARES  ELIGIBLE  FOR  FUTURE  SALE IN THE OPEN  MARKET  COULD
DEPRESS OUR STOCK PRICE.

     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 market price of the
Common Stock or our future ability to raise capital  through an offering of
our equity securities. We currently have approximately 17,318,389 shares of
Common Stock that are freely  tradable.  Approximately  7,864,034 shares of
Common  Stock  are held by our  "affiliates,"  within  the  meaning  of the
Securities Act of 1933,  and are currently  eligible for sale in the public
market subject to volume limitation.  In connection with our acquisition of
Attitude Network, Ltd., approximately 1,570,922 shares will become eligible
for  sale  in  the  public  market  without   restriction  in  April  2000.
Additionally,  as a result of the acquisitions of the web hosting assets of
Webjump.com and Chips & Bits, Inc. and Strategy Plus,  Inc.,  approximately
$9.5  million  and  $5.0  million,  respectively,  of  Common  Stock  could
potentially  become eligible for sale in the public market as soon as April
2000. The potential sale of Common

                                    45
<PAGE>

Stock is subject to demand  registration  agreements executed in connection
with the acquisitions.  The number of shares to be sold is dependant on the
average  market price of Common Stock for the five days preceding the sale.
The remaining shares are eligible for sale without  restriction in November
2000 and March 2001,  respectively.  In  connection  with our  distribution
agreement with  Sportsline.com,  Inc.,  699,281 shares will become eligible
for sale in the public market without restriction in February 2001.

     There are outstanding  options to purchase  4,546,049 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 are registered  under the Securities Act. In addition,
there are  outstanding  warrants to purchase up to 4,011,534  shares of our
Common Stock upon exercise.  Substantially all of our stockholders  holding
restricted  securities,  including  shares  issuable  upon the  exercise of
warrants to purchase our Common Stock, are entitled to registration  rights
under various conditions.

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

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

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

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

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

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

WE DO NOT EXPECT TO PAY CASH DIVIDENDS.

     We do not  anticipate  paying any cash  dividends  in the  foreseeable
future.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

     Foreign  Currency  Risk. We transact  business in the United  Kingdom.
Accordingly,  we are subject to exposure from adverse  movements in foreign
currency  exchange  rates.  The effect of foreign  currency  exchange  rate
fluctuations for 1999 was not material.  We do not use derivative financial
instruments to limit our foreign currency risk exposure.


                                    46
<PAGE>


ITEM 8.   CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                          PAGE

     Independent Auditors' Report..................................  48

     Consolidated Balance Sheets as of December 31, 1999 and 1998..  49

     Consolidated  Statements  of  Operations  for each of the
     years in the three year period ended December 31, 1999........  50

     Consolidated Statements of Stockholders' Equity and
     Comprehensive Loss for each of the years in the three year
     period ended December 31, 1999................................  51

     Consolidated  Statements  of Cash  Flows  for each of
     the years in the three year period ended December 31, 1999....  52

     Notes to Consolidated Financial Statements....................  53


     Financial Statement Schedule:

     II   - Valuation and Qualifying  Accounts for
            each of the years in the three year period
            ended December 31, 1999                            Exhibit 99.1

     All other schedules are omitted because they are not applicable or the
     required information is shown in the Consolidated Financial Statements
     or Notes thereto.


                                    47
<PAGE>


                        INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
theglobe.com, inc.:

     We have  audited  the  accompanying  consolidated  balance  sheets  of
theglobe.com,  inc. and  subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements of operations, stockholders' equity and
comprehensive  loss and cash flows for each of the years in the  three-year
period  ended  December  31,  1999.  In  connection  with our audits of the
consolidated  financial  statements,  we also have  audited  the  financial
statement schedule as listed in the accompanying  index. These consolidated
financial   statements   and   financial   statement   schedule   are   the
responsibility  of  the  Company's  management.  Our  responsibility  is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  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
consolidated  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 financial position of
theglobe.com,  inc. and  subsidiaries as of December 31, 1999 and 1998, and
the results of their  operations and their cash flows for each of the years
in the  three-year  period  ended  December  31,  1999 in  conformity  with
generally accepted accounting principles.  Also in our opinion, the related
financial  statement  schedule,  when  considered  in relation to the basic
consolidated  financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.


                                                      /s/ KPMG LLP


New York, New York
January 28, 2000


                                    48
<PAGE>

<TABLE>
<CAPTION>
                              THEGLOBE.COM, INC.

                         CONSOLIDATED BALANCE SHEETS
                                                                  DECEMBER 31,
                                                         -----------------------------
                                                             1999             1998
                                                         ------------     ------------
                        ASSETS
<S>                                                      <C>              <C>
Current assets:
   Cash and cash equivalents..........................   $ 36,585,998     $ 29,250,572
   Short-term investments.............................     19,288,627          898,546
   Accounts receivable, less allowance for doubtful
     accounts of $1,408,092 and $300,136 in 1999 and
     1998, respectively...............................      4,219,716        2,004,875
   Prepaid and other current assets...................      2,164,937          678,831
                                                         ------------     ------------
       Total current assets...........................     62,259,278       32,832,824
Property and equipment, net...........................      9,464,291        3,562,559
Restricted investments................................      3,657,497        1,734,495
Goodwill and intangible assets, net...................     63,462,251               --
                                                         ------------     ------------
      Total assets....................................   $138,843,317     $ 38,129,878
                                                         ============     ============
         LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable...................................   $  2,722,017     $  2,614,445
   Accrued expense....................................      2,439,369          817,463
   Accrued compensation...............................      1,610,445          691,279
   Deferred revenue...................................        565,919          673,616
   Current installments of obligations under capital
     leases...........................................      1,956,982        1,026,728
                                                         ------------     ------------
      Total current liabilities.......................      9,294,732        5,823,531
Obligations under capital leases, excluding current
   installments.......................................      2,200,895        2,005,724
Deferred rent.........................................        438,263               --
Stockholders' equity:
Preferred stock, $.0.001 par value; 3,000,000 shares
     authorized; no shares issued and outstanding
     at December 31, 1999 and 1998, respectively                   --               --
   Common stock, $0.001 par value; 100,000,000 shares
     authorized; 27,770,918 and 20,624,512 shares
     issued and outstanding at December 31, 1999 and
     1998, respectively...............................         27,771           20,625
   Additional paid-in capital.........................    197,307,293       50,904,181
   Deferred compensation..............................       (269,307)        (128,251)
   Accumulated other comprehensive loss...............       (109,462)         (50,006)
   Accumulated deficit................................    (70,046,868)     (20,445,926)
                                                         ------------     ------------
      Total stockholders' equity......................    126,909,427       30,300,623
Commitments and contingencies.........................
                                                         ------------     ------------
      Total liabilities and stockholders' equity......   $138,843,317     $ 38,129,878
                                                         ============     ============

        See accompanying notes to consolidated financial statements.
</TABLE>

                                    49
<PAGE>
<TABLE>
<CAPTION>

                             THEGLOBE.COM, INC.

                   CONSOLIDATED STATEMENTS OF OPERATIONS


                                                          YEAR ENDED DECEMBER 31,
                                             ----------------------------------------------
                                                 1999             1998             1997
                                             ------------     ------------     ------------
<S>                                          <C>              <C>              <C>
Revenues.................................    $ 18,640,960     $  5,509,818     $    770,293
Cost of revenues.........................       8,547,514        2,136,151          257,206
                                             ------------     ------------     ------------
      Gross profit.......................      10,093,446        3,373,667          513,087
Operating expenses:
   Sales and marketing...................      19,352,022        9,401,403        1,414,849
   Product development...................      10,488,190        2,632,613          153,667
   General and administrative............      12,164,650        6,828,134        2,827,591
   Non-recurring charge..................              --        1,370,250               --
   Amortization of goodwill and
     intangible assets...................      20,459,526               --               --
                                             ------------     ------------     ------------
      Total operating expenses...........      62,464,388       20,232,400        4,396,107
                                             ------------     ------------     ------------
      Loss from operations...............     (52,370,942)     (16,858,733)      (3,883,020)
Other income (expense):
   Interest and dividend income..........       2,485,293        1,083,400          334,720
   Interest and other expense............        (780,654)        (191,389)              --
                                             ------------     ------------     ------------
      Total other income, net............       1,704,639          892,011          334,720
                                             ------------     ------------     ------------
      Loss before provision for income
        taxes and extraordinary item.....     (50,666,303)     (15,966,722)      (3,548,300)
Provision for income taxes...............         290,337           78,918           36,100
                                             ------------     ------------     ------------
      Loss before extraordinary item.....     (50,956,640)     (16,045,640)      (3,584,400)
Extraordinary item-gain on early
        retirement of debt...............       1,355,698               --               --
                                             ------------     ------------     ------------
      Net loss...........................    $(49,600,942)    $(16,045,640)    $ (3,584,400)
                                             ============     ============     ============
Basic and diluted net loss per share:
  Loss before extraordinary item.........    $      (2.06)    $      (3.37)    $      (1.56)
  Extraordinary item-gain on early
    retirement of debt...................    $       0.06     $         --     $         --
                                             ------------     ------------     ------------
  Net loss...............................    $      (2.00)    $      (3.37)    $      (1.56)
                                             ============     ============     ============
Weighted average basic and diluted
    shares outstanding...................      24,777,444        4,762,280        2,293,546
                                             ============     ============     ============

        See accompanying notes to consolidated financial statements.
</TABLE>

                                    50
<PAGE>
<TABLE>
                               theglobe.com, inc.

