NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002, 2001 AND 2000

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE COMPANY

theglobe.com, inc. was incorporated and commenced operations on May 1, 1995. theglobe.com was an online property with registered members and users in the United States and abroad which allowed its users to personalize their online experience by publishing their own content and interacting with others having similar interests. However, due to the decline in the advertising market, the Company was forced to take cost-reduction and restructuring initiatives, which included closing www.theglobe.com business effective August 15, 2001. The Company then began to aggressively seek buyers for some or all of its remaining online and offline properties, which consisted primarily of games-related properties. In October 2001, the Company sold all of the assets used in connection with the Games Domain, Console Domain, and the Kids Domain websites. In February 2002, the Company sold all of the assets used in connection with the Happy Puppy website.

As of December 31, 2002, the Company continues to operate its Computer Games print magazine and the associated website Computer Games Online (www.cgonline.com), as well as the games distribution business of Chips & Bits, Inc. (www.chipsbits.com). In addition, the Company is continuing to actively explore a number of strategic alternatives for its remaining online and offline game properties, including continuing operations and using its cash on hand, selling some or all of these properties and/or entering into new or different lines of business.

As of December 31, 2002, the Company's revenue sources are principally from the sale of print advertising in its Computer Games magazine; the sale of video games and related products through Chips & Bits, Inc., its games distribution business; the sale of its Computer Games magazine through newsstands and subscriptions; and limited sales of online advertising.

On November 14, 2002, the Company acquired certain digital telephony assets and is currently investigating opportunities related to this acquisition.

On February 25, 2003, the Company entered into a Loan and Purchase Option Agreement with a development stage internet related business venture pursuant to which it agreed to loan the venture up to $160,000 to fund its operating expenses and obtained the option to acquire all of the outstanding capital stock of the venture in exchange for, when and if exercised, $40,000 and the issuance of an aggregate of 2,000,000 unregistered restricted shares of theglobe.com's Common Stock (See Note 2).

PRINCIPLES OF CONSOLIDATION

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

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

SHORT-TERM INVESTMENTS

The Company accounts for short-term investments in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"). SFAS 115 establishes the accounting and reporting requirements for all debt securities and for investments in equity securities that have readily determinable fair market value. All short-term marketable securities must be classified as one of the following:
held-to-maturity, available-for-sale or trading securities. As of December 31, 2002, there were no short-term investments. As of December 31, 2001, they were not material.

INVENTORIES

Inventories, consisting of products available for sale, are recorded using the specific-identification method and valued at the lower of cost or market value. The Company's allowance for slow-moving and obsolete inventory as of December 31, 2002 and December 30, 2001 was approximately $100,000 and $64,000, respectively.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost, net of accumulated depreciation and amortization. Property and equipment is depreciated using the straight-line method over the estimated useful lives of the related assets, generally three to five years for equipment, three years for software and five to seven years for furniture and fixtures.

GOODWILL AND INTANGIBLE ASSETS

Goodwill is stated at cost and evaluated for impairment at least annually. The Company will test goodwill for impairment in the quarter containing the annual anniversary of the acquisition date. The Company will perform the impairment test in accordance with SFAS 142, "Goodwill and Other Intangible Assets." SFAS 142 requires the fair value of the reporting unit be compared to the carrying value, including goodwill, as the first step in the impairment test. As of December 31, 2002 and 2001, the Company had no goodwill.

Intangible assets include certain digital telephony assets which are stated at cost and will be amortized on a straight-line basis over a period of 18 months once placed in service. Management reviews intangible assets for impairment when circumstances dictate, or at least annually in accordance with SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets."

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets, including property and equipment, goodwill and other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, the Company estimates the undiscounted future cash flows to result from the use of the asset and its ultimate disposition. If the sum of the undiscounted cash flows is less than the carrying value, the Company recognizes an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset. Fair value would generally be determined by market value. Assets to be disposed of are carried at the lower of the carrying value or fair value less costs to sell. In 2001, the Company wrote off $10.7 million in net book value of goodwill and intangible assets and $5.2 million in net book value of property and equipment. In 2000, the Company wrote off $32.4 million in net book value of goodwill and intangible assets.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of certain of the Company's financial instruments, including cash, cash equivalents, short-term investments, accounts receivable, accounts payable, accrued expenses and deferred revenue, approximate their fair value at December 31, 2002 and 2001 because of their short maturities.

