UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

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

 

For the quarterly period ended September 30, 2017

2018

OR

 

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION PERIOD FROM _______ TO _______________.

COMMISSION FILE NO.NUMBER: 0-25053

THEGLOBE.COM, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

STATE OF DELAWARE14-1782422
(STATE OR OTHER JURISDICTION OF(I.R.S. EMPLOYER

INCORPORATION OR ORGANIZATION)
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

 

1500 CORDOVA ROAD,5949 SHERRY LANE, SUITE 302

FORT LAUDERDALE, FL. 33316

950, DALLAS, TX 75225
c/o Toombs Hall and Foster
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)OFFICES

 

(954) 769 - 5900

(214) 369-5695
(Registrant'sRegistrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesx YesNo¨ No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes¨ Nox No  ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

¨Large accelerated filer¨Accelerated filer¨
Non-accelerated filer¨(Do not check if a smaller reporting company)Accelerated filer
xNon-accelerated filerxSmaller reporting companyx
¨Emerging growth company¨ 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YesxNo¨

 

The number of shares outstanding of the Registrant'sRegistrant’s Common Stock, $.001 par value (the "Common Stock"“Common Stock”) as of October 1, 2017September 30, 2018 was 441,484,838. 441,480,473.

 

 

 

 

 

THEGLOBE.COM, INC.


FORM 10-Q

 

TABLE OF CONTENTS

  

PART I:I - FINANCIAL INFORMATION12
  
 ITEM 1.FINANCIAL STATEMENTS2
Item 1.Financial Statements1
   
 Condensed Consolidated Balance Sheets at SeptemberCONDENSED CONSOLIDATED BALANCE SHEETS AT SEPTEMBER 30, 2017 (unaudited) and December2018 (UNAUDITED) AND DECEMBER 31, 2016201712
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 20173
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 20174
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS5
   
 Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017, and 2016ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS29
   
 Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 20163FORWARD LOOKING STATEMENTS9
RESULTS OF OPERATIONS10
LIQUIDITY AND CAPITAL RESOURCES11
EFFECTS OF INFLATION12
MANAGEMENT’S DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES12
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS12
   
 Notes to Unaudited Condensed Consolidated Financial StatementsITEM 3.4
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations8
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK12
ITEM 4.CONTROLS AND PROCEDURES12
   
Item 4.PART II - OTHER INFORMATIONControls and Procedures1312
  
 
PART II:ITEM 1.OTHER INFORMATIONLEGAL PROCEEDINGS1213
 ITEM 1A.
Item 1.RISK FACTORSLegal Proceedings1312
 
Item 1A.Risk Factors12
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds16
Item 3.Defaults Upon Senior Securities16
Item 4.Mine Safety Disclosures16
Item 5.Other Information16
Item 6.Exhibits16
   
 RISKS RELATING TO OUR BUSINESS GENERALLY13
RISKS RELATING TO OUR COMMON STOCK14
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS16
ITEM 3.DEFAULTS UPON SENIOR SECURITIES16
ITEM 4.MINE SAFETY DISCLOSURES16
ITEM 5.OTHER INFORMATION16
ITEM 6.EXHIBITS16
SIGNATURES17

 

1

 

 

PART I - FINANCIAL INFORMATION

ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THEGLOBE.COM, INC. AND SUBSIDIARIES

 

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THEGLOBE.COM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 SEPTEMBER 30, DECEMBER 31, 
 2017 2016 
 (UNAUDITED)    SEPTEMBER 30,
2018
(Unaudited)
  DECEMBER 31,
2017
 
ASSETS                
Current Assets:                
Cash $603  $31,285  $936  $440 
Prepaid expenses  5,602   4,936 
                
Total current assets $6,205  $36,221  $936  $440 
        
LIABILITIES AND STOCKHOLDERS' DEFICIT        
        
Current Liabilities:        
Accounts payable to related party $949,570  $769,570 
LIABILITIES AND STOCKHOLDERS’ DEFICIT        
Current Liabilities        
Accrued expenses and other current liabilities $83,500  $26,000 
Accounts payable     101   60,977    
Accrued compensation due to related parties  130,769   130,769 
Accrued expenses and other current liabilities  25,000   30,500 
Accrued interest due to related party  475,303   427,878   4,066    
Notes payable due to related party  650,000   600,000   144,959    
        
Total current liabilities  2,230,642   1,958,818   293,502   26,000 
                
Stockholders' Deficit:        
Common stock, $0.001 par value; 500,000,000 shares authorized; 441,484,838 issued and outstanding at September 30, 2017 and December 31, 2016  441,485   441,485 
        
Stockholders’ Deficit:        
Common stock, $0.001 par value, 500,000,000 shares authorized, 441,480,473issued and outstanding at September 30, 2018 and December 31, 2017  441,480   441,480 
Additional paid-in capital  294,301,845   294,301,845   296,594,042   296,594,042 
Accumulated deficit  (296,967,767)  (296,665,927)  (297,328,088)  (297,061,082)
        
Total stockholders' deficit  (2,224,437)  (1,922,597)
        
Total stockholders’ deficit  (292,566)  (25,560)
Total liabilities and stockholders’ deficit $6,205  $36,221  $936  $440 

 

See notes to unaudited condensed consolidated financial statements.

 

12

 

 

THEGLOBE.COM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 Three Months Ended September 30,  Nine Months Ended September 30, 
 2017  2016  2017  2016  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
 (UNAUDITED) (UNAUDITED)  2018  2017  2018  2017 
          (UNAUDITED) (UNAUDITED) 
Net Revenue $  $  $  $  $  $  $  $ 
                
Operating Expenses:                                
General and administrative  32,995   28,467   74,040   71,230   68,896   32,995   202,939   74,040 
Related party transactions  60,000   60,000   180,000   180,000 
  92,995   88,467   254,040   251,230 
Related party fees     60,000   60,000   180,000 
                  68,896   92,995   262,939   254,040 
Operating Loss from Continuing Operations  (92,995)  (88,467)  (254,040)  (251,230)  (68,896)  (92,995)  (262,939)  (254,040)
                
Other Expense:                                
Related party interest expense  (16,384)  (13,863)  (47,425)  (40,027)  2,430   16,384   4,066   47,425 
                
Loss from Continuing Operations Before Income Tax  (109,379)  (102,330)  (301,465)  (291,257)  (71,326)  (109,379)  (267,005)  (301,465)
                
Income Tax Provision                        
Loss from Continuing Operations  (109,379)  (102,330)  (301,465)  (291,257)  (71,326)  (109,379)  (267,005)  (301,465)
                
Discontinued Operations, net of tax:     (99)  (375)  (474)           (375)
                
Net Loss $(109,379) $(102,429) $(301,840) $(291,731) $(71,326) $(109,379) $(267,005) $(301,840)
                
Loss Per Share:                                
Basic and Diluted:                                
Continuing Operations $  $  $  $  $  $  $  $ 
Discontinued Operations $  $  $  $  $  $  $  $ 
                
Weighted Average Common Shares Outstanding  441,484,838   441,484,838   441,484,838   441,484,838   441,480,473   441,480,473   441,480,473   441,480,473 

 

See notes to unaudited condensed consolidated financial statements.

 

23

 

 

THEGLOBE.COM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

  Nine Months
Ended September 30,
 
  2017  2016 
  (UNAUDITED) 
Cash Flows from Operating Activities:        
Net loss $(301,840) $(291,731)
Add back: loss from discontinued operations  375   474 
Net loss from continuing operations  (301,465)  (291,257)
         
Adjustments to reconcile net loss from continuing operations to net cash flows from operating activities        
         
Changes in operating assets and liabilities        
Prepaid and other current assets  (666)  503 
Accounts payable  180,000   180,000 
Accounts payable to related party  (100)  4,119 
Accrued expenses and other current liabilities  (5,500)  (1,000)
Accrued interest due to related party  47,424   40,028 
         
Net cash flows from operating activities of continuing operations  (80,307)  (67,607)
Net cash flows from operating activities of discontinued operations  (375)  (474)
Net cash flows from operating activities  (80,682)  (68,081)
         
Cash Flows from Financing Activities:        
Borrowings on Notes Payable  50,000   50,000 
Net Cash flows from financing activities  50,000   50,000 
         
Net Decrease in Cash  (30,682)  (18,081)
Cash, at beginning of period  31,285   20,585 
Cash, at end of period $603  $2,504 

  Nine Months Ended September 30, 
  2018  2017 
  (UNAUDITED)  (UNAUDITED) 
Cash Flows from Operating Activities        
Net Loss $(267,005) $(301,840)
Add back:  loss from discontinued operations     375 
Net loss from continued operations  (267,005)  (301,465)
         
Adjustments to reconcile net loss from continuing operations to net cash flows used in operating activities        
Changes in operating assets and liabilities        
Prepaid and other current assets     (666)
Accounts payable to related parties     180,000 
Accounts payable  60,977   (100)
Accrued expenses and other current liabilities  57,500   (5,500)
Accrued interest due to related party  4,066   47,424 
         
Net cash flows used in operating activities of continued operations  (144,462)  (80,307)
Net cash flows used in operating activities of discontinued operations     (375)
Net cash flows used in operating activities  (144,462)  (80,682)
         
Cash Flows from Financing Activities        
Borrowings on notes payable  144,959   50,000 
Net cash flows provided by financing activities  144,959   50,000 
         
Net Increase/(Decrease) in Cash  496   (30,682)
Cash at beginning of period  440   31,285 
Cash at end of period $936  $603 

  

See notes to unaudited condensed consolidated financial statements.