     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE LOSS

<CAPTION>
                                                                                             Other
                                                                     Additional  Deferred   compreh-                     Total
                                                                      paid-in     compen-    ensive    Accumulated   stockholders'
                                 Convertible        Common stock      capital     sation      loss       deficit         equity
                               preferred stock    ----------------  ------------ --------- ---------- -------------- -------------
                              ----------------
                              Shares    Amount    Shares    Amount
                              ------    ------    ------    ------

<S>                           <C>       <C>     <C>         <C>     <C>          <C>       <C>        <C>             <C>
Balance at December 31,
   1996..................     2,759,940  $2,760   2,250,000  $2,250   $1,627,421  $(21,053)   $    --      $(815,886)   $  795,492
Net loss.................           --       --         --       --          --        --          --     (3,584,400)   (3,584,400)
Net unrealized loss on
   securities............           --       --         --       --          --        --     (41,201)            --       (41,201)
                                                                                                                      ------------
   Comprehensive loss....                                                                                               (3,625,601)
                                                                                                                      ------------

Issuance of Series C
   convertible preferred
   stock.................       140,000     140         --       --      279,860       --          --             --       280,000
Exercise of stock options           --       --      58,542      59        4,448       --          --             --         4,507
Issuance of Series D
   convertible preferred
   stock, net of expense
   of $130,464...........            51      --         --       --   19,869,536       --          --             --    19,869,536
Deferred compensation....           --       --         --       --      83,095   (83,095)         --             --            --
Amortization of deferred
   compensation..........           --       --         --       --          --    28,115          --             --        28,115
                             ---------- -------  ---------- -------  -----------  --------  ---------  -------------  ------------
Balance at December 31,
   1997..................     2,899,991   2,900   2,308,542   2,309   21,864,360  (76,033)    (41,201)    (4,400,286)   17,352,049
Net loss.................           --       --         --       --          --        --          --    (16,045,640)  (16,045,640)
Net unrealized loss on
   securities............           --       --         --       --          --        --      (8,805)            --        (8,805)
                                                                                                                      ------------
   Comprehensive loss....                                                                                              (16,054,445)
                                                                                                                      ------------
Deferred compensation....           --       --         --       --      118,125  (118,125)        --             --            --
Amortization of deferred
   compensation..........           --       --         --       --          --     65,907         --             --        65,907
Issuance of common stock
   in connection with
   exercise of stock
   options...............           --       --     398,166     398      254,619       --          --             --       255,017
Conversion of preferred
   stock in connection
   with the Company's
   IPO...................    (2,899,991) (2,900) 10,947,470  10,947       (8,047)      --          --             --            --
Non-cash compensation....           --       --       7,000       7       31,493       --          --             --        31,500
Issuance of common stock
   in connection with the
   Initial Public
   Offering, net of
   offering costs........           --       --   6,963,334   6,964   27,273,381       --          --             --    27,280,345
Transfer of warrants from
   significant shareholder
   to officers...........           --       --         --       --    1,370,250       --          --             --     1,370,250
                             ---------- -------  ---------- -------  -----------  --------  ---------  -------------  ------------
Balance at December 31,
   1998 .................           --       --  20,624,512  20,625   50,904,181  (128,251)   (50,006)   (20,445,926)   30,300,623
Net loss.................           --       --         --       --          --        --                (49,600,942)  (49,600,942)
Net unrealized loss on
  securities.............           --       --         --       --          --        --     (58,923)            --       (58,923)
Foreign currency
  translation
  adjustment.............           --       --         --       --          --        --        (533)            --          (533)
                                                                                                                      ------------
   Comprehensive loss....                                                                                              (49,660,398)
                                                                                                                      ------------
Deferred compensation....           --       --         --       --     251,622   (251,622)        --             --            --
Amortization of deferred
  compensation...........           --       --         --       --          --    110,566         --             --       110,566
Issuance of common stock
   in connection with
   exercise of stock
   options...............           --       --     175,480     175      417,286       --          --             --       417,461
Issuance of common stock
   in connection with
   Employee Stock Purchase
   Plan..................           --       --       7,200       7       75,042       --          --             --        75,049
Issuance of common stock
   in connection with
   exercise of warrants..           --       --     100,000     100      145,286       --          --             --       145,386
Issuance of common stock
   in connection with
   acquisitions..........           --       --   3,363,726   3,364   80,472,172       --          --             --    80,475,536
Issuance of common stock
   in connection with
   Secondary Public
   Offering, net of
   offering costs........           --       --   3,500,000   3,500   65,009,935       --          --             --    65,013,435
Non-cash compensation....           --       --         --       --       31,769       --          --             --        31,769
                             ---------- -------  ---------- -------  -----------  --------  ---------  -------------  ------------
Balance at December 31,
 1999....................           --  $    --  27,770,918 $27,771 $197,307,293 $(269,307) $(109,462)  $(70,046,868) $126,909,427
                             ========== =======  ========== =======  ===========  ========  =========  =============  ============

        See accompanying notes to consolidated financial statements.
</TABLE>

                                    51
<PAGE>
<TABLE>
                               theglobe.com, inc.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                                    Year ended
                                                                                   December 31,
                                                                  ----------------------------------------------
                                                                      1999             1998              1997
                                                                  ------------      ------------     -----------
<S>                                                               <C>               <C>              <C>
Cash flows from operating activities:

   Net loss.................................................      $(49,600,942)     $(16,045,640)    $(3,584,400)
     Adjustments to reconcile net loss to net cash used in
       operating activities:
       Depreciation and amortization........................       23,004,644           715,410           60,210
       Transfer of stock warrants from significant
         shareholder to officers............................               --         1,370,250               --
       Non-cash compensation................................           31,769            31,500               --
       Amortization of deferred compensation................          110,566            65,907           28,115
       Loss on disposal of equipment........................           99,179                --               --
       Amortization of debt discount........................          147,012                --               --
       Gain on early retirement of debt.....................       (1,355,698)               --               --
         Deferred rent......................................          438,263                --               --
     Changes in operating assets and liabilities:

       Accounts receivable, net.............................       (1,896,755)       (1,750,666)        (188,081)
       Prepaid and other current assets.....................       (1,356,820)         (678,831)           2,377
       Other assets.........................................               --             7,657               --
       Accounts payable.....................................         (502,479)        2,218,065          265,902
       Accrued expenses.....................................          525,654           492,009          310,220
       Accrued compensation.................................          919,166          (457,720)       1,148,999
       Deferred revenue.....................................         (654,472)          560,326           81,146
                                                                  ------------      ------------     -----------
     Net cash used in operating activities..................      (30,090,913)      (13,471,733)      (1,875,512)
                                                                  ------------      ------------     -----------


Cash flows from investing activities:

   Purchase of securities...................................      (30,135,867)               --      (13,044,374)
   Proceeds from sale of securities.........................       11,686,864        12,095,822               --
   Purchases of property and equipment......................       (5,556,647)         (730,359)        (119,984)
   Payment of security deposits.............................       (1,898,897)       (1,734,495)              --
   Cash acquired from acquisitions, net of cash paid........          552,159                --               --
                                                                  ------------      ------------     -----------
     Net cash (used in) provided by investing activities....      (25,352,388)        9,630,968      (13,164,358)
                                                                  ------------      ------------     -----------

Cash flows from financing activities:

   Payments of long-term debt...............................       (1,379,738)               --               --
   Payments under capital lease obligations.................       (1,492,333)         (315,316)              --
   Proceeds from exercise of common stock options and warrants        562,847           255,017            4,507
   Net proceeds from issuance of common stock...............       65,088,484        27,280,345               --
   Payment of financing costs...............................               --                --         (130,464)
   Proceeds from issuance of convertible preferred Series C
     stock..................................................               --                --          280,000
   Proceeds from issuance of convertible preferred Series D
     stock..................................................               --                --       20,000,000
                                                                  ------------      ------------     -----------
       Net cash provided by financing activities............       62,779,260        27,220,046       20,154,043
                                                                  ------------      ------------     -----------
       Net change in cash and cash equivalents..............        7,335,958        23,379,281        5,114,173
       Effect of exchange rate changes on cash and cash
         equivalents........................................             (533)               --               --
Cash and cash equivalents at beginning of period............       29,250,572         5,871,291          757,118
                                                                  ------------      ------------     -----------
Cash and cash equivalents at end of period..................      $36,585,998       $29,250,572      $ 5,871,291
                                                                  ============      ============     ===========

Supplemental  disclosure of cash flow  information:

Cash paid during the period for:
     Interest...............................................      $   534,458       $   123,724      $        --
                                                                  ============      ============     ===========

     Income taxes...........................................      $   209,723       $    69,890      $        --
                                                                  ============      ============     ===========
Supplemental disclosure of non-cash transactions:

   Equipment acquired under capital leases..................      $ 2,545,134       $ 3,221,769      $   126,000
                                                                  ============      ============     ===========

          See accompanying notes to consolidated financial statements.

</TABLE>


                                    52
<PAGE>


                             THEGLOBE.COM, INC.

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                         DECEMBER 31, 1999 AND 1998


(1)  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  Description of the Company

     theglobe.com,  inc. (the "Company" or "theglobe") was  incorporated on
May 1, 1995 (inception) and commenced operations on that date. theglobe.com
is an online  property  with  registered  members  and users in the  United
States and abroad.  theglobe's  users are able to personalize  their online
experience  by  publishing  their own content and  interacting  with others
having similar interests.  The Company's primary revenue source is the sale
of advertising,  with additional revenues generated through the development
and  sale of  sponsorship  placements  within  our  websites,  the  sale of
merchandise  through our online store,  electronic  commerce revenue shares
and, to a lesser extent,  membership  service fees for the sale of enhanced
services.

