Exhibit 99.5
theglobe.com, inc.
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma condensed combined balance sheet combines the historical
consolidated balance sheet of theglobe.com, inc. ("theglobe" or the "Company")
and the historical balance sheet of Direct Partner Telecom, Inc. ("DPT"), giving
effect to the acquisition of DPT ("the Acquisition") as if it had been
consummated on March 31, 2003. The unaudited pro forma condensed combined
statements of operations combine the historical consolidated statements of
operations of theglobe and DPT, giving effect to the Acquisition as if it had
occurred at the beginning of each period presented.
The unaudited pro forma condensed combined financial statements are presented
for informational purposes only, and are not necessarily indicative of what the
Company's financial position or results of operations actually would have been
had the Company completed the acquisition of DPT at the dates indicated. In
addition, the unaudited pro forma condensed combined financial statements do not
purport to project the Company's financial position or results of operations at
any future date or for any future period.
These pro forma condensed combined financial statements should be read in
conjunction with the Company's 2002 Annual Report on Form 10-K and the Company's
Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2003.
theglobe.com, inc.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2003
(UNAUDITED)
theglobe.com PRO FORMA PRO FORMA
inc. DPT ADJUSTMENTS COMBINED
------------------ ------------- ---------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 792,188 $ 137,326 $ (500,000) (c) $ 429,514
Accounts receivable, net 916,370 106,233 1,022,603
Inventory, net 363,703 - 363,703
Prepaid and other current assets 278,071 - 278,071
-------------- ------------- ---------------- ---------------
Total current assets 2,350,332 243,559 (500,000) 2,093,891
Property and equipment, net 171,956 44,115 216,071
Advance on loan commitment 40,000 - 40,000
Goodwill - - 546,153 (b) 546,153
Intangible assets 164,960 - 375,000 (b) 539,960
Other assets - 112,695 112,695
-------------- ------------- ---------------- ---------------
Total assets $ 2,727,248 $ 400,369 $ 421,153 $ 3,548,770
============== ============= ================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 530,863 $ 13,636 $ $ 544,499
Accrued expenses 1,158,566 86,968 (15,069) (c) 1,230,465
Deferred revenue 167,599 - 167,599
Due to stockholders - 583,336 (583,336) (c) -
Current portion of long-term debt 91,202 - 91,202
-------------- ------------- ---------------- ---------------
Total current liabilities 1,948,230 683,940 (598,405) 2,033,765
Long-term debt 87,852 - 98,405 (c) 186,257
-------------- ------------- ---------------- ---------------
Total liabilities 2,036,082 683,940 (500,000) 2,220,022
-------------- ------------- ---------------- ---------------
Stockholders' equity:
Common stock 31,082 10,000 1,375 (a) 32,457
(10,000) (b)
Preferred stock, at liquidation value 500,000 - 500,000
Additional paid-in capital 218,860,565 (9,990) 636,207 (a) 219,496,772
9,990 (b)
Common stock (699,281 common shares)
held in treasury at cost (371,458) - (371,458)
Accumulated deficit (218,329,023) (283,581) 283,581 (b) (218,329,023)
-------------- ------------- ---------------- ---------------
Total stockholders' equity 691,166 (283,571) 921,153 1,328,748
-------------- ------------- ---------------- ---------------
Total liabilities and stockholders'
equity $ 2,727,248 $ 400,369 $ 421,153 $ 3,548,770
============= ============= ================ ===============
The accompanying notes are an integral part of these
pro forma condensed combined financial statements.
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theglobe.com, inc.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(UNAUDITED)
theglobe.com, PRO FORMA PRO FORMA
inc. DPT ADJUSTMENTS COMBINED
--------------- --------------- ---------------- ---------------
Revenues:
Advertising $ 546,869 $ - $ - $ 546,869
Electronic commerce and other 1,111,481 - - 1,111,481
Telephony services - 448,957 - 448,957
--------------- --------------- ---------------- ---------------
Total revenues 1,658,350 448,957 - 2,107,307
Cost of revenues 847,238 383,700 - 1,230,938
--------------- --------------- ---------------- ---------------
Gross margin 811,112 65,257 - 876,369
Operating expenses:
Sales and marketing 567,338 - - 567,338
Product development 152,682 - - 152,682
General and administrative 634,517 108,362 18,750 (d) 761,629
--------------- --------------- ---------------- ---------------
Total operating expenses 1,354,537 108,362 18,750 1,481,649
--------------- --------------- ---------------- ---------------
Loss from operations (543,425) (43,105) (18,750) (605,280)
Interest and other income (expense), net (138,322) (9,797) 8,766 (e) (139,353)
--------------- --------------- ---------------- ---------------
Loss before provision for income taxes (681,747) (52,902) (9,984) (744,633)
Provision for income taxes - - - -
--------------- --------------- ---------------- ---------------
Net loss $ (681,747) $ (52,902) $ (9,984) $ (744,633)
=============== =============== ================ ===============
Basic and diluted net loss per share $ (0.04)
===============
Weighted average basic and diluted shares outstanding 33,757,293
===============
The accompanying notes are an integral part of these pro
forma condensed combined financial statements.
