AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY ___, 2004

                                                     Registration No. 333-114556


                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                          AMENDMENT NO. 2 TO FORM SB-2


                             REGISTRATION STATEMENT
                                    UNDER THE
                             SECURITIES ACT OF 1933

                               THEGLOBE.COM, INC.
                 (Name of small business issuer in its charter)

                        110 EAST BROWARD BLVD, SUITE 1400
                            FT. LAUDERDALE, FL 33301
                                 (954) 769-5900
          (Address and telephone number of principal executive offices)


Name, address and telephone number of    Copies of all communications to:
agent for service:

EDWARD A. CESPEDES, PRESIDENT            DONALD E. THOMPSON, II, ESQ.
110 EAST BROWARD BOULEVARD               PROSKAUER ROSE LLP
SUITE 1400                               2255 GLADES ROAD, SUITE 340W
FT. LAUDERDALE, FLORIDA  33301           BOCA RATON, FLORIDA  33431
(954) 769-5900                           TEL (561) 241-7400 - FAX (561) 241-7145


Approximate  date of proposed sale to the public:  As soon as practicable  after
the effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act  registration  number of the earlier  effective  registration
statement for the same offering. [ ]

If this Form is a  post-effective  amendment filed pursuant to Rule 462(c) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [ ]

If this Form is a  post-effective  amendment filed pursuant to Rule 462(d) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration number of the earlier effective registration statement for the same
offering. [ ]

If delivery  of the  prospectus  is  expected  to be made  pursuant to Rule 434,
please check the following box. [ ]




                         CALCULATION OF REGISTRATION FEE
                                                                  Proposed           Proposed
        Title of Each                                             Maximum             Maximum        Amount of
     Class of Securities                   Amount to be        Offering Price        Aggregate     Registration
      To be Registered                    Registered (1)      Per Security (2)    Offering Price        Fee
----------------------------------------------------------------------------------------------------------------
                                                                                       
Common stock, par $.001 (3)                 100,598,406             $.92          $ 92,550,534     $  11,726
Common stock, par $.001 (4)                  26,798,534             $.92            24,654,651         3,124
Common stock, par $.001 (5)                   3,000,000             $.92             2,760,000           350
                                           ------------                           ------------     ---------
                                            130,396,940                           $119,965,185     $  15,200(6)
                                           ============                           ============     =========



(1)   This  registration  statement covers any additional shares of common stock
      of  theglobe.com,  inc.  that  become  issuable by reason of (i) any stock
      dividend,  stock split,  recapitalization or any other similar transaction
      without receipt of consideration that results in an increase in the number
      of shares  of our  outstanding  common  stock or (ii) any  changes  in the
      exercise price of certain warrants in accordance with the terms thereof.




(2)   Estimated  solely for the purpose of calculating the  registration  fee in
      accordance  with Rule 457(c) of the  Securities  Act of 1933,  as amended,
      based on the  average of the bid and asked  price for our common  stock on
      the OTC Bulletin Board on April 14, 2004.

(3)   Represents shares of common stock held by the Selling Stockholders.

(4)   Represents   shares  of  common  stock   issuable  upon  the  exercise  of
      outstanding warrants and other rights.


(5)   Represents  shares of common  stock  which  may be  issuable  to a certain
      Selling Stockholder upon the achievement of various earn-out requirements.


(6)   $16,301 was previously  paid in connection  with the initial filing of the
      registration  statement  on  April  16,  2004.  The  Registrant  added  an
      additional  3,000,000 shares to the registration  statement issuable under
      the  circumstances  set  forth in  footnote  (5) above  and  removed  from
      registration  an  aggregate  of  12,445,644  shares  which could have been
      issuable to certain of the Selling Stockholders whom acquired securities
      in the Company's March 2004 private offering,  in the event the Registrant
      does not satisfy its registration obligations to such Stockholders,  for
      a net reduction of 9,445,644 shares.

The registrant hereby amends this  registration  statement on such date or dates
as may be necessary to delay its effective date until the registrant  shall file
a further amendment which specifically  states that this registration  statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities Act of 1933, or until the registration shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may determine.


--------------------------------------------------------------------------------
Preliminary  Note: This Amendment No. 2 is filed to provide  complete  conformed
signature pages, and the conformed signature page to Exhibit 5.1, which complete
conformed signature pages were inadvertently omitted from Amendment No. 1
--------------------------------------------------------------------------------





                      SUBJECT TO COMPLETION MAY ____, 2004

The  information in this  prospectus is not complete and may be changed.  We may
not sell  these  securities  until the  registration  statement  filed  with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to  sell  these  securities  and it is not  soliciting  an  offer  to buy  these
securities in any state where the offer or sale is not permitted.

PROSPECTUS

                              [THEGLOBE.COM LOGO]


                    Up to 130,396,940 Shares of Common Stock

This offering relates to the resale of an aggregate of up to 130,396,940  shares
of the common stock, $.001 par value (the "Common Stock"), of theglobe.com, inc.
by persons who are referred to in this prospectus as "Selling Stockholders". The
shares that may be resold pursuant to this prospectus include 100,598,406 shares
of Common Stock owned by the Selling  Stockholders,  26,798,534 shares of Common
Stock issuable upon the exercise of warrants  owned by the Selling  Stockholders
and  3,000,000  shares of Common Stock which may be issued to one of our Selling
Stockholders  upon the attainment of certain  business goals.  Our filing of the
registration statement of which this prospectus is a part is intended to satisfy
our  obligations to certain of the Selling  Stockholders  to register for resale
the shares issued to them and the shares  issuable upon exercise of the warrants
issued to them.


We are not offering or selling any shares of our Common  Stock  pursuant to this
prospectus.  We will not receive any proceeds from the sale of the shares by the
Selling Stockholders. We will, however, receive proceeds if Selling Stockholders
pay  cash  to  exercise  some  or all  of  the  warrants  owned  by the  Selling
Stockholders.  We will bear the expenses of the  offering of the shares,  except
that the Selling  Stockholders will pay any applicable  underwriting  discounts,
brokerage  fees  or  commissions  and  transfer  taxes,  as  well  as  fees  and
disbursements of their counsel and advisors.

Our Common Stock is quoted on the  over-the-counter  or OTC Bulletin Board under
the trading  symbol  "TGLO.OB."  On April 14,  2004,  the average of the bid and
asked price of our Common Stock was $.92. The Selling  Stockholders may sell the
shares from time to time in public or private  transactions  occurring on or off
the OTC Bulletin  Board,  at prevailing  market prices or at negotiated  prices.
Sales may be made directly to purchasers or through  brokers or to dealers,  who
are expected to receive customary commissions or discounts.

This  prospectus is a part of a  registration  statement  that we filed with the
Securities and Exchange Commission. You should read both this prospectus and any
related prospectus  supplement  together with additional  information  described
under "Where You Can Find More Information".

All  references  in  this  prospectus  to  "theglobe",  "the  Registrant",  "the
Company,"  "we,"  "us," or "our" mean  theglobe.com,  inc.  and,  as the context
requires, its subsidiaries.

YOU SHOULD  CAREFULLY  CONSIDER  THE "RISK  FACTORS"  BEGINNING ON PAGE 2 BEFORE
MAKING A DECISION TO PURCHASE SHARES OF OUR COMMON STOCK.

NEITHER  THE  SECURITIES  AND  EXCHANGE  COMMISSION  NOR  ANY  STATE  SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS  IS TRUTHFUL OR  COMPLETE.  ANY  REPRESENTATION  TO THE CONTRARY IS A
CRIMINAL OFFENSE.


                 The date of this prospectus is May ___, 2004.





                                TABLE OF CONTENTS

                                                                            Page

PROSPECTUS SUMMARY...........................................................1

RISK FACTORS.................................................................2

FORWARD-LOOKING STATEMENTS..................................................14

USE OF PROCEEDS.............................................................15

DETERMINATION OF OFFERING PRICE.............................................15

SELLING STOCKHOLDERS........................................................15

PLAN OF DISTRIBUTION........................................................22

LEGAL PROCEEDINGS...........................................................23

MANAGEMENT..................................................................24

EXECUTIVE COMPENSATION......................................................26

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................29

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..............31

DESCRIPTION OF SECURITIES...................................................32

VALIDITY OF SECURITIES......................................................38

EXPERTS ....................................................................38

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
         ACT LIABILITIES....................................................38

DESCRIPTION OF BUSINESS.....................................................39

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...................47

DESCRIPTION OF PROPERTY.....................................................55


MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS....................55


CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................58

INDEX TO FINANCIAL STATEMENTS...............................................F-1

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE...........................................59

WHERE YOU CAN FIND MORE INFORMATION.........................................60


You should rely only on the information  contained in this  prospectus.  We have
not authorized anyone to provide you with information  different from that which
is contained in this  prospectus.  This  prospectus may be used only where it is
legal to sell these  securities.  The information in this prospectus may only be
accurate on the date of this  prospectus,  regardless of the time of delivery of
this prospectus or of any sale of securities.


                                       i



                               PROSPECTUS SUMMARY

This summary  highlights key aspects of the information  contained  elsewhere in
this prospectus. This summary does not contain all of the information you should
consider  before  investing  in our  securities.  You  should  read this  entire
prospectus  carefully,  especially  the  risks of  investing  in our  securities
discussed under "Risk Factors."

References to "we," "us," "our company" and  "theglobe"  refer to  theglobe.com,
inc. together with its subsidiaries.

OUR BUSINESS

As of December 31,  2003,  we managed two primary  lines of  business.  One line
consists of our historical  network of three  wholly-owned  businesses,  each of
which  specializes in the games  business by delivering  games  information  and
selling games in the United States and abroad.  These  businesses are: our print
publication   Computer  Games  Magazine;   our  Computer  Games  Online  website
(www.cgonline.com),  which is the online counterpart to Computer Games Magazine;
and our  Chips & Bits,  Inc.  (www.chipsbits.com)  games  distribution  company.
Management  of the Company  continues to actively  explore a number of strategic
alternatives  for our online and offline game properties,  including  continuing
these operations or selling some or all of these properties.

The second line of  business,  which we recently  began,  is our VoIP  telephony
services and includes voiceglo Holdings, Inc., a wholly-owned  subsidiary,  that
offers  VoIP-based phone service.  The term "VoIP",  which means "Voice over the
Internet  Protocol",  refers to a category of hardware and software that enables
people to use the Internet to make phone calls.

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

Described below are certain  significant  transactions  and events regarding our
company which occurred in the last two years.

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

On November 14, 2002, we acquired certain VoIP assets from Brian Fowler (now our
Chief Technology Officer) and we are now pursuing  opportunities related to this
acquisition under the brand name "voiceglo".

On May 28, 2003, we acquired Direct Partner  Telecom,  Inc.  ("DPT").  DPT was a
specialized  international  communications carrier providing VoIP communications
services  to emerging  countries.  We acquired  all of the  physical  assets and
intellectual  property of DPT and originally  planned to continue to operate the
company as a subsidiary  and engage in the  provision of VoIP  services to other
telephony businesses on a wholesale transactional basis. In the first quarter of
2004 we decided to suspend further  wholesale  telephony  business in DPT and to
dedicate the DPT physical and intellectual  assets to our developing retail VoIP
business.

In March 2004,  we completed a private  offering of 333,816 units for a purchase
price of $85 per unit (the "PIPE  Offering").  Each unit consisted of 100 shares
of the Company's  Common Stock,  and warrants to acquire 50 shares of the Common
Stock at an exercise price of $.001 per share. The aggregate number of shares of
Common Stock issued in the PIPE Offering was 33,381,647  shares for an aggregate
consideration  of  $28,374,400,  or  approximately  $0.57 per share assuming the
exercise of the  16,690,824  warrants.  The purpose of the PIPE  Offering was to
raise funds for use primarily in our developing voiceglo business, including the
deployment   of   networks,   website   development,   marketing,   and  capital
infrastructure  expenditures and working capital.  We were obligated to file the
registration statement, of which the prospectus is a part, pursuant to the terms
of PIPE Offering.


                                       1



Our executive  offices are located at 110 East Broward Blvd.,  Suite 1400,  Fort
Lauderdale, Florida 33301. Our telephone number is (954) 769-5900.

THE OFFERING:


Common stock offered by Selling Stockholders               100,598,406 shares
Common stock issuable upon exercise
  of outstanding warrants                                   26,798,534 shares
Common stock issuable upon attainment of certain
  business goals                                             3,000,000 shares

Common stock outstanding:
         Prior to the offering (1)                         132,040,349 shares
         After the offering (2)(3)                         161,838,883 shares


----------------
      (1)   As of April 5, 2004.


      (2)   Assumes  that all  outstanding  warrants  and  rights are earned and
            exercised.

      (3)   Assumes that all 3,000,000 shares which are subject to issuance upon
            attainment of certain business goals are earned and issued


                                  RISK FACTORS

This  offering and an  investment  in our  securities  involves a high degree of
risk. Investors should consider each of the risks and uncertainties described in
this section and all of the other information in this prospectus before deciding
to invest in our common stock. Our business,  financial condition and results of
operations  could be severely harmed by any of the following  risks. The trading
price of our common stock could decline if any of these risks and  uncertainties
develop into actual events.  Investors may lose all or part of the money paid to
buy our common stock.

RISKS RELATING TO OUR BUSINESS GENERALLY

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

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

      o     costs resulting from the operation of our businesses;

      o     costs relating to entering new business lines;

      o     failure to generate sufficient revenue; and

      o     general and administrative expenses.

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

OUR  RECENT  ACQUISITIONS,  AS  WELL AS  POTENTIAL  FUTURE  ACQUISITIONS,  JOINT
VENTURES OR STRATEGIC  TRANSACTIONS ENTAIL NUMEROUS RISKS AND UNCERTAINTIES.  WE
MAY ENTER ADDITIONAL LINES OF BUSINESS.

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

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

      o     diversion of management's  attention and resources from our existing
            businesses;

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

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

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


                                       2



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

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

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

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

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

Our VoIP telephony  services  business and games  properties  are  substantially
dependent upon the continued growth in the general use of the Internet. Internet
and  electronic  commerce  growth  may be  inhibited  for a number  of  reasons,
including:

      o     inadequate network infrastructure;

      o     security and authentication concerns;

      o     inconsistent quality of service;

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

      o     inadequate bandwidth availability.

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

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

      o     increased government regulation;

      o     potential governmental taxation of such services; and


                                       3



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

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

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

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

WE RELY ON INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS.

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

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

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

      o     be time-consuming;


                                       4



      o     result in significant costs;

      o     subject us to significant liability for damages;

      o     result in invalidation of our proprietary rights;

      o     divert management's attention;

      o     cause product release delays; or

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

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

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

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

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

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

OUR QUARTERLY OPERATING RESULTS FLUCTUATE.

Due to our significant change in operations, including the entry into a new line
of business,  our historical  quarterly  operating  results are not  necessarily
reflective  of  future  results.  The  factors  that will  cause  our  quarterly
operating results to fluctuate in the future include:

      o     acquisitions of new businesses or sales of our assets;

      o     declines in the number of sales or technical employees;

      o     the level of traffic on our websites;


                                       5



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

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

      o     overall usage and acceptance of the Internet;

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

      o     other costs relating to the maintenance of our operations;

      o     the restructuring of our business;

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

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

OUR  LIMITED  OPERATING  HISTORY  MAKES  FINANCIAL  FORECASTING  DIFFICULT.  OUR
INEXPERIENCE IN THE INTERNET TELEPHONY BUSINESS WILL MAKE FINANCIAL  FORECASTING
EVEN MORE DIFFICULT.

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

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

      o     attract customers to our VoIP telephony service;

      o     maintain or increase sponsorship revenues for our games magazine;

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

      o     identify, attract, retain and motivate qualified personnel.

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

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

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

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

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

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

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


                                       6



WE DEPEND ON HIGHLY QUALIFIED TECHNICAL AND MANAGERIAL PERSONNEL.

Our future success also depends on our continuing ability to attract, retain and
motivate highly qualified technical expertise and managerial personnel necessary
to operate our businesses. We may need to give retention bonuses and stock
incentives to certain employees to keep them, which can be costly to us. We may
be unable to attract, assimilate or retain highly qualified technical and
managerial personnel in the future. Wages for managerial and technical employees
are increasing and are expected to continue to increase in the future. We have
from time to time in the past experienced, and could continue to experience in
the future if we need to hire any additional personnel, difficulty in hiring and
retaining highly skilled employees with appropriate qualifications. In addition,
we may have difficulty attracting qualified employees due to our restructuring
in 2000 and 2001, financial position and scaling down of operations. Also, we
may have difficulty attracting qualified employees to work in the geographically
remote location in Vermont of Chips & Bits, Inc. and Strategy Plus, Inc. If we
were unable to attract and retain the technical and managerial personnel
necessary to support and grow our businesses, our businesses would likely be
materially and adversely affected.

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

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

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

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

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

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

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

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

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


                                       7



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

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

WE MAY BE EXPOSED TO LIABILITY  FOR PRODUCTS OR SERVICES SOLD OVER THE INTERNET,
INCLUDING PRODUCTS AND SERVICES SOLD BY OTHERS.

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

WE ARE INVOLVED IN SECURITIES CLASS ACTION LITIGATION.

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

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

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


                                       8



RISKS RELATING TO OUR VOICE OVER THE INTERNET BUSINESS

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

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

      o     the identification of market demand for new products;

      o     access to sufficient capital to complete our development efforts;

      o     product and feature selection;

      o     timely implementation of product design and development;

      o     product performance;

      o     cost-effectiveness of products under development;

      o     securing effective manufacturing processes; and

      o     success of promotional efforts.

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

OUR ABILITY AND PLANS TO PROVIDE TELECOMMUNICATION  SERVICES AT ATTRACTIVE RATES
ARISE IN LARGE PART FROM THE FACT VOIP SERVICES ARE NOT CURRENTLY SUBJECT TO THE
SAME REGULATION AS TRADITIONAL TELEPHONY.

Because  their  services  are not  currently  regulated  to the same  extent  as
traditional  telephony,  VoIP providers can currently  avoid paying charges that
traditional  telephone companies must pay. Many traditional  telephone operators
are  lobbying  the  Federal  Communications  Commission  (FCC) and the states to
regulate VoIP on the same or similar basis as  traditional  telephone  services.
The FCC and several states are examining this issue.

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

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

The long distance  telephony market and the Internet telephony market are highly
competitive.  There are several  large and numerous  small  competitors,  and we
expect to face continuing  competition based on price and service offerings from
existing  competitors  and new market  entrants  in the  future.  The  principal
competitive factors in our market include price, quality of service,  breadth of
geographic presence, customer service,  reliability,  network size and capacity,
and the  availability  of  enhanced  communications  services.  Our  competitors
include major and emerging  telecommunications  carriers in the U.S. and abroad.
Financial  difficulties  in the past  several  years of many  telecommunications
providers are rapidly altering the number,  identity and  competitiveness of the
marketplace.  Many of the  competitors  for our current and planned VoIP service
offerings  have  substantially   greater  financial,   technical  and  marketing
resources,  larger  customer bases,  longer  operating  histories,  greater name
recognition and more established  relationships in the industry than we have. As
a result,  certain of these  competitors  may be able to adopt  more  aggressive
pricing policies which could hinder our ability to market our voice services.


                                       9



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

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

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

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

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

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

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


                                       10


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

Circuit-switched  telephony  networks  feature  very  high  reliability,  with a
guaranteed  quality of service.  In addition,  such networks have  imperceptible
delay and consistently  satisfactory audio quality.  Emerging VoIP networks will
not be a viable  alternative to traditional  circuit  switched  telephony unless
they can provide reliability and quality consistent with these standards.

ONLINE CREDIT CARD FRAUD CAN HARM OUR BUSINESS.

The sale of our  products and  services  over the Internet  exposes us to credit
card fraud risks. Many of our products and services, including our voiceglo VoIP
services,  can be ordered or established (in the case of new voiceglo  accounts)
over the  Internet  using a major  credit card for  payment.  As is prevalent in
retail  telecommunications  and Internet Services industries,  we are exposed to
the risk  that some of these  credit  card  accounts  are  stolen  or  otherwise
fraudulently  obtained. In general, we are not able to recover fraudulent credit
card  charges from such  accounts.  In addition to the loss of revenue from such
fraudulent  credit  card  use,  we also  remain  liable to third  parties  whose
products  or  services  are  engaged  by  us  (such  as  termination   fees  due
telecommunications  providers) in connection with the services which we provide.

In addition, depending upon the level of credit card fraud we experience, we may
become  ineligible  to accept  the  credit  cards of  certain  issuers.   We are
currently  authorized  to accept  Discover,  together  with Visa  and MasterCard
(which  are  both   covered   by  a  single   merchant   agreement   with  us).
Visa/MasterCard  constitutes the primary credit  card used by our customers. The
loss of eligibility for acceptance  of Visa/MasterCard  could  significantly and
adversely  affect our business.  We have recently updated our fraud controls and
will  attempt to manage  fraud  risks  through  our  internal  controls  and our
monitoring  and blocking  systems.  If those efforts are not  successful,  fraud
could cause our revenue to decline  significantly  and our  business,  financial
condition and results of operations to be materially and adversely affected.

RISKS RELATING TO OUR HISTORICAL BUSINESS

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

Our  subsidiary,  Chips & Bits,  Inc.  depends on major releases in the Personal
Computer (PC) market for the majority of sales and profits.  The game industry's
focus on X-Box,  Playstation and GameCube has dramatically reduced the number of
major PC releases,  which resulted in significant declines in revenues and gross
margins  for Chips & Bits.  Gross  margins for Chips & Bits were 24% and 23% for
the years ended December 31, 2003 and 2002,  respectively.  Because of the large
installed base of personal computers, these revenue and gross margin percentages
may  fluctuate  with  changes in the PC game market.  However,  we are unable to
predict when, if ever, there will be a turnaround in the PC game market.

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

WE HAVE  HISTORICALLY  RELIED  SUBSTANTIALLY  ON ONLINE  AND  PRINT  ADVERTISING
REVENUES. THE ONLINE AND PRINT ADVERTISING MARKETS HAVE SIGNIFICANTLY DECLINED.

We historically  derived a substantial  portion of our revenues from the sale of
advertisements on our website and in our magazine  Computer Games Magazine.  Our
business  model and revenues  were highly  dependent on the amount of traffic on
our websites,  our ability to properly monetize website traffic and on the print
circulation of our Computer Games magazine.  Print and online  advertising  have
dramatically  decreased  since the middle of 2000,  and may continue to decline,
which could continue to have a material effect on us. Many advertisers have been
experiencing  financial  difficulties which could materially impact our revenues
and our ability to collect our receivables.  For these reasons, we cannot assure
you that our current  advertisers will continue to purchase  advertisements from
our games properties.

WE MAY BE MATERIALLY ADVERSELY AFFECTED IF ELECTRONIC COMMERCE DOES NOT BECOME A
VIABLE SOURCE OF SIGNIFICANT REVENUES OR PROFITS.

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

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


                                       11



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

      o     the level of product returns;

      o     merchandise shipping costs and delivery times;

      o     our ability to manage inventory levels;

      o     our ability to secure and maintain relationships with vendors; and

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

If use of the Internet for  electronic  commerce does not continue to grow,  our
business and financial condition would be materially and adversely affected.

INTENSE  COMPETITION FOR ELECTRONIC  COMMERCE  REVENUES HAS RESULTED IN DOWNWARD
PRESSURE ON GROSS MARGINS.

Due to the ability of consumers to easily compare prices of similar  products or
services on competing websites and consumers' potential preference for competing
website's user interface,  gross margins for electronic  commerce  transactions,
which are narrower than for  advertising  businesses,  may further narrow in the
future and,  accordingly,  our  revenues and profits  from  electronic  commerce
arrangements may be materially and adversely affected.