     The Company's business is characterized by rapid technological change,
new product  development and evolving industry  standards.  Inherent in the
Company's  business  are various  risks and  uncertainties,  including  its
limited operating history,  unproven business model and the limited history
of commerce on the  Internet.  The Company's  success may depend,  in part,
upon the emergence of the Internet as a communications medium,  prospective
product  development  efforts and the acceptance of the Company's community
solutions by the marketplace.

     (b)  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.

     (c)  Cash and Cash Equivalents

     The Company  considers  all highly  liquid  securities  with  original
maturities of three months or less to be cash equivalents. Cash equivalents
were  $30.2  million at  December  31,  1999 and  consisted  of  government
securities.  Cash equivalents were $3.0 million as of December 31, 1998 and
consisted of corporate bonds and mutual funds.

     (d)  Short-term Investments

     The Company accounts for its short-term investments in accordance with
Statement  of  Financial  Accounting  Standards  No. 115,  "Accounting  for
Certain  Investments in Debt and Equity  Securities" ("SFAS 115"). SFAS 115
establishes  the  accounting  and  reporting   requirements  for  all  debt
securities  and for  investments  in equity  securities  that have  readily
determinable fair market value. All short-term  marketable  securities must
be classified as one of the following: held-to-maturity, available-for-sale
or trading securities. The Company's short-term investments consist of both
held-to-maturity   and   available-for-sale   securities.   The   Company's
held-to-maturity  securities are carried at amortized cost in the statement
of financial  position.  The  amortization  of the discount or premium that
arises  at   acquisition   is   included   in   earnings.   The   Company's
available-for-sale  securities are carried at fair value,  with  unrealized
gains and losses reported as a separate component of stockholders'  equity.
Unrealized  gains and  losses  are  computed  on the basis of the  specific
identification  method.  Realized  gains,  realized  losses and declines in
value  judged to be  other-than-temporary,  are  included  in other  income
(expense). The cost of available-for-sale  securities sold are based on the
specific-identification  method  and  interest  earned is  included  in net
income.

                                    53
<PAGE>

     At  December  31,  1999  and  1998,  the fair  value of the  Company's
available-for-sale  securities  approximated  cost and unrealized gains and
losses  were  not  material.  The  Company's  short-term  investments  were
comprised of the following at December 31, 1999 and 1998:

                                                    DECEMBER 31,
                                              ------------------------
                                                 1999         1998
                                              ------------  ----------
                                                   (IN THOUSANDS)
        Available-for-sale securities........  $  2,889       $    --
        Held-to-maturity securities..........    16,400           899
                                               --------       -------
             Short-term investments..........  $ 19,289       $   899
                                               ========       =======

     (e)  Property and Equipment

     Property  and  equipment  is  stated  at  cost,   net  of  accumulated
depreciation and amortization.  Property and equipment is depreciated using
the  straight-line  method over the  estimated  useful lives of the related
assets, generally three to five years for equipment and five to seven years
for furniture and fixtures.  Leasehold improvements are amortized using the
straight-line  method over the  shorter of the lease term or the  estimated
useful life of the asset.  Equipment  under capital leases is stated at the
present  value  of  minimum  lease  payments  and is  amortized  using  the
straight-line method over the estimated useful lives of the assets.

     (f)  Restricted Investments

     At  December  31,  1999  and  1998,  restricted  investments  included
security  deposits  held in  Certificates  of  Deposit  and other  interest
bearing  accounts as collateral  for certain  capital  lease  equipment and
office  space  leases.  In 1999,  the Company  pledged  approximately  $1.5
million as collateral  in connection  with its office space at 120 Broadway
in New York City.

     (g)  Goodwill and Intangible Assets

     Goodwill  and  intangible  assets  primarily  relate to the  Company's
acquisitions  accounted  for under the purchase  method of  accounting,  or
purchase of intangible assets. Under the purchase method of accounting, the
excess of the purchase price over the  identifiable  net tangible assets of
the  acquired  entity is  recorded  as  identified  intangible  assets  and
goodwill.  Goodwill  and  intangible  assets  is  stated  at  cost,  net of
accumulated  amortization,  and is being amortized using the  straight-line
method over the  expected  period of benefit  ranging  from 2 to 3 years (3
years for goodwill). As of December 31, 1999, accumulated  amortization was
$20.5 million.

     (h)  Impairment of Long-Lived Assets

     The Company  reviews its  long-lived  assets and certain  identifiable
intangible   assets   for   impairment   whenever   events  or  changes  in
circumstances  indicate  that the  carrying  amount  of an asset may not be
recoverable.  Recoverability of assets to be held and used is measured by a
comparison  of the  carrying  amount  of an  asset to the  expected  future
undiscounted  net cash flows expected to be generated by the asset. If such
assets are  considered to be impaired,  the  impairment to be recognized is
measured by the amount by which the carrying  amount of the assets  exceeds
the  fair  value  of the  assets.  To  date,  no such  impairment  has been
recorded.

     (i)  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, 1999 and 1998 because of their
short  maturities.  The  carrying  amount of the  Company's  capital  lease
obligations  approximate  their fair value based upon the implicit interest
rate of the leases.

                                    54
<PAGE>

     (j)  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.

     (k)  Revenue Recognition

     The  Company's  revenues  are  derived  principally  from  the sale of
advertisements  under  short-term  contracts.  To date, the duration of the
Company's advertising  commitments has generally averaged from one to three
months.  Advertising revenues are recognized ratably in the period in which
the  advertisement  is  displayed,  provided  that no  significant  Company
obligations remain and collection of the resulting  receivable is probable.
Company obligations  typically include the guarantee of a minimum number of
"impressions", defined as the number of times that an advertisement appears
in pages viewed by the users of the Company's online  properties.  Payments
received from advertisers  prior to displaying their  advertisements on its
sites are  recorded  as deferred  revenues  and are  recognized  as revenue
ratably  when  the  advertisement  is  displayed.  To  the  extent  minimum
guaranteed  impressions  levels are not met,  we defer  recognition  of the
corresponding revenues until guaranteed levels are achieved.

     The Company also derives other revenues from the  development and sale
of sponsorship  placements  within its websites,  sales of merchandise from
its online department  store,  acquired in February 1999 in connection with
shop.theglobe.com,  e-commerce  revenue shares and membership  service fees
from the sale of enhanced services. Development fees related to the sale of
sponsorship  placements on our websites are  recognized as revenue once the
related  activities have been performed.  Merchandise sales from the online
store  are  recognized  as  revenue  when the  product  is  shipped  to the
customer.  Freight  out costs are  included  in net sales and have not been
significant to date. The Company provides an allowance for merchandise sold
through  its online  store.  The  allowance  provided  to date has not been
significant.  Revenues  from the  Company's  share of the proceeds from its
e-commerce  partners'  sales  are  recognized  upon  notification  from its
partners of sales  attributable to the Company's sites.  Membership service
fees are deferred and recognized  ratably over the term of the subscription
period.  Other revenues  accounted for 20%, 11% and 23% of revenues for the
years ended December 31, 1999, 1998 and 1997, respectively.

     The Company  trades  advertisements  on its web properties in exchange
for  advertisements  on the  Internet  sites  of  other  companies.  Barter
revenues  and  expenses  are  recorded at the fair market value of services
provided  or  received,  whichever  is  more  readily  determinable  in the
circumstances.  Revenue from barter  transactions  is  recognized as income
when  advertisements are delivered on the Company's web properties.  Barter
expense is recognized  when the Company's  advertisements  are run on other
companies'  websites,  which  typically  occurs in the same period in which
barter revenue is recognized.  Barter revenues and expenses represented 5%,
2% and 22% of revenues  for the years ended  December  31,  1999,  1998 and
1997, respectively.

     (l)  Advertising

     Advertising  costs are  expensed as incurred and are included in sales
and marketing expense. The value of promotional coupons issued to customers
is expensed when  redeemed and is included in sales and marketing  expense.
Advertising costs were $8.7 million,  $7.3 million and $1.1 million for the
years ended December 31, 1999,  1998 and 1997,  respectively.  The value of
promotional  coupons was not material for the year ended  December 31, 1999
and the Company did not issue coupons for the years ended December 31, 1998
and 1997.

     (m)  Product Development

     Product  development  expenses include  professional fees, staff costs
and related expenses associated with

                                    55
<PAGE>

the development,  testing and upgrades to the Company's  website as well as
expenses  related to its  editorial  content and community  management  and
support.  Product  development  costs and enhancements to existing products
are charged to operations as incurred. During 1998, the Company adopted the
American Institute of Certified Public  Accountants'  Statement of Position
98-1,  "Accounting for the Cost of Computer Software  Developed or Obtained
for Internal Use" ("SOP 98-1").  SOP 98-1 requires all costs related to the
development of internal use software  other than those incurred  during the
application  development stage to be expensed as incurred. It also provides
guidance on the  capitalization  of costs uncurred  during the  application
development stage for computer software  developed or obtained for internal
use. As of December 31, 1999, the Company  capitalized  approximately  $1.3
million in connection with the Company's back office systems.