 

34

 

 

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(1)ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1)         ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

DESCRIPTION OF THEGLOBE.COM

 

theglobe.com, inc. (the “Company”“Company,” “theglobe,” “we” or “theglobe”“us”) was incorporated on May 1, 1995 (inception) and commenced operations on that date. Originally, theglobe.com waswe were an online community with registered members and users in the United States and abroad. However, due toOn September 29, 2008, we consummated the deteriorationsale of the online advertising market, the Company was forced to restructurebusiness and ceased the operations of its online community on August 15, 2001.  The Company then sold most of its remaining online and offline properties.  The Company continued to operate its Computer Games print magazine and the associated CGOnline website, as well as the e-commerce games distribution business of Chips & Bits, until their shutdown in March 2007.  On June 1, 2002, Chairman Michael S. Egan and Director Edward A. Cespedes became Chief Executive Officer and President of the Company, respectively.  On November 14, 2002, the Company entered into the Voice over Internet Protocol (“VoIP”) business by acquiring certain VoIP assets.

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

As more fully discussed in Note 3, “Discontinued Operations,” in March 2007, management and the Board of Directors of the Company made the decision to discontinue the operating, research and development activities of its VoIP telephony services business and terminate all of the remaining employees of that business.

On September 29, 2008, the Company sold its Tralliance business and issued 229,000,000 shares of its Common Stock to a company controlled by Michael S. Egan, the Company’sour former Chairman and Chief Executive Officer. As a result of and on the effective date of the sale of itsour Tralliance business, the Companywhich was our last remaining operating business, we became a shell“shell company, (as” as that term is defined in Rule 12b-2 of the Securities and Exchange Act, of 1934) with no material operations or assets.  However,

On December 20, 2017, Delfin Midstream LLC (“Delfin”) entered into a Common Stock Purchase Agreement with certain matters,of our stockholders for the purchase of a total of 312,825,952 shares of our Common Stock, par value $0.001 per share (“Common Stock”), representing approximately 70.9% of our Common Stock. On December 31, 2017 (the “Closing Date”), Mr. Egan, Edward A. Cespedes and Robin S. Lebowitz resigned from their respective positions as more fully discussedofficers and directors of the Company. William “Rusty” Nichols was appointed the sole member of our Board and our sole executive officer. Effective June 29, 2018, our Board appointed Mr. Frederick Jones as President, Chief Executive Officer, Chief Financial Officer, and Director of the Company, and Mr. Nichols resigned from his positions of President, Chief Executive Officer, Chief Financial Officer, Director, and any other directorships, offices or other positions with the Company.

As a shell company, our operating expenses have consisted primarily of, and we expect them to continue to consist primarily of, customary public company expenses, including personnel, accounting, financial reporting, legal, audit and other related public company costs.

As of September 30, 2018, as reflected in Note 2, “Liquidity and Going Concern Considerations,” raise substantial doubt about the Company’sour accompanying Consolidated Balance Sheet, our current liabilities exceed our total assets. Additionally, we received a report from our independent registered public accountants, relating to our December 31, 2017 audited financial statements, containing an explanatory paragraph regarding our ability to continue as a going concern. We prefer to avoid filing for protection under the U.S. Bankruptcy Code. However, unless we are successful in raising additional funds through the offering of debt or equity securities, we may not be able to continue to operate as a going concern for any significant length of time in the future. Notwithstanding the above, we currently intend to continue operating as a public company and making all the requisite filings under the Exchange Act.

 

PRINCIPLES OF CONSOLIDATION

 

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

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

 

The unaudited interim condensed consolidated financial statements of the Company as ofat September 30, 20172018 and for the three and nine months ended September 30, 20172018 and 20162017 included herein have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended, and Article 10 of Regulation S-X under the Securities Act of 1933, as amended. Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations relating to interim condensed consolidated financial statements.

 

5

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company at September 30, 20172018 and the results of its operations and its cash flowflows for the three and nine months ended September 30, 20172018 and 2016.2017. The results of operations and cash flows for such periods are not necessarily indicative of results expected for the full year or for any future period.

 

USE OF ESTIMATES

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires managementthe Company 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 primarily to valuations of accounts payable and accrued expenses. Our estimates, judgments and assumptions are continually evaluated based upon available information and experience. Because of estimates inherent in the financial reporting process, actual results could differ from those estimates. See Note 2, “Liquidity and Going Concern Considerations” for a discussion of the Company’s derecognition of certain accounts payable and accrued expenses. 

4

 

NET INCOME PER SHARE

 

The Company reports basic and diluted net income per common share in accordance with FASB ASC Topic 260, "Earnings“Earnings Per Share." 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 exercise of stock options (using the treasury stock method). Common equivalent shares are excluded from the calculation if their effect is anti-dilutive.

Due to the anti-dilutive effect of potentially dilutive securities or common stock equivalents that could be issued, such securities were excluded from the diluted net loss per common share calculation for all periods presented. Such potentially dilutive securities and common stock equivalents consisted of the following for the periods ended September 30:

   2018   2017 
Options to purchase common stock      

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

Management has determined that all recently issued accounting pronouncements will not have a material impact on the Company’s financial statements or do not apply to the Company’s operations.

 

(2)LIQUIDITY AND GOING CONCERN CONSIDERATIONS

(2)          LIQUIDITY AND GOING CONCERN CONSIDERATIONS

 

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

 

Since 2008, the Company was able to continue operating as a going concern due principally to funding of $500,000 received during 2008 under a Revolving Loan Agreement with an entity controlled by Michael S. Egan, itsthe former Chairman and Chief Executive Officer and total proceeds of approximately $2,437,000 received during 2009 through the second quarter of 2015 under an Earn-out Agreement with an entity also controlled by Mr. Egan (as more fully discussed below), as well as the forbearance of its creditors. The Earn-out period expired on May 5, 2015, with the final pro-rated payment of $37,000 received byMore recently, the Company in May 2015. More recently, as more fully discussed in Note 4, “Debt,”received fundings of $50,000 each in March 2016, November 2016 and March 2017 the Company received fundings of $50,000 eachas well as $10,000 in November 2017 under three (3) promissory notesPromissory Notes entered into with the same entity that provided funding under the Revolving Loan Agreement (the “Promissory Notes”). Additionally, on November 10,In connection with the Closing with Delfin Midstream LLC the Promissory Notes have been fully satisfied.

6

On December 20, 2017, Michael S. Egan, our former Chief Executive Officer and majority stockholder, and certain of our other stockholders (each a “Seller” and collectively the Company“Sellers”) entered into a fourth $50,000 promissory noteCommon Stock Purchase Agreement (the “November 2017 Promissory Note”“Purchase Agreement”) with Dancing Bear and intends to use the proceeds from such promissory note to fund its public company operating costs while it explores options relatedDelfin. Pursuant to the futureterms of theglobe (see Note 7, Subsequent Events for further details)the Purchase Agreement, Delfin agreed to purchase from the Sellers an aggregate of 312,825,952 shares of our Common Stock, representing approximately 70.9% of the issued and outstanding shares of our Common Stock. The closing of the purchase and sale transaction occurred on December 31, 2017 (the “Closing Date”). In connection with the transaction, we terminated the Master Services Agreement we had entered into with an entity controlled by Mr. Egan and satisfied all promissory notes and other borrowings under the credit line with respect to indebtedness owed to related parties. Delfin beneficially owns approximately 70.9% of our Common Stock and continues to own such amount as of the date of this filing.

 

Since the Closing Date of the Purchase Agreement, Delfin has continued to fund the Company through loans to the Company. At September 30, 2017,2018, the Company had a net working capital deficit of approximately $2,224,000.$293,000. Such working capital deficit included (i) a totalaccrued expenses of approximately $1,125,000$84,000, accounts payable of approximately $61,000 and approximately $149,000 in principal and accrued interest owed under the aforementioned Revolving Loan AgreementMarch 2018 Promissory Note with Delfin, the Company’s majority shareholder, which was amended and Promissory Notes; (ii) a total of approximately $950,000restated in management service fees owed under a Master Services AgreementMay 2018 to an entity controlled by Mr. Egan; (iii) a total of approximately $131,000 of$150,000 and then again on November 2, 2018 to increase the principal amount to up to $350,000 to pay certain accrued officer compensation due primarily to Mr. Egan; and (iv) an aggregate of approximately $25,000 in other unsecuredexpenses, accounts payable over the last six months, and accrued expenses owed to non-related parties.

During the fourth quarter of 2014,allow the Company derecognized approximately $84,000 of old accrued expenses related to its former Tralliance business (including $33,000 of disputed liabilities) based upon the belief that the statute of limitations applicable to enforcement of such liabilities had lapsed. During the fourth quarter of 2013, the Company derecognized approximately $296,000 of old liabilities of its former Tralliance business, including approximately $170,000 of disputed accounts payable owed to 2 former vendors and accrued expenses totaling approximately $126,000, based upon the belief that the statute of limitations applicable to enforcement of such liabilities had lapsed. As more fully described in Note 3, “Discontinued Operations,” the Company derecognized approximately $1,354,000 of old liabilities of its former VoIP telephony service business, including approximately $1,000,000 of disputed liabilities, during the fourth quarter of 2012 based upon our belief that the statute of limitations applicable to enforcement of such liabilities has lapsed. There can be no assurance that the holders of derecognized account payables will agree with our application of statutes of limitation to time bar claims related to such payables nor seek to assert a basis to toll or suspend the running of the otherwise applicable statutes of limitation.