OUR  ELECTRONIC  COMMERCE  BUSINESS MAY RESULT IN SIGNIFICANT  LIABILITY  CLAIMS
AGAINST US.

Consumers may sue us if any of the products that we sell are defective,  fail to
perform properly or injure the user.  Consumers are also increasingly seeking to
impose liability on game  manufacturers and distributors  based upon the content
of the games and the alleged  affect of such  content on  behavior.  Some of our
agreements with manufacturers  contain provisions intended to limit our exposure
to liability  claims.  However,  these limitations may not prevent all potential
claims. Liability claims could require us to spend significant time and money in
litigation or to pay significant  damages.  As a result, any claims,  whether or
not successful, could seriously damage our reputation and our business.

RISKS RELATING TO OUR COMMON STOCK AND THIS OFFERING

THE VOLUME OF SHARES BEING  REGISTERED  PURSUANT TO THIS  PROSPECTUS  FOR FUTURE
SALE IN THE OPEN  MARKET  COULD  DRIVE  DOWN THE  PRICE OF OUR STOCK OR KEEP OUR
STOCK PRICE FROM IMPROVING, EVEN IF OUR FINANCIAL PERFORMANCE IMPROVES.


This prospectus covers approximately 131 million shares of our Common Stock,
all of which will become eligible for potential resale in the open market. As of
April 5, 2004, we had issued and outstanding  approximately  132 million shares,
of which  approximately  25 million shares are freely  tradeable over the public
markets.  There is  limited  trading  volume in our shares and we are now traded
only in the  over-the-counter  market.  Sales of  significant  amounts of Common
Stock in the public market in the future,  the perception  that sales will occur
or the  registration  of  additional  shares  pursuant to  existing  contractual
obligations could materially and adversely drive down the price of our stock. In
addition, such factors could adversely affect the ability of the market price of
the Common  Stock to increase  even if our business  prospects  were to improve.
Substantially all of our stockholders holding restricted  securities,  including
shares issuable upon the exercise of warrants to purchase our Common Stock,  are
entitled to registration rights under various conditions.  Most of these holders
have elected to register their securities for resale as part of the registration
statement of which this  prospectus  is a part.  Also,  we may issue  additional
shares of our common stock or other equity  instruments which may be convertible
into common stock at some future date, which could further  adversely affect our
stock price.



                                       12



In addition,  as of April 5, 2004,  there were  outstanding  options to purchase
approximately  10,050,000 shares of our Common Stock,  which become eligible for
sale in the  public  market  from  time to time  depending  on  vesting  and the
expiration of lock-up agreements. The issuance of these securities is registered
under  the   Securities  Act  and   consequently,   subject  to  certain  volume
restrictions as to options owned by executive officers, will be freely tradable.

OUR CHAIRMAN MAY CONTROL US.

Michael S. Egan, our Chairman and Chief Executive Officer, beneficially owns or
controls, directly or indirectly, approximately 59 million shares of our Common
Stock as of April 5, 2004, which in the aggregate represents approximately 43%
of the outstanding shares of our Common Stock (treating as outstanding for this
purpose the shares of Common Stock issuable upon exercise of the options owned
by Mr. Egan or his affiliates). Accordingly, Mr. Egan would likely be able to
exercise significant influence over, if not control, any stockholder vote.

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

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

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

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

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

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

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

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


                                       13



Certain Delaware laws could have the effect of delaying, deterring or preventing
a change in control of our company. One of these laws prohibits us from engaging
in a business combination with any interested  stockholder for a period of three
years from the date the person became an interested stockholder,  unless various
conditions are met. In addition,  provisions of our charter and by-laws, and the
significant  amount of Common  Stock held by our  current  and former  executive
officers,   directors  and  affiliates,   could  together  have  the  effect  of
discouraging  potential  takeover  attempts  or  making  it more  difficult  for
stockholders to change management.  In addition, the employment contracts of our
Chairman,  CEO and Vice President of Finance  provide for  substantial  lump sum
payments  ranging from 2 (for the Vice  President)  to 10 times (for each of the
Chairman  and CEO) of their  respective  average  combined  salaries and bonuses
(together with the continuation of various benefits for extended periods) in the
event of their  termination  without cause or a termination by the executive for
"good   reason",   which   is   conclusively   presumed   in  the   event  of  a
"change-in-control" (as such terms are defined in such agreements).

OUR STOCK PRICE IS VOLATILE.

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


      o     news relating to the  performance  and acceptance of our new product
            lines

      o     quarterly variations in our operating results;

      o     competitive announcements;


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


      o     sales of any of our remaining games properties;

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

      o     news relating to trends in our markets.

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

                           FORWARD-LOOKING STATEMENTS

This prospectus  contains  forward-looking  statements within the meaning of the
federal  securities  laws that relate to future  events or our future  financial
performance.  In some cases,  you can  identify  forward-looking  statements  by
terminology,  such  as  "may,"  "will,"  "should,"  "could,"  "expect,"  "plan,"
"anticipate," "believe," "estimate," "project," "predict," "intend," "potential"
or  "continue"  or the negative of such terms or other  comparable  terminology,
although not all  forward-looking  statements  contain such terms.  In addition,
these  forward-looking  statements  include,  but are not limited to, statements
regarding:

      o     implementing our business strategy;

      o     marketing and  commercialization  of our existing products and those
            products under development;

      o     plans for future  products  and  services  and for  enhancements  of
            existing products and services;

      o     potential governmental regulation and taxation;

      o     our intellectual property;

      o     our estimates of future revenue and profitability;

      o     our estimates or expectations of continued losses;


                                       14



      o     our expectations  regarding future expenses,  including research and
            development,  sales and  marketing,  and general and  administrative
            expenses;

      o     difficulty or inability to raise additional financing, if needed, on
            terms acceptable to us;

      o     our estimates  regarding our capital  requirements and our needs for
            additional financing;

      o     attracting and retaining customers and employees;

      o     rapid technological changes in our industry and relevant markets;

      o     sources of revenue and anticipated revenue;

      o     plans for future acquisitions; and

      o     competition in our market.

These statements are only predictions. Although we believe that the expectations
reflected  in  these  forward-looking   statements  are  reasonable,  we  cannot
guarantee future results,  levels of activity,  performance or achievements.  We
are not  required  to and do not  intend  to update  any of the  forward-looking
statements  after the date of this prospectus or to conform these  statements to
actual results.  In light of these risks,  uncertainties  and  assumptions,  the
forward-looking  events  discussed in this  prospectus  might not occur.  Actual
results,  levels of  activity,  performance,  achievements  and  events may vary
significantly  from  those  implied  by  the   forward-looking   statements.   A
description  of risks that could cause our results to vary  appears  under "Risk
Factors" and elsewhere in this prospectus.

In this prospectus,  we refer to information regarding our potential markets and
other  industry  data. We believe that we have obtained  this  information  from
reliable  sources that customarily are relied upon by companies in our industry,
but we have not independently verified any of this information.

                                 USE OF PROCEEDS

We will not receive any proceeds  upon the sale of shares of Common Stock by the
Selling  Stockholders.  The Company will only receive  proceeds in the event the
Selling Stockholders exercise their warrants. We intend to use the proceeds from
the  exercise  of  warrants  for working  capital  and other  general  corporate
purposes.

                         DETERMINATION OF OFFERING PRICE

The shares of Common Stock will be sold at prevailing  market prices at the time
of the sale or at negotiated prices by the Selling Stockholders.


                                       15


                              SELLING STOCKHOLDERS

The following table sets forth certain  information  known to us with respect to
the  beneficial  ownership of the Company's  common stock as of April 5, 2004 by
the  Selling  Stockholders  who may sell their  Common  Stock  pursuant  to this
prospectus.  This  information  is  based  upon  information  provided  by  each
respective Selling Stockholder and Schedules 13D and other public accounts filed
with the Commission.

The shares offered by this  prospectus may be offered for sale from time to time
by the Selling  Stockholders.  Because the Selling  Stockholders  may offer all,
some or none of the shares  pursuant to this  prospectus,  and because there are
currently no agreements, arrangements or understandings with respect to the sale
of any shares,  no estimate can be given as to the number of shares that will be
held  by the  Selling  Stockholders  after  the  completion  of  this  offering,
accordingly,  it is  assumed  that  all  the  shares  offered  pursuant  to this
prospectus are sold. No selling  stockholder has, or within the past three years
has had, any position,  office or other material  relationship with us or any of
our predecessors or affiliates, except as noted.

The  number  of  shares  of  Common  Stock  beneficially  owned  by the  Selling
Stockholders  includes  the  shares of Common  Stock  beneficially  owned by the
Selling  Stockholders  as of the date of this  prospectus  and  shares of Common
Stock underlying warrants held by the Selling  Stockholders that are exercisable
within sixty days (60) days of the date of this prospectus.  Except as otherwise
indicated,  to our  knowledge,  the  Selling  Stockholders  have sole voting and
investment power with respect to all shares  beneficially owned by them, or with
respect to the shares underlying warrants,  will have sole voting and investment
power at the time such shares are sold. The percentages shown in the table below
are based upon  132,040,349  shares of Common Stock  outstanding  as of April 5,
2004. The numbers shown in the column "Shares Being Offered" include  additional
shares of Common  Stock that may be issued to many of the  Selling  Stockholders
upon exercise of any warrant held by them.


                                       16




                                                   Number of                                      Number of       Percentage
                                                     Shares        Number of                        Shares        Beneficial
                                                  Beneficially      Shares          Shares       Beneficially     Ownership
                                                  Owned Before    Underlying     Being Offered    Owned After      After
             Selling Stockholder                 this Offering    Warrants(1)                        this          this
                                                                                                  Offering(2)     Offering
------------------------------------------------------------------------------------------------------------------------------
                                                                                                   
Telstra Super Pty Ltd. ...................            360,000        120,000         360,000               0
Wellington  Management  Portfolios (Dublin) -
Global Smaller Companies Equity Portfolio.            202,500         67,500         202,500               0
New Zealand Funds Management Limited......            300,000        100,000         300,000               0
SEI Institutional  Investments  Trust,  Small
Cap Fund..................................          1,350,000        450,000       1,350,000               0
Seligman  Portfolios,  Inc.,  Seligman Global
Smaller Companies Portfolio...............             33,750         11,250          33,750               0
Australian Retirement Fund................            420,000        140,000         420,000               0
Emergency Services Superannuation Board...            285,000         95,000         285,000               0
Retail Employees Superannuation Trust.....            495,000        165,000         495,000               0
SEI Institutional  Investments  Trust,  Small
Mid Cap Equity Fund ......................            255,000         85,000         255,000               0
Talvest Global Small Cap Fund.............            345,000        115,000         345,000               0
BC Telecom  Pension Plan for  Management  and
Exempt Employees..........................             75,000         25,000          75,000               0
J B Were Global Small Companies Pooled Fund         1,425,000        475,000       1,425,000               0
SEI  Institutional  Managed Trust,  Small Cap
Growth Fund...............................          1,575,000        525,000       1,575,000               0
Seligman Global Fund Series,  Inc.,  Seligman
Global Smaller Companies Fund.............            900,000        300,000         900,000               0
TELUS Corporation Foreign Equity Active Pool          165,000         55,000         165,000               0
British   Columbia   Investment    Management
Corporation...............................            645,000        215,000         645,000               0
The Dow Chemical Employees' Retirement Plan         1,155,000        385,000       1,155,000               0
The Robert Wood Johnson Foundation........          1,425,000        475,000       1,425,000               0
Laborers'  District  Council and Contractors'
of Ohio Pension Fund......................            375,000        125,000         375,000               0
Wellington     Trust    Company,     National
Association  Multiple  Collective  Investment
Funds Trust, Emerging Companies Portfolio.          1,800,000        600,000       1,800,000               0
Government  of Singapore  Investment  Company
Pte, Ltd..................................          4,950,000      1,650,000       4,950,000               0
New York  State  Nurses  Association  Pension         780,000        260,000         780,000               0
Plan......................................
Oregon Investment Council.................          2,550,000        850,000       2,550,000               0
Wellington     Trust    Company,     National
Association   Multiple   Common  Trust  Funds
Trust, Emerging Companies Portfolio.......          1,950,000        650,000       1,950,000               0
Howard Hughes Medical Institute...........          1,275,000        425,000       1,275,000               0
Ohio Carpenters' Pension Fund.............            405,000        135,000         405,000               0
The Retirement  Program Plan for Employees of
Union Carbide Corporation.................          1,050,000        350,000       1,050,000               0
The Maritime Life Discovery Fund..........            585,000        195,000         585,000               0
Proximity Partners, LP....................            611,775        203,925         611,775               0
Proximity Fund LP.........................            611,775        203,925         611,775               0
Gamma Opportunity Capital Partners LP.....            882,450        588,300         882,450               0
Enable Growth Partners....................            611,700        203,900         611,700               0
Capital Ventures  International...........          3,058,800      1,019,600       3,058,800               0
SF Capital Partners, Ltd..................          3,211,800      1,070,600       3,211,800               0
Longview Fund, LP.........................          1,764,750        588,250       1,764,750               0
Longview Equity Fund, LP..................          2,084,550        694,850       2,084,550               0
Longview International Equity Fund, LP....            694,800        231,600         694,800               0
Alpha Capital AG..........................          1,764,750        588,250       1,764,750               0



                                       17



                                                   Number of                                      Number of       Percentage
                                                     Shares        Number of                        Shares        Beneficial
                                                  Beneficially      Shares          Shares       Beneficially     Ownership
                                                  Owned Before    Underlying     Being Offered    Owned After      After
             Selling Stockholder                 this Offering    Warrants(1)                        this          this
                                                                                                  Offering(2)     Offering
------------------------------------------------------------------------------------------------------------------------------
                                                                                                   
Manuel Senderos F.........................          1,588,235        529,412       1,588,235               0
Gruber & McBaine International............            344,250        114,750         344,250               0
Jon D. Gruber & Linda W. Gruber...........            344,250        114,750         344,250               0
Lagunitas Partners LP.....................            996,750        332,250         996,750               0
J. Patterson McBaine......................            150,000         50,000         150,000               0
Seneca Capital LP.........................            520,500        173,500         520,500               0
Seneca Capital International Ltd..........          1,008,900        336,300       1,008,900               0
Sergio Rosengaus Leizgold.................            150,000         50,000         150,000               0
Carinthia Pte, Ltd........................          1,614,707        538,236       1,614,707               0
Mauricio Garduno..........................            529,411        176,470         529,411               0
Paul Tomasi...............................            432,950        117,650         352,950          80,000           *
Garrett Pettingell (3)....................            106,618(17)     14,706          44,118          62,500           *
Idlewyld, LLC.............................            337,956        337,956         337,956               0
David Dohrmann............................             11,914         11,914          11,914               0
William C. Begien.........................            109,489        109,489         109,489               0
Baruch & Shoshana Halpern, ...............            540,641        540,641         540,641               0
Huizenga Investments Limited Partnership (4)        2,400,000        400,000       2,400,000               0
Berard Holdings Limited Partnership.......            600,000        100,000         600,000               0
Actarus Fund II, LLP (4)..................          1,380,000        230,000       1,380,000               0
Stephan Paternot (4)......................            364,957        364,957         364,957               0
Michael E. Maroone........................            240,000         40,000         240,000               0
Henry C. Duques (4).......................             60,000         10,000          60,000               0
Robert W. and Sarah M. Tuthill, BDE.......             96,425         14,000          84,000          12,425           *
Robert Emmett McTigue.....................             60,000         10,000          60,000               0
James A. Jordan, IRA......................            240,000         40,000         240,000               0
Janet Jordan..............................            136,000         20,000         120,000          16,000           *
Marjorie W. Egan..........................            120,000         20,000         120,000               0
Susan B. Segaul (5).......................             60,000         10,000          60,000               0
Michael G. Moore..........................            245,000         40,000         240,000           5,000           *
Celeste V. Allen (6)......................            120,000         20,000         120,000               0
Rosalie V. Arthur (7).....................             70,002         10,000          60,000          10,002           *
Robert F. and Mary M. Dwors, JTROS........             72,000         12,000          72,000               0
Weezor I Limited Partnership..............             60,000         10,000          60,000               0
Ron Castell...............................             60,000         10,000          60,000               0
James J. and Nancy W. Blosser, JTROS......             60,000         10,000          60,000               0
Ted and Carol Drum, JTROS.................             60,000         10,000          60,000               0
William J. Gross..........................             60,400         10,000          60,000             400           *
Thomas G. Egan III (8)....................            240,000         40,000         240,000               0
John T. Mooney (9)........................            145,000         20,000         120,000          25,000           *
Grant J. and Eliza Egan Smith, JTROS (9)..             60,000         10,000          60,000               0
Kenneth and Jessica Beir, TBE (10)........            168,125         20,000         120,000          48,125           *
Laurent F. Sidon (11).....................            381,000         40,000         240,000         141,000           *
Thomas First..............................            120,000         20,000         120,000               0
Revocable Living Trust of George E. Pittinos          240,000         40,000         240,000               0
Jan Vitrofsky (12)........................             24,000          4,000          24,000               0
Kenneth and Marguerite Larsen, JTROS......            240,000         40,000         240,000               0
Charles P. and Linda H. Irwin, JTROS......             60,000         10,000          60,000               0
Macdonald and Juliet H. Clark, JTROS......            120,000         20,000         120,000               0
Daniel Walsh..............................             24,000          4,000          24,000               0
Michael J. Kennelty (13)..................            148,084          4,000          24,000         124,084           *
Robert Giannini...........................             60,000         10,000          60,000               0
Stephen N. Lipton.........................            170,000         20,000         120,000          50,000           *
John M. Pennekamp.........................             72,000         12,000          72,000               0
Michael and Joan Sher, TROS (14)..........             60,000         10,000          60,000               0
Jack Paltani..............................            120,000         20,000         120,000               0
Albert R. Paonessa........................             60,000         10,000          60,000               0
John A. Schneider.........................            240,000         40,000         240,000               0
Thomas W. Scott...........................            240,000         40,000         240,000               0




                                       18





                                                   Number of                                      Number of       Percentage
                                                     Shares        Number of                        Shares        Beneficial
                                                  Beneficially      Shares          Shares       Beneficially     Ownership
                                                  Owned Before    Underlying     Being Offered    Owned After      After
             Selling Stockholder                 this Offering    Warrants(1)                        this          this
                                                                                                  Offering(2)     Offering
------------------------------------------------------------------------------------------------------------------------------
                                                                                                   
Gregory  A.  McLaughlin  as  trustee  of  the
Tripp,  Scott,  Conklin  & Smith,  PA  Profit
Sharing Plan fbo Norman D. Tripp..........            480,000         80,000         480,000               0
Tripperoo  Family Limited  Partnership  Class
AA Florida Limited Partnership............            480,000         80,000         480,000               0
Tripp Scott P.A.  Amended and Restated Profit
Sharing Plan fbo Dennis Dustin Smith......            180,000         30,000         180,000               0
Smith Trust...............................             60,000         10,000          60,000               0
Tripp Scott  Conklin & Smith PSP fbo Garry W.
Johnson...................................             65,000         10,000          60,000           5,000           *
Philip P. and Susan A. Smith, JTROS.......            240,000         40,000         240,000
The Nantucket Irrevocable Trust (15)......          2,400,000        400,000       2,400,000               0
David A. Mitchell.........................            276,000         46,000         276,000               0
Frank Fowler..............................             96,000         16,000          96,000               0
Charles A. Hinnant........................            120,000         20,000         120,000               0
R.F. Decosimo.............................             70,000         10,000          60,000          10,000           *
Eloise D. Robbins.........................            230,000         30,000         180,000          50,000           *
Barbara N. and Walter D. Moore, Jr., JTWROS            60,000         10,000          60,000               0
J. Melville Armstrong.....................             60,000         10,000          60,000               0
Joseph F. Decosimo........................            510,000         80,000         480,000          30,000           *
Rita F. Kerr..............................             84,000         14,000          84,000               0
W.A. Bryan Patten ........................          1,325,000        200,000       1,200,000         125,000           *
Michael F. McGauley.......................            250,000         20,000         120,000         130,000           *
Judith F. Stone...........................             60,000         10,000          60,000               0
Brenda G. McKenzie........................            240,000         40,000         240,000               0
Creel Medical Service, Inc. Profit Sharing
Trust.....................................             60,000         10,000          60,000               0
Joy W. Jones..............................             60,000         10,000          60,000               0
Lawrence Partners, LP.....................             70,000         10,000          60,000          10,000           *
Lesslie W. Lee, IRA.......................             60,000         10,000          60,000               0
Brent S. Mills............................             60,000         10,000          60,000               0
Stan Martynski Rollover IRA                            65,000         10,000          60,000           5,000           *
Brent L. Norris, M.D......................             60,000         10,000          60,000               0
Thomas R. Northcott, IRA..................             60,000         10,000          60,000               0
Patten & Patten, Inc. Profit Sharing Plan.            120,000         20,000         120,000               0
Patten &  Patten,  Inc.  Profit  Sharing  fbo
Frank M. Robbins, III.....................            180,000         30,000         180,000               0
Jack Stocker..............................             70,000         10,000          60,000          10,000           *
R. Alan Winger............................             60,000         10,000          60,000               0
James L. Wolford..........................            240,000         40,000         240,000               0
Lawrence I. Young, M.D. IRA Rollover......             60,000         10,000          60,000               0
711 East Company..........................            360,000         60,000         360,000               0
Suntrust   Bank,   Chattanooga   Trustee  for
Miller & Martin  Profit  Sharing Plan - James
M. Haley IV...............................             60,000         10,000          60,000               0
Suntrust   Bank,   Chattanooga   Trustee  for
Miller & Martin  Profit  Sharing Plan - Lowry
F. Kline, DIA.............................             60,000         10,000          60,000               0
Suntrust   Bank,   Chattanooga   Trustee  for
Miller & Martin Projet  Sharing Plan - Howard
Levine....................................             60,000         10,000          60,000               0
A-OK Supply Co. Employee Profit Sharing Plan           60,000         10,000          60,000               0
Charlie   H.   Armstrong   &  Barbara   Mayer
Armstrong, JTWROS.........................             70,000         10,000          60,000          10,000           *
Jean R. Bowden............................             60,000         10,000          60,000               0
James L. Caldwell, Jr.....................             60,000         10,000          60,000               0
Malcolm  B.  Daniell  and  Zella  C.  Daniell
JTWROS....................................            120,000         20,000         120,000               0



                                       19




                                                   Number of                                      Number of       Percentage
                                                     Shares        Number of                        Shares        Beneficial
                                                  Beneficially      Shares          Shares       Beneficially     Ownership
                                                  Owned Before    Underlying     Being Offered    Owned After      After
             Selling Stockholder                 this Offering    Warrants(1)                        this          this
                                                                                                  Offering(2)     Offering
------------------------------------------------------------------------------------------------------------------------------
                                                                                                   
Eliot Family Limited Partnership..........            120,000         20,000         120,000               0
George I. Haigler.........................             48,000          8,000          48,000               0
Julia Elizabeth Haigler-Baker.............             12,000          2,000          12,000               0
Margaret Susan Haigler....................             12,000          2,000          12,000               0
Ruth A. Liu...............................             60,000         10,000          60,000               0
T.E. Mynatt, Jr...........................             60,000         10,000          60,000               0
Kathleen Cartter Patten...................            157,500         20,000         120,000          37,500           *
William Allen Bryan Patten................            160,000         20,000         120,000          40,000           *
Fred Robinson.............................             60,000         10,000          60,000               0
Sarah Caldwell Patten.....................            157,500         20,000         120,000          37,500           *
Michael A. Stoker.........................             60,000         10,000          60,000               0
W.A. Bryan Patten and Z. Cartter Patten,
III Trustees U/WZ. Cartter Patten, Jr. - Sons
Trust.....................................            340,000         40,000         240,000         100,000           *
Wayne E. Tipps............................             60,000         10,000          60,000               0
Charles R. Adcock.........................             60,000         10,000          60,000               0
Douglas W. Curtis, IRA....................             60,000         10,000          60,000               0
Fletcher Bright...........................            240,000         40,000         240,000               0
Robert W. Jones...........................             60,000         10,000          60,000               0
J. Nelson and Deanne W. Irvine, JTWROS....             60,000         10,000          60,000               0
Joel B. Clements,  MD Rollover IRA........             60,000         10,000          60,000               0
C. Robert Clark Rollover IRA..............             60,000         10,000          60,000               0
Donald A. Bodley Rollover IRA.............             60,000         10,000          60,000               0
Richard E. Cormier Rollover IRA...........             60,000         10,000          60,000               0
Linda T. Collins Rollover IRA.............             60,000         10,000          60,000               0
John W. Moore, IRA........................             60,000         10,000          60,000               0
John A. Kosik, IRA........................             84,000         14,000          84,000               0
John A. Hewgley, IRA......................             60,000         10,000          60,000               0
Paul E. Henson, Jr. M.D. Rollover IRA.....             70,000         10,000          60,000          10,000           *
A.R. Fortune, II Rollover IRA.............             60,000         10,000          60,000               0
Charles P. Driver Rollover IRA............             60,000         10,000          60,000               0
Henry Crumbliss Rollover IRA..............             60,000         10,000          60,000               0
Robert T. Spalding Rollover IRA...........             60,000         10,000          60,000               0
Robert L. Raitz, M.D. Rollover IRA........             60,000         10,000          60,000               0
Earl T. McGhee Rollover IRA...............             60,000         10,000          60,000               0
Bonnie G. McBride Rollover IRA............             60,000         10,000          60,000               0
Steve A. McKenzie.........................            240,000         40,000         240,000               0
Frank J.B. Varallo........................            240,000         40,000         240,000               0
Kevin Lancey..............................             80,000(16)     55,000          80,000               0
Jeffrey S. Roschman.......................          1,760,000(16)  1,210,000       1,760,000               0
Robert J. Roschman........................          1,760,000(16)  1,210,000       1,760,000               0
James L. Magruder (18)....................            660,000(16)    275,000         525,000         135,000           *
Todd Krizelman (19).......................            709,976        272,521         272,521         437,455           *
Brian Fowler (20).........................          1,815,000      1,750,000       1,750,000          65,000           *
Michael S. Egan (21)......................         58,943,274(22)    204,082      48,979,991       9,963,283         7.3
S. Jacqueline Egan (23)...................          3,745,419(24)    204,082       3,731,419          14,000           *
E&C Capital Partners LLLP (25)............         32,469,012              0      32,469,012               0
Dancing Bear Investments, Inc. (26).......          8,303,148              0       2,779,560       5,523,588         4.2
The Michael S. Egan Grantor Retained
Annuity Trust F/B/O Sarah Egan                      2,007,000              0       2,000,000           7,000           *
Mooney (27)...............................
The Michael S. Egan Grantor Retained
Annuity Trust F/B/O Eliza Shenners                  2,007,000              0       2,000,000           7,000           *
Egan (27).................................
The Michael S. Egan Grantor Retained
Annuity Trust F/B/O Catherine Lewis                 2,014,000              0       2,000,000          14,000           *
Egan (27).................................