INCOME TAXES

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

REVENUE RECOGNITION

The Company's revenues were derived principally from the sale of print advertisements under short-term contracts in the games information magazine Computer Games, through the sale of video games and related products through the games distribution business Chips & Bits, Inc.; through the sale of the games information magazine through newsstands and subscriptions; and through limited sale of online advertisements principally under short-term advertising arrangements, averaging one to three months.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

REVENUE RECOGNITION (Continued)

ADVERTISING AND OTHER MAGAZINE

The Company derives revenue through the sale of advertisements in its games information magazine and the sale of its games information magazine through newsstands and subscriptions.

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

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

Online advertising revenues are recognized ratably in the period in which the advertisement is displayed, provided that no significant Company obligations remain and collection of the resulting receivable is probable. Company obligations typically include the guarantee of a minimum number of "impressions", defined as the number of times that an advertisement appears in pages viewed by the users of the Company's online properties, for a fixed fee. To the extent minimum guaranteed impressions levels are not met, the Company defers recognition of the corresponding revenues until guaranteed levels are achieved. The Company's online advertising revenue includes the development and sale of sponsorship placements within its web sites. Development fees related to the sale of sponsorship placements on the Company's web sites are deferred and recognized ratably as revenue over the term of the contract.

Advertising revenue from the Company's games magazine for the years ended December 31, 2002, 2001 and 2000 was approximately $3.1 million, $3.5 million and $4.5 million, respectively. Sales of the Company's games information magazine through newsstands and subscriptions accounted for approximately $3.5 million, $4.6 million and $3.2 million of total revenue for the years ended December 31, 2002, 2001, and 2000, respectively. Advertising revenue from the Company's online properties for the years ended December 31, 2002, 2001 and 2000 was approximately $0 million, $2.9 million, and $15.0 million, respectively. Advertising and other magazine revenue accounted for 68%, 40% and 65% of total revenues for the years ended December 31, 2002, 2001, and 2000, respectively.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

REVENUE RECOGNITION (Continued)

The Company participates in barter transactions whereby the Company trades marketing data in exchange for advertisements in the publications of other companies. In prior years, the Company also traded advertisements on its web properties in exchange for advertisements on Internet sites of other companies. Barter revenues and expenses are recorded at the fair market value of services provided or received, whichever is more readily determinable in the circumstances. Revenue from barter transactions is recognized as income when advertisements or other products are delivered by the Company. Barter expense is recognized when the Company's advertisements are run on other companies' web sites or in their magazines, which typically occurs within one to six months from the period in which barter revenue is recognized. Barter revenues were approximately 1%, 1% and 4% of total revenues for the years ended December 31, 2002, 2001 and 2000, respectively.

ELECTRONIC COMMERCE AND OTHER

The Company derives other revenues from the sale of video games and related products through its online store.

Sales from the online store are recognized as revenue when the product is shipped to the customer. Freight out costs are included in net sales and have not been significant in prior years, however, represented approximately 4% of revenue in 2002. The Company provides an allowance for returns of merchandise sold through its online store. The allowance for returns provided to date has not been significant.

Sales through the online store accounted for approximately 31% or $3.1 million, 31% or $5.1 million, and 24% or $7.2 million of total revenues for the years ended December 31, 2002, 2001, and 2000, respectively.