As discussed previously, on September 29, 2008, the Company (i) sold the business and substantially all of the assets of its Tralliance Corporation subsidiary to Tralliance Registry Management, and (ii) issued 229,000,000 shares of its Common Stock (the “Shares”) to Registry Management (the “Purchase Transaction”). Tralliance Registry Management and Registry Management are entities controlled by Michael S. Egan. The closing of the Purchase Transaction resulted in the cancellation of all of the Company’s remaining Convertible Debt, related accrued interest and rent and accounts payable owed to entities controlled by Mr. Egan as of the date of closing (totaling approximately $6,400,000). However, the Company continues to be obligated to repay its principal borrowings and accrued interest due to an entity controlled by Mr. Egan under the aforementioned Revolving Loan Agreement and Promissory Notes. The Company currently has no ability to repay these loans should a demand for payment be made by the noteholder. Immediately after giving effect to the closing of the Purchase Transaction and the issuance of the Shares thereunder, Mr. Egan beneficially owned approximately 76% of the Company’s Common Stock and continues to beneficially own such amount at September 30, 2017.

As additional consideration under the Purchase Transaction, Tralliance Registry Management was obligated to pay an earn-out to theglobe equal to 10% (subject to certain minimums) of Tralliance Registry Management’s net revenue (as defined) derived from “.travel” names registered by Tralliance Registry Management from September 29, 2008 through May 5, 2015 (the “Earn-out”). The minimum Earn-out payable by Tralliance Registry Management to theglobe was $300,000 in the first year, increasing by $25,000 in each subsequent year (pro-rated for the final year of the Earn-out). As discussed earlier, the final Earn-out payment of approximately $37,000 was made in May 2015 and the Earn-out Agreement has now expired.

5

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

Immediately following the closing of the Purchase Transaction, theglobe became a shell company with no material operations or assets, and no source of revenue other than under the Earn-out.  As a shell company, theglobe’s operating expenses have consisted primarily of and are expected to continue to consist primarily of expenses incurred under the aforementioned Master Services Agreement and other customary public company expenses, including legal, audit and other miscellaneous public company costs.  some working capital.

 

MANAGEMENT’S PLANS

 

On a short term liquidity basis,Management anticipates continued funding from Delfin as it determines the Company must receivedirection of the continued indulgence of its primary creditor, Mr. Egan, including the continued forebearance of Mr. Egan and related entities in making demand for payment for amounts outstanding under the Revolving Loan Agreement, the Promissory Notes and the Master Services Agreement, in order to continue as a going concern.Company.

 

It is the Company’s preference to avoid filing for protection under the U.S. Bankruptcy Code. However, based upon the Company’s current financial condition as discussed above, management believes that additional debt or equity capital will need to be raised in order for theglobe to continue to operate as a going concern on a long-term basis. The Company currently has no access to credit facilities and has traditionally relied on borrowings from related parties to meet short-term liquidity needs, including to fund its public company operating costs while it explores its options related to the future of theglobe. Any such equity capital raised would likely result in very substantial dilution in the number of outstanding shares of the Company’s Common Stock and, if raised from anyone other than Mr. Egan or his related entities, would likely result in a change in control of theglobe. Given theglobe’s current financial condition, it has no intent to seek to acquire or start any new businesses. It is possible, however, that the Company could become a party to a “reverse merger” or similar transaction whereby a privately owned operating company would be merged into, or otherwise acquired by, the Company or a subsidiary thereof, in exchange for the issuance of shares of capital stock to the owners of the private company that would then represent substantially all of the then outstanding capital stock of the Company. There can be no assurance that any such reverse merger or similar transaction will be pursued or consummated, or that the Company will continue as a going concern.(3)          DEBT

(3)DISCONTINUED OPERATIONS

 

In March 2007, management and the Board of Directors of2018, the Company decidedexecuted a Promissory Note with Delfin, which was amended and restated in May 2018 to discontinue$150,000 and then again on November 2, 2018 to increase the operating, researchprincipal amount to up to $350,000 to pay certain accrued expenses, accounts payable over the last six months, and development activities of its VoIP telephony services business and terminate all ofto allow the remaining employees of the business.The Company’s decisionCompany to discontinue the operations of its VoIP telephony services business was based primarilyhave some working capital. Interest accrues on the historical losses sustained by this business, management’s expectationsunpaid principal balance at a rate of continued losses for the foreseeable futureeight (8%) per annum, and estimates of the amount of capital required to successfully monetize this business. All elements of its VoIP telephony services business shutdown plan were completed by the Company in 2007 except for the resolution of certain disputed vendor accounts payables, totaling approximately $1,000,000, and the payment of remaining non-disputed accounts payable. The disputed accounts payables related primarily to telecommunications network service fees charged by various former telecommunication vendors during the period from 2004 to 2007. These charges were disputed by the Company primarily due to such items as incorrect quantities, rates, in-service dates, regulatory fees/charges, late fees and contract termination charges.

During the fourth quarter of 2012, the Company re-evaluated all remaining liabilities of its VoIP telephony services business in light of the passage of time and applicable state statute of limitation laws. Based upon this re-evaluation, the Company derecognized accounts payable liabilities related to six (6) former telecommunication vendors totaling approximately $1,354,000, including the disputed liabilities of approximately $1,000,000 discussed earlier, from its balance sheet at December 31, 2012. There are no Discontinued Operations assets or liabilities at September 30, 2017.

(4)DEBT

Debt consists of notes payables due to a related party, as summarized below:

  September 30, 2017  December 31, 2016 
2008 Revolving Loan Notes due to a related party; due on demand $500,000  $500,000 
March 2016 Promissory Note due to a related party; due on demand  50,000   50,000 
November 2016 Promissory Note due to a related party; due on demand  50,000   50,000 
March 2017 Promissory Note due to a related party; due on demand  50,000    
  $650,000  $600,000 

6

On June 6, 2008, the Company and its subsidiaries, as guarantors, entered into a Revolving Loan Agreement with Dancing Bear Investments, Inc. (“Dancing Bear”), pursuant to which Dancing Bear may loan up to $500,000 to the Company on a revolving basis (the “Credit Line”). Dancing Bear is controlled by Michael S. Egan, our Chairman and Chief Executive Officer. In connection with its entry into the Credit Line, the Company borrowed $100,000 under the Credit Line. Subsequently, during the remainder of 2008, the Company made additional borrowings totaling the final $400,000 available under the Credit Line. As of September 30, 2017 and December 31, 2016, outstanding principal of $500,000 and accrued interest of $460,631 and $423,233 respectively, related to this Line of Credit have been reflected as current liabilities in our Consolidated Balance Sheet. Related Party Interest Expense related to the Credit Line of $37,397 was recognized in our Consolidated Statement of Operations during both the nine months ended September 30, 2017 and 2016, respectively.

On May 7, 2009, the Company entered into a Note and Modification Agreement with Dancing Bear Investments, Inc., which amended the repayment terms of the Revolving Loan Agreement. Under the terms of the Note Modification Agreement, from and after June 6, 2009 (the original maturity date of the Credit Line), all amounts due under the Revolving Loan Agreement, including principal and accrued interest, will be due and payable on the earlier of (i) five (5) business days following any demand for payment, which demand can be made by Dancing Bear at any time; or (ii)maturity date, calculated on a 365/366-day year, as applicable. The Promissory Note is due upon the occurrence of an event of default, as defined in the Revolving Loan Agreement. All funds borrowed under the Credit Linedemand. It may be prepaid in whole or in part, without penalty,party at any time duringprior to the term of the Credit Line.maturity date. The Company currently has no ability to repay this loan should Dancing Bear demand payment.expects continued funding from Delfin.

 

In connection with the Credit Line, the Company executed and delivered a promissory note to Dancing Bear in the amount of $500,000 bearing interest at ten percent (10%) per annum on the principal amount then outstanding. The Company’s subsidiaries unconditionally guaranteed the Credit Line by entering into an Unconditional Guaranty Agreement. All amounts outstanding from time to time under the Credit Line are secured by a lien on all assets of the Company and its subsidiaries pursuant to a Security Agreement with Dancing Bear.

On March 23, 2016, the Company entered into a $50,000 promissory note (the “March 2016 Promissory Note”) with, and borrowed the full amount of such promissory note from, Dancing Bear. The promissory note is unsecured and initially matured and was due on the first to occur of (i) September 22, 2016, or (ii) an event of default as defined under the promissory note. On September 20, 2016, the Company entered into a Note and Modification Agreement with Dancing Bear. Under the terms of the Note Modification Agreement, from and after September 22, 2016 (the original maturity date of promissory note) all amount due under the promissory note, including principal and accrued interest, will be due and payable on the earlier of (i) five (5) business days following any demand for payment, which demand can be made by Dancing Bear at any time; or (ii) an event of default as defined under the promissory note. Interest at a rate of 10% per annum is payable by the Company on all unpaid borrowings under the promissory note. The Company used the proceeds from the promissory note to pay its public company operating costs from March 2016 to October 2016.

On November 7, 2016, the Company entered into a second $50,000 promissory note (the “November 2016 Promissory Note”) with, and borrowed the full amount of such promissory note from, Dancing Bear. The promissory note is unsecured and matures with all amounts due, including principal and accrued interest, on the earlier of (i) five (5) business days following any demand for payment, which demand can be made by Dancing Bear at any time; or (ii) an event of default as defined under the promissory note. The Company used the proceeds from the promissory note to pay its public company operating costs from November 2016 to March 2017.