                                       20



                                                   Number of                                      Number of       Percentage
                                                     Shares        Number of                        Shares        Beneficial
                                                  Beneficially      Shares          Shares       Beneficially     Ownership
                                                  Owned Before    Underlying     Being Offered    Owned After      After
             Selling Stockholder                 this Offering    Warrants(1)                        this          this
                                                                                                  Offering(2)     Offering
------------------------------------------------------------------------------------------------------------------------------
                                                                                                   
The Michael S. Egan Grantor Retained
Annuity Trust F/B/O Teague Michael
Thomas Egan (27)..........................          2,014,000              0       2,000,000          14,000           *
The Michael S. Egan Grantor Retained
Annuity Trust F/B/O Riles Martin
Michael Egan (27).........................          2,014,000              0       2,000,000          14,000           *
NeoPets, Inc.(28)                                   3,000,000              0       3,000,000               0
                                                -------------------------------------------------------------

         TOTAL                                    142,182,214**   26,798,534**   130,396,940**    11,785,274**



*     less than 1%

**    Does not count more than once shares which are beneficially  owned by more
      than one person.

(1)   Pursuant  to Rule  13d-3  of the  Exchange  Act,  as  used in this  table,
      "beneficial  ownership"  means  the sole or  shared  power to vote,  or to
      direct  the  disposition  of, a  security  and a person  is deemed to have
      "beneficial  ownership"  of any security  that the person has the right to
      acquire within 60 days of April 5, 2004.  Without  limiting the generality
      of the foregoing, includes all of the underlying shares of common stock in
      the column labeled "Number of Shares Underlying Warrants".

(2)   Assumes  the sale by the  Selling  Stockholders  of all shares  registered
      hereby.

(3)   Mr. Pettingell is our Chief Financial Officer.

(4)   A former director (or a company  controlled by such a former  director) of
      ours who resigned or whose term ended in June 2001.

(5)   Mother of Robin Lebowitz, one of our executive officers.

(6)   President of Certified  Vacations,  a company  controlled by our Chairman,
      Michael Egan.

(7)   One of our former board members who resigned in November 2001.

(8)   Brother of our Chairman, Michael Egan.

(9)   Son-in-law or daughter of our Chairman, Michael Egan.

(10)  Brother-in-law of our Chairman, Michael Egan.

(11)  Son-in-law of our Chairman,  Michael Egan. A company controlled by Laurent
      Sidon also provides services to us. See "Certain Relationships and Related
      Transactions".

(12)  Serves  as the  President  of  Thomas  Street  Logistics  LLC,  a  company
      controlled by our Chairman, Michael Egan. Thomas Street Logistics provides
      services  to  the  Company.   See  "Certain   Relationships   and  Related
      Transactions".

(13)  One of our full-time employees.

(14)  Parents-in-law of our President, Edward Cespedes.


(15)  Trust for the benefit of the children of our Chairman,  Michael Egan.

(16)  Includes shares underlying certain earn-out warrants, which have not
      yet been earned as follows: (i) Lancey, 45,000 warrants; (ii) J. Roschman,
      990,000 warrants; (iii) R. Roschman,  990,000 warrants; and (iv) Magruder,
      225,000  warrants.  J. Roschman has agreed,  when and if such warrants are
      earned, to transfer 500,000 of such warrants to Izor
      Investments.


(17)  His  beneficial  ownership  includes  50,000  shares of our  common  stock
      issueable  upon  exercise of options that are currently  exercisable,  and
      12,500 shares of our common stock  issueable upon exercise of options that
      are exercisable within 60 days of April 5, 2004.

(18)  Mr.  Magruder is the  Director  of Carrier  Relations  of our  subsidiary,
      Direct Partner Telecom.

(19)  One of our former directors who did not seek reelection in June 2002.

(20)  Mr. Fowler is our Chief Technology Officer.

(21)  Mr. Egan is our Chairman and Chief Executive Officer.

(22)  Includes  the shares  that Mr. Egan is deemed to  beneficially  own as the
      controlling  investor of Dancing  Bear  Investments,  Inc. and E&C Capital
      Partners,  LLLP and as the Trustee of each of the Michael S. Egan  Grantor
      Retained Annuity Trusts for the benefit of his children. Also includes (i)
      3,838,269  shares of our common stock  issueable  upon exercise of options
      that  are  currently  exercisable  and  971  shares  of our  common  stock
      issueable upon exercise of options that are exercisable  within 60 days of
      April 5,  2004;  (ii)  3,541,337  shares of our  common  stock held by Mr.
      Egan's wife,  as to which he  disclaims  beneficial  ownership;  and (iii)
      204,082 shares of our common stock  issueable upon exercise of warrants at
      $1.22 per share owned by Mr. Egan and his wife.


                                       21



(23)  Ms.  Egan is the spouse of Mr.  Egan,  our  Chairman  and Chief  Executive
      Officer.

(24)  Includes  204,082  shares of our common stock  issueable  upon exercise of
      warrants owned jointly by Mr. and Mrs. Egan.

(25)  E&C  Capital  Partners,  LLLP  is  a  privately  held  investment  vehicle
      controlled  by our Chairman,  Michael S. Egan.  Our  President,  Edward A.
      Cespedes,  has  a  minority,   non-controlling  interest  in  E&C  Capital
      Partners, LLLP.

(26)  Dancing Bear  Investments,  Inc., is  controlled by our Chairman,  Michael
      Egan.

(27)  Each of these  Trusts is for the  benefit  of one of the  children  of our
      Chairman, Michael Egan.


(28)  NeoPets,  Inc. is a party to an agreement  with us relating to advertising
      and marketing. All 3,000,000 of such shares are issuable in various stages
      subject to meeting certain business criteria set forth in the agreement.



                              PLAN OF DISTRIBUTION

The Selling Stockholders, or by their pledgees,  transferees or other successors
in interest,  may sell the shares of Common Stock from time to time in public or
private  transactions  occurring on or off the OTC Bulletin Board, at prevailing
market prices or at negotiated prices.  Sales may be made directly to purchasers
or  through  brokers  or to  dealers,  who are  expected  to  receive  customary
commissions or discounts.  To this end, the Selling Stockholders may offer their
shares  for  sale  in one or  more  of the  following  transactions  listed  and
described below:

      o     In the over-the-counter market, including the OTC Bulletin Board;

      o     Through the facilities of any national  securities  exchange or U.S.
            automated  inter-dealer  quotation  system of a registered  national
            securities  association  on which any of the shares of Common  Stock
            are then listed, admitted to unlisted trading privileges or included
            for quotation in privately negotiated transactions;

      o     In   transactions   other   than  on  such   exchanges   or  in  the
            over-the-counter market;

      o     In connection with short sales of our common stock;

      o     In ordinary  brokerage  transactions  and  transactions in which the
            broker-dealer solicits purchasers;

      o     In block trades in which the broker-dealer  will attempt to sell the
            shares as agent but may  position  and resell a portion of the block
            as principal to facilitate the transaction;

      o     In  purchases  by a  broker-dealer  as  principal  and resale by the
            broker-dealer for its account;

      o     In privately negotiated transactions;

      o     Broker-dealers  may agree with the  selling  stockholders  to sell a
            specified number of such shares at a stipulated price per share;

      o     In a combination of any such methods of sale; and

      o     Any other method permitted pursuant to applicable law.

The  selling  stockholders  may  also  sell  shares  under  Rule 144  under  the
Securities Act, if available, rather than under this prospectus.

If the Selling  Stockholders sell their shares directly,  or indirectly  through
underwriters,  broker-dealers  or agents acting on their  behalf,  in connection
with such sales, the  broker-dealers  or agents may receive  compensation in the
form of  commissions,  concessions,  allowances  or  discounts  from the Selling
Stockholders  and/or the purchasers of the shares for whom they may act as agent
or to whom  they  sell  the  shares  as  principal  or both.  Such  commissions,
concessions, allowances or discounts might be in excess of customary amounts. To
comply with the securities laws of certain jurisdictions, the securities offered
in this prospectus will be offered or sold in those  jurisdictions  only through
registered or licensed broker/dealers. In addition, in certain jurisdictions the
securities  offered in this  prospectus  may not be offered or sold  unless they
have been registered or qualified for sale in those jurisdictions,  or unless an
exemption from  registration or qualification is available and is complied with.
We are not  aware  of any  definitive  selling  arrangement  at the date of this
prospectus  between any Selling  Stockholder and any  broker-dealer or agent. We
will not receive any of the proceeds  from the sale of the shares by the Selling
Stockholders,  but may receive  certain  funds upon the  exercise of warrants as
described under "Use of Proceeds."

In connection  with the  distribution  of their  shares,  certain of the Selling
Stockholders  may  enter  into  hedging  transactions  with  broker-dealers.  In
connection with such  transactions,  broker-dealers may engage in short sales of
the shares in the course of hedging the  positions  they assume with the Selling
Stockholders.

The Selling Stockholders may also sell the shares short and redeliver the shares
of Common Stock to close out the short positions.


                                       22



The Selling  Stockholders may also enter into option or other  transactions with
broker-dealers, which require the delivery of the shares to the broker-dealer.

The  Selling   Stockholders   may  also  loan  or  pledge   their  shares  to  a
broker-dealer.  The  broker-dealer  may then sell the loaned  shares or,  upon a
default, may sell the pledged shares.

The selling  stockholders  also may transfer the shares of common stock in other
circumstances,  in which case the  transferees,  pledges or other  successors in
interest will be the selling  beneficial  owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this  prospectus
after we have filed an  amendment  to this  prospectus  under Rule  424(b)(3) or
other  applicable  provision of the  Securities Act amending the list of selling
stockholders to include the pledgee,  transferee or other successors in interest
as selling stockholders under this prospectus.

The Selling  Stockholders  and any dealer acting in connection with the offering
or any broker  executing a sell order on behalf of a selling  stockholder may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the  "Securities  Act"). In that case, any profit on the sale of shares
by a selling  stockholder and any commissions or discounts  received by any such
broker  or  dealer  may be  deemed  to be  underwriting  compensation  under the
Securities  Act.  Any such broker or dealer may be required to deliver a copy of
this  prospectus  to any person who  purchases any of the shares from or through
such broker or dealer.  These shares may later be  distributed,  sold,  pledged,
hypothecated or otherwise transferred.  In addition to any other applicable laws
or regulations,  Selling  Stockholders must comply with regulations  relating to
distributions  by  Selling  Stockholders,   including  Regulation  M  under  the
Securities Exchange Act of 1934, as amended (the "Exchange Act").

                                LEGAL PROCEEDINGS

On and  after  August 3, 2001 and as of the date of this  filing,  six  putative
stockholder class action lawsuits were filed against the Company, certain of its
current and former  officers and directors,  and several  investment  banks that
were the underwriters of the Company's November 23, 1998 initial public offering
and its May 19, 1999 secondary  offering.  The lawsuits were filed in the United
States  District  Court for the Southern  District of New York.  The  complaints
against  the  Company  have  been  consolidated  into  a  single  action  and  a
Consolidated Amended Complaint,  which is now the operative complaint, was filed
on April 19, 2002.

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

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


                                       23



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


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


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

                                   MANAGEMENT

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

                                                 POSITION OR OFFICE
    NAME                         AGE              WITH THE COMPANY
    ------------------------------------------------------------------------

    Michael Egan                  64      Chairman   and  Chief   Executive
                                          officer

    Edward A. Cespedes            38      President and Director

    Garrett Pettingell            45      Chief Financial Officer

    Robin Lebowitz                39      Vice  President  of  Finance  and
                                          Director


Michael S. Egan.  Michael Egan has served as theglobe.com's  Chairman since 1997
and as its Chief Executive  Officer since June 1, 2002. Since 1996, Mr. Egan has
been the  controlling  investor of Dancing Bear  Investments,  a privately  held
investment  company.  Mr.  Egan is  also  Chairman  of  Certified  Vacations,  a
privately  held wholesale  travel  company which was founded in 1980.  Certified
Vacations specializes in designing,  marketing and delivering vacation packages.
Mr. Egan is a member of the Board of Directors of Boca Resorts, Inc. (NYSE: RST)
(formerly  Florida  Panthers  Holdings,  Inc.)  and a  member  of the  Board  of
Directors of the Horatio Alger Association.  Mr. Egan spent over 30 years in the
rental car business.  He began with Alamo Rent-A-Car in 1973, became an owner in
1979,  and became  Chairman and majority  owner from January 1986 until November
1996 when he sold the company to AutoNation.  In 2000,  AutoNation  spun off the
rental  division,  ANC Rental  (Other  OTC:  ANCXZ.PK),  and Mr.  Egan served as
Chairman  until  October  2003.  Prior  to  acquiring  Alamo,  he  held  various
administration  positions at Yale  University  and taught at the  University  of
Massachusetts at Amherst.  Mr. Egan is a graduate of Cornell University where he
received his Bachelor's degree in Hotel Administration.


                                       24



Edward A.  Cespedes.  Edward  Cespedes has served as a director of  theglobe.com
since 1997 and as President of theglobe.com  since June 1, 2002. Mr. Cespedes is
also the Chairman of EKC Ventures, LLC, a privately held investment company. Mr.
Cespedes  served as the Vice Chairman of Prime  Ventures,  LLC, from May 2000 to
February  2002.  From August 2000 to August  2001,  Mr.  Cespedes  served as the
President of the Dr. Koop Lifecare Corporation and was a member of the Company's
Board of Directors  from January 2001 to December  2001.  From 1996 to 2000, Mr.
Cespedes was a Managing  Director of Dancing Bear  Investments.  Concurrent with
his position at Dancing Bear  Investments,  from 1998 to 2000, Mr. Cespedes also
served as Vice President for corporate development for theglobe.com where he had
primary  responsibility  for all  mergers,  acquisitions,  and  capital  markets
activities. In 1996, prior to joining Dancing Bear Investments, Mr. Cespedes was
the Director of Corporate Finance for Alamo  Rent-A-Car.  From 1988 to 1996, Mr.
Cespedes worked in the Investment  Banking  Division of J.P. Morgan and Company,
where he most recently focused on mergers and acquisitions. In his capacity as a
venture  capitalist,  Mr.  Cespedes  has  served  as a  member  of the  board of
directors of various  portfolio  companies.  Mr.  Cespedes is the founder of the
Columbia  University Hamilton  Associates,  a foundation for university academic
endowments.  In 1988 Mr. Cespedes  received a Bachelor's degree in International
Relations from Columbia University.

Garrett Pettingell.  Garrett Pettingell was appointed Chief Financial Officer of
theglobe.com  on February 23, 2004.  From  January 2000 to September  2002,  Mr.
Pettingell  was CFO of  TeleComputing,  Inc. a  Norwegian  application  services
provider  (ASP)  and  Apptix,  Inc.,  a  Norwegian  ASP  which was spun off from
TeleComputing.  Before joining  TeleComputing,  Mr.  Pettingell  worked for Bank
Austria as Head of Corporate  Banking in their Moscow,  Russia  subsidiary  from
January 1997 to January 1999 and for Sequoia International Hotels as Director of
Finance  from  February  1999 to January  2000.  Mr.  Pettingell  has his MBA in
Finance from The Wharton School,  as well as a Master of  International  Studies
from the Lauder  Institute of the University of  Pennsylvania.  During 2003, Mr.
Pettingell attended Nova Southeastern University,  where he obtained a Master of
Accounting.

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

                    INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

Michael  Egan,  theglobe.com's  Chairman  and CEO,  was  Chairman  of ANC Rental
Corporation from late 2000 until October 2003 and was Chief Executive Officer of
ANC Rental Corporation from late 2000 until April 4, 2002. In November 2001, ANC
Rental  Corporation  filed  voluntary  petitions  for relief under Chapter 11 or
Title 11 of the United States  Bankruptcy  Code in the United States  Bankruptcy
Court for the District of Delaware (Case No. 01-11200).

Edward Cespedes,  a director and the President of theglobe,  was also a director
of Dr. Koop Lifecare Corporation from January 2001 to December 2001. In December
2001, Dr. Koop Lifecare Corporation filed petitions seeking relief under Chapter
7 of the United States Bankruptcy Code.


                                       25



                             EXECUTIVE COMPENSATION

The following table sets forth information concerning  compensation for services
in all  capacities  awarded  to,  earned by or paid by us to our  those  persons
serving as the chief executive  officer at any time during the last year and our
two other most highly compensated executive officers  (collectively,  the "Named
Executive Officers"):




                                                                                    Long-Term
                                                                                 Compensation(1)
                                                                                -------------------
                                              Annual Compensation
                                     ---------------------------------------
                                                                                   Number of
                                                                                   Securities             All Other
Name and                                           Salary          Bonus           Underlying           Compensation
Principal Position                    Year           ($)            ($)            Options (#)               ($)
----------------------------------   --------    -----------    ------------    -------------------    -----------------
                                                                                        
Michael S. Egan,                      2003          125,000          50,000           1,000,000                   -
Chairman, Chief Executive             2002                -               -           2,507,500                   -
  Officer (2)                         2001                -               -               7,500                   -

Edward A. Cespedes,                   2003          225,000          50,000             550,000                   -
President (3)                         2002          100,000          25,000           1,757,500              41,668

Robin S. Lebowitz,                    2003          137,500               -             100,000                   -
Chief Financial Officer (4)           2002           58,350          10,000             507,500                   -


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

(1)   Included in long-term  compensation for 2003 are 1,650,000 options granted
      during  the  year at $0.56  per  share to the  Named  Executive  Officers.
      Details of these  grants  may be found in the table of  Options  Grants in
      2003 on page 27.  Included in  long-term  compensation  for 2002 are 7,500
      options  granted to each of Messrs.  Egan and Cespedes and Ms. Lebowitz in
      June 2002 at an exercise  price of $0.04 per share in accordance  with the
      Company's Director  Compensation Plan; 2,500,000,  1,750,000,  and 500,000
      options  granted  in June  2002 at an  exercise  price of $0.02  per share
      related to bonuses  earned in 2002 for Messrs.  Egan and  Cespedes and Ms.
      Lebowitz,  respectively.  Included in long-term  compensation for 2001 are
      7,500  options  granted to Mr. Egan in June 2001 at an  exercise  price of
      $0.23 in accordance with the Company's Director Compensation Plan.

(2)   Mr. Egan became an  executive  officer in July 1998.  We began  paying Mr.
      Egan a base salary in July of 2003.  We did not pay Mr. Egan a base salary
      in 2002 or 2001.

(3)   Mr.  Cespedes became  President in June 2002.  Prior to this, Mr. Cespedes
      served as a  consultant  to the  Company  and was paid  $41,668  for these
      services.

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

Mr. Garrett Pettingell became Chief Financial Officer of the Company in February
of 2004. His current base salary is $160,000 per year. He also received  options
to acquire  200,000  shares at an exercise  price of $1.06 per share.  50,000 of
these  options  vested  immediately  and the balance vest ratably on a quarterly
basis over 3 years.


                                       26



               AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
                         AND 2003 YEAR-END OPTION VALUES


The following tables set forth for each of the Named Executive  Officers (a) the
number of options  exercised  during 2003,  (b) the total number of  unexercised
options for common stock  (exercisable and  unexercisable)  held at December 31,
2003, (c) the value of those options that were in-the-money on December 31, 2003
based  on the  difference  between  the  closing  price of our  common  stock on
December  31, 2003 and the exercise  price of the options on that date,  and (d)
the total number of options granted to such persons in 2003.




                                                              Number of Securities                 Value of Unexercised
                                                          Underlying Unexercised Stock          In-the-Money Stock Options
                                                         Options at Fiscal Year-End (#)           at Fiscal Year End (1)
                                                         -------------------------------     ----------------------------------
                              Shares
                           Acquired on       Value                              Un-                                 Un-
Name                        Exercise #      Realized      Exercisable       Exercisable      Exercisable        Exercisable
-----------------------    -------------    ---------    --------------    -------------     -------------    -----------------
                                                                                            
Michael S. Egan                    -             -        3,837,298            7,702         4,053,562        $         9,363
Edward  A. Cespedes                -             -        2,456,362            8,638         2,724,562                9,363
Robin S. Lebowitz                  -             -          616,897           17,183           751,634               22,041


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

(1)   Value  represents  closing  price of our common stock on December 31, 2003
      less the exercise  price of the stock option,  multiplied by the number of
      shares exercisable or unexercisable, as applicable.