ADVERTISING COSTS

Advertising costs are expensed as incurred and are included in sales and marketing expense. Advertising costs were approximately $0.2 million, $5.1 million and $7.9 million for the years ended December 31, 2002, 2001, and 2000, respectively. Barter advertising costs were approximately 1%, 1% and 4% of total revenues for the years ended December 31, 2002, 2001 and 2000, respectively.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

PRODUCT DEVELOPMENT

Product development expenses include professional fees, staff costs and related expenses associated with the development, testing and upgrades to the Company's website as well as expenses related to its editorial content and community management and support. Product development costs and enhancements to existing products are charged to operations as incurred. The Company accounts for development costs in accordance with the American Institute of Certified Public Accountants' Statement of Position 98-1, "Accounting for the Cost of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 requires all costs related to the development of internal use software other than those incurred during the application development stage to be expensed as incurred. SOP 98-1 also provides guidance on the capitalization of costs incurred during the application development stage for computer software developed or obtained for internal use.

STOCK-BASED COMPENSATION

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

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

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

                                2002          2001            2000
                            ------------  -------------  --------------
Net loss - as reported      $(2,615,000)  $(40,620,000)  $(103,866,000)
                            ============  =============  ==============
Net loss - pro forma        $(2,714,000)  $(40,537,000)  $(107,876,000)
                            ============  =============  ==============

Basic net loss per share -
   as reported              $     (0.09)  $      (1.34)  $       (3.43)
                            ============  =============  ==============
Basic net loss per share -
   pro forma                $     (0.10)  $      (1.34)  $       (3.56)
                            ============  =============  ==============

The per share weighted-average fair value of stock options granted during 2002, 2001, and 2000 was $0.02, $0.32, and $1.64, respectively, on the date of grant using the option-pricing method with the following weighted-average assumptions:

                                       2002       2001      2000
                                     ---------  --------  --------
Risk-free interest rate                  4.78%     3.75%     6.22%
Expected life                        10 years   4 years   4 years
Volatility                           135%-160%      130%      130%
Expected dividend rate                      0         0         0

The Company follows FASB Interpretation No 44, "Accounting for Certain Transactions Involving Stock Compensation" ("FIN No. 44") which provides guidance for applying APB Opinion No 25. "Accounting for Stock Issued to Employees." With certain exceptions, FIN No. 44 applies prospectively to new awards, exchanges of awards in a business combination, modifications to outstanding awards and changes in grantee status on or after July 1, 2000. The Company applied FIN No. 44 to account for its cancellation and reissuance of options (see Note 4).

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

NET LOSS PER COMMON SHARE

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

Diluted loss per share has not been presented separately, as the outstanding stock options, warrants and contingent stock purchase warrants are anti-dilutive for each of the periods presented. Diluted net loss per common share for the years ended December 31, 2002, 2001 and 2000 does not include the effects of options to purchase 5,971,440, 3,104,349, and 5,114,803 shares of common stock, respectively nor warrants to purchase 6,186,634, 4,011,534, and 4,011,534 for each of the years then ended. The weighted average shares outstanding for the year ended December 31, 2001 have been restated to remove treasury shares previously included in the calculation.

COMPREHENSIVE INCOME (LOSS)

The Company reports comprehensive income (loss) in accordance with the Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income" ("SFAS 130"). This statement establishes standards for the reporting and display of comprehensive income
(loss) and its components in a full set of general-purpose financial statements. Comprehensive income (loss) generally represents all changes in stockholders' equity during the year except those resulting from investments by, or distributions to, stockholders'.

USE OF ESTIMATES

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

CONCENTRATION OF CREDIT RISK

Financial instruments which subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

CONCENTRATION OF CREDIT RISK (Continued)

CASH AND CASH EQUIVALENTS

From time to time during the year, the Company may have had deposits in financial institutions in excess of the federally insured limits. At December 31, 2002, the Company has bank deposits of approximately $602,000 in excess of federally insured limits. The Company maintains its cash with high quality financial institutions, which the Company believes limits the risks.

ACCOUNTS RECEIVABLE

The Company's customers are primarily concentrated in the United States. The Company performs ongoing credit evaluations of customers' financial condition, generally does not require collateral and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information. Concentration of credit risk is limited due to the Company's large number of customers, however the Company's online advertising client base has been until recently concentrated among dedicated internet companies.