On March 29, 2017, the Company entered into a third $50,000 promissory note (the “March 2017 Promissory Note”) with, and borrowed the full amount of such promissory note from, Dancing Bear. The promissory note is unsecured and matures with all amounts due, including principal and accrued interest, on the earlier of (i) five (5) business days following any demand for payment, which demand can be made by Dancing Bear at any time; or (ii) an event of default as defined under the promissory note. The Company intends to use the proceeds from the promissory note to pay its public company operating costs over a short period of time.(4)          STOCK OPTION PLANS

 

As of September 30, 2017 and December 31, 2016, accrued interest totaling $14,671 and $4,645, respectively, related to the March 2016, November 2016 and March 2017 Promissory Notes has been reflected as current liabilities on our Condensed Consolidated Balance Sheet. Related Party Interest Expense related to the March 2016, November 2016 and March 2017 Promissory Notes totaling $10,028 and $2,630 was recognized in our Consolidated Statement of Operations during the nine months ended September 30, 2017 and 2016, respectively.

The Company has no ability to repay any of the loans discussed above should Dancing Bear demand payment.

(5)STOCK OPTION PLANS

As of September 30, 2017,2018, all of the Company’s stock option plans have been terminated and there are no shares available for grant under these plans. Remaining stock options outstanding and exercisable expired in August 2016.

 

There were no stock option grants or exercises during each of the nine months ended September 30, 20172018 and 2016.2017.

 

(6)RELATED PARTY TRANSACTIONS

(5)          RELATED PARTY TRANSACTIONS

 

In connection with the closing of the Tralliance Purchase Transaction, the Company also entered into a Master Services Agreement (“Services Agreement”) with Dancing Bear Investments, Inc. (“Dancing Bear”), an entity which was controlled by Mr. Egan, our former Chairman and CEO. Under the terms of the Services Agreement, for a fee of $20,000 per month ($240,000 per annum), Dancing Bear provides personnel and services to the Company so as to enable it to continue its existence as a public company without the necessity of any full-time employees of its own. The Company’s CondensedServices Agreement had an initial term of one year. In connection with the Delfin transaction, the Services Agreement has been terminated. Services under the Services Agreement include, without limitation, accounting, assistance with financial reporting, accounts payable, treasury/financial planning, record retention and secretarial and investor relations functions. Related party fees related to the Master Services Agreement of $60,000 and $180,000 was recognized in our Consolidated Balance Sheets atStatement of Operations during the three months and nine months ended September 30, 2017 and December 31, 2016 includes certain related party debt liabilities2017. Any balances owed under the Services agreement were satisfied with the Delfin transaction. There are $60,000 in payments to Dancing Bear, an entity controlled by Michael S. Egan, our Chairman and Chief Executive Officer, as summarized below:a former officer in the nine months ended September 30, 2018.

 

7

 

 

  September 30, 2017  December 31, 2016 
Notes payable due to related parties $650,000  $600,000 
Accrued interest due to related parties  475,303   427,878 
Total principal and accrued interest $1,125,303  $1,027,878 

In March 2018, the Company executed a Promissory Note with Delfin, which was amended and restated in May 2018 to $150,000 and then again on November 2, 2018 to increase the principal amount to up to $350,000 to pay certain accrued expenses, accounts payable over the last six months, and to allow the Company to have some working capital. The Company expects continued funding from Delfin. Related party interest expense associated with such debt totaling $47,425$4,066 and $40,027$47,425 has been recognized in our Condensed Consolidated Statement of Operations for the nine months ended September 30, 20172018 and 2016,2017, respectively. See Note 4,3, “Debt,” for a more complete discussion of related party debt.

 

During both the nine months ended September 30, 2017 and 2016, the Company accrued management services fee expenses totaling $180,000 payable to Dancing Bear under a Master Services Agreement entered into on September 29, 2008 by and between Dancing Bear and the Company.  No management service fees were paid during either the nine months ended September 30, 2017 or the nine months ended September 30, 2016. At September 30, 2017 and December 31, 2016, a total of approximately $949,570 and $769,570, respectively, in management service fees remained unpaid and are accrued on the Company’s condensed consolidated balance sheet.(6)          SUBSEQUENT EVENTS

In order to help the Company make it through a liquidity crisis in 2008, Michael S. Egan, our Chairman and Chief Executive Officer, agreed to defer receiving a portion of his 2008 salary, totaling $105,769, until a future undetermined point in time. Additionally, Robin S. Lebowitz, our Vice President of Finance, agreed to defer receiving an aggregate of $25,000 in car allowance payable during 2006, 2007 and 2008 to a future undetermined point in time. The aforementioned deferred payments were accrued by the Company during the years that such compensation was earned, with the total amount of $130,769 classified as Accrued Compensation Due to Related Parties in our Consolidated Balance Sheets at September 30, 2017 and December 31, 2016.

(7)SUBSEQUENT EVENTS

 

The Company’s management evaluated subsequent events through the time of the filing of this report on Form 10-Q. The Company’s management is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on its consolidated financial statements exceptstatements.

(7)          REVISION OF FINANCIAL STATEMENTS FOR THE QUARTER ENDED JUNE 30,2018

During the course of preparing the quarterly report on Form 10-Q for the following:quarter ended September 30, 2018, the Company identified an error related to certain expenses not being recorded in the second quarter of 2018 in connection with the failure to accrue a payment totaling $60,000 to a former officer, which resulted in the understatement of its net loss for the three and six months ended June 30, 2018. The reason for the error was related to certain information not being provided to the Company's accounting staff as a result of the Company's transition of certain financial and accounting duties to a new Chief Executive Officer and a new Chief Financial Officer in the second quarter of 2018.

 

On November 10, 2017 The following tablesreconcile the prior period as reported to the as revised balances:

  June 30, 2018 
  As Reported  Adjustment  As Revised 
Condensed Consolidated Balance Sheet:            
             
Total Current Assets $1,706  $-  $1,706 
Total Assets $1,706  $-  $1,706 
Total Current Liabilities $162,946  $60,000  $222,946 
Total Liabilities $162,946  $60,000  $222,946 
Total Stockholders' Equity $(161,240) $(60,000) $(221,240)

  For The Three Months Ended  For The Six Months Ended 
  June 30, 2018  June 30, 2018 
   As Reported   Adjustment   As Revised   As Reported   Adjustment   As Revised 
Condensed Consolidated Statement of Operations:                        
                         
Revenue $-  $-  $-  $-  $-  $- 
Operating Expenses $41,444  $60,000  $101,444  $134,044  $60,000  $194,044 
Loss From Continuing Operations $(42,803) $(60,000) $(102,803) $(135,680) $(60,000) $(195,680)
Net Loss $(42,803) $(60,000) $(102,803) $(135,680) $(60,000) $(195,680)
Net Loss Per Share - Basic and Diluted $(0.00) $-  $(0.00) $(0.00) $-  $(0.00)
Weighted Average Number of Common Shares Outstanding - Basic  and Diluted  441.480,473   -   441,480,473   441,480,473   -   441,480,473 

  For The Six Months Ended 
  June 30, 2018 
   As Reported   Adjustment   As Revised 
Condensed Consolidated Statement of Cash Flows:            
             
Cash Flows From Operating Activities:            
Net Loss $(135,680) $(60,000) $(195,680)
Changes in accrued expenses and other liabilities $945  $60,000  $60,945 
Net Cash Used In Operating Activities $(68,693) $-  $(68,693)

In accordance with SEC Staff Accounting Bulletin No 108, the Company entered into a fourth $50,000 promissory note (the “November 2017 Promissory Note”)has evaluated this error, based on an analysis of qualitative and quantitative factors, as to whether it was material to the condensed consolidated statement of operations for the three and six months ended June 30, 2018 and if amendments of previously filed financial statements with Dancing Bear. The promissory note, which bears interest at the rate of 10% per annum, is unsecured and matures with all the amounts due, including principal and accrued interest, on the earlier of (i) five (5) business days following any demand for payment, which demand can be made by Dancing Bear at any time; or (ii) an event of default as defined under the promissory note.SEC are required. The Company intends to usehas determined that quantitatively and qualitatively, the proceeds from the promissory note to pay its public company operating costs over a short period of time while it explores its options relatederror has no material impact to the futurecondensed consolidated statement of theglobe.operations for the three and six months ended June 30, 2018 or other prior periods.

 

8

ITEM 2.MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

FORWARD LOOKING STATEMENTS

 

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the federal securities laws that relate to futureSecurities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or our future financial performance.trends and similar expressions concerning matters that are not historical facts. 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"“may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “intend,” “potential” or "continue"“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:

 

·our abilityneed for additional equity and debt capital financing to successfully resolve disputed liabilities;continue as a going concern, and the sources of such capital;

·our abilityintent with respect to raise additional and sufficient capital;future dividends;

·our ability to continue to operate as a going concern; and

·the continued forbearance of certain related parties from making demand for payment under certain contractual obligations of, and loans to, the Company.Company; and
·our estimates with respect to certain accounting and tax matters.