                              OPTION GRANTS IN 2003
                                                                Percent of
                                                                   Total
                                            Number of             Options        Exercise
                                            Securities          Granted to        or Base
                                            Underlying           Employees         Price
Name                                     Options Granted          in 2003        ($/Share)         Expiration Date
-----------------------------------    ---------------------    ------------    ------------    ----------------------
                                                                                       
Michael S. Egan                           1,000,000    (1)         25.86%           $0.56            5/22/2013
Edward A. Cespedes                          550,000    (1)         14.22%           $0.56            5/22/2013
Robin S. Lebowitz                           100,000    (1)          2.59%           $0.56            5/22/2013


---------------------
(1)   These options were granted on May 21, 2003, vested  immediately and have a
      life of ten years from date of grant.


EMPLOYMENT AGREEMENTS

CHIEF EXECUTIVE OFFICER EMPLOYMENT AGREEMENT AND PRESIDENT EMPLOYMENT AGREEMENT.
On August 1, 2003, we entered into separate employment agreements with our Chief
Executive  Officer  ("CEO"),  Michael  S.  Egan,  and our  President,  Edward A.
Cespedes.  The two  employment  agreements  are  substantially  similar and each
provides for the following:

      o     employment as one of our executives;

      o     an annual base salary of $250,000 with eligibility to receive annual
            increases  as  determined  in the sole  discretion  of the  Board of
            Directors;

      o     an annual cash bonus,  which will be awarded upon the achievement of
            specified  pre-tax  operating  income (not be less than  $50,000 per
            year);

      o     participation in all welfare, benefit and incentive plans (including
            equity based compensation plans) offered to senior management;


                                       27



      o     a term of employment which commenced on August 1, 2003 and continues
            through  the  first  anniversary  thereof.  The  term  automatically
            extends for one day each day unless  either the Company or executive
            provides  written  notice to the other not to  further  extend.  The
            agreement  provides  that, in the event of termination by us without
            "cause" or by the  executive  for "good  reason"  (which  includes a
            "Change of Control"), the executive will be entitled to receive from
            us:

            -     (A) his base  salary  through the date of  termination  and an
                  amount  equal  to the  product  of (x) the  higher  of (i) the
                  executive's average annual incentive paid or payable under the
                  Company's annual incentive plan for the last three full fiscal
                  years,  including  any  portion  which  has  been  earned  but
                  deferred and (ii) the annual  incentive  paid or payable under
                  the  Company's  annual  incentive  plan for the most  recently
                  completed fiscal year, including any portion thereof which has
                  been earned but deferred  (and  annualized  if the fiscal year
                  consists of less than twelve full months or, if during  which,
                  the  executive  was employed for less than twelve full months)
                  and (y) a fraction,  the  numerator  of which is the number of
                  days  in  the  current   fiscal  year   through  the  date  of
                  termination, and the denominator of which is 365;

            -     (B) any accrued vacation pay; and

            -     (C) a lump-sum cash payment equal to ten (10) times the sum of
                  executive's base salary and highest annual incentive;

            -     for the  continued  benefit of  executive,  his spouse and his
                  dependents  for a period of ten (10) years  following the date
                  of termination, the medical, hospitalization, dental, and life
                  insurance  programs  in which  executive,  his  spouse and his
                  dependents were participating immediately prior to the date of
                  termination at the level in effect and upon  substantially the
                  same terms and conditions as existed  immediately prior to the
                  date of termination;

            -     reimbursement for any reasonable and necessary monies advanced
                  or  expenses  incurred  in  connection  with  the  executive's
                  employment; and

            -     executive will be vested,  as of the date of  termination,  in
                  all rights  under any equity  award  agreements  (e.g.,  stock
                  options   that  would   otherwise   vest  after  the  date  of
                  termination)   and  in  the  case  of  stock  options,   stock
                  appreciation  rights or similar  awards,  thereafter  shall be
                  permitted  to  exercise  any and all  such  rights  until  the
                  earlier  of  (i)  the  third   anniversary   of  the  date  of
                  termination  and  (ii)  the end of the  term  of  such  awards
                  (regardless  of any  termination  of  employment  restrictions
                  therein  contained) and any restricted stock held by executive
                  will become immediately vested as of the date of termination.

CHIEF FINANCIAL OFFICER EMPLOYMENT AGREEMENT. We also entered into an employment
agreement with our then Chief Financial Officer ("CFO"),  Robin Segaul Lebowitz,
on August 1, 2003. Her employment agreement provides for the following:

      o     employment as one of our executives;

      o     an annual base salary of $150,000 with eligibility to receive annual
            increases  as  determined  in the sole  discretion  of the  Board of
            Directors;

      o     a  discretionary  annual  cash  bonus,  which will be awarded at our
            Board's discretion;

      o     participation in all welfare, benefit and incentive plans (including
            equity based compensation plans) offered to senior management;

      o     term of employment  which  commenced on August 1, 2003 and continues
            through  the  first  anniversary  thereof.  The  term  automatically
            extends for one day each day unless  either the Company or executive
            provides  written  notice to the other not to  further  extend.  The
            agreement  provides  that, in the event of termination by us without
            "cause" or by the  executive  for "good  reason"  (which  includes a
            "Change of Control"), the executive will be entitled to receive from
            us:


                                       28



            -     (A) her base  salary  through the date of  termination  and an
                  amount  equal  to the  product  of (x) the  higher  of (i) the
                  executive's average annual incentive paid or payable under the
                  Company's annual incentive plan for the last three full fiscal
                  years,  including  any  portion  which  has  been  earned  but
                  deferred and (ii) the annual  incentive  paid or payable under
                  the  Company's  annual  incentive  plan for the most  recently
                  completed fiscal year, including any portion thereof which has
                  been earned but deferred  (and  annualized  if the fiscal year
                  consists of less than twelve full months or, if during  which,
                  the  executive  was employed for less than twelve full months)
                  and (y) a fraction,  the  numerator  of which is the number of
                  days  in  the  current   fiscal  year   through  the  date  of
                  termination, and the denominator of which is 365;

            -     (B) any accrued vacation pay; and

            -     (C) a lump-sum  cash payment equal to two (2) times the sum of
                  executive's base salary and highest annual incentive;

            -     for the  continued  benefit of  executive,  her spouse and her
                  dependents for a period of two (2) years following the date of
                  termination,  the medical,  hospitalization,  dental, and life
                  insurance  programs  in which  executive,  her  spouse and her
                  dependents were participating immediately prior to the date of
                  termination at the level in effect and upon  substantially the
                  same terms and conditions as existed  immediately prior to the
                  date of termination;

            -     reimbursement for any reasonable and necessary monies advanced
                  or  expenses  incurred  in  connection  with  the  executive's
                  employment; and

            -     executive will be vested,  as of the date of  termination,  in
                  all rights  under any equity  award  agreements  (e.g.,  stock
                  options   that  would   otherwise   vest  after  the  date  of
                  termination)   and  in  the  case  of  stock  options,   stock
                  appreciation  rights or similar  awards,  thereafter  shall be
                  permitted  to  exercise  any and all  such  rights  until  the
                  earlier  of  (i)  the  third   anniversary   of  the  date  of
                  termination  and  (ii)  the end of the  term  of  such  awards
                  (regardless  of any  termination  of  employment  restrictions
                  therein  contained) and any restricted stock held by executive
                  will become immediately vested as of the date of termination.

      Effective  February 23, 2004,  Ms.  Lebowitz's  employment  agreement  was
      amended.  Ms.  Lebowitz's  new title is Vice  President,  Finance  and her
      annual base salary is $130,000.


                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ARRANGEMENTS  WITH  ENTITIES  CONTROLLED BY VARIOUS  DIRECTORS AND OFFICERS.  On
November 14, 2002, E & C Capital Partners,  LLLP ("E&C  Partners"),  a privately
held  investment  holding company owned by Michael S. Egan, our Chairman and CEO
and a major stockholder,  and Edward A. Cespedes,  our President and a Director,
entered  into a  non-binding  letter  of intent  with  theglobe.com  to  provide
$500,000 of new financing via the purchase of shares of a new Series F Preferred
Stock of  theglobe.com.  On March 28, 2003, the parties signed a Preferred Stock
Purchase Agreement and other related documentation  pertaining to the investment
and  closed  on  the  investment.  Pursuant  to  the  Preferred  Stock  Purchase
Agreement,  E & C Capital Partners received 333,333 shares of Series F Preferred
Stock  convertible into shares of the Company's Common Stock at a price of $0.03
per share. The conversion price was subject to adjustment upon the occurrence of
certain events, including downward adjustment on a weighted-average basis in the
event the Company  issued  securities at a purchase price below $0.03 per share.
If  fully  converted,   and  without  regard  to  the  anti-dilutive  adjustment
mechanisms  applicable  to  the  Series  F  Preferred  Stock,  an  aggregate  of
approximately  16,666,650 million shares of Common Stock would be issueable. The
Series F Preferred  Stock had a  liquidation  preference of $1.50 per share (and
was  thereafter  entitled  to  participate  with  the  Common  Stock  on an  "as
converted" basis), and was entitled to a dividend at the rate of 8% per annum if
and to the extent  declared by the board and was also entitled to participate in
any dividend  declared on the  Company's  common  stock.  The Series F Preferred
Stock also was entitled to vote on an "as  converted"  basis with the holders of
Common Stock. In addition,  as part of the $500,000  investment,  E & C Partners
received  warrants to purchase  approximately 3.3 million shares of theglobe.com
Common  Stock  at an  exercise  price of  $0.125  per  share.  The  warrant  was
exercisable  at any time on or  before  March  28,  2013.  E & C  Partners  also
received certain demand registration rights in connection with its investment.


                                       29



On May 22,  2003,  E&C  Partners  and certain  trusts,  of which Mr. Egan is the
trustee,  entered into a Note Purchase  Agreement  with the Company  pursuant to
which they acquired  convertible  promissory notes (the "Convertible  Notes") in
the  aggregate  principal  amount of  $1,750,000.  The  Convertible  Notes  were
convertible  at anytime into shares of the  Company's  common stock at a blended
rate of $.09 per share (the  Convertible  Note held by E&C were  convertible  at
approximately  $.079 per share and the Convertible Notes held by the Trusts were
convertible at $.10 per share),  which if fully  converted,  would result in the
issuance of approximately  19,445,000  shares.  The Convertible  Notes had a one
year maturity  date,  which could be extended at the option of the holder of the
Note  for  periods  aggregating  two  years,  and was  secured  by a  pledge  of
substantially  all of the assets of the Company.  In addition,  E&C Partners was
issued a warrant to acquire 3,888,889 shares of theglobe.com  common stock at an
exercise price of $.15 per share.  The warrant was exercisable at any time on or
before May 22, 2013.  E&C Partners and the trusts are entitled to certain demand
and piggy-back registration rights in connection with their investment.

On February 2, 2004,  Michael S. Egan (our Chairman and Chief Executive Officer)
and his wife, S. Jacqueline  Egan,  entered into a Note Purchase  Agreement with
the Company  pursuant to which they acquired  convertible  promissory notes (the
"Bridge  Notes") in the aggregate  principal  amount of  $2,000,000.  The Bridge
Notes were  convertible at anytime into shares of the Company's  common stock at
an initial rate of $.98 per share. The conversion rate was initially  adjustable
based on an amount  equal to the rate at which the Company sold its common stock
in any  subsequent  qualified  private  offering  (defined as an offering  which
raises  a  minimum  of $7.5  million)  (or at a 20%  discount  to  such  amount,
depending upon the timing of completion,  and amount of, such private offering).
This  conversion  was  subsequently  adjusted  to $.57 per share,  which was the
effective per share rate of the subsequent qualified private offering (and which
is referenced  elsewhere in this prospectus as the "PIPE Offering").  The Bridge
Notes  were due on  demand  from the  holder,  and were  secured  by a pledge of
substantially all of the assets of the Company. The security interest was shared
with the holders of the  Company's  Secured  Convertible  Notes in the principal
amount of  $1,750,000.  The Bridge  Notes paid  interest at the rate of ten (10)
percent  per annum.  In  addition,  the Egans  were  issued a warrant to acquire
204,082  shares of  theglobe.com  common stock at an initial  exercise  price of
$1.22 per share.  This warrant is exercisable at any time on or before  February
2, 2009. The Egans are entitled to certain  demand and  piggy-back  registration
rights in connection with this investment.

On March 11, 2004, theglobe.com, inc. completed the PIPE Offering. In connection
with the PIPE Offering,  Mr. Egan,  our Chairman,  Chief  Executive  Officer and
principal  stockholder,  together  with  certain  of his  affiliates  and  other
parties,  converted  the  $2,000,000  Bridge  Note,  the  $1,750,000  of Secured
Convertible  Notes  and all of the  Company's  outstanding  shares  of  Series F
Preferred  Stock,  and  exercised  (on a  cashless  exercise  basis)  all of the
warrants issued in connection with the foregoing  Secured  Convertible Notes and
Series F Preferred Stock,  together with certain warrants issued to Dancing Bear
Investments  (an affiliate of Mr.  Egan).  As a result of such  conversions  and
exercises, the Company issued an aggregate of approximately 48.75 million shares
of Common Stock to such parties.

Interest  expense on the  $1,750,000  Convertible  Notes  totaled  approximately
$108,200,  excluding the  amortization of the discount on the Notes,  during the
year ended December 31, 2003. The interest remained unpaid at December 31, 2003,
and was included in accrued expenses in our consolidated balance sheet.

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

Several  entities  controlled  by our  Chairman  have  provided  services to the
Company  and  two of its  subsidiaries,  including:  the  lease  of  office  and
warehouse space; and the outsourcing of customer service and warehouse functions
for the  Company's  VoIP  operations.  During  2003,  approximately  $148,000 of
expense was  recorded  related to the lease of the office  space and $126,000 of
expense was recorded for warehouse space and related out-sourcing functions.

We sublease  approximately  15,000 square feet of office space for our executive
offices from Certified Vacations,  a company which is controlled by our Chairman
and CEO Michael Egan. The sublease commenced on September 1, 2003 and expires on
July 31,  2007.  The  initial  base rent is $18.91 per square  foot on an annual
basis ($283,650 annually in the aggregate) and will increase on each anniversary
of the sublease by $1.50 per square foot. In addition, since August 2003 we have
outsourced  our  Customer  Service  function  from  Certified   Vacations  under
renewable  short  term  agreements  at  incremental  cost,  for which we paid an
aggregate of $109,000 in the year ended December 31, 2003.


                                       30



Beginning in August,  2003,  our  subsidiary,  Voiceglo  Holdings,  Inc.,  began
outsourcing  warehouse space and related  services from Thomas Street  Logistics
LLC,  which is  controlled  by our  Chairman  and  CEO,  Michael  Egan,  and our
President,  Edward Cespedes. Our agreement with Thomas Street Logistics includes
secure warehouse space, equipment rental,  insurance,  utilities,  office space,
inventory  management,  shipping  services,  personnel and  provisioning  of our
equipment for $25,000 per month and a nominal shipping and handling fee per item
shipped.  Effective,  April 15, 2004,  voiceglo  terminated its arrangement with
Thomas  Street  Logistics  and  will  transition  these  functions  to  voiceglo
personnel and warehouse space.

ARRANGEMENTS WITH RELATIVES.  In March 2004, the Company engaged the services of
Pay the Rent, a company  controlled  by the  son-in-law of our Chairman and CEO,
Michael Egan. Pay the Rent was contracted  for the  production,  audio and video
post-production,  voice-over,  and scoring of a television  commercial featuring
voiceglo.  Payment in full in the amount of  $142,200  was  remitted in March of
2004. In 2003,  we  reimbursed  Pay the Rent $18,013 for marketing and promotion
expenses (at cost) for a separate marketing promotion.

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth  certain  information   regarding  beneficial
ownership of our common stock as of the record date of April 5, 2004 by (i) each
person who owns  beneficially more than 5% of our common stock, (ii) each of our
directors,  (iii) each of our "Named Executive  Officers" and (iv) all directors
and  executive   officers  as  a  group.  A  total  of  132,040,349   shares  of
theglobe.com's common stock were issued and outstanding on April 5, 2004.

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



                                                                                Shares Beneficially Owned
                                                                    --------------------------------------------------
Directors, Named Executive Officers and 5% Stockholders                Number           Percent        Title of Class
----------------------------------------------------------------    --------------    -------------    ---------------
                                                                                              
Dancing Bear Investments, Inc. (1).........................             8,303,148            6.3            Common
Michael S. Egan (2)........................................            58,943,274           43.3            Common
Edward A. Cespedes (3).....................................             2,459,240            1.8            Common
Robin S. Lebowitz (4)......................................               620,961              *            Common
Garrett Pettingell (5).....................................               106,618              *            Common
E&C Capital Partners LLLP (6)..............................            32,469,012           24.6            Common
Wellington Management Company, LLP (7).....................            27,131,250           19.2            Common
All directors and executive officers as a group
  (4 persons)..............................................            62,130,093           44.6            Common


-----------------------
*     less than 1%

(1)   Dancing Bear  Investments  Inc.'s mailing address is P.O. Box 029006,  Ft.
      Lauderdale, FL 33302. Mr. Egan owns Dancing Bear Investments, Inc.


                                       31



(2)   Includes  the shares  that Mr. Egan is deemed to  beneficially  own as the
      controlling  investor of Dancing  Bear  Investments,  Inc. and E&C Capital
      Partners,  LLLP and as the Trustee of the Michael S. Egan Grantor Retained
      Annuity  Trusts  for  the  benefit  of his  children.  Also  includes  (i)
      3,838,269  shares of our common stock  issueable  upon exercise of options
      that  are  currently  exercisable  and  971  shares  of our  common  stock
      issueable upon exercise of options that are exercisable  within 60 days of
      April 5,  2004;  (ii)  3,541,337  shares of our  common  stock held by Mr.
      Egan's wife,  as to which he  disclaims  beneficial  ownership;  and (iii)
      204,082 shares of our common stock  issueable upon exercise of warrants at
      $1.22 per share owned by Mr. Egan and his wife.

(3)   Includes  2,458,269  shares of our common stock issueable upon exercise of
      options that are currently  exercisable and 971 shares of our common stock
      issueable upon exercise of options that are exercisable  within 60 days of
      April 5, 2004.

(4)   Includes  618,929  shares of our common stock  issueable  upon exercise of
      options  that are  currently  exercisable,  and 2,032 shares of our common
      stock  issueable upon exercise of options that are  exercisable  within 60
      days of April 5, 2004.

(5)   Includes  50,000  shares of our common stock  issueable  upon  exercise of
      options that are  currently  exercisable,  and 12,500 shares of our common
      stock  issueable upon exercise of options that are  exercisable  within 60
      days of April 5, 2004.

(6)   E&C  Capital  Partners,  LLLP  is  a  privately  held  investment  vehicle
      controlled  by our Chairman,  Michael S. Egan.  Our  President,  Edward A.
      Cespedes,  has  a  minority,   non-controlling  interest  in  E&C  Capital
      Partners,  LLLP. E&C Capital Partners,  LLLP's mailing address is P.O. Box
      029006, Ft. Lauderdale, FL 33302.

(7)   Includes  9,043,750  shares of our common stock  issuable upon exercise of
      warrants at $0.001 per share. All of such shares and warrants are owned of
      record by client  accounts  and  funds  for  which  Wellington  Management
      Company,  LLP acts as manager or advisor.  Wellington's mailing address is
      75 State Street, Boston, MA 02109.


                            DESCRIPTION OF SECURITIES

GENERALLY

We are  currently  authorized  to issue  203,000,000  shares  of  capital  stock
consisting of:


      o     200,000,000  shares  of common  stock,  par value of $.001 per share
            ("Common  Stock"),  132,040,349  shares  of which  were  issued  and
            outstanding as of April 5, 2004, and


      o     3,000,000 shares of preferred stock, $.001 par value, 425,000 shares
            of which have been  designated  as "Series F  Preferred  Stock",  of
            which no shares are issued and  outstanding,  25,000 shares of which
            have been  designated  as "Series G  Preferred  Stock",  of which no
            shares are issued and outstanding,  and 250,000 shares of which have
            been designated Junior Participating  Preferred,  of which no shares
            are issued  and  outstanding,  and which was  created as part of the
            Company's stockholder rights plan.

Each  holder of Common  Stock is  entitled  to one vote per share on all matters
submitted to a vote of  stockholders,  including the election of directors.  The
Common Stock does not have cumulative  voting rights,  which means that (subject
to the rights of the holders of any Preferred Stock),  the holders of a majority
of the shares  voting for  election  of  directors  can elect all members of the
Board of Directors.  Subject to the preferential rights of the holders of shares
of Preferred Stock, the holders of Common Stock are entitled to share ratably in
such  dividends,  if any, as may be declared  and paid by the Board of Directors
out of funds legally  available  therefor.  At this time,  we do not  anticipate
paying any cash  dividends  for the  foreseeable  future.  Upon  liquidation  or
dissolution  of the Company,  the holders of Common Stock of the Company will be
entitled to share  ratably in the assets of the Company  legally  available  for
distribution  to  stockholders  after payment of liabilities  and subject to the
prior  rights of any holders of  Preferred  Stock then  outstanding.  Holders of
Common  Stock  have no  conversion,  sinking  fund,  redemption,  preemptive  or
subscription  rights.  The rights,  preferences,  and  privileges  of holders of
Common Stock are subject to the rights of the holders of shares of any series of
Preferred Stock which the Company may issue in the future.


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The Board of Directors is authorized,  subject to any limitations  prescribed by
law,  from  time to time to issue up to an  aggregate  of  3,000,000  shares  of
Preferred  Stock in one or more classes or series,  each of such class or series
to have such preferences,  voting powers, qualifications and special or relative
rights or  privileges  as shall be  determined  by the Board of  Directors  in a
resolution  or  resolutions  providing  for the issue of such class or series of
Preferred Stock. Thus, any class or series may, if so determined by the Board of
Directors,  have full voting rights with the Common Stock or superior or limited
voting rights,  to be convertible  into Common Stock or another  security of the
Company, and have such other preferences, relative rights and limitations as the
Company's Board of Directors shall determine.  As a result,  any class or series
of  Preferred  Stock could have rights which could  adversely  affect the voting
power of the Common  Stock or which  could  delay,  defer or prevent a change in
control of the  Company.  The shares of any class or series of  Preferred  Stock
need not be identical.

OUTSTANDING OPTIONS AND WARRANTS

As of April 5, 2004,  we had issued and  outstanding  options  and  warrants  to
acquire  approximately  10,050,000  and  24,250,000  shares of our Common Stock,
respectively.  In addition to the warrants describe above the Company also holds
in escrow warrants to acquire up to 2,250,000 shares of Common Stock, subject to
release  over  approximately  the next two years  (some of which may  accelerate
under certain  events) upon the  attainment of certain  performance  objectives.
Many  of  the  outstanding   instruments   representing   the  warrants  contain
anti-dilution  provisions  pursuant to which the  exercise  prices and number of
shares issueable upon exercise may be adjusted.

REGISTRATION RIGHTS


The Company has filed the registration  statement, of which this prospectus is a
part, pursuant to registration rights which it granted as part of the March 2004
PIPE  Offering.  Pursuant to the PIPE  Offering,  the  Company  agreed to file a
registration  statement relating to the resale of the shares of common stock and
the shares of common stock  underlying  the warrants (the  "Underlying  Shares")
issued in such Offering no later than April 22, 2004. The Company further agreed
to use all  reasonable  efforts  to  cause  such  registration  statement  to be
declared effective no later than June 6, 2004, if the registration  statement is
not reviewed by the Commission,  or July 6, 2004, if the registration  statement
is reviewed by the Commission, and to keep such registration statement effective
until  the  earlier  of (i) March  15,  2006,  (ii) the date by which all of the
shares  and  Underlying  Shares  have been sold  pursuant  to such  registration
statement,  and (iii) the date by which the  shares  and  Underlying  Shares are
eligible  to be  sold  by  non-affiliates  of  the  Company  under  Rule  144(k)
promulgated  under the  Securities  Act.  If the Company had failed to meet such
initial  filing  date or  effective  date,  the Company may have been liable for
significant late fees to the investors in the PIPE Offering.  This prospectus is
intended to satisfy our obligations to the investors in the PIPE Offering.