     (n)  Stock-Based Compensation

     The Company has adopted Statement of Financial Accounting Standard No.
123, "Accounting for Stock-Based  Compensation" ("SFAS 123"), which permits
entities to recognize as expense over the vesting  period the fair value of
all stock-based awards on the date of grant. Alternatively, SFAS 123 allows
entities to continue to apply the provisions of Accounting  Principle Board
Opinion No. 25 ("APB 25") and provide  pro forma net  earnings  disclosures
for employee stock option grants if the fair-value-based  method defined in
SFAS 123 had been applied. The Company has elected to continue to apply the
provisions  of  APB  Opinion  25  and  provide  the  pro  forma  disclosure
provisions of SFAS 123.

     (o)  Net Loss Per Common Share

     The Company  adopted  Statement of Financial  Accounting  Standard No.
128,  "Computation  of Earnings  Per Share,"  ("SFAS  128") during the year
ended  December 31,  1997.  In  accordance  with SFAS 128 and the SEC Staff
Accounting  Bulletin No. 98, basic earnings per share is computed using the
weighted  average  number of common shares  outstanding  during the period.
Common equivalent shares consist of the incremental  common shares issuable
upon  the  conversion  of  the  Convertible   Preferred  Stock  (using  the
if-converted method) and shares issuable upon the exercise of stock options
and warrants (using the Treasury Stock method);  common  equivalent  shares
are  excluded  from the  calculation  if  their  effect  is  anti-dilutive.
Pursuant  to SEC  Staff  Accounting  Bulletin  No.  98,  common  stock  and
convertible preferred stock issued for nominal consideration,  prior to the
anticipated  effective  date of an IPO,  are required to be included in the
calculation  of basic  and  diluted  net loss per  share,  as if they  were
outstanding for all periods presented. To date, the Company has not had any
issuances or grants for nominal consideration.

     Diluted  loss per  share  has not been  presented  separately,  as the
outstanding stock options,  warrants and contingent stock purchase warrants
are anti-dilutive for each of the periods presented.

     Diluted  net loss per common  share for the years ended  December  31,
1999,  1998 and 1997 does not  include  the  effects of options to purchase
4,301,887,  2,830,242 and 1,443,958  shares of Common Stock,  respectively;
warrants to purchase  4,011,534,  4,046,018 and 3,522,732  shares of Common
Stock,  respectively;  and -0-,  -0- and  9,906,654  shares of  convertible
preferred stock on an "as if" converted basis, respectively.

     (p)  Comprehensive Income

     In June 1997, the Financial  Accounting  Standards  Board (the "FASB")
issued  Statement of  Financial  Accounting  Standard  No. 130,  "Reporting
Comprehensive  Income" ("SFAS 130"). This statement  establishes  standards
for the reporting and display of comprehensive income and its components in
a full set of general purpose financial  statements.  Comprehensive  income
generally  represents all changes in shareholders' equity during the period
except  those  resulting  from   investments  by,  or   distributions   to,
shareholders.  The Company's  comprehensive  loss was  approximately  $49.7
million,  $16.1  million and $3.7 million and for the years ended  December
31, 1999, 1998 and 1997,  respectively.  The Company's other  comprehensive
loss items for the year ended December 31, 1999 were approximately  $59,000
of net unrealized losses related to its short-term investments and a $1,000
loss  related to its foreign  currency  translation  adjustment.  The other
comprehensive  loss item for the years ended December 31, 1998 and 1997 was
$9,000  and  $41,000,  respectively,  and  represented  the  Company's  net
unrealized losses on its short-term investments.

                                    56
<PAGE>

     (q)  Use of Estimates

     The  preparation of financial  statements in conformity with generally
accepted  accounting  principles  requires management to make estimates and
assumptions  that affect the reported amounts of assets and liabilities and
the  disclosure of  contingent  assets and  liabilities  at the date of the
financial  statements  and the  reported  amounts of revenue  and  expenses
during  the  reporting  period.  Actual  results  could  differ  from those
estimates.

     (r)  Concentration of Credit Risk

     Financial  instruments  which subject the Company to concentrations of
credit risk  consist  primarily  of cash and cash  equivalents,  short-term
investments and trade accounts receivable. The Company invests its cash and
cash  equivalents  and  short-term  investments  among a  diverse  group of
issuers and instruments. The Company performs periodic evaluations of these
investments  and the relative  credit  standings of the  institutions  with
which it invests.  At certain  times,  the Company's cash balances with any
one financial  institution may exceed Federal Deposit Insurance Corporation
insurance limits.

     The  Company's  customers  are  primarily  concentrated  in the United
States.  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;  to date,  such  losses  have  been  within
management's expectations.

     For the year ended  December  31, 1999,  there were no customers  that
accounted  for over 10% of revenues  generated by the Company.  The Company
had one customer that represented  more than 10% of accounts  receivable as
of December 31, 1999.

     For the year ended  December  31, 1998,  there were no customers  that
accounted for over 10% of revenues generated by the Company, or of accounts
receivable at December 31, 1998.

     For the year ended  December  31, 1997,  there were no customers  that
accounted for over 10% of revenues generated by the Company.

     (s)  Segment Reporting

     During  1998,  the Company  adopted the  provisions  of  Statement  of
Financial Accounting  Standards No. 131,  "Disclosures About Segments of an
Enterprise  and Related  Information"  ("SFAS 131").  SFAS 131  establishes
annual and interim reporting standards for operating segments of a company.
SFAS  131  requires  disclosures  of  selected  segment-related   financial
information  about  products,  major  customers and geographic  areas.  The
Company is organized in a single  operating  segment for purposes of making
operating decisions and assessing performance. The chief operating decision
maker  evaluates  performance,  makes  operating  decisions  and  allocates
resources based on financial data  consistent with the  presentation in the
accompanying consolidated financial statements.

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

     (t)  Recent Accounting Pronouncements

     In  June  1998,  the  Financial   Accounting  Standards  Board  issued
Statement  of  Financial  Accounting  Standard  No.  133,  "Accounting  for
Derivative  Instruments and Hedging  Activities" ("SFAS 133"). SFAS No. 133
establishes accounting and reporting standards for derivative  instruments,
including  derivative  instruments  embedded  in other  contracts,  and for
hedging  activities.  SFAS No. 133 is effective for all fiscal  quarters of
fiscal  years  beginning  after  June 15,  2000.  The  Company  has not yet
analyzed the impact of this  pronouncement  on its  consolidated  financial
statements.

     (u)  Reclassifications

     Certain  reclassifications have been made to prior year's consolidated
financial statements to conform to the current year's presentation.

(2)  ACQUISITIONS

     a)   factorymall.com, inc.

     On  February  1,  1999,  theglobe  formed  Nirvana  Acquisition  Corp.
("Nirvana"),  a Washington  corporation  and a  wholly-owned  subsidiary of
theglobe.  Nirvana  was  merged  with and  into  factorymall.com,  inc.,  a
Washington corporation d/b/a Azazz ("factorymall"), with factorymall as the
surviving  corporation.  The merger was effected  pursuant to the Agreement
and Plan of Merger, dated February 1, 1999, by and among theglobe, Nirvana,
and

                                    57
<PAGE>

factorymall and certain  shareholders  thereof.  As a result of the merger,
factorymall  became a  wholly-owned  subsidiary  of  theglobe.  factorymall
operated Azazz, a leading  interactive  department  store. This transaction
was accounted for under the purchase method of accounting.

     The  consideration  paid by  theglobe  in  connection  with the merger
consisted of  approximately  614,104  newly  issued  shares of Common Stock
valued  at $17.5  million.  In  addition,  options  to  purchase  shares of
factorymall's  common stock,  without par value, were exchanged for options
to purchase  approximately  82,034 shares of theglobe's Common Stock valued
at $1.7 million.  Warrants to purchase  shares of factorymall  common stock
were  exchanged  for warrants to purchase  approximately  18,810  shares of
theglobe's  Common  Stock  valued at $0.4  million.  theglobe  also assumed
certain bonus  obligations of factorymall  triggered in connection with the
merger that  resulted in the issuance by theglobe of  approximately  73,728
shares of Common Stock, valued at $2.0 million,  and payment by theglobe of
approximately  $0.5 million in cash, which has been included as part of the
total purchase price  consideration.  The Company also incurred expenses of
approximately $0.7 million related to the merger.

     The total purchase price for this transaction was approximately  $22.8
million.  Of this amount,  approximately $0.1 million of the purchase price
was allocated to net tangible  assets.  The historical  carrying amounts of
such net tangible assets approximated their fair values. The purchase price
in excess of the fair  value of the net  tangible  assets  assumed,  in the
amount of $22.7 million was allocated to goodwill and certain  identifiable
intangible  assets and is being  amortized using the  straight-line  method
over its estimated useful life of 2 to 3 years (3 years for goodwill),  the
expected  period  of  benefit.  Factorymall's  results  of  operations  are
included in the consolidated statement of operations from February 1, 1999.

     b)   Attitude Network, Ltd.

     On April 5, 1999, theglobe formed Bucky Acquisition Corp. ("Bucky"), a
Delaware corporation and a wholly-owned  subsidiary of theglobe.  Bucky was
merged  with  and into  Attitude  Network,  Ltd.,  a  Delaware  corporation
("Attitude"),  with Attitude as the surviving  corporation.  The merger was
effective  pursuant  to the  Agreement  and Plan of Merger,  dated April 5,
1999, which closed on April 9, 1999, by and among theglobe, Bucky, Attitude
and  certain  shareholders  thereof.  As a result of the  merger,  Attitude
became a wholly-owned subsidiary of theglobe. Attitude's properties publish
games   information   content  and  include   HappyPuppy,   KidsDomain  and
GamesDomain.  This  transaction was accounted for under the purchase method
of accounting.