 

These statements are only predictions. Although we believe that the expectations reflected in these forward-looking statements reflect our current view about future events and are reasonable,subject to risks, uncertainties and assumptions. Unless required by law, we cannot guarantee future results, levels of activity, performance or achievements. We are not required to and do not intend to update any of the forward-looking statements after the date of this Form 10-Q or to conform these statements to actual results. In light of these risks, uncertaintiesWe wish to caution readers that certain important factors may have affected and assumptions,could in the forward-looking events discussed in this Form 10-Q might not occur. Actualfuture affect our actual results levels of activity, performance, achievements and events may varycould cause actual results to differ significantly from those implied by theexpressed in any forward-looking statements.statement. A description of risks that could cause our results to vary appears under "Risk Factors"“Risk Factors” and elsewhere in this Form 10-Q. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward- looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:

·our ability to raise additional and sufficient capital;
·our ability to continue to receive funding from related parties; and
·our ability to successfully estimate the impact of certain accounting and tax matters.

The following discussion should be read together in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto and the audited consolidated financial statements and notes to those statements contained in the Annual Report on Form 10-K for the year ended December 31, 2016.2017.

 

 89 

 

 

OVERVIEW

 

theglobe.com, inc. (the “Company,” “theglobe,” “we” or “us”) was incorporated on May 1, 1995 and commenced operations on that date. Originally, we were an online community with registered members and users in the United States and abroad. On September 29, 2008, theglobe.com, inc.we consummated the sale of the business and substantially all of the assets of itsour subsidiary, Tralliance Corporation subsidiary(“Tralliance”), to Tralliance Registry Management Company, LLC, an entity controlled by Michael S. Egan, the Company’sour former Chairman and Chief Executive Officer. As a result of and on the effective date of the sale of itsour Tralliance business, which was theglobe’sour last remaining operating business, theglobewe became a “shell company,” as that term is defined in Rule 12b-2 of the Exchange Act, with no material operations or assets. We currently have no material operations or assets.

On December 20, 2017, our former Chief Executive Officer and majority stockholder, Mr. Egan entered into the Purchase Agreement with Delfin for the purchase by Delfin of shares owned by Mr. Egan representing approximately 70.9% of our Common Stock. On the Closing Date, Mr. Egan, Mr. Cespedes and Ms. Lebowitz resigned from their respective positions as officers and directors of the Company. Mr. Nichols was appointed the sole member of our Board and our sole executive officer. Effective June 29, 2018, our Board appointed Mr. Frederick Jones as President, Chief Executive Officer, Chief Financial Officer, and Director of the Company, and Mr. Nichols resigned from his positions of President, Chief Executive Officer, Chief Financial Officer, Director, and any other directorships, offices or other positions with the Company.

 

As part of the consideration for the sale of its Tralliance business, theglobe received earn-out rights from Tralliance Registry Management (“Earn-out”), which constitutes the only source of revenue for theglobe as a shell company.  theglobe’s operating expenses as a shell company, our operating expenses have consisted primarily of, and we expect them to continue to consist primarily of, customary public company expenses, including personnel, accounting, financial reporting, legal, audit and other related public company costs.

 

In March 2007, management and the BoardAs of Directors of the Company made the decision to cease all activities related to its VoIP telephony services business. Results of operations for the VoIP telephony services businesses have been reported separatelySeptember 30, 2018, as “Discontinued Operations”reflected in theour accompanying condensed consolidated statements of operations for all periods presented. There are no discontinued operations assets orConsolidated Balance Sheet, our current liabilities included in the accompanying condensed consolidated balance sheets.exceed our total assets.

 

BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS; GOING CONCERN

 

We received a report from our independent registered public accountants, relating to our December 31, 20162017 audited consolidated financial statements, containing an explanatory paragraph regarding our ability to continue as a going concern. As a shell company, our management believes that theglobewe will not be able to generate operating cash flows sufficient to fund itsour operations and pay itsour existing current liabilities in the foreseeable future. Based upon our current limited cash resources and without the infusion of additional capital and/or the continued indulgenceforbearance of itsour creditors, our management does not believe the Companywe can operate as a going concern beyond a short period of time. See “Future and Critical Need for Capital” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for further details.

 

Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, our condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable to continue as a going concern.

 

RESULTS OF OPERATIONS

 

THREE MONTHS ENDED SEPTEMBER 30, 20172018 COMPARED
TO

THE THREE MONTHS ENDED SEPTEMBER 30, 2016

2017
CONTINUING OPERATIONS

 

NET REVENUE. Commensurate with the sale of our Tralliance business on September 29, 2008, we became a shell company. As a result, net revenue for both the three months ended September 30, 20172018 and 20162017 was $0.

 

GENERAL AND ADMINISTRATIVE. General and administrative expenses include only customary public company expenses, including accounting, legal, audit, insurance and other related public company costs. General and administrative expenses totaled approximately $33 thousand$69,000 in the third quarter of 20172018 as compared to approximately $28 thousand$33,000 for the same quarter of the prior year.year, primarily arising from increased accounting and legal expenses.

10

 

RELATED PARTY TRANSACTIONS. Related party transaction expensefees totaled $60 thousand$0 for both the three months ended September 30, 2017, and 2016 and consisted2018 as compared to approximately $60,000 for the same quarter of the prior year relating to management services fees payable to Dancing Bear for accounting, finance, administrative and managerial support.

 

RELATED PARTY INTEREST EXPENSE. Related party interest expense for the three months ended September 30, 2018 totaled $2,430 compared to approximately $16,000 for the three months ended September 30, 2017 and 2016 was approximately $16 thousand and $14 thousand, respectively, and consisted primarily of interest due and payable to Delfin in 2018 and Dancing Bear underin 2017.

NINE MONTHS ENDED SEPTEMBER 30, 2018 COMPARED TO
THE NINE MONTHS ENDED SEPTEMBER 30, 2017
CONTINUING OPERATIONS

NET REVENUE. Net revenue totaled $0 for both the Revolving Loan Agreementnine months ended September 30, 2018 and Promissory Notes.2017.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses include only customary public company expenses, including accounting, legal, audit, insurance and other related public company costs. General and administrative expenses totaled approximately $203,000 for the first nine months of 2018 as compared to approximately $74,000 for the same period of 2017, primarily arising from increased accounting and legal expenses.

RELATED PARTY TRANSACTIONS. Related party fees totaled $60,000 for the nine months ended September 30, 2018 as compared to approximately $180,000 for the nine months ended September 30, 2017 relating to management services fees payable to Dancing Bear for accounting, finance, administrative and managerial support in 2017 and payments to a former officer in 2018.

RELATED PARTY INTEREST EXPENSE. Related party interest expense for the nine months ended September 30, 2018 and 2017 was approximately $4,000 and $47,000, respectively, and consisted of interest due and payable to Delfin in 2018 and Dancing Bear in 2017.

 

INCOME TAXES. No tax benefit was recorded for the losses incurred during the third quarterfirst nine months of 20172018 or the third quarterfirst nine months of 20162017 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.

 

9

NINE MONTHS ENDED SEPTEMBER 30, 2017 COMPARED TO

THE NINE MONTHS ENDED SEPTEMBER 30, 2016

CONTINUING OPERATIONS

NET REVENUE. Net revenue totaled $0 for both the six months ended September 30, 2017 and 2016.

GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative expenses include only customary public company expenses, including accounting, legal, audit, insurance and other related public company costs.   General and administrative expenses totaled approximately $74 thousand for the first nine months of 2017 as compared to approximately $71 thousand for the same period of 2016.

RELATED PARTY TRANSACTIONS. Related party transaction expense totaled $180 thousand for both the nine months ended September 30, 2017, and 2016 and consisted of management services fees payable to Dancing Bear for accounting, finance, administrative and managerial support.

RELATED PARTY INTEREST EXPENSE. Related party interest expense for the nine months ended September 30, 2017 and 2016 was approximately $47 thousand and $40 thousand, respectively, and consisted primarily of interest due and payable to Dancing Bear under the Revolving Loan Agreement.

INCOME TAXES. No tax benefit was recorded for the losses incurred during the nine months ended September 30, 2017 or 2016 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.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW ITEMS

 

As of September 30, 2017,2018, we had $603$936 in cash as compared to $31,285$440 as of December 31, 2016.2017. Net cash flows used in operating activities of continuing operations totaled approximately $80 thousand$144,000 for the nine months ended September 30, 20172018 compared to approximately $68 thousandnet cash flows used in operating activities of continuing operations of $80,000 for the nine months ended September 30, 2016.

As discussed earlier, on March 29, 2017 and on March 23, 2016, the Company borrowed $50 thousand each under the Promissory Notes from Dancing Bear with such borrowing reflected within Cash Flows from Financing Activities for the nine months ended September 30, 2017 and 2016, respectively.2017.

 

FUTURE AND CRITICAL NEED FOR CAPITAL

 

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

 

11

Since 2008, the Company waswe have been able to continue operating as a going concern due principally to funding of $500 thousand$500,000 received during 2008 under a Revolving Loan Agreement with an entity controlled by Michael S.Mr. Egan, itsour former Chairman and Chief Executive Officer, and total proceeds of approximately $2.437 million$2,437,000 received during 2009 through the second quarter of 2015 under an Earn-out Agreement with an entity also controlled by Mr. Egan (as more fully discussed below), as well as the forbearance of itsour creditors. The Earn-out period expired on May 5, 2015, with the final pro-rated payment of $37 thousand received by the Company in May 2015. More recently, as more fully discussed in Note 4, “Debt,”we received funding of $50,000 each in March 2016, November 2016 and March 2017 the Company received fundings of $50 thousand eachas well as $10,000 in November 2017 under three (3) promissory notesPromissory Notes entered into with the same entity that provided funding under the Revolving Loan Agreement (the “Promissory Notes”). Additionally,Agreement. In connection with the closing of the purchase of Common Stock by Delfin, the Promissory Notes were fully satisfied.