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theglobe.com, inc.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED)
theglobe.com, PRO FORMA PRO FORMA
inc. DPT ADJUSTMENTS COMBINED
--------------- --------------- --------------- --------------
Revenues:
Advertising and other magazine $ 6,592,758 $ - $ - $ 6,592,758
Electronic commerce and other 3,074,327 - - 3,074,327
Telephony services - 524,548 - 524,548
--------------- --------------- ---------------- ---------------
Total revenues 9,667,085 524,548 - 10,191,633
Cost of revenues 5,563,010 462,312 - 6,025,322
--------------- --------------- ---------------- ---------------
Gross margin 4,104,075 62,236 - 4,166,311
Operating expenses:
Sales and marketing 3,523,226 - - 3,523,226
Product development 652,997 - - 652,997
General and administrative 2,868,640 287,653 18,750 (d) 3,175,043
--------------- --------------- ---------------- ---------------
Total operating expenses 7,044,863 287,653 18,750 7,351,266
--------------- --------------- ---------------- ---------------
Loss from operations (2,940,788) (225,417) (18,750) (3,184,955)
Interest and other income (expense), net 338,127 (5,262) 4,158 (e) 337,023
--------------- --------------- ---------------- ---------------
Loss before provision for income taxes (2,602,661) (230,679) (14,592) (2,847,932)
Provision for income taxes 12,000 - - 12,000
--------------- --------------- ---------------- ---------------
Net loss $ (2,614,661) $ (230,679) $ (14,592) $ (2,859,932)
=============== =============== ================ ===============
Basic and diluted net loss per share $ (0.09)
===============
Weighted average basic and diluted shares outstanding 30,728,868
===============
The accompanying notes are an integral part of these pro
forma condensed combined financial statements.
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theglobe.com, inc.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. Description of Transaction and Basis of Presentation
Effective May 28, 2003, theglobe acquired the assets and certain
liabilities of Direct Partner Telecom, Inc. ("DPT"), a company engaged
in providing Voice over the Internet telephony services
internationally, in exchange for 1,375,000 shares of theglobe common
stock and the issuance of warrants to acquire 500,000 shares of
theglobe's common stock at an exercise price of $0.72 per share. The
warrants are exercisable any time before May 23, 2013. In addition,
the former shareholders of DPT may earn additional warrants to acquire
up to 2,750,000 shares of theglobe common stock at an exercise price
of $0.72 per share if DPT achieves certain revenue and earnings
targets over approximately the next three years. The warrants will
accelerate and be deemed earned in the event of a "change of control,"
as defined in the Agreement and Plan of Merger.
Simultaneously with the acquisition, DPT was merged with a newly
formed wholly owned subsidiary of theglobe, DPT Acquisition, Inc.
In addition, theglobe agreed to repay obligations to certain of the
former shareholders of DPT totaling $600,000 immediately after the
closing of the transaction. Settlement consisted of a cash payment of
$500,000 and the issuance of $100,000 of promissory notes with a two
year maturity.
As part of the acquisition, theglobe entered into an employment
agreement with the Chief Executive Officer of DPT. The term of the
agreement is one year and automatically renews for an additional year
at expiration. The agreement also contains certain non-compete
provisions for a period of three years following the termination of
the Chief Executive Officer of DPT.
NOTE 2. Pro Forma Adjustments
Adjustments included in the column under the heading "Pro Forma
Adjustments" include the following:
(a) To reflect the issuance of 1,375,000 shares of theglobe common
stock and warrants to acquire 500,000 shares of theglobe common
stock to acquire DPT.
(b) Allocation of the $638,000 purchase price to the fair value of
the net assets acquired of DPT.
(c) To reflect the settlement of obligations due to the former
shareholders of DPT.
(d) To record the amortization of the intangible asset recorded as a
result of the non-compete provisions included in the employment
agreement with the Chief Executive Officer of DPT.
(e) To reverse interest expense associated with the obligations to
the former shareholders of DPT and record interest expense under
the provisions of the promissory notes issued immediately after
the closing of the acquisition of DPT.
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