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

     The total purchase price for this transaction was approximately  $46.8
million.  Of this amount,  approximately $0.2 million of the purchase price
was allocated to net tangible liabilities.  The historical carrying amounts
of such net  tangible  liabilities  approximated  their  fair  values.  The
purchase price in excess of the fair value of the net tangible  liabilities
assumed  in the amount of $47.0  million  was  allocated  to  goodwill  and
certain  identifiable  intangible  assets and is being  amortized using the
straight-line  method  over a its  estimated  useful  life of 3 years,  the
expected period of benefit.  Attitude's  results of operations are included
in the consolidated statement of operations from April 9, 1999.

     The following unaudited pro forma consolidated  financial  information
gives effect to the acquisitions of  factorymall.com  and Attitude Network,
Ltd. as if they had  occurred at the  beginning of the  respective  periods
presented.  The unaudited pro forma consolidated  financial  information is
not  necessarily  indicative  of the  consolidated  results that would have
occurred, nor is it necessarily indicative of results that may occur in the
future.


                                    58
<PAGE>

                                                         DECEMBER    DECEMBER
                                                            31,         31,
                                                           1999        1998
                                                        ----------  ----------
                                                        (IN THOUSANDS, EXCEPT
                                                           PER SHARE DATA)

Revenues.............................................   $  19,032   $  7,869
Net loss.............................................     (57,016)   (47,107)
Net loss per share-basic and diluted.................   $   (2.26)  $  (6.71)
Weighted average basic and diluted shares
  outstanding........................................      25,261      7,021


     (c)  Web Hosting Assets of Webjump.com

     On November 30, 1999,  Jump  Acquisition  LLC ("Jump LLC"), a Delaware
limited  liability  company  and a wholly  owned  subsidiary  of  theglobe,
acquired  all of the  assets  of  Webjump.com  ("Webjump"),  a web  hosting
property   catering   primarily  to  small   businesses  and   professional
webmasters,  from  Infonent.com.  The  purchase of the  Webjump  assets was
effected  pursuant to an Agreement of Purchase and Sale, dated November 30,
1999,  by  and  among  theglobe,   Jump  LLC,   Infonent.com   and  certain
stockholders of  Infonent.com.  The assets acquired in connection with this
transaction  consisted of data,  intellectual  property and other  physical
property  used in  connection  with the  operation of Webjump's web hosting
property.  The Company intends to use the acquired assets to expand its own
web hosting operations.

     The Company  issued  1,104,972  shares of newly issued  Common  Stock,
valued at $12.9 million, in connection with this transaction. An additional
$12.5  million  ,  payable  in newly  issued  shares of  Common  Stock,  is
contingent  based upon the  attainment  by the Webjump  property of certain
performance targets on or prior to November 30, 2000.

     In addition  to the  issuance of Common  Stock,  the Company  incurred
acquisition  costs of $0.1 million.  The aggregate  purchase price of $13.0
million has been accounted for as purchased  intangible  assets and will be
amortized using the straight-line method over an estimated useful life of 3
years, the expected period of benefit.

(3)  PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:

                                                         DECEMBER    DECEMBER
                                                            31,         31,
                                                           1999        1998
                                                        ----------  ----------
                                                            (IN THOUSANDS)
Computer equipment and software, including assets
  under capital leases of $5,830 and $3,306,
  respectively.......................................   $  9,613     $ 4,299
Furniture and fixtures, including assets under
  capital leases of $42 and $42, respectively........      1,159          89
Leasehold improvements...............................      2,025          --
                                                        ----------  ----------
                                                          12,797       4,388
Less accumulated depreciation and amortization,
  including amounts related to assets under capital        3,333         825
  leases of $1,828 and $461, respectively............   ----------  ----------
   Total.............................................   $  9,464     $ 3,563
                                                        ==========  ==========


(4)  INCOME TAXES

     Income  taxes for the year ended  December 31, 1999 and 1998 are based
solely on state and local taxes on business and investment capital.

                                    59
<PAGE>

     The tax effects of temporary differences that give rise to significant
portions  of the  deferred  tax  assets and  deferred  tax  liabilities  at
December 31, 1999 and 1998 are presented below.

                                                          1999        1998
                                                       ----------  ----------
                                                           (IN THOUSANDS)
Deferred tax assets:
   Net operating loss carryforwards..................   $ 32,344    $ 13,412
   Allowance for doubtful accounts...................        603         138
   Depreciation......................................        151         (28)
   Issuance of warrants..............................        630         630
   Deferred compensation.............................        193          45
   Start-up costs....................................        210          --
   Deferred revenue..................................         75          --
   Other.............................................         --          97
                                                       ----------  ----------
      Total gross deferred tax assets................     34,206      14,294
Less valuation allowance.............................    (31,893)    (14,294)
                                                       ----------  ----------
      Total net deferred tax assets..................      2,313          --

Deferred tax liabilities:
   Intangible assets other than goodwill.............     (2,313)         --
                                                       ----------  ----------
      Total gross deferred tax liabilities...........     (2,313)         --
                                                       ----------  ----------
                                                        $     --    $     --
                                                       ==========  ==========


     Because of the Company's  lack of earnings  history,  the deferred tax
assets have been fully offset by a 100% valuation allowance.  The valuation
allowance for deferred tax assets was $31.9 million and $14.3 million as of
December  31,  1999 and  1998,  respectively.  The net  change in the total
valuation allowance was $17.6 million and $12.3 million for the years ended
December 31, 1999 and 1998, 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 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 $31.9 million,
subsequently recognized tax benefits, if any, in the amount of $5.8 million
will be applied directly to contributed capital.

     At December 31, 1999, the Company had net operating loss carryforwards
available for US and foreign tax purposes of $69.5 million and $1.0 million
respectively. These carryforwards expire through 2019.

     Under  Section 382 of the Internal  Revenue  Code of 1986,  as amended
(the "Code"),  the utilization of net operating loss  carryforwards  may be
limited under the change in stock  ownership rules of the Code. As a result
of  ownership  changes  which  occurred  in August  1997 and May 1999,  the
Company's operating tax loss carryforwards and tax credit carryforwards are
subject to these limitations.

(5)  STOCKHOLDERS' EQUITY

     Authorized Shares

     In July 1998,  the Company  amended and  restated its  certificate  of
incorporation. As a result, the total number of shares which the Company is
authorized to issue is 103,000,000 shares:  100,000,000 of these shares are
Common Stock,  each having a par value of $0.001;  and 3,000,000 shares are
Preferred Stock, each having a par value of $0.001.

                                    60
<PAGE>

     Common Stock

     On November  14,  1998,  the  Company  completed  its  initial  public
offering and  concurrent  offering  ("the  offerings")  directly to certain
investors  in which it sold  6,963,334  shares of Common  Stock,  including
763,334  shares  in  connection  with  the  exercise  of the  underwriters'
over-allotment  option,  at  $4.50  per  share.  Upon  the  closing  of the
offerings, all of the Company's preferred stock, par value $0.001 per share
(the  "Preferred  Stock")  automatically  converted  into an  aggregate  of
10,947,470  shares of Common Stock. Net proceeds from the offerings,  after
underwriting and placement agent fees of $2.0 million and offering costs of
$2.0 million, were $27.3 million.

     In May 1999,  the Company  completed a  secondary  public  offering of
3,500,000  shares of its Common  Stock at an  offering  price of $20.00 per
share.  Net  proceeds  to the  Company  amounted  to $65.0  million,  after
underwriting discounts and offering costs of $3.5 million and $1.5 million,
respectively.

     The  Company  issued  shares of Common  Stock in  connection  with the
acquisitions  of  factorymall,  Attitude  and the  web  hosting  assets  of
Webjump.  The shares issued in connection with these transactions  amounted
to 687,832, 1,570,922 and 1,104,972, respectively. Additional shares may be
issued in connection  with the  acquisition  of the Webjump  assets pending
attainment of certain performance goals by November 2000.

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

     Stock Split

     On May 14,  1999,  the Company  effected a 2-for-1  stock split to all
shareholders  of  record  as of  May 3,  1999.  All  share  and  per  share
information in the accompanying  consolidated financial statements has been
retroactively restated to reflect the effect of the stock split.

     Convertible Preferred Stock

     In April  1997,  the  Company  amended  the Series C  Preferred  Stock
agreement  in order to extend the private  placement  of Series C Preferred
Stock to April 15, 1997. In  connection  with this private  placement,  the
Company issued an additional  140,000 shares of Series C Preferred Stock at
$2.00 per share for an aggregate price of $280,000 in 1997.

     In August 1997, the Company  authorized and issued 51 shares of Series
D Preferred Stock for an aggregate cash amount of $20,000,000 in connection
with the investment by Dancing Bear Investments, Inc., an entity controlled
by the  Chairman,  which holds a majority  interest in the  Company.  These
shares constituted 51% of the fully diluted capital stock of the Company at
the time of  exercise,  as  defined.  In addition to the Series D Preferred
Stock, Dancing Bear Investments, Inc. also received warrants which provided
the right to purchase up to 10 shares of Series E Preferred  Stock ("Series
E Warrants")  representing  10% of the fully  diluted  capital stock of the
Company  at the  time  of  exercise  for an  aggregate  purchase  price  of
$5,882,353,  if exercised  in total.  In  connection  with the Dancing Bear
investment,  two officers and shareholders of the Company received $500,000
each as signing  bonuses in connection  with their  employment  agreements.
Such amounts were  accrued for at that time and were  subsequently  paid in
the first quarter of 1998.