SEGMENT REPORTING

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

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued Interpretation 46, "Consolidation of Variable Interest Entities" an Interpretation of ARB 51. This statement requires under certain circumstances consolidation of variable interest entities (primarily joint ventures and other participating activities). The adoption of this statement is not expected to have a significant impact on the Company's financial position or results of operations.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure." SFAS No. 148 amends SFAS No. 123 as it relates to the transition by an entity to the fair value method of accounting for stock-based employee compensation. The provisions of SFAS No. 148 are effective for financial statements for fiscal years ending after December 15, 2002. The Company has not yet made a decision to change the method of accounting for stock-based employee compensation.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force ("EITF") 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The principal difference between SFAS No. 146 and EITF 94-3 relates to the timing of liability recognition. Under SFAS No. 146, a liability for a cost associated with an exit or disposal activity is recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost was recognized at the date of an entity's commitment to an exit plan. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS No. 146 is not expected to have a material impact on the Company's financial position or results of operations.

In April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections." SFAS No. 4 required all gains and losses from the extinguishment of debt to be reported as extraordinary items and SFAS No. 64 related to the same matter. SFAS No. 145 requires gains and losses from certain debt extinguishment not to be reported as extraordinary items when the use of debt extinguishment is part of the risk management strategy. SFAS No. 44 was issued to establish transitional requirements for motor carriers. Those transactions are completed, therefore SFAS No. 145 rescinds SFAS No. 44. SFAS No. 145 also amends SFAS No. 13 requiring sale-leaseback accounting for certain lease modifications. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. The adoption of SFAS No. 145 is not expected to have a material impact on the Company's financial position or results of operations.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that the purchase method of accounting be used for all business combinations. SFAS No. 141 specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported separately from goodwill. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142. SFAS No.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and subsequently SFAS No. 144 after its adoption.

The Company adopted the provisions of SFAS No. 141 as of July 1, 2001 and SFAS No. 142 as of January 1, 2002. Goodwill and intangible assets determined to have an indefinite useful life acquired in purchase business combinations completed after June 30, 2001, but before SFAS No. 142 is adopted in full, are not amortized. Goodwill and intangible assets acquired in business combinations completed before July 1, 2001 will continue to be amortized and tested for impairment prior to the full adoption of SFAS No. 142.

Upon adoption of SFAS No. 142, the Company is required to evaluate its existing intangible assets and goodwill that were acquired in a purchase business combination, and to make any necessary reclassifications in order to conform with the new criteria in SFAS No. 141 for recognition separate from goodwill. The Company will be required to reassess the useful lives and residual values of all intangible assets acquired, and make any necessary amortization period adjustments by the end of the first interim period after adoption. If an intangible asset is identified as having an indefinite useful life, the Company will be required to test the intangible asset for impairment in accordance with the provisions of SFAS No. 142 within the first interim period. Impairment is measured as the excess of carrying value over the fair value of an intangible asset with an indefinite life. Any impairment loss will be measured as of the date of adoption and recognized as the cumulative effect of a change in accounting principle in the first interim period.

In connection with SFAS No. 142's transitional goodwill impairment evaluation, the statement requires the Company to perform an assessment of whether there is an indication that goodwill is impaired as of the date of adoption. To accomplish this the Company must identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of January 1, 2002. The Company will then have up to six months from the date of adoption to determine the fair value of each reporting unit and compare it to the reporting unit's carrying amount. To the extent a reporting unit's carrying amount exceeds its fair value, an indication exists that the reporting unit's goodwill may be impaired and the Company must perform the second step of the transitional impairment test. The second step is required to be completed as soon as possible, but no later than the end of the year of adoption. In the second step, the Company must compare the implied fair value of the reporting unit's goodwill, determined by allocating the reporting unit's fair value to all of it assets (recognized and unrecognized) and liabilities in a manner similar to a purchase price allocation in accordance with SFAS No. 141, to its carrying amount, both of which would be measured as of the date of adoption.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)