In March 2018, the Company executed a Promissory Note with Delfin, which was amended and restated in May 2018 to $150,000 and then again on November 10, 2017,2, 2018 to increase the principal amount to up to $350,000 to pay certain accrued expenses, accounts payable over the last six months, and to allow the Company entered intoto have some working capital. Interest accrues on the unpaid principal balance at a fourth $50 thousand promissory note (the “November 2017rate of eight (8%) per annum, and is payable on the maturity date, calculated on a 365/366 day year, as applicable. The Promissory Note”) with Dancing Bear and intends to use the proceeds from such promissory note to fund its public company operating costs while it explores options relatedNote is due upon demand. It may be prepaid in whole or in any part at any time prior to the futurematurity date. Management anticipates continued funding from Delfin as it determines the direction of theglobe (see Note 7, Subsequent Events for further details).the Company.

 

At September 30, 2017, the Company2018, we had a net working capital deficit of approximately $2.224 million.  Such working capital$293,000. This deficit included (i) a totalaccrued expenses of approximately $1.125 million$84,000, accounts payable of approximately $61,000 and approximately $149,000 in principal and accrued interest owed under the aforementioned Revolving Loan Agreement and Promissory Notes; (ii) a total of approximately $950 thousand in management service fees owed under a Master Services Agreement to an entity controlled by Mr. Egan; (iii) a total of approximately $131 thousand of accrued officer compensation due primarily to Mr. Egan; and (iv) an aggregate of approximately $25 thousand in other unsecured accounts payable and accrued expenses owed to non-related parties.

10

DuringNote with Delfin, the fourth quarter of 2014, the Company derecognized approximately $84 thousand of old accrued expenses related to its former Tralliance business (including $33 thousand of disputed liabilities) based upon the belief that the statute of limitations applicable to enforcement of such liabilities had lapsed. During the fourth quarter of 2013, the Company derecognized approximately $296 thousand of old liabilities of its former Tralliance business, including approximately $170 thousand of disputed accounts payable owed to 2 former vendors and accrued expenses totaling approximately $126 thousand, based upon the belief that the statute of limitations applicable to enforcement of such liabilities had lapsed. As more fully described in Note 3, “Discontinued Operations,” the Company derecognized approximately $1.354 million of old liabilities of its former VoIP telephony service business, including approximately $1 million of disputed liabilities, during the fourth quarter of 2012 based upon our belief that the statute of limitations applicable to enforcement of such liabilities has lapsed. There can be no assurance that the holders of derecognized account payables will agree with our application of statutes of limitation to time bar claims related to such payables nor seek to assert a basis to toll or suspend the running of the otherwise applicable statutes of limitation.Company’s majority shareholder.

 

As discussed previously, on September 29, 2008, the Company (i) sold the business and substantially all of the assets of its Tralliance Corporation subsidiary to Tralliance Registry Management, and (ii) issued 229 million shares of its Common Stock (the “Shares”) to Registry Management (the “Purchase Transaction”). Tralliance Registry Management and Registry Management are entities controlled by Michael S. Egan. The closing of the Purchase Transaction resulted in the cancellation of all of the Company’s remaining Convertible Debt, related accrued interest and rent and accounts payable owed to entities controlled by Mr. Egan as of the date of closing (totaling approximately $6.4 million). However, the Company continues to be obligated to repay its principal borrowings and accrued interest due to an entity controlled by Mr. Egan under the aforementioned Revolving Loan Agreement and Promissory Notes. The Company currently has no ability to repay these loans should a demand for payment be made by the noteholder. Immediately after giving effect to the closing of the Purchase Transaction and the issuance of the Shares thereunder, Mr. Egan beneficially owned approximately 76% of the Company’s Common Stock and continues to beneficially own such amount at September 30, 2017.

As additional consideration under the Purchase Transaction, Tralliance Registry Management was obligated to pay an earn-out to theglobe equal to 10% (subject to certain minimums) of Tralliance Registry Management’s net revenue (as defined) derived from “.travel” names registered by Tralliance Registry Management from September 29, 2008 through May 5, 2015 (the “Earn-out”). The minimum Earn-out payable by Tralliance Registry Management to theglobe was $300 thousand in the first year, increasing by $25 thousand in each subsequent year (pro-rated for the final year of the Earn-out). As discussed earlier, the final Earn-out payment of approximately $37 thousand was made in May 2015 and the Earn-out Agreement has now expired.

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

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

On a short term liquidity basis, the Company must receive the continued indulgence of its primary creditor, Mr. Egan, including the continued forebearance of Mr. Egan and related entities in making demand for payment for amounts outstanding under the Revolving Loan Agreement, the Promissory Notes and the Master Services Agreement, in order to continue as a going concern.

It is the Company’s preference to avoid filing for protection under the U.S. Bankruptcy Code. However, based upon the Company’s current financial condition as discussed above, management believes that additional debt or equity capital will need to be raised in order for theglobe to continue to operate as a going concern on a long-term basis. The Company currently has no access to credit facilities and has traditionally relied on borrowings from related parties to meet short-term liquidity needs, including to fund its public company operating costs while it explores its options related to the future of theglobe. Any such equity capital raised would likely result in very substantial dilution in the number of outstanding shares of the Company’s Common Stock and, if raised from anyone other than Mr. Egan or his related entities, would likely result in a change in control of theglobe. Given theglobe’s current financial condition, it has no intent to seek to acquire or start any new businesses. It is possible, however, that the Company could become a party to a “reverse merger” or similar transaction whereby a privately owned operating company would be merged into, or otherwise acquired by, the Company or a subsidiary thereof, in exchange for the issuance of shares of capital stock to the owners of the private company that would then represent substantially all of the then outstanding capital stock of the Company. There can be no assurance that any such reverse merger or similar transaction will be pursued or consummated, or that the Company will continue as a going concern.

EFFECTS OF INFLATION

 

Management believes that inflation has not had a significant effect on our results of operations during 20172018 and 2016.2017.

 

11

MANAGEMENT'SMANAGEMENT’S DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

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

 

Certain of our accounting policies require higher degrees of judgment than others in their application. Primarily, these include valuationsvaluation of accounts payable and accrued expenses.

 

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

 

Management has determined that all recently issued accounting pronouncements will not have a material impact on the Company’s financial statements or do not apply to the Company’s operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

 

Not applicable to smaller reporting companies such as thisthe Company.

ITEM 4. CONTROLS AND PROCEDURES

ITEM 4.CONTROLS AND PROCEDURES

 

We maintain disclosure controls and procedures that are designed to ensure (1) that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's ("SEC"Commission’s (“SEC”) rules and forms, and (2) that this information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures.

 

12

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2017.2018. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective in alerting them in a timely manner to material information regarding us (including our consolidated subsidiaries) that is required to be included in our periodic reports to the SEC.

 

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated any change in our internal control over financial reporting that occurred during the quarter ended September 30, 20172018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, and have determined there to be no reportable changes.

 

PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

 

ITEM 1. LEGAL PROCEEDINGSNone.

 

NONE.

ITEM 1A. RISK FACTORS

ITEM 1A.RISK FACTORS

 

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

 

RISKS RELATING TO OUR BUSINESS GENERALLY

 

WE MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN.We may not be able to continue as a going concern.

 

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Companywe be unable to continue as a going concern. However, for the reasons described below, Company management doeswe do not believe that cash on hand and cash flow generated internally by the Companyus will be adequate to fund itsour limited overhead and other cash requirements beyond a short period of time. These reasons raise significant doubt about our ability to continue as a going concern. In addition, our independent registered public accounting firm has issued a report that included an explanatory paragraph referring to our significant net losses, accumulated deficit of approximately $297 million as of December 31, 2017 and the Company’sprevious sale of our last remaining operating business, which as it noted raised substantial doubt about our ability to continue as a going concern.

 

12

Since 2008, the Company waswe were able to continue operating as a going concern due principally to funding of $500 thousand$500,000 received during 2008 under a Revolving Loan Agreement with an entity controlled by Michael S.Mr. Egan, itsour former Chairman and Chief Executive Officer, and total proceeds of approximately $2.437 million received during 2009 through the second quarter of 2015 under an Earn-out Agreement with an entity also controlled by Mr. Egan (as more fully discussed below), as well as the forbearance of itsour creditors. The Earn-out period expired on May 5, 2015, with the final pro-rated payment of $37 thousand received by the Company in May 2015. More recently, as more fully discussed in Note 4, “Debt,”we received funding of $50,000 each in March 2016, November 2016 and March 2017 the Company received fundings of $50 thousand eachas well as $10,000 in November 2017 under three (3) promissory notes entered into with the same entity that provided funding under the Revolving Loan Agreement (the “Promissory Notes”). Additionally, on November 10, 2017,Agreement. In connection with the Company entered into a fourth $50 thousandclosing of the purchase of Common Stock by Delfin, the promissory note (the “November 2017 Promissory Note”) with Dancing Bear and intends to use the proceeds from such promissory note to fund its public company operating costs while it explores options related to the future of theglobe (see Note 7, Subsequent Events for further details).notes were fully satisfied.

 

At September 30, 2017, the Company2018, we had a net working capital deficit of approximately $2.224 million.  Such working capital$293,000. This deficit included (i) a totalaccrued expenses of approximately $1.125 million$84,000, accounts payable of approximately $61,000 and approximately $149,000 in principal and accrued interest owed under the aforementioned Revolving Loan Agreement and Promissory Notes; (ii) a total of approximately $950 thousand in management service fees owed under a Master Services Agreement to an entity controlled by Mr. Egan; (iii) a total of approximately $131 thousand of accrued officer compensation due primarily to Mr. Egan; and (iv) an aggregate of approximately $25 thousand in other unsecured accounts payable and accrued expenses owed to non-related parties.