     As of December  31, 1997,  the Company had five series of  Convertible
Preferred Stock  (collectively  "Preferred Stock") authorized of which only
four of the series were  outstanding.  The holders of the various series of
Preferred Stock  generally have the same rights and privileges.  Each class
of the Company's  Preferred  Stock is  convertible  into Common  Stock,  as
defined  below,  and has rights and  preferences  which are generally  more
senior to the  Company's  Common Stock and are more fully  described in the
Company's amended and restated certificate of incorporation.

                                    61
<PAGE>

     The  conversion  rate of the  Series A, B and C  Preferred  Stock,  as
defined in the  original  private  placement  agreements  was the  quotient
obtained by dividing the  applicable  series'  original  issue price by the
applicable   series'   conversion  price.  The  original  issue  price  and
conversion  price was $0.10 per share for  Series A,  $0.525  per share for
Series B and $2.00 per share for Series C, as  determined  by  negotiations
among  the  parties.  Each  share of  Series D and E  Preferred  Stock  was
convertible  into an amount of common  representing 1% of the fully diluted
capital stock, as defined in the original private placement agreement. Such
conversion features were determined by negotiations among the parties.

     In the event of any voluntary or involuntary liquidation,  dissolution
or winding up of the Company,  as defined, on a pari passu basis, an amount
equal to $0.10 per share for Series A, $0.525 per share for Series B, $2.00
per share for Series C,  $392,156.86 per share for Series D and $588,235.30
per share  for  Series E,  would be paid out of the  assets of the  Company
available for  distribution  before any such payments  would be made on any
shares of the  Company's  common  shares or any other  capital stock of the
Company  other  than the  Preferred  Stock,  plus any  declared  but unpaid
dividends.

     Upon  consummation  of  the  initial  public  offerings,  all  of  the
Company's  outstanding Preferred Stock was converted into 10,947,470 shares
of Common Stock.

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

     Warrants

     In connection with the  acquisitions of factorymall and Attitude,  the
Company  assumed  warrants to purchase  18,810 and 46,706  shares of Common
Stock,  respectively.  These  warrants  are  immediately  exercisable  at a
weighted average exercise price of $9.16.

(6)  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.  Under the Amended Plan,  the Board of Directors may issue  incentive
stock  options or  nonqualified  stock  options to purchase up to 1,332,000
common shares.  Incentive  stock options must be granted at the fair market
value of the Company's Common Stock at the date the option is issued.

     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. A committee  selected by the Company's
Board of Directors has the authority to approve  optionees and the terms of
the stock  options  granted,  including  the option  price and the  vesting
terms.  Options  granted  under the Amended  Plan  expire  after a ten year
period.  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.

     In  connection  with the  Dancing  Bear  Investments  investment,  the
Company reserved an additional  250,000 shares of Common Stock for issuance
upon the  exercise of options to be granted in the future under the Amended
Plan.

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

                                    62
<PAGE>

Plan  provides  for the grant of  "incentive  stock  options"  intended  to
qualify  under  Section 422 of the Code and stock  options  which do not so
qualify.  The granting of incentive  stock options is subject to limitation
as  set  forth  in  the  1998  Plan.  Directors,  officers,  employees  and
consultants  of the Company and its  subsidiaries  are  eligible to receive
grants under the 1998 Plan. A committee  selected by the Company's Board of
Directors has the authority to approve optionees and the terms of the stock
options granted,  including the option price and the vesting terms. Options
granted  under the 1998 Plan expire after a ten year period and are subject
to the acceleration of vesting upon the occurrence of certain events.

     The Company  applies APB Opinion No. 25 in accounting  for its Amended
Plan and 1998 Plan and, accordingly,  compensation cost of $66,000, $66,000
and $28,000 has been  recognized  for stock  options  granted to  employees
below  fair  market  value in 1999,  1998 and  1997,  respectively,  in the
accompanying   consolidated   financial   statements.   Compensation   cost
recognized in connection  with stock options granted to  non-employees  was
$55,000 for the year ended  December 31, 1999.  There were no stock options
granted to non-employees, other than directors, during 1998 and 1997.

     The Company  applies APB No. 25 in  accounting  for its stock  options
granted to employees  and  accordingly,  no  compensation  expense has been
recognized  in the  consolidated  financial  statements  (except  for those
options issued with exercise  prices less than fair market value at date of
grant). 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:

                                              1999        1998        1997
                                           ----------  ----------  ----------
                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)

Net loss -- as reported................      $49,601     $16,046     $ 3,584
                                           ==========  ==========  ==========
Net loss -- pro forma..................      $61,071     $21,290     $ 3,621
                                           ==========  ==========  ==========
Basic net loss per common share--
  as reported..........................      $ (2.00)    $ (3.37)    $ (1.56)
                                           ==========  ==========  ==========
Basic net loss per common share--
  pro forma............................      $ (2.46)    $ (4.47)    $ (1.58)
                                           ==========  ==========  ==========


     The per share  weighted-average  fair value of stock  options  granted
during 1999, 1998 and 1997 was $13.85,  $4.02 and $0.16,  respectively,  on
the  date of grant  using  the  option-pricing  method  with the  following
weighted-average  assumptions:  1999--risk-free interest rate 5.14%, and an
expected  life of four years,  and a  volatility  of 111%;  1998--risk-free
interest rate 5.00%,  and an expected life of four years,  and a volatility
of 150%; 1997--risk-free interest rate 6.00%, and an expected life of three
years.  As permitted under the provisions of SFAS No. 123, and based on the
historical  lack of a public market for the Company's  units, no factor for
volatility has been reflected in the option pricing calculation for 1997.

                                    63
<PAGE>

     Stock option activity during the periods indicated is as follows:

                                                                    WEIGHTED
                                                                     AVERAGE
                                                         OPTIONS    EXERCISE
                                                         GRANTED     PRICE
                                                       ----------  ----------
Outstanding at December 31, 1996.....................    684,098      $ 0.03
Granted..............................................    823,402      $ 0.37
Exercised............................................    (58,542)     $ 0.08
Canceled.............................................     (5,000)     $ 0.41
                                                       ----------
Outstanding at December 31, 1997.....................  1,443,958      $ 0.22
Granted..............................................  1,835,100      $ 4.51
Exercised............................................   (405,166)     $ 0.63
Canceled.............................................    (43,650)     $ 0.39
                                                       ----------
Outstanding at December 31, 1998.....................  2,830,242      $ 2.93
Granted..............................................  1,823,300      $16.32
Assumed in connection with acquisitions..............    522,885      $24.80
Exercised............................................   (175,480)     $ 2.38
Canceled.............................................   (699,060)     $22.83
                                                       ----------
Outstanding at December 31, 1999.....................  4,301,887      $ 8.06
                                                       ==========     =====
Vested at December 31, 1997..........................    795,966
                                                       ==========
Vested at December 31, 1998..........................    694,346
                                                       ==========
Vested at December 31, 1999..........................  2,335,447
                                                       ==========
Options available at December 31, 1999...............    563,740
                                                       ==========


     The following table summarizes information about stock options
outstanding at December 31, 1999:

<TABLE>
<CAPTION>
                                    Options Outstanding                      Options Exercisable
                  ---------------------------------------------------  ---------------------------
                                         Weighted
                                          Average
                                         Remaining
                                        Contractual        Weighted                     Weighted
     Range of            Number            Life            Average        Number        Average
  Exercise Price      Outstanding         (years)       Exercise Price  Outstanding  Exercise Price
------------------ ----------------  ------------------ --------------  -----------  --------------
<S>                      <C>                 <C>            <C>            <C>            <C>
   $.01 - $.01           125,000             5.9            $ 0.01         125,000       $ 0.01
   $.05 - $.05            71,612             5.9            $ 0.05          69,612       $ 0.05
   $.20 - $.20            73,278             6.9            $ 0.20          68,478       $ 0.20
   $.35 - $.41           663,504             7.3            $ 0.36         640,304       $ 0.36
  $1.39 - $1.39           62,634             8.0            $ 1.39           6,299       $ 1.39
  $2.30 - $2.30            2,000             8.3            $ 2.30             400       $ 2.30
  $3.83 - $4.95        1,589,898             8.6            $ 4.41         955,085       $ 4.47
  $5.99 - $5.99           11,677             6.5            $ 5.99          11,677       $ 5.99
  $9.38 - $13.88         489,452             8.8            $10.87          72,052       $10.65
 $14.18 - $20.22       1,022,585             9.2            $16.56         371,712       $15.75
 $21.41 - $31.90         145,955             8.9            $23.76          14,536       $22.30
 $32.88 - $34.26          44,292             9.3            $33.73             292       $34.26
-----------------      ---------             ---            ------       ---------       ------
  $.01 - $34.26        4,301,887             8.4            $ 8.06       2,335,447       $ 4.94
=================      =========             ===            ======       =========       ======
</TABLE>

(7)  EMPLOYEE STOCK PURCHASE PLAN

     The Company's Employee Stock Purchase Plan ("ESPP") was adopted by the
Board of  Directors  in  February  1999 and  subsequently  approved  by the
Company's  stockholders in June 1999. The ESPP provides eligible  employees
of the Company the opportunity to apply a portion of their  compensation to
the  purchase of shares of the Company at a 15%  discount.  The Company has
reserved 400,000  authorized  shares of Common Stock for issuance under the
ESPP. As of December 31, 1999, the Company had issued  approximately  7,200
shares in

                                    64
<PAGE>

connection with the ESPP.