Holders of substantially  all other privately  placed  securities of the Company
also have certain  registration  rights,  including various demand  registration
rights which, subject to certain qualifications and deferrals,  may be exercised
by  certain  of  the  investors  commencing  after  the  effective  date  of the
registration  statement of which this  prospectus  is a part,  and as to others,
commencing in July 2004 and thereafter. The Company has voluntarily included, on
a "piggy-back"  basis, in this prospectus  shares to be offered by other selling
stockholders  who were granted  registration  rights by the Company prior to the
PIPE Offering.


As part of the PIPE Offering,  Messrs. Egan and Cespedes,  together with certain
other related parties and Halpern  Capital,  Inc.,  agreed to a lock-up of their
shares of Common  Stock and  warrants  to acquire  shares of Common  Stock for a
period of 90 days commencing with the effective date of this prospectus.


                                       33



LIMITATION ON LIABILITY

Our  certificate  of  incorporation  limits or  eliminates  the liability of our
directors  or officers to us or our  stockholders  for  monetary  damages to the
fullest extent  permitted by the Delaware  General  Corporation Law, or DGCL, as
amended.  The  DGCL  provides  that a  director  of  our  company  shall  not be
personally liable to us or our stockholders for monetary damages for a breach of
fiduciary duty as a director, except for liability:

      o     for any breach of such person's duty of loyalty;

      o     for acts or  omissions  not in good faith or  involving  intentional
            misconduct or a knowing violation of law;

      o     for the  payment  of  unlawful  dividends  and  some  other  actions
            prohibited by Delaware corporate law; and

      o     for any  transaction  resulting  in  receipt  by such  person  of an
            improper personal benefit.

The  certificate  of  incorporation  also provides  that the directors  shall be
entitled to the  benefits  of all  limitations  on the  liability  of  directors
generally that now or hereafter become available under the DGCL.

The  certificate of  incorporation  also contains  provisions  indemnifying  our
directors, officers and employees to the fullest extent permitted by the DGCL.

We  maintain  directors'  and  officers'  liability  insurance  to  provide  our
directors and officers with  insurance  coverage for losses  arising from claims
based on breaches of duty, negligence, error and other wrongful acts.

RIGHTS AGREEMENT

Our board of directors adopted a Rights Agreement. Under the Rights Agreement:

      o     our board of directors  declared a dividend of one  preferred  stock
            purchase right (a "Right") for each outstanding  share of our common
            stock; and

      o     each Right  entitles the  registered  holder a purchase  from us one
            one-thousandth  of a share of a new  series of junior  participating
            preferred  stock,  par value $.001 per share (the "Junior  Preferred
            Stock"), at a price to be determined by our board of directors,  per
            one  one-thousandth  of  a  share  (the  "Purchase   Price"),   with
            adjustment.

The  description  and terms of the Rights are  described  in a Rights  Agreement
between us and the designated  Rights Agent. The description  presented below is
intended as a summary  only and is qualified in its entirety by reference to the
Rights  Agreement,  a form of which  has  been  filed  as an  exhibit  to one of
previous registration statements. See "Where You Can Find More Information".

The Rights are attached to all certificates  representing  outstanding shares of
our common stock,  and no separate  Right  Certificates  were  distributed.  The
Rights will  separate  from the shares of our common stock as soon as one of the
following two events occur:

      o     a public  announcement  that, without the prior consent of our board
            of directors,  a person or group (an "Acquiring Person"),  including
            any  affiliates  or  associates  of that  person or group,  acquired
            beneficial  ownership of securities having 15% or more of the voting
            power  of  all  our  outstanding  voting  securities.  Dancing  Bear
            Investments,  Michael S. Egan, certain other designated  individuals
            or any entities  controlled by these persons are not included in the
            definition of Acquiring Person; and

      o     ten (10)  business  days,  or a later date as our board of directors
            may determine,  following the commencement of, or announcement of an
            intention that remains in effect for five (5) business days to make,
            tender  offer or exchange  offer that would  result in any person or
            group becoming an Acquiring Person.

We refer to the  earlier of these  dates as the  "Distribution  Date." The first
date of  public  announcement  that a person or group  has  become an  Acquiring
Person is the "Stock Acquisition Date."


                                       34



Until the Distribution  Date,  Rights will be transferred with and only with the
shares of our common stock. In addition, until the Distribution Date, or earlier
redemption or expiration, of the Rights:

      o     new common stock  certificates  issued upon transfer or new issuance
            of shares of common stock will contain a notation  incorporating the
            Rights Agreement by reference; and

      o     the surrender for transfer of any  certificates for shares of common
            stock outstanding, even without a notation, will also constitute the
            transfer of the Rights  associated  with the shares of common  stock
            represented by the certificate.

As soon as practicable  following the Distribution Date,  separate  certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the shares of common  stock as of the close of business  on the  Distribution
Date, and to each initial record holder of various shares of common stock issued
after the Distribution Date. The separate Right Certificates alone will evidence
the Rights.  The Rights are not exercisable until the Distribution Date and will
expire at 5:00 P.M., New York, New York time, on the tenth (10th) anniversary of
the date of issuance, unless earlier redeemed by us as described below.

If any person  becomes  an  Acquiring  Person,  except by a  Permitted  Offer as
defined below,  each holder of a Right will have,  under the terms of the Rights
Agreement,  the right (the "Flip-In  Right") to receive upon exercise the number
of shares of common stock, or, in the discretion of our board of directors,  the
number of  one-thousandths  of a share of Junior  Preferred  Stock,  or, in some
circumstances,  our other  securities,  having a value  immediately  before  the
triggering  event equal to two times the  Purchase  Price.  Notwithstanding  the
description  above,  following the occurrence of the event described  above, all
Rights that are, or generally were,  beneficially  owned by any Acquiring Person
or any affiliate or associate of an Acquiring Person will be null and void.

A "Permitted Offer" is a tender or exchange offer for all outstanding  shares of
common stock which is at a price and on terms determined, before the purchase of
shares  under the  tender or  exchange  offer,  by a majority  of  Disinterested
Directors,  as defined  below,  to be adequate,  taking into account all factors
that the  Disinterested  Directors  deem  relevant,  and  otherwise  in our best
interests  and our  stockholders'  best  interest,  other than the person or any
affiliate  or  associate  on whose  behalf the offer is being made,  taking into
account all factors that the Disinterested Directors may deem relevant.

"Disinterested Directors" are our directors who are not our officers and who are
not Acquiring  Persons or affiliates  or  associates  of Acquiring  Persons,  or
representatives of any of them.

If, at any time following the Stock Acquisition Date,

      o     we  are  acquired  in  a  merger  or  other   business   combination
            transaction in which the holders of all of the outstanding shares of
            common stock immediately  before the consummation of the transaction
            are not the  holders of all of the  surviving  corporation's  voting
            power; or

      o     more than 50% of our assets or earning power is sold or  transferred
            with or to an Interested Stockholder; or

      o     if in the  transaction all holders of shares of common stock are not
            offered the same consideration as any other person; then each holder
            of a Right,  except  Rights  which  previously  have been  voided as
            described  above,  shall  afterwards  have the right (the "Flip-Over
            Right") to receive,  upon  exercise,  shares of common  stock of the
            acquiring  company  having a value  equal to two times the  Purchase
            Price.  The holders of a Right will  continue to have the  Flip-Over
            Right whether or not the holder  exercises or surrenders the Flip-In
            Right.

The Purchase  Price  payable,  and the number of  one-thousandths  of a share of
Junior Preferred Stock or other securities issuable, upon exercise of the Rights
may be adjusted from time to time to prevent dilution in the event of any one of
the following:

      o     a   stock   dividend   on,   or  a   subdivision,   combination   or
            reclassification of, the shares of Junior Preferred Stock; the grant
            to holders of the shares of Junior Preferred stock of various rights
            or warrants to subscribe for or purchase shares of Junior  Preferred
            Stock at a price;


                                       35



      o     or securities convertible into shares of Junior Preferred Stock with
            a conversion  price,  less then the then current market price of the
            shares of Junior Preferred Stock; or

      o     the  distribution to holders of the shares of Junior Preferred Stock
            of evidences of indebtedness or assets,  excluding regular quarterly
            cash dividends,  or of subscription  rights or warrants,  other than
            those referred to above.

The Purchase  Price  payable,  and the number of  one-thousandths  of a share of
Junior Preferred Stock or other securities issuable, upon exercise of the Rights
may also be  adjusted  in the  event of a stock  split of the  shares  of common
stock,  or a stock  dividend on the shares of common stock  payable in shares of
common stock, or subdivisions,  consolidations  or combinations of the shares of
common stock occurring, in any case, before the Distribution Date.

With some exceptions, no adjustment in the Purchase Price will be required until
cumulative  adjustments  require an  adjustment  of at least 1% in the  Purchase
Price. No fractional  one-thousandths  of a share of Junior Preferred Stock will
be issued and,  instead,  an adjustment in cash will be made based on the market
price of the shares of Junior Preferred Stock on the last trading day before the
date of exercise.

At any time  before the earlier to occur of (1) a person  becoming an  Acquiring
Person or (2) the  expiration of the Rights,  we may redeem the Rights in whole,
but not in part, at a price of $.001 per Right (the "Redemption  Price"),  which
redemption  shall  be  effective  upon the  action  of our  board of  directors.
Additionally,  we may redeem the then  outstanding  Rights in whole,  but not in
part, at the Redemption Price at any one of the following times:

      o     after the  triggering of the Flip-In Right and before the expiration
            of any period  during  which the Flip-In  Right may be  exercised in
            connection with a merger or other business  combination  transaction
            or series of  transactions  involving  us in which  all  holders  of
            shares of our common  stock are not offered  the same  consideration
            but not  involving  an  Interested  Stockholder,  as  defined in the
            Rights Agreement;

      o     following  an  event  giving  rise  to,  and the  expiration  of the
            exercise  period  for,  the  Flip-In  Right if and for as long as no
            person beneficially owns securities  representing 15% or more of the
            voting power of our voting securities; and

      o     when  the  Acquiring  Person  reduces  his  ownership  below  5%  in
            transactions not involving us.

The redemption of Rights  described above shall be effective only as of the time
when the Flip-In Right is not exercisable, and in any event, only after ten (10)
business  days' prior notice.  Upon the effective  date of the redemption of the
Rights,  the right to exercise the Rights will  terminate and the only rights of
the holders of Rights will be to receive the Redemption Price.

The shares of Junior  Preferred  Stock  purchasable  upon exercise of the Rights
will be  nonredeemable  and junior to any other series of preferred stock we may
issue, unless otherwise provided in the terms of the stock. Each share of Junior
Preferred Stock will have a preferential  quarterly  dividend in an amount equal
to 1,000 times the dividend  declared on each share of common  stock,  but in no
event  less than  $1.00.  In the event of  liquidation,  the  holders  of Junior
Preferred Stock will receive a minimum  preferred  liquidation  payment equal to
the greater of $1.00 or 1,000  times the  payment  made per each share of common
stock.  Each  share of Junior  Preferred  Stock will have  1,000  votes,  voting
together  with  the  shares  of  common  stock.  In the  event  of  any  merger,
consolidation  or  other  transaction  in  which  shares  of  common  stock  are
exchanged,  each share of Junior  Preferred  Stock will be  entitled  to receive
1,000 times the amount and type of  consideration  received  per share of common
stock. The rights of the Junior Preferred Stock as to dividends, liquidation and
voting, and in the vent of mergers and consolidations are protected by customary
anti-dilution  provisions.  Fractional  shares of Junior Preferred Stock will be
issuable;  however,  we may elect to distribute  depositary  receipts in lieu of
fractional  shares.  In lieu of fractional  shares other than fractions that are
multiples of one  one-thousandth  of a share, an adjustment in cash will be made
based on the market price of the Junior Preferred Stock on the last trading date
before the date of exercise.

Until a Right is exercised,  the holder will have no rights as our  stockholder,
including,  without limitation, the right to vote or to receive dividends. While
the distribution of the Rights was not taxable to our stockholders, stockholders
may,  depending  upon the  circumstances,  recognize  taxable  income should the
Rights become exercisable or upon the occurrence of some subsequent events.


                                       36



The Rights have various anti-takeover effects. The Rights will cause substantial
dilution  to a person or group of persons  that  attempts to acquire us on terms
not approved by our board of directors. The Rights should not interfere with any
merger of other business  combination  approved by our board of directors before
the time that a person or group has  acquired  beneficial  ownership  of fifteen
percent (15%) or more of our common stock since the Rights may be redeemed by us
at the Redemption Price until that time.

"Interested  Stockholder"  means any Acquiring Person or any of their affiliates
or  associates,  or any  other  person  in which an  Acquiring  Person  or their
affiliates  or  associates  have in  excess  of five  percent  (5%) of the total
combined  economic or voting power, or any person acting in concert or on behalf
of any Acquiring Person or their affiliates or associates.

DELAWARE LAW AND VARIOUS CHARTER AND BY-LAWS PROVISIONS

DELAWARE LAW. We must comply with the  provisions of Section 203 of the Delaware
General  Corporation  Law. In general,  Section  203  prohibits a publicly  held
Delaware  corporation  from  engaging  in  a  "business   combination"  with  an
"interested  stockholder"  for a period of three (3) years after the date of the
transaction  in which the person becomes an interested  stockholder,  unless the
business combination is approved in a prescribed manner.

A  "business  combination"  includes a merger,  asset sale or other  transaction
resulting in a financial benefit to the interested  stockholder.  An "interested
stockholder" is a person who, together with affiliates and associates, owns, or,
in some cases,  within three (3) years prior,  did own, fifteen percent (15%) or
more  of  the  corporation's   voting  stock.  Under  Section  203,  a  business
combination  between the Company and an  interested  stockholder  is  prohibited
unless it satisfies one of the following three (3) conditions:

      o     our board of  directors  must have  previously  approved  either the
            business  combination  or  the  transaction  that  resulted  in  the
            stockholder becoming an interested stockholder;

      o     upon   consummation  of  the   transaction   that  resulted  in  the
            stockholder  becoming  an  interested  stockholder,  the  interested
            stockholder  owned at least 85% of our voting stock  outstanding  at
            the time the  transaction  commenced,  excluding,  for  purposes  of
            determining  the number of shares  outstanding,  shares owned by (1)
            persons who are directors  and also officers and (2) employee  stock
            plans, in some instances; and

      o     the business  combination  is approved by our board of directors and
            authorized at an annual or special  meeting of the  stockholders  by
            the  affirmative  vote of the  holders  of at  least  66 2/3% of the
            outstanding  voting  stock  that  is not  owned  by  the  interested
            stockholder.

SPECIAL MEETINGS.  Our by-laws provide that special meetings of stockholders for
any purpose or purposes  can be called only upon the request of our  chairman of
the board,  our  president,  our board of  directors,  or the  holders of shares
entitled to at least a majority of the votes at the meeting.

AMENDMENT OF OUR BY-LAWS. To adopt, repeal, alter or amend the provisions of our
by-laws,  our by-laws require either the  affirmative  vote of the holders of at
least a majority of the voting power of all of the issued and outstanding shares
of our  capital  stock  entitled  to  vote  on the  matter  or by our  board  of
directors.

ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND PROPOSALS. Our by-laws
establish  advance notice  procedures for  stockholders  to make  nominations of
candidates for election as directors,  or bring other business  before an annual
meeting of our stockholders.  These procedures provide that only persons who are
nominated by or at the direction of our board of directors,  or by a stockholder
who has given timely written notice to our secretary before the meeting at which
directors  are to be  elected,  will  be  eligible  for  election  as one of our
directors. Further, these procedures provide that at an annual meeting, the only
business  that may be conducted is the business  that has been  specified in the
notice  of the  meeting  given  by, or at the  direction  of,  our board of by a
stockholder  who has  given  timely  written  notice  to our  secretary  of such
stockholder's intention to bring that business before the meeting.


                                       37



Under these procedures, notice of stockholder nominations to be made or business
to be  conducted  at an annual  meeting  must be received by us not less than 60
days nor more than 90 days before the date of the  meeting,  or, if less than 70
days' notice or prior public  disclosure  of the date of the meeting is given or
made to the  stockholders,  the 10th day  following  the  earlier of (1) the day
notice  was  mailed,  or (2) the day public  disclosure  was made.  Under  these
procedures,  notice of a stockholder  nomination to be made at a special meeting
at which  directors  are to be elected must be received by us not later than the
close of business on the tenth (10th) day  following  the day on which notice of
the date of the special  meeting was mailed or public  disclosure of the date of
the special meeting was made, whichever occurs first.

Under our by-laws, a stockholder's  notice nominating a person for election as a
director must contain  specific  information  about the proposed nominee and the
nominating  stockholder.  If our chairmen  determines  that a nomination was not
made in the manner described in our by-laws, the nomination will be disregarded.
Similarly, a stockholder's notice proposing the conduct of business must contain
specific information about the business and about the proposing stockholder.  If
our  chairman  determines  that  business was not  properly  brought  before the
meeting  in the  manner  described  in our  by-laws,  the  business  will not be
conducted.

By requiring  advance notice of nominations by stockholders,  our by-laws afford
our board an opportunity to consider the  qualifications of the proposed nominee
and,  to the extent  deemed  necessary  or  desirable  by our  board,  to inform
stockholders  about these  qualifications.  By requiring advance notice of other
proposed business,  our by-laws also provide an orderly procedure for conducting
annual meetings of stockholders and, to the extent deemed necessary or desirable
by our board,  provides our board with an  opportunity  to inform  stockholders,
before  meetings,  of any business  proposed to be  conducted  at the  meetings,
together with any recommendations as to our board's position regarding action to
be taken with respect to the business,  so that  stockholders  can better decide
whether to attend a meeting or to grant a proxy regarding the disposition of any
business.

Although  our  certificate  does not give our  board  any  power to  approve  or
disapprove stockholder nominations of the election of directors or proposals for
action, the foregoing provisions may have the effect of precluding a contest for
the election of directors or the  consideration of stockholder  proposals if the
proper  procedures are not followed,  and of  discouraging  or deterring a third
party  from  conducting  a  solicitation  of  proxies  to elect its own slate of
directors  or  to  approve  its  own   proposal,   without   regard  to  whether
consideration  of these nominees or proposals  might be harmful or beneficial to
us and our stockholders.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock Transfer
& Trust Company.

                             VALIDITY OF SECURITIES

Proskauer  Rose LLP will pass on the validity of the common stock  offered under
this prospectus for the Company.

                                     EXPERTS

Our  consolidated  financial  statements  as of December  31, 2003 are  included
herein and in the registration  statement in reliance upon the report of Rachlin
Cohen & Holtz  LLP,  independent  certified  public  accountants,  and  upon the
authority of said firm as experts in accounting and auditing.

              DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
                         FOR SECURITIES ACT LIABILITIES

Section 145 of the Delaware General  Corporation Law ("DGCL")  provides that, to
the extent a  director,  officer,  employee or agent of a  corporation  has been
successful  on the  merits  or  otherwise  in  defense  of any  action,  suit or
proceeding,  whether civil,  criminal,  administrative  or  investigative  or in
defense of any claim, issue, or matter therein (hereinafter a "Proceeding"),  by
reason of the fact that person is or was a director,  officer, employee or agent
of a corporation  or is or was serving at the request of such  corporation  as a
director, officer, employee or agent of another corporation or of a partnership,
joint  venture,  trust or  other  enterprise  (collectively  an  "Agent"  of the
corporation)  that  person  shall be  indemnified  against  expenses  (including
attorney's  fees)  actually  and  reasonably   incurred  by  him  in  connection
therewith.


                                       38



The DGCL also provides that a corporation may indemnify any person who was or is
a party or is  threatened  to be made a party to any  threatened  Proceeding  by
reason of the fact that  person is or was an Agent of the  corporation,  against
expenses  (including  attorney's  fees),  judgment,  fines and  amounts  paid in
settlement  actually and reasonably  incurred by that person in connection  with
such  action,  suit or  proceeding  if that person  acted in good faith and in a
manner  that  person  reasonably  believed to be in, or not opposed to, the best
interest  of the  corporation,  and,  with  respect  to any  criminal  action or
proceeding,  had no  reasonable  cause to  believe  that  person's  conduct  was
unlawful;  provided,  however,  that  in an  action  by or in the  right  of the
corporation,  the  corporation  may not indemnify  such person in respect of any
claim,  issue, or matter as to which that person is adjudged to be liable to the
corporation  unless,  and only to the extent that,  the Court of Chancery or the
court  in which  such  proceeding  was  brought  determined  that,  despite  the
adjudication of liability but in view of all the circumstances of the case, such
person is reasonably entitled to indemnity.

Article VI of the By-laws  requires the Company to indemnify  any person who was
or is a party or is threatened to be made a party to or is involved  (including,
without  limitation,  as a witness)  in any  threatened,  pending  or  completed
action,  suit,  arbitration,   alternative  dispute  mechanism,   investigation,
administrative  hearing  or  any  other  proceeding,  whether  civil,  criminal,
administrative or investigative  (other than an action by or in the right of the
Company)  brought by reason of the fact that he or she is or was a  director  or
officer of the Company,  or,  while a director or officer of the Company,  is or
was  serving at the  request of the  Company as a director or officer of another
corporation,  partnership,  joint venture, trust or other enterprise,  including
service with respect to an employee  benefits plan against  expenses  (including
attorneys' fees,  judgments,  fines,  excise taxes under the Employee Retirement
Income Security Act of 1974,  penalties and amounts paid in settlement) incurred
by him or her in  connection  with such action,  suit or proceeding if he or she
acted in good faith and in a manner he or she  reasonably  believed  to be in or
not opposed to the best  interests  of the  Company,  and,  with  respect to any
criminal  action or  proceeding,  had no reasonable  cause to believe his or her
conduct was unlawful.

Article  VI  of  the  Company's  Fourth  Amended  and  Restated  Certificate  of
Incorporation (the  "Certificate")  provides that to the fullest extent that the
DGCL,  as it now exists or may hereafter be amended,  permits the  limitation or
elimination  of the liability of directors,  a director of the Company shall not
be liable to the Company or its  stockholders for monetary damages for breach of
fiduciary duty as a director.

The Company has entered  into  indemnification  agreements  with  certain of its
directors and officers.  These agreements provide, in general,  that the Company
will  indemnify such directors and officers for, and hold them harmless from and
against,  any and all amounts  paid in  settlement  or incurred  by, or assessed
against,  such directors and officers  arising out of or in connection  with the
service of such  directors  and officers as a director or officer of the Company
or its  Affiliates  (as  defined  therein) to the fullest  extent  permitted  by
Delaware Law.

The  Company  maintains  directors'  and  officers'  liability  insurance  which
provides for payment, on behalf of the directors and officers of the Company and
its  subsidiaries,  of  certain  losses  of such  persons  (other  than  matters
uninsurable  under law) arising from claims,  including claims arising under the
Securities  Act, for acts or omissions by such persons while acting as directors
or officers of the Company and/or its subsidiaries, as the case may be.

Insofar as indemnification  for liabilities arising under the Securities Act may
be  permitted  to  directors,  officers or persons  controlling  the  Registrant
pursuant to the foregoing provisions,  the Registrant has been informed that, in
the opinion of the Commission,  such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.