During the fourth quarter of 2014, the Company derecognized approximately $84 thousand of old accrued expenses related to its former Tralliance business (including $33 thousand of disputed liabilities) based upon the belief that the statute of limitations applicable to enforcement of such liabilities had lapsed. During the fourth quarter of 2013, the Company derecognized approximately $296 thousand of old liabilities of its former Tralliance business, including approximately $170 thousand of disputed accounts payable owed to 2 former vendors and accrued expenses totaling approximately $126 thousand, based upon the belief that the statute of limitations applicable to enforcement of such liabilities had lapsed. As more fully described in Note 3, “Discontinued Operations,” the Company derecognized approximately $1.354 million of old liabilities of its former VoIP telephony service business, including approximately $1 million of disputed liabilities, during the fourth quarter of 2012 based upon our belief that the statute of limitations applicable to enforcement of such liabilities has lapsed. There can be no assurance that the holders of derecognized account payables will agree with our application of statutes of limitation to time bar claims related to such payables nor seek to assert a basis to toll or suspend the running of the otherwise applicable statutes of limitation.

As discussed previously, on September 29, 2008, the Company (i) sold the business and substantially all of the assets of its Tralliance Corporation subsidiary to Tralliance Registry Management, and (ii) issued 229 million shares of its Common Stock (the “Shares”) to Registry Management (the “Purchase Transaction”). Tralliance Registry Management and Registry Management are entities controlled by Michael S. Egan. The closing of the Purchase Transaction resulted in the cancellation of all ofDelfin, the Company’s remaining Convertible Debt, related accrued interest and rent and accounts payable owed to entities controlled by Mr. Egan as of the date of closing (totaling approximately $6.4 million). However, the Company continues to be obligated to repay its principal borrowings and accrued interest due to an entity controlled by Mr. Egan under the aforementioned Revolving Loan Agreement and Promissory Notes. The Company currently has no ability to repay these loans should a demand for payment be made by the noteholder. Immediately after giving effect to the closing of the Purchase Transaction and the issuance of the Shares thereunder, Mr. Egan beneficially owned approximately 76% of the Company’s Common Stock and continues to beneficially own such amount at September 30, 2017.

As additional consideration under the Purchase Transaction, Tralliance Registry Management was obligated to pay an earn-out to theglobe equal to 10% (subject to certain minimums) of Tralliance Registry Management’s net revenue (as defined) derived from “.travel” names registered by Tralliance Registry Management from September 29, 2008 through May 5, 2015 (the “Earn-out”). The minimum Earn-out payable by Tralliance Registry Management to theglobe was $300 thousand in the first year, increasing by $25 thousand in each subsequent year (pro-rated for the final year of the Earn-out). As discussed earlier, the final Earn-out payment of approximately $37 thousand was made in May 2015 and the Earn-out Agreement has now expired.

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

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

On a short term liquidity basis, the Company must receive the continued indulgence of its primary creditor, Mr. Egan, including the continued forebearance of Mr. Egan and related entities in making demand for payment for amounts outstanding under the Revolving Loan Agreement, the Promissory Notes and the Master Services Agreement, in order to continue as a going concern.majority shareholder.

 

 13 

 

 

It is the Company’s preferenceOn a short-term liquidity basis, we must receive capital contributions or loans from Delfin or its affiliates in order to continue as a going concern. We prefer to avoid filing for protection under the U.S. Bankruptcy Code. However, based upon the Company’sour current financial condition as discussed above, management believeswe believe that we will need to raise additional debt or equity capital will need to be raised in order for theglobeus to continue to operate as a going concern on a long-term basis. The CompanyAny such capital would likely come from Delfin, as we currently hashave no access to credit facilities and hashave traditionally relied on borrowings from related parties to meet short-term liquidity needs, including to fund its public company operating costs while it explores its options related to the future of theglobe.needs. Any such equity capital raised would likely result in very substantial dilution in the number of outstanding shares of our Common Stock. We intend to use the Company’s Common Stockproceeds from the 2018 Promissory Note and if raisedseek other loans from anyone other than Mr. Egan or hisDelfin and related entities, would likely result in a change in controlif necessary, to fund our public company operating costs while we explore our options related to the future of theglobe. Given theglobe’s current financial condition, it has no intent to seek to acquire or start any new businesses. It is possible, however, that the Company could become a party to a “reverse merger” or similar transaction whereby a privately owned operating company would be merged into, or otherwise acquired by, the Company or a subsidiary thereof, in exchange for the issuance of shares of capital stock to the owners of the private company that would then represent substantially all of the then outstanding capital stock of the Company. There can be no assurance that any such reverse merger or similar transaction will be pursued or consummated, or that the Company will continue as a going concern.

 

WE MAY NOT BE SUCCESSFUL IN SETTLING DISPUTED VENDOR CHARGES.

During 2014,In 2018, we derecognized approximately $84 thousand of liabilities (including $33 thousand of disputed liabilities) relatedcan borrow up to our former Tralliance business. Additionally, during 2012, we derecognized approximately $1.354 million of old liabilities related to our former VoIP telephony services business ( including approximately $1.0 million of disputed liabilities)$350,000 under an amended and in 2013 we derecognized approximately $296 thousand of old liabilities related to our former Tralliance business (including $170 thousand of disputed liabilities). These liabilities were derecognized based on our belief that the applicable statute of limitations periods to bring claims to collect such liabilities have expired. There can no assurance that vendors will not file claims and attempt to collect certain of these derecognized liabilities for which we believe the statute of limitations has lapsed. Should vendors file claims, there can be no assurance that the Company will be successful in settling the claims without significant costs, including attorney’s fees. Any adverse outcome in any of these matters could materially and adversely affect our financial position, utilize a significant portion of our cash resources and/or require additional capital to be infused into the Company, and adversely affect our ability to continue as a going concern.

OUR NET OPERATING LOSS CARRYFORWARDS MAY BE SUBSTANTIALLY LIMITED.

As of December 31, 2016, we had net operating loss carryforwards which may be potentially available for U.S. tax purposes of approximately $166 million. These carryforwards expire through 2036. The Tax Reform Act of 1986 imposes substantial restrictions on the utilization of net operating losses and tax credits in the event of an "ownership change" of a corporation. Due to various significant changes in our ownership interests, as defined in the Internal Revenue Code of 1986, as amended, that occurred prior to December 31, 2008, we have substantially limited the availability of our net operating loss carryforwards.

OUR OFFICERS, INCLUDING OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER AND PRESIDENT HAVE OTHER INTERESTS; WE HAVE CONFLICTS OF INTEREST WITH OUR DIRECTORS; ALL OF OUR DIRECTORS ARE EMPLOYEES OR STOCKHOLDERS OF THE COMPANY OR AFFILIATES OF OUR LARGEST STOCKHOLDER.restated promissory note from Delfin.

 

Our Chairman and Chief Executive Officer, management may have other interests that may conflict with the interests of our stockholders.

Mr. Michael Egan, is an officer or director of other companies. Mr. EganJones became our Chief Executive Officer effective June 1, 2002.29, 2018. Mr. Egan is alsoJones previously served as the controlling investorChief Executive Officer of The Registry Management Company, LLC, Dancing Bear Investments, Inc., E&C Capital Partners LLLP, and E&C Capital Partners II, LLC,Fairwood, which are our largest stockholders. Mr. Egan is also the controlling investor of License Holdings, LLC and Labigroup Holdings, LLC, entities which have had various ongoing business relationships with the Company. Additionally, Mr. Egan is the parent of Delfin, our controlling investor of Tralliance Registry Management Company, LLC, an entity which acquired our Tralliance business.

Our President, Treasurer and Chief Financial Officer and Director,stockholder. Mr. Edward A. Cespedes, isJones also an officer, director or shareholder ofmaintains directorships with other companies and entities, including E&C Capital Partners LLLP, E&C Capital Partners II, LLC, and The Registry Management Company, LLC. Additionally, Mr. Cespedes currently serves asthose that may be involved in the President and a director of Paymeon, Inc., a location-based marketing company.

Our Vice President of Finance and Director, Ms. Robin Lebowitz is also an officer of Dancing Bear Investments, Inc. She is also an officer, director gas and/or shareholder of other companies or entities controlled by Mr. Egan and Mr. Cespedes, including The Registry Management Company, LLC.

energy business. Due to the relationships with his relatedsuch entities, Mr. EganJones will have an inherent conflict of interest in making any decision related to transactions between the related entities and us. Furthermore, since Mr. Jones is also the Company'ssole member of our Board of Directors, our Board presently is comprised entirely of individuals who are executive officers of theglobe, and therefore are not "independent."“independent.” We intend to review related party transactions in the future on a case-by-case basis.

 

WE CURRENTLY HAVE NO BUSINESS OPERATIONS AND ARE A SHELL COMPANY.We currently have no business operations and are a shell company.

 

Immediately following the closing of the Tralliance Purchase Transaction, theglobewe became a shell company with no material operations or assets, and no source of revenue other than under the “net revenue” earn-out arrangement with Tralliance Registry Management. It is expectedWe expect that theglobe’sour future operating expenses as a public shell company will consist primarily of expenses incurred under the aforementioned Master Services Agreement and other customary public company expenses, including legal, audit and other miscellaneous public company costs. Given theglobe’scosts which will need to be paid by Delfin. In addition, our lack of operations, assets and current financial condition and the state of the current United States capital markets and economy, the Company has no current intentprospects makes it difficult for investors to seek to acquire, or start, any other business.evaluate our future performance.