(8)  NON-RECURRING CHARGE

     The Company recorded a non-cash,  non-recurring charge of $1.4 million
to earnings in the third quarter of 1998 in connection with the transfer of
Series E Warrants to acquire 450,000 shares of Common Stock by Dancing Bear
Investments,  Inc.  (the  Company's  principal  shareholder  at the date of
transfer)  to certain  officers of the  Company,  at an  exercise  price of
approximately  $1.45 per share. The Company  accounted for such transaction
as if it were a compensatory plan adopted by the Company. Accordingly, such
amount was recorded as a non-cash,  non-recurring  compensation  expense in
the  Company's  statement  of  operations  for  services  provided  by such
officers to the Company with an offsetting  increase to additional  paid-in
capital.  The amount of the  non-cash  charge  was based on the  difference
between the fair market value at the time of the transfer ($4.50 per share)
and the exercise price per warrant of approximately $1.45 per share.

(9)  EXTRAORDINARY ITEM-GAIN ON EARLY RETIREMENT OF DEBT

     In connection with the acquisition of Attitude,  the Company assumed a
non-interest bearing obligation, payable over 17 years, ("happypuppy note")
to the former owner of the happypuppy.com website ("happypuppy"), an online
property acquired by Attitude prior to its acquisition by the Company.  The
net present value of the happypuppy  note as of the date of acquisition was
approximately  $2.7  million.  In  October  1999,  in  connection  with the
settlement of certain  litigation  between the Company and the former owner
of happypuppy,  the Company made a lump sum payment of  approximately  $1.4
million to the former owner of  happypuppy.  The $1.4  million  represented
full  repayment of the happypuppy  note. At the time of repayment,  the net
present  value of the  happypuppy  note  was  approximately  $2.8  million.
Accordingly,  the Company  recognized an extraordinary gain of $1.4 million
on the early retirement of long-term debt.

(10) COMMITMENTS & CONTINGENCIES

     (a)  Operating Leases

     The Company has several non-cancelable  leases,  primarily relating to
the  rental of certain  facilities  and  equipment.  Future  minimum  lease
payments, by year and in the aggregate, under operating leases with initial
or  remaining  terms in excess of one year  consisted  of the  following at
December 31, 1999:

YEAR ENDED DECEMBER 31,                                          AMOUNT
----------------------                                        -----------
2000.......................................................   $ 2,152,240
2001.......................................................     1,781,732
2002.......................................................     1,560,165
2003.......................................................     1,515,649
2004 and thereafter........................................    16,057,667
                                                              -----------
     Total minimum lease payments..........................   $23,067,453
                                                              ===========


     Rent expense under  operating  leases  amounted to $2.4 million,  $0.4
million and $0.1 million for the years ended  December  31, 1999,  1998 and
1997, respectively.

     (b)  Capital Leases

     The Company has non-cancelable capital leases relating to the lease of
certain  property  and  equipment.  The  Company's  lease  obligations  are
collateralized  by Certificates of Deposit and interest bearing accounts at
December  31,  1999.  Future  minimum  lease  payments,  by year and in the
aggregate, under capital leases with initial or remaining terms

                                    65
<PAGE>

in excess of one year consisted of the following at December 31, 1999:

                                                                  CAPITAL
   YEAR ENDED DECEMBER 31,                                        LEASES
   ----------------------                                       ----------
   2000......................................................   $2,375,259
   2001......................................................    2,096,319
   2002......................................................      390,480
   2003......................................................        1,703
   2004 and thereafter.......................................           --
                                                                ----------
         Total minimum lease payments........................    4,863,761
   Less amount representing interest (at rates ranging
     from 10.5% to 19.9%)....................................      705,884
                                                                ----------
   Present value of minimum capital lease payments...........    4,157,877
   Less current installments of obligation under capital
     leases.................................................     1,956,982
                                                                ----------
   Obligations under capital leases, excluding current
     installments...........................................    $2,200,895
                                                                ==========

     (c)  Employment Agreements

     The  Company  maintains  employment  agreements,  expiring  at various
intervals from 2000 through 2003,  with four  executive  officers and eight
employees of the Company.  The  employment  agreements  provide for minimum
salary levels,  incentive compensation and severance benefits,  among other
items.

     (d)  Litigation

     On July 1, 1999, the Company filed a complaint in Supreme Court of the
State  of  New  York,   County  of  New  York.  The  lawsuit  alleges  that
Stockplayer.com,  Inc.  breached  advertising  service  agreements with the
Company  by  failing  to pay  for  advertising  services  performed  by the
Company. On August 13, 1999, Stockplayer.com, Inc. filed its answer denying
that it breached these  advertising  services  agreements.  The answer also
alleges that the Company breached alleged express and implied warranties in
connection   with   certain   information   provided   by  the  Company  to
Stockplayer.com.  Stockplayer.com  alleges  that it has been  damaged in an
amount  not less  than  $5,000,000.  Based  on our  analysis,  the  Company
believes that these  allegations  are without merit and plans to vigorously
defend these  allegations.  The Company  believes  that it is unlikely that
this  claim  will  have  a  material   adverse   effect  on  the  Company's
consolidated financial condition or results of operations.

     From time to time the Company has been named in other  claims  arising
in the  ordinary  course of  business.  In the opinion of  management,  the
ultimate  disposition  of these  matters  will not have a material  adverse
effect  on  the  Company's  consolidated  financial  position,  results  of
operations or liquidity.

(11) RELATED PARTY TRANSACTIONS

     Certain  officers and  directors of the Company also serve as officers
and directors of Dancing Bear Investments, Inc.

     In 1998, the Company entered into an electronic commerce contract with
AutoNation,  Inc.  ("AutoNation"),  (formerly  doing  business  as Republic
Industries),  an entity affiliated with a Director of the Company, pursuant
to which the Company granted a right of first  negotiation  with respect to
the  exclusive  right to engage in or conduct an  automotive  "clubsite" on
theglobe website through  AutoNation.  Additionally,  AutoNation  agreed to
purchase  advertising  from the Company for a three-year  period at a price
which  adjusted to match any more favorable  advertising  price quoted to a
third party by the Company, excluding certain short-term advertising rates.
For the years  ended  December  31, 1999 and 1998,  the Company  recognized
revenue of $0.3 million and $0.1 million,  respectively, in connection with
the AutoNation agreement.

     Additionally in 1998, the Company entered into an electronic  commerce
arrangement with InteleTravel,  an entity controlled by the Chairman of the
Company, whereby the Company agreed to develop a web community for

                                    66
<PAGE>

InteleTravel  in order for its travel  agents to conduct  business  through
theglobe in exchange for access to InteleTravel  customers for distribution
of the  Company's  products and services.  For the year ended  December 31,
1999, the Company recognized revenue of $0.3 million in connection with the
InteleTravel agreement.  There was no revenue recognized for the year ended
December 31, 1998.

     In  1999,  the  Company  entered  into  a  community   agreement  with
ClikVacations.com  Inc.,  an  entity  controlled  by  the  Chairman  of the
Company,  whereby  the  Company  agreed to co-brand  certain  products  and
services of theglobe for use on the  Clik.com  website.  Additionally,  the
Company  agreed  to  sell  all  advertising   inventory  related  to  these
co-branded  products  and  services  in  exchange  for a portion of the net
advertising  sales.  The  Company  recognized  revenue  of $0.1  million in
connection with the ClikVacations.com agreement for the year ended December
31, 1999.

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

(12) SUBSEQUENT EVENTS-UNAUDITED

     (a)  Resignation of Co-Chief Executive Officers

     In January 2000, the Co-Chief  Executive Officers announced they would
be resigning their positions as Co-Chief Executive Officers of the Company,
effective  upon the hiring of a new Chief  Executive  Officer.  The Company
anticipates  the  hiring of a new Chief  Executive  Officer  by the  second
quarter of 2000.

     (b)  2000 Broad Based Employee Stock Option Plan

     In February 2000, the Board of Directors  adopted the 2000 Broad Based
Employee Stock Option Plan (the

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<PAGE>

"2000 Plan"). The 2000 Plan authorized the issuance of 850,000 nonqualified
stock  options as  provided in section 422 of the  Internal  Revenue  Code.
Nonqualified stock options under the 2000 Plan may be granted to directors,
officers,  other  employees,  consultants and advisors of the Company.  The
2000 Plan  requires  that the majority of the stock  options  issued are to
non-management  employees.  A committee  selected by the Company's Board of
Directors has the authority to approve optionees and the terms of the stock
options granted,  including the option price and the vesting terms. Options
granted  under the 2000 Plan expire after a ten year period and are subject
to the acceleration of vesting upon the occurrence of certain events. As of
March 2000, the Company had approximately 400,000 stock options outstanding
under the 2000 Plan.

     (c)  Acquisition of Chips & Bits, Inc. and Strategy Plus, Inc.

     On February  24, 2000,  CB  Acquisition  Corp.  ("CB Merger  Sub"),  a
Vermont  corporation  and a wholly-owned  subsidiary of theglobe was merged
with and into Chips & Bits, Inc., a Vermont  corporation  ("Chips & Bits"),
with Chips & Bits as the surviving  corporation (the "CB Merger").  Also on
February  24, 2000,  SP  Acquisition  Corp.  ("SP Merger  Sub"),  a Vermont
corporation and a wholly-owned  subsidiary of theglobe, was merged with and
into Strategy Plus, Inc., a Vermont  corporation  ("Strategy  Plus"),  with
Strategy Plus as the surviving  corporation  (together  with the CB Merger,
the "Mergers"). The Mergers were effected pursuant to an Agreement and Plan
of Merger  dated as of January  13, 2000 by and among  theglobe,  CB Merger
Sub, SP Merger Sub, Chips & Bits,  Strategy Plus, Yale Brozen and Christina
Brozen (the "Merger Agreement").  As a result of the Mergers,  both Chips &
Bits and Strategy Plus became wholly-owned subsidiaries of theglobe.