                             DESCRIPTION OF BUSINESS

OVERVIEW

theglobe.com, inc. (the "Company" or "theglobe") was incorporated on May 1, 1995
(inception) and commenced operations on that date. Originally,  theglobe.com was
an online  community with registered  members and users in the United States and
abroad.  That  product  gave  users the  freedom  to  personalize  their  online
experience by publishing their own content and by interacting with others having
similar interests.  However,  due to the deterioration of the online advertising
market,  the Company was forced to restructure  and ceased the operations of its
online community on August 15, 2001. The Company then sold most of its remaining
online and offline  properties.  In October  2001,  the Company  sold all of the
assets used in connection  with the Games Domain and Console Domain  websites to
British  Telecommunications  plc, and all of the assets used in connection  with
the Kids Domain  website to Kaboose Inc. In February  2002, the Company sold all
of the assets used in  connection  with the Happy Puppy website to Internet Game
Distribution, LLC.


                                       39



On June 1, 2002, Chairman Michael S. Egan and Director Edward A. Cespedes became
Chief Executive Officer and President of the Company,  respectively. The Company
continues  to operate its  Computer  Games  print  magazine  and the  associated
website  Computer  Games  Online  (www.cgonline.com),   as  well  as  the  games
distribution  business of Chips & Bits,  Inc.  (www.chipsbits.com).  The Company
continues  to  actively  explore  a number  of  strategic  alternatives  for its
remaining  online  and  offline  game  properties,   including   continuing  its
operations  or selling some or all of these  properties.  We may also enter into
additional or different lines of business. Except as described below, we have no
current  arrangements  or  understanding  by  which  we may  enter  into  new or
additional lines of business.

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

In  February  2003,  the  Company  committed  to fund  operating  expenses  of a
development stage Internet venture at the Company's  discretion in the form of a
loan. As of December 31, 2003,  approximately  $0.5 million had been advanced to
the venture.  We have the option to acquire this  development  stage  venture in
exchange  for the  issuance  of a  nominal  amount of cash and an  aggregate  of
2,000,000 shares of our common stock.


On May 28, 2003, the Company acquired Direct Partner Telecom,  Inc.  ("DPT"),  a
company engaged in VoIP telephony  services in exchange for 1,375,000  shares of
the  Company's  Common  Stock and the  issuance of  warrants to acquire  500,000
shares of the  Company's  Common  Stock.  The  transaction  included an earn-out
arrangement  whereby the former stockholders of DPT may earn additional warrants
to acquire up to 2,750,000  shares of the Company's  Common Stock at an exercise
price of $0.72 per share upon the attainment of certain  performance  targets by
DPT over  approximately  a three year period  following the date of acquisition.
The  performance  targets for the first 500,000 of these earn-out  warrants were
not achieved and expired on March 31, 2004.  Subject to certain  qualifications,
the warrants will also accelerate and be deemed earned in the event of a "change
in control" of the Company, as defined in the acquisition  documents.  DPT was a
specialized  international  communications carrier providing VoIP communications
services to emerging countries. DPT is headquartered in Ft. Lauderdale,  Florida
with  switching  facilities in New York,  New York and Miami,  Florida.  The DPT
network provides "next generation"  packet-based  telephony and value added data
services to carriers and businesses in the United States and Internationally.


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

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

OUR PRODUCTS AND SERVICES

As of December 31,  2003,  we managed two primary  lines of  business.  One line
consists of our historical  network of three  wholly-owned  businesses,  each of
which  specializes in the games  business by delivering  games  information  and
selling games in the United States and abroad.  These  businesses are: our print
publication   Computer  Games  Magazine;   our  Computer  Games  Online  website
(www.cgonline.com),  which is the online counterpart to Computer Games Magazine;
and our  Chips & Bits,  Inc.  (www.chipsbits.com)  games  distribution  company.
Management  of the Company  continues to actively  explore a number of strategic
alternatives  for its remaining  online and offline game  properties,  including
continuing its existing  operations and using its cash on hand,  selling some or
all of these properties and/or entering into new or different lines of business.


                                       40



The  second  line  of  business,  VoIP  telephony  services,  includes  voiceglo
Holdings, Inc., a wholly-owned subsidiary of theglobe.com that offers VoIP-based
phone  service.  The term "VoIP"  refers to a category of hardware  and software
that enables people to use the Internet to make phone calls.

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

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

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

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

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

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

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

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

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

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

      o     GloPhone users speak free to other GloPhone users;


                                       41



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

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

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

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

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

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

      o     voiceglo users speak free to other voiceglo users.

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

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

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

OUR COMPUTER GAMES BUSINESS

Computer  Games  Magazine.  Computer Games Magazine is a consumer print magazine
for gamers.


                                       42



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

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

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

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

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

Advertising.  We continue to attract  major  advertisers  to our Computer  Games
print magazine,  which is a widely respected consumer print magazine for gamers.
In 2003, no single advertiser accounted for more than 10% of total revenues. For
the twelve  months ended  December 31, 2003,  over 40 clients  advertised in our
Computer  Games  magazine.  Following a series of cost  reduction  measures  and
restructuring,  we currently have an internal advertising sales staff of two (2)
professionals,  both of whom are dedicated to selling  advertising  space in our
Computer Games print magazine.  Although these professionals focus on developing
long-term  strategic  relationships with clients as they sell  advertisements in
our Computer Games print magazine,  most of our actual advertising contracts are
for periods of one to three months.  All  compensation to our sales personnel is
commission based.

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

COMPETITION

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

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


                                       43



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

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

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

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

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

COMPUTER GAMES  BUSINESS.  Competition  among games print  magazines is high. We
compete for advertising and circulation  revenues principally with publishers of
other  technology  and games  magazines  with similar  editorial  content as our
magazine. The technology magazine industry has traditionally been dominated by a
small  number  of large  publishers.  We  believe  that we  compete  with  other
technology  and  games  publications  based on the  nature  and  quality  of our
magazines' editorial content and the attractive  demographics of our readers. In
recent years, demand for online and PC based games has decreased as non PC based
game consoles, including those from Sony (PlayStation II), Microsoft (X-Box) and
Nintendo (Game Boy and GameCube), have made major product advancements.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

We regard  substantial  elements of our Websites and  underlying  technology  as
proprietary.  In  addition,  we have  developed  in our  VoIP  business  certain
technologies  which we  believe  are  proprietary  and are  seeking  to  develop
additional propriety  technology.  We attempt to protect these assets by relying
on  intellectual  property  laws. We also generally  enter into  confidentiality
agreements with our employees and consultants and in connection with our license
agreements  with  third  parties.   We  also  seek  to  control  access  to  and
distribution of our technology, documentation and other proprietary information.
Despite  these  precautions,  it may be  possible  for a third  party to copy or
otherwise obtain and use our proprietary information without authorization or to
develop  similar  technology  independently.  We pursue the  registration of our
trademarks  in the  United  States  and  internationally  and  we are  currently
pursuing patent protection for certain of our VoIP technology, including certain
technology related to our linkage of a telephone number to an IP address and our
browser to telephone interface.

Effective trademark, service mark, copyright, patent and trade secret protection
may not be available in every  country in which our services are made  available
through the Internet.  Policing unauthorized use of our proprietary  information
is  difficult.  Existing or future  trademarks  or service  marks applied for or
registered  by other  parties  and which are similar to ours may prevent us from
expanding  the  use of our  trademarks  and  service  marks  into  other  areas.
Enforcing  our  patent  rights  could  result in costly  litigation.  Our patent
applications  could be rejected or any patents  granted could be  invalidated in
litigation.  Should  this  happen,  we  would  lose  a  significant  competitive
advantage.  Additionally,  our competitors or others could be awarded patents on
technologies and business processes that could require us to significantly alter
our technology,  change our business  processes or pay  substantial  license and
royalty  fees.  (See  "Risk   Factors-We  rely  on  intellectual   property  and
proprietary rights.")


                                       44



GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

IN  GENERAL.  We are  subject to laws and  regulations  that are  applicable  to
various Internet activities.  There are an increasing number of federal,  state,
local  and  foreign  laws  and  regulations   pertaining  to  the  Internet  and
telecommunications,  including internet telephony (VoIP). In addition,  a number
of federal,  state, local and foreign  legislative and regulatory  proposals are
under  consideration.  Laws or  regulations  may be adopted  with respect to the
Internet  relating to, among other things,  fees and taxation of VoIP  telephony
services,  liability for  information  retrieved  from or  transmitted  over the
Internet,  online content  regulation,  user privacy and quality of products and
services.  Changes in tax laws relating to electronic  commerce could materially
affect  our  business,   prospects  and  financial  condition.   Moreover,   the
applicability  to the  Internet  of  existing  laws  governing  issues  such  as
intellectual property ownership and infringement,  copyright,  trademark,  trade
secret,  obscenity,  libel,  employment  and personal  privacy is uncertain  and
developing.   Any  new   legislation  or  regulation,   or  the  application  or
interpretation  of existing laws or regulations,  may decrease the growth in the
use of the Internet or VoIP telephony services, may impose additional burdens on
electronic commerce or may alter how we do business.

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

INTERNET  TELEPHONY  (VOIP)  REGULATION.  The use of the Internet and private IP
networks  to  provide  voice  communications  services  over the  Internet  is a
relatively recent market development. Although the provision of such services is
currently  permitted by United States federal law and largely unregulated within
the  United  States,  several  foreign  governments  have  adopted  laws  and/or
regulations   that  could   restrict  or  prohibit   the   provision   of  voice
communications services over the Internet or private IP networks.

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

If the FCC or any state determines to regulate VoIP, they may impose surcharges,
taxes, licensing or additional regulations upon providers of Internet telephony.
These surcharges could include access charges payable to local exchange carriers
to carry and terminate  traffic,  contributions to the universal service fund or
other  charges.   Regulations   requiring  compliance  with  the  Communications
Assistance for Law Enforcement  Act, or provision of enhanced 911 services could
also place a  significant  financial  burden on us. The  imposition  of any such
additional fees, charges, taxes, licenses and regulations on VoIP services could
materially  increase  our costs  and may  reduce or  eliminate  the  competitive
pricing advantage we seek to enjoy. We cannot predict what  regulations,  if any
the FCC will impose.


                                       45



Although Internet telephony and VoIP services are presently largely  unregulated
by  the  state   governments,   such  state  governments  and  their  regulatory
authorities  may  assert  jurisdiction  over  the  provision  of  intrastate  IP
communications  services  where  they  believe  that  their   telecommunications
regulations  are broad enough to cover  regulation  of IP services.  A number of
state  regulators  have  recently  taken the position  that VoIP  providers  are
telecommunications providers and must register as such within their states. VoIP
operators have resisted such  registration on the position that VoIP is not, and
should  not be,  subject  to such  regulations  because  VoIP is an  information
service,  not a  telecommunication  service. In a recent federal court decision,
the  Minnesota  Public  Utilities  Commission  was enjoined in their  attempt to
enforce traditional phone regulations against Vonage, a VoIP provider.  However,
other states are not bound by that  decision and may reject the VoIP  operator's
position  and  may  seek to  subject  us to  regulation  and  require  us to pay
associated  charges  and  taxes.  Various  state  regulatory   authorities  have
initiated  proceedings  to examine the regulatory  status of Internet  telephony
services, and in several cases rulings have been obtained to the effect that the
use of the Internet to provide  certain  intrastate  services does not exempt an
entity from paying  intrastate  access charges in the jurisdictions in question.
As state governments, courts, and regulatory authorities continue to examine the
regulatory status of Internet telephony services, they could render decisions or
adopt  regulations   affecting  providers  of  Internet  telephony  services  or
requiring  such   providers  to  pay  intrastate   access  charges  or  to  make
contributions to universal service funding. Should the FCC determine to regulate
IP  services,  states may decide to follow the FCC's lead and impose  additional
obligations as well.

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

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

CERTAIN OTHER REGULATION AFFECTING THE INTERNET. In the United States,  Congress
has recently adopted legislation that regulates certain aspects of the Internet,
including online content, user privacy and taxation.  In addition,  Congress and
other  federal  entities  are  considering   other  legislative  and  regulatory
proposals that would further  regulate the Internet.  Congress has, for example,
considered  legislation on a wide range of issues including  Internet  spamming,
database privacy,  gambling,  pornography and child protection,  Internet fraud,
privacy and digital signatures.  Various states have adopted and are considering
Internet-related legislation. Increased U.S. regulation of the Internet may slow
its growth,  particularly if other governments follow suit, which may negatively
impact the cost of doing  business  over the Internet and  materially  adversely
affect our  business,  financial  condition,  results of  operations  and future
prospects.  Legislation has also been proposed that would clarify the regulatory
status of VoIP service.  The Company has no way of knowing  whether  legislation
will pass or what form it might  take.  Domain  names  have been the  subject of
significant  trademark litigation in the United States and internationally.  The
current system for  registering,  allocating and managing  domain names has been
the subject of litigation  and may be altered in the future.  The  regulation of
domain  names  in  the  United  States  and in  foreign  countries  may  change.
Regulatory bodies are anticipated to establish  additional top-level domains and
may appoint  additional  domain name registrars or modify the  requirements  for
holding domain names,  any or all of which may dilute the strength of our names.
We may not acquire or maintain our domain names in all of the countries in which
our websites may be accessed,  or for any or all of the  top-level  domain names
that may be introduced.

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

EMPLOYEES

As of December 31, 2003, we had approximately 42 active full-time employees. Our
future success depends,  in part, on our ability to continue to attract,  retain
and motivate highly qualified  technical and management  personnel.  Competition
for these  persons is intense.  From time to time,  we also  employ  independent
contractors  to  support  our  network  operations,  research  and  development,
marketing, sales and support and administrative organizations. Our employees are
not represented by any collective  bargaining unit and we have never experienced
a work stoppage. We believe that our relations with our employees are good.


                                       46



            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

During 2000 and 2001, the Company  restructured its business operations and sold
off or closed most of its  businesses.  As of December 31, 2003,  we managed two
primary lines of business.  One line consists of our historical network of three
wholly owned  businesses,  each of which  specializes  in the games  business by
delivering games  information and selling games in the United States and abroad.
These  businesses  are:  our print  publication  Computer  Games  Magazine;  our
Computer   Games  Online  website   (www.cgonline.com),   which  is  the  online
counterpart  to  Computer   Games   Magazine;   and  our  Chips  &  Bits,   Inc.
(www.chipsbits.com) games distribution company.

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

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

RESULTS OF  OPERATIONS  FOR THE YEAR ENDED  DECEMBER  31, 2003  COMPARED TO YEAR
ENDED DECEMBER 31, 2002

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

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

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

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


                                       47



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

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

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

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

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


                                       48



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

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

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

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

INTEREST INCOME  (EXPENSE),  NET.  Non-cash interest expense of $1.5 million was
recorded  in the second  quarter of 2003  related to the  beneficial  conversion
feature of the  $1,750,000  in  Convertible  Notes issued on May 22,  2003.  The
expense resulted as the Convertible Notes were convertible into our Common Stock
at a price  below the fair  market  value of our Common  Stock  (for  accounting
purposes),  based on the closing  price of our Common  Stock as reflected on the
OTCBB on the issuance  date of the notes.  In  addition,  the warrant to acquire
3,888,889  shares of our  Common  Stock  issued to one of the note  holders  was
exercisable  at a price  below the fair  market  value of our Common  Stock (for
accounting  purposes),  based  on the  closing  price  of our  Common  Stock  as
reflected  on the  OTCBB on the date of  issuance.  The  value  assigned  to the
warrant was recorded as a discount to the face value of the Convertible Notes to
be  amortized  to  interest  expense  over  the term of the  Convertible  Notes.
Discount  amortization  of  approximately  $0.2 million was included in interest
expense, net, during the year ended December 31, 2003.

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

INCOME TAXES.  No tax benefit was recorded for the year ended  December 31, 2003
as we recorded a 100%  valuation  allowance  against our otherwise  recognizable
deferred tax assets due to the  uncertainty  surrounding  the timing or ultimate
realization  of the benefits of our net operating loss  carryforwards  in future
periods.  The income tax provision recorded for the year ended December 31, 2002
was based  solely on state and local taxes on business and  investment  capital.
Our  effective  tax rate differs  from the  statutory  Federal  income tax rate,
primarily as a result of the  uncertainty  regarding  our ability to utilize our
net operating loss  carryforwards.  As of December 31, 2003, the Company had net
operating  loss  carryforwards  available  for U.S.  and foreign tax purposes of
approximately  $144 million.  These  carryforwards  expire through 2023. The Tax
Reform Act of 1986 imposes  substantial  restrictions  on the utilization of net
operating  losses  and tax  credits in the event of an  "ownership  change" of a
corporation. Due to the change in our ownership interests in August 1997 and May
1999 and the Company's  recently completed PIPE Offering in March 2004 (together
with the exercise and conversion of various  securities in connection  with such
PIPE Offering), as defined in the Internal Revenue Code of 1986, as amended, the
Company may have substantially limited or eliminated the availability of its net
operating loss carryforwards. There can be no assurance that the Company will be
able to avail itself of any net operating loss carryforwards..


                                       49



LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

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

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

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


                                       50



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

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

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

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

In connection  with the PIPE Offering,  Mr. Egan, our Chairman,  Chief Executive
Officer and  principal  stockholder,  together  with certain of his  affiliates,
including E&C Capital Partners,  converted a $2,000,000 Bridge Note,  $1,750,000
of Secured  Convertible  Notes and all of the  Company's  outstanding  shares of
Series F Preferred Stock, and exercised all of the warrants issued in connection
with the  foregoing  Secured  Convertible  Notes and Series F  Preferred  Stock,
together with certain warrants issued to Dancing Bear Investments,  an affiliate
of Mr. Egan. As a result of such  conversions and exercises,  the Company issued
an aggregate of 48,775,909 additional shares of Common Stock.

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


                                       51



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

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

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

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

EFFECTS OF INFLATION

Due to  relatively  low levels of inflation in 2003 and 2002,  inflation has not
had a significant effect on our results of operations since inception.

MANAGEMENT'S DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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


                                       52



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

REVENUE RECOGNITION

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

The  Company's  games  division  participates  in  barter  transactions.  Barter
revenues and expenses are recorded at the fair market value of services provided
or  received,  whichever  is more  readily  determinable  in the  circumstances.
Revenue from barter  transactions is recognized as income when advertisements or
other products are delivered by the Company.  Barter expense is recognized  when
the Company's  advertisements  are run on other companies'  websites or in their
magazines,  which  typically  occurs within one to six months from the period in
which the related  barter  revenue is recognized.  Barter  advertising  revenues
represented  approximately  2% and 1% of consolidated  net revenue for the years
ended December 31, 2003 and 2002, respectively.

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

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

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

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

VALUATION OF CUSTOMER RECEIVABLES

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

CAPITALIZATION OF COMPUTER SOFTWARE COSTS

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


                                       53



INTANGIBLE ASSETS

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

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

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

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

      o     Significant negative industry or economic trends.

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

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

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In December  2003, the FASB issued  Interpretation  No. 46R,  "Consolidation  of
Variable  Interest  Entities,"  an  Interpretation  of ARB  51.  This  statement
requires under certain circumstances consolidation of variable interest entities
(primarily joint ventures and other participating  activities).  The Company has
not yet evaluated the impact of this pronouncement on the Company.

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


                                       54



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

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation - Transition and  Disclosure."  SFAS No. 148 amends SFAS No. 123 as
it relates to the transition by an entity to the fair value method of accounting
for  stock-based  employee  compensation.  The  provisions  of SFAS No.  148 are
effective for financial  statements  for fiscal years ending after  December 15,
2002.  The adoption of this  statement did not have a significant  impact on the
Company's financial position or results of its operations.

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

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

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

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

OFF-BALANCE SHEET ARRANGEMENTS

As of  December  31,  2003,  we did not  have  any  material  off-balance  sheet
arrangements that have or are reasonably likely to have a material effect on our
current  or  future  financial  condition,  revenues  or  expenses,  results  of
operations, liquidity, or capital resources.

                             DESCRIPTION OF PROPERTY

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


                                       55



            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The shares of our Common Stock were delisted from the NASDAQ  national market in
April  2001 and now trade in the  over-the-counter  market  on what is  commonly
referred to as the electronic  bulletin  board,  under the symbol  "TGLO.OB" The
following  table  sets  forth the range of high and low bid prices of our common
stock for the periods indicated as reported by the over-the-counter  market (the
electronic  bulletin board). The quotations below reflect  inter-dealer  prices,
without retail  mark-up,  mark-down or commission  and may not represent  actual
transactions:

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


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

HOLDERS OF COMMON STOCK

We had approximately 667 holders of record of Common Stock as of March 24, 2004.
This does not reflect  persons or entities  that hold Common Stock in nominee or
"street" name through various brokerage firms.

DIVIDENDS

We have not paid any cash  dividends on our Common Stock since our inception and
do not intend to pay dividends in the foreseeable future. Our board of directors
will determine if we pay any future dividends.



                               SECURITIES OFFERED UNDER EQUITY COMPENSATION PLANS

                           Number of securities to be      Weighted-average exercise         Number of securities
                             issued upon exercise of         price of outstanding          remaining available for
         Plan                 outstanding options,                 options,                         future
       Category                     warrants                  warrants and rights           issuance under equity
                                   and rights                                                 compensation plans
-----------------------    ----------------------------    --------------------------    -----------------------------
                                                                                
Equity Compensation                4,421,810                      $ 1.55                           400,177
plans approved by
security holders

Equity Compensation                5,521,000                      $ 0.05                           959,000
plans not  approved by
security holders

Total                              9,942,810                      $ 0.72                          1,359,177



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

      o     230,000  shares of Common  Stock of  theglobe.com,  inc.,  par value
            $0.001  per  share  ,  issued  to  Charles  Peck   pursuant  to  the
            Non-Qualified  Stock  Option  Agreement  dated  June  1,  2002 at an
            exercise  price of $0.035  per share.  These  stock  options  vested
            immediately and have a life of ten years from date of grant.


                                       56



      o     1,750,000  shares of Common Stock of theglobe.com,  inc.,  issued to
            Edward  A.  Cespedes  pursuant  to the  Non-Qualified  Stock  Option
            Agreement  dated  August 12, 2002 at an exercise  price of $0.02 per
            share. These stock options vested immediately and have a life of ten
            years from date of grant.

      o     2,500,000  shares of Common Stock of theglobe.com,  inc.,  issued to
            Michael S. Egan pursuant to the Non-Qualified Stock Option Agreement
            dated August 12, 2002 at an exercise price of $0.02 per share. These
            stock options vested  immediately  and have a life of ten years from
            date of grant.

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

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

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


                                       57


ITEM 7.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS

                                                                           PAGE
                                                                           ----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                           F-1


CONSOLIDATED FINANCIAL STATEMENTS

   Balance Sheets                                                            F-2

   Statements of Operations                                                  F-3

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

   Statements of Cash Flows                                                  F-5

   Notes to Financial Statements                                             F-7


                                       32


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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

We have audited the  accompanying  consolidated  balance sheets of theglobe.com,
inc.  and  Subsidiaries  as of  December  31,  2003 and  2002,  and the  related
consolidated  statements of operations,  stockholders'  equity and comprehensive
income (loss),  and cash flows for each of the years ended December 31, 2003 and
2002. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

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


RACHLIN COHEN & HOLTZ LLP

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


                                      F-1


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2003 AND 2002



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

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

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


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

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

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


See notes to consolidated financial statements.


                                      F-2


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 2003 AND 2002



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

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

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

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

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

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

Weighted Average Common Shares Outstanding                  38,710,917        30,382,293
                                                          ============      ============


See notes to consolidated financial statements.