In August 2001, the Financial Accounting Standards Board issued FASB Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (Statement 144), which supersedes both FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (Statement 121) and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" (Opinion 30), for the disposal of a segment of a business (as previously defined in that Opinion). Statement 144 retains the fundamental provisions in Statement 121 for recognizing and measuring impairment losses on long-lived assets held for use and long-lived assets to be disposed of by sale, while also resolving significant implementation issues associated with Statement 121. For example, Statement 144 provides guidance on how a long-lived asset that is used as part of a group should be evaluated for impairment, establishes criteria for when a long-lived asset is held for sale, and prescribes the accounting for a long-lived asset that will be disposed of other than by sale. Statement 144 retains the basic provisions of Opinion 30 on how to present discontinued operations in the income statement but broadens that presentation to include a component of an entity (rather than a segment of a business). Unlike Statement 121, an impairment assessment under Statement 144 will never result in a write-down of goodwill. Rather, goodwill is evaluated for impairment under Statement No. 142, Goodwill and Other Intangible Assets.

The Company adopted its provisions for the quarter ended March 31, 2002. The adoption of Statement 144 for long-lived assets held for use did not have a material impact on the Company's financial statements because the impairment assessment under Statement 144 is largely unchanged from Statement 121. The provisions of the Statement for assets held for sale or other disposal generally are required to be applied prospectively after the adoption date to newly initiated disposal activities.

RECLASSIFICATIONS

Certain amounts in 2001 and 2000 were reclassified to conform to the 2002 presentation.

NOTE 2. GOING CONCERN CONSIDERATIONS

The Company's December 31, 2002 consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered recurring losses from operations since inception, has an accumulated deficit as of December 31, 2002 of approximately $217,200,000 and has disposed of a significant part of its operations. These conditions raise substantial doubt about its ability to continue as a going concern. In addition, the Company is subject to the following risks and uncertainties.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 2. GOING CONCERN CONSIDERATIONS (Continued)

LOSS OF NASDAQ LISTING

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

The delisting has made trading the Company's shares more difficult for investors, potentially leading to further declines in share price. It would also make it more difficult for the Company to raise additional capital. The Company will also incur additional costs under state blue sky laws if they sell equity instruments due to the delisting.

SALES AND INCOME TAX OBLIGATIONS

The Company was audited by the State of New York regarding sales tax on certain bandwidth for the period 1996-2001. The Company has reached a tentative settlement for payment of approximately $250,000 in additional taxes, with an arrangement for payment over a four year period commencing in March 2003. The Company no longer operates in New York and therefore is no longer subject to this tax.

In addition, the Company was served a tax lien in the amount of $40,000 by the State of Vermont regarding income taxes dating back to the year 2000. This obligation relates to a period prior to Chips and Bits acquisition by the Company. Management is investigating the source of the claim and, if it is determined to be a valid obligation, the Company intends to pay it in full.

Both liabilities have been recorded in the accompanying consolidated financial statements and are included in accrued expenses.

MANAGEMENT'S PLANS

Management and the Board of Directors are currently exploring a number of strategic alternatives regarding its remaining assets and use of its cash on hand and are also continuing to identify and implement internal actions to improve the Company's liquidity and operations. These alternatives may include selling assets, which, in any case, could result in significant changes in the Company's business, or entering into new or different lines of business.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

potential  claims.  The remaining 425,000 warrants are subject to an
earn-out  agreement and will be released when the conditions of that
agreement,  primarily  performance  targets,  are  satisfied.  The
1,750,000  warrants  issued  were determined to have a fair value of

approximately $42,000 and were recorded, together with the obligation to pay the seller approximately $123,000, as the cost of the intangible asset. The remaining 425,000 warrants subject to the earn-out provision will be recorded at fair value when and if the earn-out provisions are satisfied. In addition, the Company entered into an employment agreement with the Seller. The Company is currently developing a business plan for the utilization of this asset.

In conjunction with the acquisition, E&C Capital Partners, a privately held investment vehicle controlled by the Chairman and Chief Executive Officer and the President entered into a Preferred Stock Purchase Agreement with the Company to provide financing in the amount of $500,000 through the purchase of preferred securities, which provide for certain rights and privileges (see Note 16). In addition, certain officers, directors and other related entities entered into a nonbinding letter of intent to loan up to $1.0 million to the Company pursuant to a convertible loan facility (see Note 16).