     The total purchase price of this  transaction  was $15.3 million.  The
consideration  paid by the Company  consisted  of  1,885,125  shares of the
Company's  Common Stock,  valued at $14.9  million,  and $0.3  million.  In
addition, the Company assumed certain bonus obligations of Chips & Bits and
Strategy Plus triggered in connection with the Mergers that resulted in the
issuance  of 18,852  shares of the Common  Stock,  valued at $0.1  million,
which has been included as part of the purchase  price  consideration.  The
Company has also incurred  preliminary  acquisition  costs of approximately
$0.2 million.  An additional payment of $1.3 million in newly issued shares
of Common Stock is contingent  upon the  attainment of certain  performance
targets by Chips & Bits and Strategy Plus during the 2000 fiscal year.

     This  transaction  will be accounted for under the purchase  method of
accounting and the difference  between the purchase price and the estimated
fair  value of the  acquired  assets  and  liabilities  of Chips & Bits and
Strategy Plus will be recorded as goodwill and other intangible assets. The
goodwill and other  intangible  assets will be  amortized  over a estimated
useful life of three years, the expected period of benefit.

     (e)  Sportsline.com, Inc. Partnership

     In February  2000,  the Company  entered into a strategic  partnership
with  Sportsline.com,   Inc.  ("Sportsline"),   whereby  the  Company  will
exclusively  develop  and operate  community  solutions  on the  Sportsline
website.  Under  the  terms of the  agreement,  Sportsline  will  receive a
minimum  guarantee of $5.0 million,  payable in the Company's Common Stock.
The total shares of Common Stock issued in  connection  with the  agreement
was 699,281.  Sportsline will receive  additional  compensation in stock or
cash,  based upon the achievement of certain  performance  goals throughout
the term of the agreement. Additionally, the Company receives the exclusive
right to sell advertising,  sponsorships and non-sports  related e-commerce
within the Sportsline community area.

ITEM 9.   CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS AND ACCOUNTING
          AND FINANCIAL DISCLOSURE

     None.

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<PAGE>

                                  PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information   called  for  by  Part  III,   Item  10,   regarding  the
Registrant's  directors is included in the our Proxy Statement  relating to
our  annual  meeting  of  stockholders  to be  held in  June  2000,  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, 1999, the Company's year end.

ITEM 11.  EXECUTIVE COMPENSATION

     Information  called for by Part III,  Item 11, is  included in the our
Proxy  Statement  relating to the our annual meeting of  stockholders to be
held in June 2000, 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, 1999, the
Company's year end.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information  called for by Part III,  Item 12, is  included in the our
Proxy  Statement  relating to the our annual meeting of  stockholders to be
held in June 2000, 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,
1999, the Company's year end.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information  regarding our relationships  and related  transactions is
available under "Certain  Transactions" in our Proxy Statement  relating to
our  annual  meeting  of  stockholders  to be  held in  June  2000,  and is
incorporated herein by reference.  The Proxy Statement will be filed within
120 days of December 31, 1999, the Company's year end.


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<PAGE>


                                  PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K


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

     (1)  Financial  Statements:   See  Index  to  Consolidated   Financial
          Statements at Item 8 on page 38 of this report.

     (2)  Financial Statement Schedule: See Index to Consolidated Financial
          Statements at Item 8 on page 38 of this report.

     (3)  EXHIBITS

     The following Exhibits are attached hereto and incorporated  herein by
     reference:

          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**

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

          2.3    Agreement of Purchase and Sale as dated  November 30, 1999
                 by and among  theglobe.com,  inc., Jump  Acquisition  LLC,
                 Infonent.com, Inc. and certain stockholders thereof****

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

          3.1    Form  of  Fourth  Amended  and  Restated   Certificate  of
                 Incorporation of the Company*

          3.2    Form of By-Laws of the Company*

          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*

          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********

          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*******

          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*******

          4.5    Registration  Rights  Agreement,  dated as of September 1,
                 1998********

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

          4.7    Specimen  certificate  representing shares of Common Stock
                 of the Company*

          4.8    Amended and Restated  Warrant to Acquire  Shares of Common
                 Stock*

          4.9    Form of Rights  Agreement,  by and between the Company and
                 American Stock Transfer & Trust Company as Rights Agent*

          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********

          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*******

          4.12   Registration   Rights  Agreement  among  the  Company  and
                 certain shareholders of the Company,  dated April 9, 1999,
                 in connection  with the  acquisition of Attitude  Network,
                 Ltd*******

          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 Infonet.com, Inc.

          4.14   Registration   Rights  Agreement  among  the  Company  and
                 certain  shareholders  of the Company,  dated February 22,
                 1999, in connection  with the acquisition of Chips & Bits,
                 Inc. and Strategy Plus, Inc.

          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***

          10.1   Employment Agreement dated August 13, 1997, by and between
                 the Company and Todd V. Krizelman*

          10.2   Employment Agreement dated August 13, 1997, by and between
                 the Company and Stephan J. Paternot*

          10.3   Employment  Agreement  dated July 13, 1998, by and between
                 the Company and Francis T. Joyce*

          10.4   Form of Indemnification  Agreement between the Company and
                 each of its Directors and Executive Officers*


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<PAGE>

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

          10.6   200 Broad Based Stock Option Plan

          10.7   1998 Stock Option Plan, as amended*******

          10.8   1995 Stock Option Plan*

          10.9   factorymall.com,inc. 1998 Stock Option Plan******

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

          10.11  Attitude Network, Ltd. Stock Option Plan*******

          10.12  Form of Employee Stock Purchase Plan********

          10.13  License   Agreement   between   the   Company  and  Engage
                 Technologies, Inc. dated October 31, 1998********

          10.14  Employment Agreement dated August 31, 1998, by and between
                 the Company and Dean Daniels*

          10.15  Data Center Space Lease  between  Telehouse  International
                 Corporation  of America and the Company,  dated August 24,
                 1998*

          23.1   Consent of KPMG LLP

          27.1   Financial Data Schedule

          99.1   Valuation and Qualifying Accounts

(b)  REPORTS ON FORM 8-K

     On October 20, 1999, we filed a Form 8-K/A under Item 2 and 7 amending
the original Form 8-K filed on April 9, 1999  regarding  the  completion of
the acquisition of Attitude Network, Ltd.

     On October 20,  1999,  we filed a Form 8-K/A under Item 7 amending the
original Form 8-K filed on February 1, 1999 and an amended Form 8-K/A filed
on  April  1,  1999  regarding  the   completion  of  the   acquisition  of
factorymall.com.

     On November 30, 1999, we filed a Form 8-K under Item 2 and 7 regarding
the acquisition of the web hosting assets of Webjump.com from Infonent.com,
Inc.

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

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<PAGE>

       * Incorporated by reference from our registration statement on Form
         S-1 (Registration No. 333-59751).
      ** Incorporated by reference from our report on Form 8-K filed on
         February 16, 1999.
     *** Incorporated by reference from our report on Form 8-K filed on
         April 9, 1999.
    **** Incorporated by reference from our report on Form 8-K filed on
         November 30, 1999.
   ***** Incorporated by reference from our report on Form 8-K filed on
         February 24, 2000.
  ****** Incorporated by reference from our Registration of Form S-8 (No.
         333-75503), filed on April 1, 1999.
 ******* Incorporated by reference from our registration statement on Form
         S-1 (Registration No. 333-76153).
******** Incorporated by reference on our Report Form 10-K filed March 1999.
       + Confidential treatment granted as to parts of this document.
      ++ Confidential treatment requested.



                                    72
<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, 2000                   theglobe.com, inc.

                                         By /s/ Todd V. Krizelman
                                            -------------------------------
                                            TODD V. KRIZELMAN
                                            CO-CHIEF EXECUTIVE OFFICER

     Pursuant to the  requirements  of the  Securities  and Exchange Act of
1934, this report has been signed below by the following  persons on behalf
of the Registrant  and in the capacities  indicated this 30th day of March,
2000.

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


      /s/ Todd V. Krizelman       Co-Chief Executive Officer and Director
     -------------------------
          TODD V. KRIZELMAN


      /s/ Stephan J. Paternot     Co-Chief Executive Officer, Secretary
     -------------------------    and Director
          STEPHAN J. PATERNOT


      /s/ Dean S. Daniels         President and Chief Operating Officer
     -------------------------
          DEAN S. DANIELS


      /s/ Francis T. Joyce        Vice President and Chief Financial
     -------------------------    Officer (Chief Accounting Officer)
          FRANCIS T. JOYCE


      /s/ Edward A. Cespedes      Vice President of Corporate
     -------------------------    Development and Director
          EDWARD A. CESPEDES


      /s/ Rosalie V. Arthur       Director
     -------------------------
          ROSALIE V. ARTHUR


      /s/ Henry C. Duques         Director
     -------------------------
          HENRY C. DUQUES


      /s/ Robert M. Halperin      Director
     -------------------------
          ROBERT M. HALPERIN


      /s/ H. Wayne Huizenga       Director
     -------------------------
          H. WAYNE HUIZENGA


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