 

14

WE MAY SUFFER ADVERSE CONSEQUENCES IF WE ARE DEEMED AN INVESTMENT COMPANY (DEFINED BELOW) AND WE MAY INCUR SIGNIFICANT COSTS TO AVOID INVESTMENT COMPANY STATUS.We may suffer adverse consequences if we are deemed an investment company (defined below) and we may incur significant costs to avoid investment company status.

 

We believe that we are not an investment company as defined by the Investment Company Act of 1940. If the Commission or a court were to disagree with us, we could be required to register as an investment company. This would negatively affect our ability to consummate a potential acquisition of an operating company, subjecting us to disclosure and accounting guidance geared toward investment, rather than operating companies; limiting our liability to borrow money, issue options, issue multiple classes of stock and debt, and engage in transactions with affiliates; and requiring us to undertake significant costs and expenses to meet disclosure and regulatory requirements to which we would be subject as a registered investment company.

 

RISKS RELATING TO OUR COMMON STOCK

 

WE ARE CONTROLLED BY OUR CHAIRMAN.We are controlled by our majority stockholder, which may limit the ability of our other stockholders to influence future corporate action.

 

On September 29, 2008, inIn connection with the sale of Tralliance, the Company issued 229 million shares of its Common Stock to Registry Management, an entity controlled by Michael S. Egan, its Chairman and Chief Executive Officer. Previously on June 10, 2008, Dancing Bear Investments, Inc., also an entity controlled by Mr. Egan, convertedPurchase Agreement, as described above, Delfin purchased an aggregate of $400 thousand312,825,952 shares of outstanding convertible secured promissory notes due to them byour Common Stock, representing approximately 70.9% of the Company into 40 millionissued and outstanding shares of our Common Stock. As a result of the issuance of the 269 million shares under the transactions described above, Mr. Egan’s beneficial ownership has been increased to approximately 76% of the Company’s Common Stock and heAccordingly, Delfin continues to own such amount at September 30, 2017. Accordingly, Mr. Egan isbe in a position to control the vote on all corporate actions in the future.

 

DELISTING OF OUR COMMON STOCK MAKES IT MORE DIFFICULT FOR INVESTORS TO SELL SHARES.The delisting of our Common Stock makes it more difficult for investors to sell shares.

 

The shares of our Common Stock were delisted from the NASDAQ national market in April 2001 and are now traded in the over-the-counter market on what is commonly referred to as the electronic bulletin board or "OTCBB."“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.securities, if at all. The delisting has made trading our shares more difficult for investors. It has also made it more difficult for us to raise additional capital. We may also incur additional costs under state blue-sky laws if we sell equity due to our delisting.

 

14

OUR COMMON STOCK IS SUBJECT TO CERTAIN "PENNY STOCK" RULES WHICH MAY MAKE IT A LESS ATTRACTIVE INVESTMENT.

We do not currently intend to pay dividends on our Common Stock and, consequently, the ability of our stockholders to achieve a return on their investment in our Common Stock will depend on appreciation in the price of our Common Stock.

We do not expect to pay cash dividends on our Common Stock. Any future dividend payment are within the absolute discretion of our Board of Directors and will depend on, among other things, our results of operations, working capital requirements, capital expenditure requirements, financial condition, contractual restrictions, business opportunities, anticipated cash needs, provisions of applicable law and other factors that our Board of Directors may deem relevant. We may not generate sufficient cash from operations in the future to pay dividends on our Common Stock. As a result, the success of an investment in our Common Stock will depend on future appreciation in its value. The price of our Common Stock may not appreciate in value or even maintain the price at which our stockholders purchased shares. If our Common Stock does not appreciate in value, investors could suffer losses in their investment in our Common Stock.

Our Common Stock is subject to certain “penny stock” rules which may make it a less attractive investment.

 

Since the trading price of our Common Stock is less than $5.00 per share and our net tangible assets are less than $2.0 million, trading in our Common Stock is subject to the requirements of Rule 15g-9 of the Exchange Act. Under Rule 15g-9, brokers who recommend penny stocks to persons who are not established customers and accredited investors, as defined in the Exchange Act, must satisfy special sales practice requirements, including requirements that they make an individualized written suitability determination for the purchaser; and receive the purchaser'spurchaser’s written consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional disclosures in connection with any trades involving a penny stock, including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated with that market. Such requirements may severely limit the market liquidity of our Common Stock and the ability of purchasers of our equity securities to sell their securities in the secondary market. For all of these reasons, an investment in our equity securities may not be attractive to our potential investors.

 

AS A RESULT OF THE CLOSING OF THE PURCHASE AGREEMENT, WE ARE A SHELL COMPANY AND ARE SUBJECT TO MORE STRINGENT REPORTING REQUIREMENTS AND RULE 144 IS NOT GENERALLY AVAILABLE AS A BASIS OF RESALE.As a shell company, we are subject to more stringent reporting requirements.

 

As a result of the consummation of the Purchase Transaction, weWe have no or nominal operations and assets, and pursuant to Rule 405 and Exchange Act Rule 12b-2, we are a shell company. Applicable securities rules prohibit shell companies from using a Form S-8 to register securities pursuant to employee compensation plans. However, the rules do not prevent us from registering securities pursuant to certain other registration statements. Additionally, Form 8-K requires shell companies to provide more detailed disclosure upon completion of a transaction that causes it to cease being a shell company. To the extent we acquire a business in the future, we must file a current report on Form 8-K containing the information required in a registration statement on Form 10, within four business days following completion of the transaction together with financial information of the private operating company. In order to assist the SEC in the identification of shell companies, we are also required to check a box on Form 10-Q and Form 10-K indicating that we are a shell company. To the extent that we are required to comply with additional disclosure because we are a shell company, we may be delayed in executing any mergers or acquiring other assets that would cause us to cease being a shell company. In addition, the SEC adopted amendments to

Rule 144 effective February 15, 2008,is not generally available to holders of our Common Stock which (withmakes it difficult to resell shares in the future.

With limited exceptions related to restrictive securities acquired before we became a “shell company”) do not allow a holder, holders of our restricted securities of a “shell company”are limited in their ability to resell their securities pursuant to Rule 144. Preclusion from the use of the resale exemption from registration afforded by Rule 144 may make it more difficult for us to sell equity securities in the future.future, and for stockholders to resell their restricted securities.

 

 15 

 

Our need for capital will create additional risks and create dilution to existing stockholders.

As mentioned above, we will need to raise additional capital in the future, which may be funded from unrelated third-party sources, including the incurring of debt and/or the sale of additional equity securities. In addition, we may require additional financing to fund working capital and operating losses in the future should the need arise. The incurrence of debt creates additional financial leverage and therefore an increase in the financial risk of our operations. The sale of additional equity securities will be dilutive to the interests of our current stockholders. In addition, there can be no assurance that such additional financing, whether debt or equity, will be available to us or that it will be available on acceptable commercial terms. Any inability to secure such additional financing on acceptable terms could have a materially adverse impact on our business, financial condition and operating results.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)Unregistered Sales of Equity Securities.
None.
(b)Use of Proceeds From Sales of Registered Securities.
Not applicable.
(c)Repurchases.
None.

 

(a) Unregistered Sales of Equity Securities.

None.

(b) Use of Proceeds From Sales of Registered Securities.

Not applicable.

(c) Repurchases.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

 

None.

ITEM 4. MINE SAFETY DISCLOSURES

ITEM 4.MINE SAFETY DISCLOSURES

 

Not applicable.

ITEM 5. OTHER INFORMATION

ITEM 5.OTHER INFORMATION

 

None.

ITEM 6. EXHIBITS

ITEM 6.EXHIBITS

 

10.110.25Amended and Restated Promissory Note, dated as of November 10, 2017 by and between Dancing Bear Investments, Inc. and theglobe.com, inc.2, 2018.
  
31.1Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a).
  
31.2Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a).
  
32.1Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
  
32.2Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

101.1NSXBRL Instance Document
  
101.SCHXBRL Taxonomy Extension Schema Document
  
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
  
101.DEFXBRL Taxonomy Extension Definitions Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
  
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
101.DEFXBRL Taxonomy Extension Definitions Linkbase Document

 

 16 

 

 

SIGNATURES

 

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

 

Dated: November 19, 2018theglobe.com, inc.
DatedNovember 13, 2017By: /s/ Michael S. Egan
Michael S. Egan
Chief Executive Officer
(Principal Executive Officer)
  
 By:/s/ Edward A. CespedesFrederick Jones
 Edward A. CespedesFrederick Jones
 PresidentChief Executive Officer and Chief Financial Officer
 (Principal FinancialExecutive Officer)

 

 17 

 

 

EXHIBIT INDEX

10.110.25Amended and Restated Promissory Note, dated as of November 10, 2017 by and between Dancing Bear Investments, Inc. and theglobe.com, inc.2, 2018.
  
31.1Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a).
  
31.2Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a).
  
32.1Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
  
32.2Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.

101.1NSXBRL Instance Document
  
101.SCHXBRL Taxonomy Extension Schema Document
  
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
  
101.DEFXBRL Taxonomy Extension Definitions Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
  
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
101.DEFXBRL Taxonomy Extension Definitions Linkbase Document

 

 18