                                      F-3


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

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



                                                                                                                  Accumulated
                                                                Common Stock          Additional                     Other
                                           Preferred     --------------------------    Paid-in       Treasury    Comprehensive
                                             Stock          Shares        Amount       Capital         Stock      Income (Loss)
                                          ------------   ------------  ------------  ------------  ------------   ------------
                                                                                                
Balance at December 31, 2001              $         --     31,081,574  $     31,082  $218,255,565  $   (371,458)  $   (120,866)

Year Ended December 31, 2002:
  Net loss                                          --             --            --            --            --             --

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

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

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


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

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

Year Ended December 31, 2003:
  Net loss

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

  Employee stock-based compensation                         --         417,567

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

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

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


See notes to consolidated financial statements.


                                       F-4




                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 2003 AND 2002



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

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

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

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

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

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

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




See notes to consolidated financial statements.


                                      F-5


                                   THEGLOBE.COM, INC. AND SUBSIDIARIES

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (Continued)



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

Supplemental Disclosure of Non-Cash Transactions:
    Common stock and warrants issued in connection with acquisition
       of Direct Partner Telecom, Inc.                                            $    638,000    $         --
                                                                                  ============    ============
    Conversion of Series G Automatically Converting Preferred
       Stock into Common Stock                                                    $  7,315,000    $         --
                                                                                  ============    ============
    Additional paid-in capital attributable to beneficial conversion features of
       Series F Preferred Stock and $1,750,000 Convertible Notes                  $  2,250,000    $         --
                                                                                  ============    ============
    Preferred dividends recorded as a result of beneficial conversion
       features of preferred stock issued                                         $  8,120,000    $         --
                                                                                  ============    ============
    Debt assumed in purchase of intangible asset                                  $         --    $    122,960
                                                                                  ============    ============
    Intangible asset purchased in exchange for warrants                           $         --    $     42,000
                                                                                  ============    ============



See notes to consolidated financial statements.


                                      F-6


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2003 AND 2002

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE COMPANY

theglobe.com, inc. (the "Company" or "theglobe") was incorporated on May 1, 1995
(inception) and commenced operations on that date. Originally,  theglobe.com was
an online  community with registered  members and users in the United States and
abroad.  That  product  gave  users the  freedom  to  personalize  their  online
experience by publishing their own content and by interacting with others having
similar interests.  However,  due to the deterioration of the online advertising
market,  the Company was forced to restructure  and ceased the operations of its
online community on August 15, 2001. The Company then sold most of its remaining
online and offline  properties.  In October  2001,  the Company  sold all of the
assets used in connection  with the Games Domain and Console Domain  websites to
British  Telecommunications  plc, and all of the assets used in connection  with
the Kids Domain  website to Kaboose Inc. In February  2002, the Company sold all
of the assets used in  connection  with the Happy Puppy website to Internet Game
Distribution, LLC.

On June 1, 2002, Chairman Michael S. Egan and Director Edward A. Cespedes became
Chief Executive Officer and President of the Company,  respectively. The Company
continues  to operate its  Computer  Games  print  magazine  and the  associated
website  Computer  Games  Online  (www.cgonline.com),   as  well  as  the  games
distribution  business of Chips & Bits,  Inc.  (www.chipsbits.com).  The Company
continues  to  actively  explore  a number  of  strategic  alternatives  for its
remaining  online  and  offline  game  properties,   including   continuing  its
operations and using its cash on hand,  selling some or all of these  properties
and/or entering into new or different lines of business.

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


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


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

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

                   PROFITABILITY AND LIQUIDITY CONSIDERATIONS

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


                                      F-7


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

                                    Liquidity

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

                                  Profitability

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

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

                                     Summary

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

(a) PRINCIPLES OF CONSOLIDATION

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

(b) USE OF ESTIMATES

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

(c) CASH AND CASH EQUIVALENTS

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

(d) MARKETABLE SECURITIES

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


                                      F-8


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

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

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

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

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

(e) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of certain of the Company's financial instruments, including
cash, cash equivalents,  short-term investments,  accounts receivable,  accounts
payable, accrued expenses and deferred revenue,  approximate their fair value at
December 31, 2003 and 2002 due to their short maturities.

(f) INVENTORY

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

(g) LONG-LIVED ASSETS

Long-lived  assets,  including  property  and  equipment,   goodwill  and  other
intangible  assets are reviewed for  impairment  annually or whenever  events or
changes in  circumstances  indicate that the carrying amount of an asset may not
be recoverable. If events or changes in circumstances indicate that the carrying
amount  of  an  asset  may  not  be  recoverable,   the  Company  estimates  the
undiscounted  future  cash  flows to  result  from the use of the  asset and its
ultimate disposition. If the sum of the undiscounted cash flows is less than the
carrying  value,  the Company  recognizes  an impairment  loss,  measured as the
amount by which the  carrying  value  exceeds the fair value of the asset.  Fair
value would generally be determined by market value.

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

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


                                      F-9


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

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

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

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

(h) CONCENTRATION OF CREDIT RISK

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

(i) REVENUE RECOGNITION

ADVERTISING

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

The Company  participates  in barter  transactions  whereby  the Company  trades
marketing  data in exchange  for  advertisements  in the  publications  of other
companies.  Barter revenue and expenses are recorded at the fair market value of
services  provided or received,  whichever is more readily  determinable  in the
circumstances.  Revenue from barter  transactions  is  recognized as income when
advertisements or other products are delivered by the Company. Barter expense is
recognized  when  the  Company's  advertisements  are  run in  other  companies'
magazines,  which  typically  occurs within one to six months from the period in
which barter revenue is recognized.  Barter revenue represented approximately 2%
and 1% of  consolidated  net revenue for the years ended  December  31, 2003 and
2002, respectively.

MAGAZINE SALES

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

ELECTRONIC COMMERCE AND OTHER

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

TELEPHONY SERVICES

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


                                      F-10


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

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

(j) ADVERTISING COSTS

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

(k) PRODUCT DEVELOPMENT

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

(l) STOCK-BASED COMPENSATION

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

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

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

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

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


                                      F-11


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

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


                                       2003       2002
                                     ---------  --------
Risk-free interest rate                  3.00%     4.78%
Expected life                         5 years   10 years
Volatility                                160%  135%-160%
Expected dividend rate                      0          0

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

(m)  INCOME TAXES

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

(n)  NET LOSS PER COMMON SHARE

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

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

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


                                      F-12


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

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

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

(o) COMPREHENSIVE INCOME (LOSS)

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


(p) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2003, the FASB issued Interpretation 46R, "Consolidation of Variable
Interest  Entities," an Interpretation of ARB 51. This statement  requires under
certain  circumstances  consolidation of variable interest  entities  (primarily
joint  ventures  and other  participating  activities).  The Company has not yet
evaluated the impact of this pronouncement on the Company.

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

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


                                      F-13


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

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

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

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

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

(q) RECLASSIFICATIONS

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


NOTE 2. ACQUISITIONS AND DISPOSITION

Acquisition of Direct Partner Telecom, Inc.

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

The total purchase price of DPT was allocated as follows:

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


                                      F-14


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 2. ACQUISITIONS AND DISPOSITION
(Continued)

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

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

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

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

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


Loan and Purchase Option Agreement

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

Acquisition of VoIP Assets

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


                                      F-15


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 2. ACQUISITIONS AND DISPOSITION
(Continued)

Disposition of Website

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

NOTE 3. INTANGIBLE ASSETS

The components of intangible assets were as follows:



                                     December 31, 2003               December 31, 2002
                               ----------------------------   ----------------------------
                               Gross Carrying   Accumulated   Gross Carrying   Accumulated
                                   Amount      Amortization        Amount     Amortization
                                ------------   ------------   ------------     ------------
                                                                   
Amortized Intangible Assets:
   Digital Telephony            $    227,452   $     28,432   $    164,960     $         --
                                ============   ============   ============     ============


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

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


NOTE 4. PROPERTY AND EQUIPMENT

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

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


                                      F-16


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

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

Debt consists of the following:



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

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

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

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

  Long-term portion                                                  $1,913,610     $   87,852
                                                                     ==========     ==========


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

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

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

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


                                      F-17


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 5. DEBT
                                  (Continued)

Repayment  of  debt  is  due  as  follows:

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

NOTE 6. INCOME TAXES

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

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

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

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

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

Under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"),
the  utilization  of net operating loss  carryforwards  may be limited under the
change in stock ownership  rules of the Code. As a result of ownership  changes,
which  occurred in August 1997 and May 1999 and the Company's  private  offering
completed in March 2004  (together  with the exercise and  conversion of various
securities  in  connection  with the  private  offering),  the  Company may have
substantially  limited or eliminated the  availability of its net operating loss
carryforwards.  There  can be no  assurance  that  the  Company  will be able to
utilize any of its net operating loss carryforwards.


                                      F-18


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7. STOCKHOLDERS' EQUITY

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

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

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

On March 28, 2003, E&C Capital  Partners entered into a Preferred Stock Purchase
Agreement  with the Company  (the  "Preferred  Stock  Investment"),  whereby E&C
Capital Partners received 333,333 shares of Series F Preferred Stock convertible
into  shares of the  Company's  Common  Stock at a price of $0.03 per share.  If
fully converted,  and without regard to the anti-dilutive  adjustment mechanisms
applicable  to the Series F  Preferred  Stock,  an  aggregate  of  approximately
16,667,000 shares of Common Stock could be issued.  The Series F Preferred Stock
has a  liquidation  preference of $1.50 per share (and  thereafter  participates
with the  holders  of  Common  Stock  on an  "as-converted"  basis),  will pay a
dividend  at the rate of 8% per  annum  and  entitles  the  holder to vote on an
"as-converted"  basis with the holders of Common Stock. In addition,  as part of
the $500,000  investment,  E&C Capital  Partners  received  warrants to purchase
approximately  3,333,000  shares of the  Company's  Common  Stock at an exercise
price of $0.125 per share. The warrants are exercisable at any time on or before
March 28, 2013. E&C Capital Partners is entitled to certain demand  registration
rights in connection with its investment.

The proceeds  attributable  to the issuance of the Series F Preferred  Stock and
the  related  warrants  were  allocated  to each  security in the same manner as
described  in the  discussion  of the  Series G  Preferred  Stock.  As a result,
$83,000 was  allocated  to the  warrants  sold.  In  addition,  the value of the
preferential  conversion  was  calculated  by  comparing  the fair  value of the
underlying  common shares on the date of issuance  based on the closing price of
the  Company's  Common  Stock  as  reflected  on the  OTCBB  to the  "effective"
conversion price. This resulted in a preferential  conversion discount,  limited
to the  proceeds  from the  sale,  of  $417,000.  The sum of the two  discounts,
$500,000,  was  recorded as a dividend to the  preferred  stockholders  in March
2003, as the preferred shares were immediately convertible into common shares.

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


                                      F-19


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

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

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

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

NOTE 8. STOCK OPTION PLAN

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

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

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

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

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

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

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


                                      F-20


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

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

On May 31, 2000,  the Company  offered to  substantially  all of its  employees,
excluding  executive  officers and the Board of  Directors,  the right to cancel
certain outstanding stock options and receive new options with an exercise price
equal to the then current fair market value of the stock.  Options to purchase a
total of  approximately  1.1 million  shares,  approximately  20% of outstanding
options on that date, were canceled and  approximately  856,000 new options were
granted at an exercise price of $1.594 per share, which was based on the closing
price of the Company's Common Stock on May 31, 2000. The new options vest at the
same rate that they would have vested under previous  option plans.  The Company
is accounting for these  re-priced  stock options using  variable  accounting in
accordance  with FIN No.  44. In  addition,  as a result of  options  which were
granted within six months of the  cancellations,  an additional  244,000 options
also required  variable  accounting in accordance  with FIN No. 44. For the year
ended  December  31, 2003,  approximately  $30,933 of  compensation  expense was
recorded  in  connection  with  the  re-priced  stock  options.   There  was  no
compensation  charge  relating to the  re-priced  options  during the year ended
December 31, 2002. As of December 31, 2003,  82,480 options  remain  outstanding
which are being  accounted for in accordance with FIN No. 44. The Company cannot
estimate  the impact of FIN No. 44 on its future  results of  operations  as the
charge is dependent on the future  market price of the  Company's  Common Stock,
which cannot be predicted with any degree of certainty. Depending upon movements
in the market value of the Company's Common Stock, this accounting treatment may
result in significant non-cash compensation charges in future periods.

Stock option activity during the periods indicated is as follows:



                                                                         Weighted
                                            Options        Total          Average
                                             Vested       Options      Exercise Price
                                           ----------    ----------      ----------
                                                                      
Outstanding at December 31, 2001                          3,104,349      $     5.77

Granted                                                   5,347,500            0.02
Exercised                                                        --              --
Canceled                                                 (2,480,409)           3.31
                                                         ----------
Outstanding at December 31, 2002            5,870,749     5,971,440            0.63
                                           ==========
Granted                                                   4,407,450            0.80
Exercised                                                  (429,000)           0.28
Canceled                                                     (7,080)           1.07
                                                         ----------
Outstanding at December 31, 2003            8,475,232     9,942,810      $     0.72
                                           ==========    ==========      ==========

Options available at December 31, 2002                    4,259,547
                                                         ==========
Options available at December 31, 2003                    1,359,177
                                                         ==========



                                      F-21


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

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


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

NOTE 9. COMMITMENTS AND CONTINGENCIES

Network Commitments

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

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

Purchase Obligations

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


                                      F-22


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9. COMMITMENTS AND CONTINGENCIES
(Continued)

Employment Agreements

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

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

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

Severance Agreement

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

Operating Leases

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

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

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

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


                                      F-23



                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9. COMMITMENTS AND CONTINGENCIES
(Continued)

Termination of 401(K) Plan

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

Letter of Credit

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

Litigation

On and  after  August 3, 2001 and as of the date of this  filing,  six  putative
shareholder class action lawsuits were filed against the Company, certain of its
current and former  officers and directors,  and several  investment  banks that
were the underwriters of the Company's November 23, 1998 initial public offering
and its May 19, 1999 secondary  offering.  The lawsuits were filed in the United
States  District  Court for the Southern  District of New York.  The  complaints
against  the  Company  have  been  consolidated  into  a  single  action  and  a
Consolidated Amended Complaint,  which is now the operative complaint, was filed
on April 19, 2002.

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

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

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

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


                                      F-24



                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9. COMMITMENTS AND CONTINGENCIES
(Continued)

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

NOTE 10. RELATED PARTY TRANSACTIONS

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

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

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

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

Stockholders' Agreement

In 1997, the Chairman,  the former Co-Chief Executive Officers, two Directors of
the Company and Dancing Bear (an entity controlled by the Chairman) entered into
a Stockholders' Agreement (the "Stockholders'  Agreement") pursuant to which the
Chairman and Dancing  Bear or certain  entities  controlled  by the Chairman and
certain permitted  transferees (the "Chairman Group") agreed to vote for certain
nominees  of  the  former  Co-Chief   Executive  Officers  or  certain  entities
controlled  by the former  Co-Chief  Executive  Officers  and certain  permitted
transferees  (the "Former  Co-Chief  Executive  Officer Groups") to the Board of
Directors and the Former  Co-Chief  Executive  Officer Groups agreed to vote for
the  Chairman  Group's  nominees to the Board,  who would  represent  up to five
members of the Board.  Additionally,  pursuant to the terms of the Stockholders'
Agreement,  the former Co-Chief  Executive Officer and the two Directors granted
an irrevocable proxy to Dancing Bear with respect to any shares acquired by them
pursuant to the exercise of outstanding  Warrants transferred to each of them by
Dancing Bear. Such shares would be voted by Dancing Bear, which is controlled by
the  Chairman,  and would be  subject  to a right of first  refusal  in favor of
Dancing Bear upon certain private  transfers.  The Stockholders'  Agreement also
provided  that if the  Chairman  Group sold shares of Common  Stock and Warrants
representing  25% or more of the Company's  outstanding  Common Stock (including
the Warrants) in any private sale, the Former Co-Chief  Executive Officer Groups
and the two  Directors  of the Company  would be required to sell up to the same
percentage of their shares as the Chairman Group's sales. If either the Chairman
Group sold shares of Common  Stock or Warrants  representing  25% or more of the
Company's  outstanding  Common  Stock  (including  the  Warrants)  or the Former
Co-Chief  Executive  Officer Groups sold shares or Warrants  representing  7% or
more of the shares and Warrants of the Company in any private  sale,  each other
party to the Stockholders' Agreement,  including entities controlled by them and
their permitted transferees, had the option to sell up to the same percentage of
their  shares.  Effective  March  28,  2003,  the  Stockholders'  Agreement  was
terminated.

NOTE 11.  SEGMENTS AND GEOGRAPHIC INFORMATION

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


                                      F-25



                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 11.  SEGMENTS AND GEOGRAPHIC INFORMATION
(Continued)

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

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

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

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

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

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

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


                                      F-26



                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 11.  SEGMENTS AND GEOGRAPHIC INFORMATION
(Continued)

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

NOTE 12. VALUATION AND QUALIFYING ACCOUNTS - ALLOWANCE FOR DOUBTFUL ACCOUNTS



                    Balance
                       At        Additions     Additions                 Balance
                   Beginning      Due To       Charged To               At End Of
Year Ended,        Of Period   Acquisitions     Expense    Deductions     Period
-----------------  ----------  -------------  -----------  -----------  ----------
                                                         
December 31, 2003  $  128,613  $          --  $   114,888  $  (130,515) $  112,986
December 31, 2002  $3,203,295  $          --  $        --  $(3,074,682) $  128,613



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



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

Basic and diluted net loss per
   share                         $       (0.10)  $        (0.23)  $     (0.09)  $    (0.04)


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



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

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




                                      F-27


                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 14. SUBSEQUENT EVENTS

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

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

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

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

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

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


                                      F-28



                       THEGLOBE.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 14. SUBSEQUENT EVENTS
(Continued)

Proforma (Unaudited)

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

Gross proceeds:
   Bridge note                             $   2,000,000
   Private offering                           28,374,000
                                           -------------
                                              30,374,000
   Commission paid                            (1,200,000)
                                           -------------
   Net proceeds                            $  29,174,000
                                           =============


                                                       Pro Forma
                                    Historical        Adjustments            Pro forma
                                    ----------        -----------          -------------
                                                                   
Cash and cash equivalents         $  1,062,000        $29,174,000  (a)      $ 30,236,000
Long-term debt                       1,914,000         (1,750,000) (b) ]         285,000
                                                          121,000  (c) ]
Preferred stock                        500,000           (500,000) (d)                --
Common stock                            50,246             82,157  (e)           132,403
Additional paid-in capital        $238,302,000       $ 31,221,000  (f)      $269,523,000


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

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


                                      F-29



           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                            AND FINANCIAL DISCLOSURE

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

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

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

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

The Company furnished KPMG with a copy of its Report on Form 8-K relating to the
foregoing  change in accountants  and requested KPMG to furnish it with a letter
addressed to the  Securities  and  Exchange  Commission  ("Commission")  stating
whether it agrees with the  statements  set forth above. A copy of KPMG's letter
to the  Commission  dated August 13, 2002 was filed as an exhibit on Form 8-K on
August  13,  2002 and as an  exhibit  on Form  10-K for the  fiscal  year  ended
December 31, 2002 filed on March 31, 2003.

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


                                       58


                       WHERE YOU CAN FIND MORE INFORMATION

      We have filed a  registration  statement on Form SB-2 with the  Securities
and Exchange  Commission  relating to the securities offered by this prospectus.
This  prospectus  does  not  contain  all of  the  information  provided  in the
registration  statement  and the  exhibits  and  schedules  to the  registration
statement.  Statements  contained in this  prospectus  as to the contents of any
contract or other document referred to are not necessarily  complete and in each
instance we refer you to the copy of the contract or other  document filed as an
exhibit to the  registration  statement,  each such statement being qualified in
all respects by such reference.  For further  information with respect to us and
the  securities  offered by this  prospectus,  we refer you to the  registration
statement, exhibits, and schedules.

      We file annual,  quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission.  You may read a copy of
any document we file without charge at the public reference facility  maintained
by the SEC in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain  copies  of all or any  part  of the  registration  statement  from  that
facility upon payment of the prescribed fees. You may obtain  information on the
operation of the public reference room by calling the SEC at 1-800-SEC-0330. The
SEC maintains a Website at http://www.sec.gov  that contains reports,  proxy and
information  statements,  and other information  regarding registrants that file
electronically with the SEC.



                                       59




                               130,396,940 Shares



                                  Common Stock

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

                                   PROSPECTUS

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




                               [THEGLOBE.COM LOGO]





                                  May __, 2004



                                     PART II

                   INFORMATION NOT REQUIRED IN THE PROSPECTUS


ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General  Corporation Law ("DGCL")  provides that, to
the extent a  director,  officer,  employee or agent of a  corporation  has been
successful  on the  merits  or  otherwise  in  defense  of any  action,  suit or
proceeding,  whether civil,  criminal,  administrative  or  investigative  or in
defense of any claim, issue, or matter therein (hereinafter a "Proceeding"),  by
reason of the fact that person is or was a director,  officer, employee or agent
of a corporation  or is or was serving at the request of such  corporation  as a
director, officer, employee or agent of another corporation or of a partnership,
joint  venture,  trust or  other  enterprise  (collectively  an  "Agent"  of the
corporation)  that  person  shall be  indemnified  against  expenses  (including
attorney's  fees)  actually  and  reasonably   incurred  by  him  in  connection
therewith.

The DGCL also provides that a corporation may indemnify any person who was or is
a party or is  threatened  to be made a party to any  threatened  Proceeding  by
reason of the fact that  person is or was an Agent of the  corporation,  against
expenses  (including  attorney's  fees),  judgment,  fines and  amounts  paid in
settlement  actually and reasonably  incurred by that person in connection  with
such  action,  suit or  proceeding  if that person  acted in good faith and in a
manner  that  person  reasonably  believed to be in, or not opposed to, the best
interest  of the  corporation,  and,  with  respect  to any  criminal  action or
proceeding,  had no  reasonable  cause to  believe  that  person's  conduct  was
unlawful;  provided,  however,  that  in an  action  by or in the  right  of the
corporation,  the  corporation  may not indemnify  such person in respect of any
claim,  issue, or matter as to which that person is adjudged to be liable to the
corporation  unless,  and only to the extent that,  the Court of Chancery or the
court  in which  such  proceeding  was  brought  determined  that,  despite  the
adjudication of liability but in view of all the circumstances of the case, such
person is reasonably entitled to indemnity.

Article VI of the By-laws  requires the Company to indemnify  any person who was
or is a party or is threatened to be made a party to or is involved  (including,
without  limitation,  as a witness)  in any  threatened,  pending  or  completed
action,  suit,  arbitration,   alternative  dispute  mechanism,   investigation,
administrative  hearing  or  any  other  proceeding,  whether  civil,  criminal,
administrative or investigative  (other than an action by or in the right of the
Company)  brought by reason of the fact that he or she is or was a  director  or
officer of the Company,  or,  while a director or officer of the Company,  is or
was  serving at the  request of the  Company as a director or officer of another
corporation,  partnership,  joint venture, trust or other enterprise,  including
service with respect to an employee  benefits plan against  expenses  (including
attorneys' fees,  judgments,  fines,  excise taxes under the Employee Retirement
Income Security Act of 1974,  penalties and amounts paid in settlement) incurred
by him or her in  connection  with such action,  suit or proceeding if he or she
acted in good faith and in a manner he or she  reasonably  believed  to be in or
not opposed to the best  interests  of the  Company,  and,  with  respect to any
criminal  action or  proceeding,  had no reasonable  cause to believe his or her
conduct was unlawful.

Article  VI  of  the  Company's  Fourth  Amended  and  Restated  Certificate  of
Incorporation (the  "Certificate")  provides that to the fullest extent that the
DGCL,  as it now exists or may hereafter be amended,  permits the  limitation or
elimination  of the liability of directors,  a director of the Company shall not
be liable to the Company or its  stockholders for monetary damages for breach of
fiduciary duty as a director.

The Company has entered  into  indemnification  agreements  with  certain of its
directors and officers.  These agreements provide, in general,  that the Company
will  indemnify such directors and officers for, and hold them harmless from and
against,  any and all amounts  paid in  settlement  or incurred  by, or assessed
against,  such directors and officers  arising out of or in connection  with the
service of such  directors  and officers as a director or officer of the Company
or its  Affiliates  (as  defined  therein) to the fullest  extent  permitted  by
Delaware Law.

The  Company  maintains  directors'  and  officers'  liability  insurance  which
provides for payment, on behalf of the directors and officers of the Company and
its  subsidiaries,  of  certain  losses  of such  persons  (other  than  matters
uninsurable  under law) arising from claims,  including claims arising under the
Securities  Act, for acts or omissions by such persons while acting as directors
or officers of the Company and/or its subsidiaries, as the case may be.


                                       60



Insofar as indemnification  for liabilities arising under the Securities Act may
be  permitted  to  directors,  officers or persons  controlling  the  Registrant
pursuant to the foregoing provisions,  the Registrant has been informed that, in
the opinion of the Commission,  such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The  estimated  expenses  of the  offering,  all of which are to be borne by the
company, are as follows:

          SEC Registration Fee                          $         16,301
          Printing Expenses*                                       7,500
          Accounting Fees and Expenses*                           10,000
          Legal Fees and Expenses*                                75,000
          Registrar and Transfer Agent Fee*                        2,500
          Miscellaneous*                                           5,000
                                                        ----------------
          Total*                                        $        116,301


* Estimated

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

On November 14, 2002, the Company acquired certain Voice over Internet  Protocol
("VoIP") assets from Brian Fowler (now Chief Technology  Officer of the Company)
in exchange  for the  issuance of  warrants to acquire  1,750,000  shares of the
Company's  common  stock and the  potential  to earn a  warrant  to  acquire  an
additional  425,000 shares as part of an earn-out  arrangement.  The performance
targets for the warrants to acquire an  additional  425,000  shares were not met
and expired on December 31, 2003.  The exercise  price of the warrants is $0.065
and the warrants are exercisable at anytime before November 12, 2012.


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

On May 22,  2003,  E&C Capital  Partners  together  with certain  affiliates  of
Michael  S.  Egan,  entered  into a Note  Purchase  Agreement  with the  Company
pursuant to which they acquired  $1,750,000 of Secured  Convertible  Notes.  The
Convertible  Notes were convertible  into a maximum of approximately  19,444,000
shares of the Company's  common stock at a blended rate of $0.09 per share.  The
Convertible  Notes  provided  for  interest at the rate of ten percent per annum
payable  semi-annually,  a one year  maturity  and were  secured  by a pledge of
substantially  all of the  assets  of the  Company.  In  addition,  E&C  Capital
Partners  was  issued a Warrant  to acquire  3,888,889  shares of the  Company's
Common  Stock  at an  exercise  price  of  $0.15  per  share.  The  Warrant  was
exercisable  at any time on or  before  May 22,  2013.  The  investors  received
certain  piggy-back  and demand  registration  rights in  connection  with their
investment.

                                       61



On May 28, 2003, the Company acquired Direct Partner Telecom,  Inc.  ("DPT"),  a
company engaged in VoIP telephony services. DPT was a specialized  international
communications  carrier  providing  VoIP  communications  services  to  emerging
countries.  The purchase  price  consisted of 1,375,000  shares of  theglobe.com
common stock and  warrants to purchase an  additional  500,000  shares of common
stock,  together with the ability to earn additional  warrants to purchase up to
an additional 2,750,000 shares. The performance targets for the first 500,000 of
these earn-out warrants were not achieved and expired on March 31, 2004. Subject
to certain  qualifications,  the  warrants  will also  accelerate  and be deemed
earned in the event of a "change in control" of the  Company,  as defined in the
acquisition documents.  The initial warrants (and any additional warrants if and
to the extent earned) have an exercise price of $.72 per share and expire on May
22, 2013.

On July 2, 2003, the Company  completed a private offering of Series G Preferred
Stock  for an  aggregate  purchase  price  of  approximately  $8.7  million.  In
accordance with the terms of such Preferred stock, the Series G Preferred shares
converted into common stock at $0.50 per share (or an aggregate of approximately
17.4  million  shares)  upon  the  filing  of  an  amendment  to  the  Company's
certificate of incorporation  to increase its authorized  shares of Common Stock
from 100,000,000  shares to 200,000,000  shares.  Such an amendment was filed on
July 29, 2003.  Investors also received  warrants to acquire  approximately  3.5
million  shares of common stock.  The warrants are  exercisable  for a period of
five years at an exercise price of $1.39 per common share. The exercise price of
the warrants,  together with the number of warrants issuable upon exercise,  are
subject to adjustment upon the occurrence of certain events.  The purpose of the
Series G Preferred  Stock  offering was to raise funds for use  primarily in the
Company's  VoIP  telephony  services  business,   including  the  deployment  of
networks,  website development,  marketing,  and limited capital  infrastructure
expenditures and working capital.  The investors in the Series G Preferred Stock
Offering,  together  with the former  stockholders  of DPT,  are entitled to one
demand registration right commencing in July 2004.


On February 2, 2004,  Michael S. Egan (our Chairman and Chief Executive Officer)
and his wife, S. Jacqueline  Egan,  entered into a Note Purchase  Agreement with
the Company  pursuant to which they acquired a convertible  promissory note (the
"Bridge Note") in the aggregate principal amount of $2,000,000.  The Bridge Note
was  convertible  at anytime  into shares of the  Company's  common  stock at an
initial rate of $.98 per share.  The  conversion  rate was subject to adjustment
based upon the rate (effectively,  $.57 per share) at which the Company sold its
common stock in the subsequent  March 2004 private  offering (which is described
below).  The Bridge Note was due on demand from the holder, and was secured by a
pledge of substantially all of the assets of the Company. Such security interest
was shared with the then holders of the Company's  Secured  Convertible Notes in
the principal  amount of $1,750,000  issued on May 22, 2003 to various  entities
affiliated  with Michael S. Egan.  The Bridge Notes bore interest at the rate of
ten (10) percent per annum.

In  addition,  the Egans  were  issued a warrant to  acquire  204,082  shares of
theglobe.com  common stock at an exercise price of $1.22 per share.  The warrant
is exercisable at any time on or before February 2, 2009. The Egans are entitled
to certain demand and piggy-back  registration  rights in connection  with their
investment.  The  exercise  price of the  warrant  (together  with the number of
shares for which such warrant is  exercisable) is subject to adjustment upon the
occurrence of certain events.

On March 11, 2004,  theglobe.com,  inc.  completed a private offering of 329,916
units (the "Units") for a purchase price of $85 per Unit (the "PIPE  Offering").
Each Unit consisted of 100 shares of the Company's  common stock and warrants to
acquire 50 shares of the common stock (the "PIPE  Warrants").  The PIPE Warrants
are  exercisable  for a period  of five (5) years  commencing  May 4, 2004 at an
initial exercise price of $.001 per share. The Company also granted an option to
one party to acquire an  additional  3,900 Units on or before  March 22, 2004 on
the same terms,  which option was fully exercised.  Assuming the exercise of the
PIPE Warrants, the aggregate number of shares of common stock issued in the PIPE
Offering was 50,072,471 shares for an aggregate consideration of $28,374,400, or
approximately $.57 per share.

Halpern Capital,  Inc., acted as placement agent for the PIPE offering,  and was
paid a  commission  of $1.2  million  and issued a warrant to acquire  1,000,000
shares of common stock at $.001 per share.


Pursuant  to the  terms of the  PIPE  Offering  the  Company  was  contractually
obligated  to  file a  registration  statement  relating  to the  resale  of the
Securities on or about April 22, 2004 and to cause such  registration  statement
to become  effective before on or about July 6, 2004 (or 30 days earlier if such
registration statement is not reviewed by the SEC). In the event the Company was
late in any of its  registration  obligations,  it would  have been  liable  for
payment of a late fee of 5% of the amount  raised in the PIPE Offering per month
(not to exceed 25% in the  aggregate),  unless such fee was waived under certain
conditions.  Any such  late fee  would  have  been  payable  in  either  cash or
additional  shares of Common Stock  (valued for such purpose at $.57 per share),
or any combination of the two, at the option of the Company.



                                       62



In connection  with the PIPE Offering,  Mr. Egan, our Chairman,  Chief Executive
Officer and principal  stockholder,  together with certain of his affiliates and
other parties,  converted the $2,000,000 Bridge Note, an aggregate of $1,750,000
of Secured  Convertible  Notes and all of the  Company's  outstanding  shares of
Series F Preferred Stock, and exercised all of the warrants issued in connection
with the  foregoing  Secured  Convertible  Notes and Series F  Preferred  Stock,
together with certain  warrants issued to Dancing Bear Investments (an affiliate
of Mr. Egan). As a result of such conversions and exercises,  the Company issued
an aggregate of approximately 48.75 million shares of Common Stock.


On May 5, 2004, the Company  entered into an agreement with NeoPets,  Inc. which
provides for certain  marketing and  advertising  services  associated  with the
Company's   voiceglo  VoIP  services  on  NeoPets   website.   As  part  of  the
consideration  for such  services,  the Company  agreed to issue up to 3,000,000
shares in various stages upon the attainment of certain business objectives. The
Company agreed to certain  registration  rights relating to the shares issued or
issueable and agreed to cause the registration of such shares.


All of the foregoing private offerings or acquisitions were directed solely to a
limited number of investors who are sophisticated and, with the exception of the
November 2002  acquisition  from Brian  Fowler,  who are  accredited  within the
meaning of applicable securities laws. The Company believes that such offers and
sales were exempt from registration  pursuant to Sections 4(2) of the Securities
Act of 1933 and Regulation D promulgated thereunder.

ITEM 27. EXHIBITS

NO.            ITEM

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

3.2   Certificate of Amendment to Fourth Amended and Restated Certificate of
      Incorporation.**

3.3   Certificate of Amendment to Fourth Amended and Restated Certificate of
      Incorporation filed with the Secretary of State of Delaware on July 29,
      2003.**

3.4   Certificate relating to Previously Outstanding Series of Preferred Stock
      and Relating to the Designation, Preferences and Rights of the Series F
      Preferred Stock(14).

3.5   Certificate of Amendment Relating to the Designation Preferences and
      Rights of the Junior Participating Preferred Stock.**

3.6   Form of By-Laws of the Company. **

4.1   Registration Rights Agreement, dated as of September 1, 1998(5).

4.2   Amendment No.1 to Registration Rights Agreement, dated as of April 9,
      1999(6).

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

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

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

4.6   Form of Warrant dated November 12, 2002 to acquire shares of Common
      Stock.(9).

4.7   Form of Warrant dated March 28, 2003 to acquire shares of Common Stock
      (14).

4.8   Form of Warrant dated May 28, 2003 to acquire an aggregate of 500,000
      shares of theglobe.com Common Stock (10).

4.9   Form of Warrant dated July 2, 2003 to acquire securities of theglobe.com,
      inc. (11).


4.10  Form  of  Warrant   dated  March  5,  2004  to  acquire   securities  of
      theglobe.com, inc. (17).

5.1   Opinion of Proskauer Rose LLP***


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


                                       63



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

10.3  2000 Broad Based Stock Option Plan(7).

10.4  1998 Stock Option Plan, as amended(6).

10.5  1995 Stock Option Plan(1).

10.6  Employee Stock Purchase Plan(5).

10.7  Technology Purchase Agreement dated November 12, 2002, among theglobe.com,
      inc., and Brian Fowler(9).

10.8  Employment Agreement dated November 12, 2002, among theglobe.com, inc. and
      Brian Fowler(9).

10.9  Payment Agreement dated November 12, 2002, among theglobe.com, inc.,
      1002390 Ontario Inc., and Robert S. Giblett(9).

10.10 Release Agreement dated November 12, 2002, among theglobe.com, inc. and
      certain other parties named therein(9).

10.11 Preferred Stock Purchase Agreement dated March 28, 2003 between
      theglobe.com, inc. and E&C Capital Partners, LLLP.(14).

10.12 Loan and Purchase Option Agreement dated February 25, 2003 (13).*

10.13 Amended and Restated Promissory Note (13).*

10.14 Form of Stock Purchase Agreement (13).*

10.15 Note Purchase Agreement dated May 22, 2003 between theglobe.com, inc. and
      E&C Capital Partners, LLLP and certain other investors named therein (10)

10.16 Agreement and Plan of Merger dated May 23, 2003 between theglobe.com,
      inc., DPT Acquisition, Inc., Direct Partner Telecom, Inc., and the
      stockholders thereof (10).

10.17 Employment Agreement dated May 28, 2003 between theglobe.com and James
      Magruder (10).

10.18 Form of Subscription Agreement relating to the purchase of Units of Series
      G Preferred Stock and Warrants of theglobe.com, inc. (11).

10.19 Employment Agreement dated August 1, 2003 between theglobe.com, inc. and
      Michael S. Egan (12).

10.20 Employment Agreement dated August 1, 2003 between theglobe.com, inc. and
      Edward A. Cespedes (12).

10.21 Employment Agreement dated August 1, 2003 between theglobe.com, inc. and
      Robin Segaul Lebowitz (12).

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

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

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




                                       64



10.25 Non-Qualified Stock Option Agreement dated as of July 17, 2003 between
      theglobe.com, inc. and Kellie L. Smythe (12).

10.26 2003 Sales Representatives Stock Option Plan (12).

10.27 Securities Purchase and Registration Agreement dated March 2, 2004
      relating to the purchase of Units of Common Stock and Warrants of
      theglobe.com, inc. (15)

10.28 Amendment to the Service Order Agreement Terms and Conditions dated July
      30, 2003, and October 24, 2003 between XO Communications, Inc. and Direct
      Partner Telecom, Inc., including XO Services Terms and Conditions.(15)*

10.29 Agreement dated August 7, 2003 by and between Promotion and Display
      Technology, Ltd. and theglobe.com, inc. (15) *

10.30 Broad Capacity Services Agreement dated October 17, 2003 by and between
      Direct Partner Telecom, Inc. and Progress Telecom Corporation. (15)*

16.   Letter dated August 13, 2002 from KPMG LLP relating to change of
      independent certified accountants (8).

21.   Subsidiaries **

23.1  Consent of Rachlin Cohen & Holtz LLP. **

23.2  Consent of Proskauer Rose LLP (included in Exhibit 5.1)

24.   Power of Attorney (16)



                                       65




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

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


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


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

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

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

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

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

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

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

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

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

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

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

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

15.   Incorporated by reference from our Form 10-KSB filed on March 30, 2004.

16.   Included on the signature page to this registration statement.


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


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


** Previously filed

*** Filed herewith


                                       66



ITEM 28. UNDERTAKINGS

         (a)      The undersigned registrant hereby undertakes:

                  (1)      To file,  during any period in which  offers or sales
                           are being made,  a  post-effective  amendment to this
                           registration statement to:

                           (i)      include any  prospectus  required by Section
                                    10(a)(3) of the Securities Act;

                           (ii)     reflect  in  the  prospectus  any  facts  or
                                    events   which,   individually   or  in  the
                                    aggregate, represent a fundamental change in
                                    the   information   in   the    registration
                                    statement.  Notwithstanding  the  foregoing,
                                    any   increase  or  decrease  in  volume  of
                                    securities  offered  (if  the  total  dollar
                                    value of securities offered would not exceed
                                    that which was registered) and any deviation
                                    from  the low or high  end of the  estimated
                                    maximum  offering  range may be reflected in
                                    the  form  of  prospectus   filed  with  the
                                    Commission  pursuant  to Rule  424(b) if, in
                                    the  aggregate,  the  changes  in volume and
                                    price  represent  no more than 20% change in
                                    the  maximum  aggregate  offering  price set
                                    forth in the  "Calculation  of  Registration
                                    Fee"  table  in the  effective  registration
                                    statement; and

                           (iii)    include any  additional or changed  material
                                    information  with  respect  to the  plan  of
                                    distribution.

                  (2)      That, for the purpose of determining  liability under
                           the   Securities   Act,  each  such  post   effective
                           amendment  shall be deemed  to be a new  registration
                           statement relating to the securities offered therein,
                           and the  offering  of such  securities  at that  time
                           shall be deemed to be the initial bona fide  offering
                           thereof.

                  (3)      To   remove   from   registration   by   means  of  a
                           post-effective  amendment any of the securities being
                           registered  which remain unsold at the termination of
                           the offering.

         (b)      Insofar as indemnification  for liabilities  arising under the
                  Securities  Act may be  permitted to  directors,  officers and
                  controlling   persons  of  the  registrant   pursuant  to  the
                  foregoing  provisions,  or otherwise,  the registrant has been
                  advised  that in the opinion of the  Securities  and  Exchange
                  Commission  such  indemnification  is against public policy as
                  expressed   in  the   Securities   Act  and   is,   therefore,
                  unenforceable.  In the event that a claim for  indemnification
                  against  such  liabilities  (other  than  the  payment  by the
                  registrant of expenses incurred or paid by a director, officer
                  or  controlling  person of the  registrant  in the  successful
                  defense of any action, suit or proceeding) is asserted by such
                  director, officer or controlling person in connection with the
                  securities being  registered,  the registrant will,  unless in
                  the  opinion of its  counsel  the  matter has been  settled by
                  controlling  precedent,  submit  to  a  court  of  appropriate
                  jurisdiction the question whether such  indemnification  by it
                  is against  public policy as expressed in the  Securities  Act
                  and will be governed by the final adjudication of such issue.


                                       67


                                   SIGNATURES


Pursuant to the  requirements  of the  Securities  Act of 1933, as amended,  the
registrant  has  caused  this  Amendment  No.  2 to the Form  SB-2  Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized in the City of Fort Lauderdale,  State of Florida, on the 10 of May,
2004.

                                  theglobe.com, inc.


                                  By: /s/ Michael S. Egan
                                      ----------------------------------------
                                      Michael S. Egan, Chief Executive Officer
                                      (Principal Executive Officer)






Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1
to the Form SB-2 Registration Statement has been signed by the following persons
in the capacities and on the date indicated.



/s/ Michael S. Egan                                           May 10, 2004
----------------------------------------------
Michael S. Egan, Chief Executive
Officer and Director
(Principal Executive Officer)


/s/ Edward A. Cespedes                                        May 10, 2004
----------------------------------------------
Edward A. Cespedes, Director


/s/ Robin Segaul Lebowitz                                     May 10, 2004
----------------------------------------------
Robin Segaul Lebowitz, Director


/s/ Garrett Pettingell                                        May 10, 2004
----------------------------------------------
Garrett Pettingell, Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)





                                       68



                                  EXHIBIT INDEX

NO.               ITEM

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

3.2   Certificate of Amendment to Fourth Amended and Restated Certificate of
      Incorporation.**

3.3   Certificate of Amendment to Fourth Amended and Restated Certificate of
      Incorporation filed with the Secretary of State of Delaware on July 29,
      2003.**

3.4   Certificate relating to Previously Outstanding Series of Preferred Stock
      and Relating to the Designation, Preferences and Rights of the Series F
      Preferred Stock(14).

3.5   Certificate of Amendment Relating to the Designation Preferences and
      Rights of the Junior Participating Preferred Stock.**

3.6   Form of By-Laws of the Company. **

4.1   Registration Rights Agreement, dated as of September 1, 1998(5).

4.2   Amendment No.1 to Registration Rights Agreement, dated as of April 9,
      1999(6).

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

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

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

4.6   Form of Warrant dated November 12, 2002 to acquire shares of Common
      Stock.(9).

4.7   Form of Warrant dated March 28, 2003 to acquire shares of Common Stock
      (14).

4.8   Form of Warrant dated May 28, 2003 to acquire an aggregate of 500,000
      shares of theglobe.com Common Stock (10).

4.9   Form of Warrant dated July 2, 2003 to acquire securities of theglobe.com,
      inc. (11).

4.10  Form of Warrant dated March 5, 2004 to acquire securities of theglobe.com,
      inc. (13).


5.1   Opinion of Proskauer Rose LLP***


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

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

10.3  2000 Broad Based Stock Option Plan(7).

10.4  1998 Stock Option Plan, as amended(6).

10.5  1995 Stock Option Plan(1).

10.6  Employee Stock Purchase Plan(5).



                                       69



10.7  Technology Purchase Agreement dated November 12, 2002, among theglobe.com,
      inc., and Brian Fowler(9).

10.8  Employment Agreement dated November 12, 2002, among theglobe.com, inc. and
      Brian Fowler(9).

10.9  Payment Agreement dated November 12, 2002, among theglobe.com, inc.,
      1002390 Ontario Inc., and Robert S. Giblett(9).

10.10 Release Agreement dated November 12, 2002, among theglobe.com, inc. and
      certain other parties named therein(9).

10.11 Preferred Stock Purchase Agreement dated March 28, 2003 between
      theglobe.com, inc. and E&C Capital Partners, LLLP.(14).

10.12 Loan and Purchase Option Agreement dated February 25, 2003 (13).*

10.13 Amended and Restated Promissory Note (13).*

10.14 Form of Stock Purchase Agreement (13).*

10.15 Note Purchase Agreement dated May 22, 2003 between theglobe.com, inc. and
      E&C Capital Partners, LLLP and certain other investors named therein (10)

10.16 Agreement and Plan of Merger dated May 23, 2003 between theglobe.com,
      inc., DPT Acquisition, Inc., Direct Partner Telecom, Inc., and the
      stockholders thereof (10).

10.17 Employment Agreement dated May 28, 2003 between theglobe.com and James
      Magruder (10).

10.18 Form of Subscription Agreement relating to the purchase of Units of Series
      G Preferred Stock and Warrants of theglobe.com, inc. (11).

10.19 Employment Agreement dated August 1, 2003 between theglobe.com, inc. and
      Michael S. Egan (12).

10.20 Employment Agreement dated August 1, 2003 between theglobe.com, inc. and
      Edward A. Cespedes (12).

10.21 Employment Agreement dated August 1, 2003 between theglobe.com, inc. and
      Robin Segaul Lebowitz (12).

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

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

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

10.25 Non-Qualified Stock Option Agreement dated as of July 17, 2003 between
      theglobe.com, inc. and Kellie L. Smythe (12).

10.26 2003 Sales Representatives Stock Option Plan (12).

10.27 Securities Purchase and Registration Agreement dated March 2, 2004
      relating to the purchase of Units of Common Stock and Warrants of
      theglobe.com, inc. (15)

10.28 Amendment to the Service Order Agreement Terms and Conditions dated July
      30, 2003, and October 24, 2003 between XO Communications, Inc. and Direct
      Partner Telecom, Inc., including XO Services Terms and Conditions.(15)*


                                       70



10.29 Agreement dated August 7, 2003 by and between Promotion and Display
      Technology, Ltd. and theglobe.com, inc. (15) *

10.30 Broad Capacity Services Agreement dated October 17, 2003 by and between
      Direct Partner Telecom, Inc. and Progress Telecom Corporation. (15)*

16.   Letter dated August 13, 2002 from KPMG LLP relating to change of
      independent certified accountants (8).

21.   Subsidiaries **

23.1  Consent of Rachlin Cohen & Holtz LLP. **

23.2  Consent of Proskauer Rose LLP (included in Exhibit 5.1)

24.   Power of Attorney (16)

________________

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

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

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

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

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

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

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

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

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

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

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

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

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

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

15.   Incorporated by reference from our Form 10-KSB filed on March 30, 2004.

16.   Included on the signature page to this registration statement.


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


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


** Previously filed

*** Filed herewith


                                       71