Also, effective July 10, 2002, the Company launched various direct marketing initiatives through a newly created division, tglo direct. The subsidiary markets products such as safe e-mail lists, e-books, lead generation tools and other products to entrepreneurs that wish to enter into new web-based businesses or promote their existing businesses. Most of the products are subscription-based, with prices ranging from approximately $11.00 per year to approximately $69.95 per year. While this operation is currently in "beta" launch and accounted for only approximately $4,000 of revenue in 2002, the Company is investigating ways to increase the level of this business.

On February 25, 2003, the Company entered into a Loan and Purchase Option Agreement with a development stage internet related business venture ("target") pursuant to which it agreed to loan the target up to $160,000 to fund its operating expenses and obtained the option to acquire all of the outstanding capital stock of the venture in exchange for, when and if exercised, $40,000 and the issuance of an aggregate of 2,000,000 unregistered restricted shares of theglobe.com's common stock In addition, the Company is to pay forty percent of the pre-tax income of the target for the first three years into an annual cash bonus pool for the benefit of certain employees of the target. The purchase option expires the later of March 31, 2003. However, at theglobe.com's sole discretion, the purchase option may be extended on a month to month basis. If the Company decides not to exercise the option to purchase, $60,000 of the loan will be forgiven.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 2. GOING CONCERN CONSIDERATIONS (Continued)

MANAGEMENT'S PLANS (Continued)

As of December 31, 2002, the Company has advanced $40,000 of the loan. The loan earns interest at 10%.

SUMMARY

In view of these matters, continuation of the Company as a going concern is dependent upon the success of the Company's restructuring and management's ability to develop profitable operations from the remaining products and services. Management believes that the actions presently being taken provide the opportunity for the Company to continue as a going concern. However, there can be no assurances that management will be successful in the implementation of its plan or that future operations will be profitable.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3. IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS

Beginning in 2000, primarily due to declines in the internet based advertising market, the Company has undertaken significant cost-reduction and restructuring initiatives. In addition, the Company had made a series of acquisitions which resulted in the recording of goodwill, all of which was determined to be impaired. The following is a summary of the results of those initiatives and impairment evaluations.

GOODWILL AND INTANGIBLE ASSET IMPAIRMENT

The operations of the Company are currently conducted primarily by two subsidiaries, Chips & Bits, Inc. and Strategy Plus, Inc.

On February 24, 2000, CB Acquisition Corp., a Vermont corporation and a wholly owned subsidiary of theglobe.com was merged with and into Chips & Bits, Inc., a Vermont corporation ("Chips & Bits"), with Chips & Bits as the surviving corporation. Also on February 24, 2000, SP Acquisition Corp., a Vermont corporation and a wholly owned subsidiary of theglobe.com, was merged with and into Strategy Plus, Inc., a Vermont corporation ("Strategy Plus"), with Strategy Plus as the surviving corporation. As a result of the mergers, both Chips & Bits and Strategy Plus became wholly owned subsidiaries of the Company.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 3. IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

GOODWILL AND INTANGIBLE ASSET IMPAIRMENT (Continued)

The total consideration paid by the Company for the above acquisitions consisted of 1,903,977 shares of the Company's Common Stock, valued at $14.9 million. The Company also incurred acquisition costs of approximately $0.6 million. An additional payment of $1.3 million in newly issued shares of Common Stock was contingent upon the attainment of certain performance targets by Chips & Bits and Strategy Plus during the 2000 fiscal year. During August 2001, the Company settled this contingency resulting in no additional consideration being paid to the former shareholders.

This transaction was accounted for under the purchase method of accounting. The aggregate purchase price of these transactions was $15.5 million. The Company allocated $1.1 million to the net tangible assets of Chips & Bits and $1.6 million to the net tangible liabilities of Strategy Plus. The historical carrying amounts of the net tangible assets acquired and liabilities assumed by the Company approximated their fair market value on the date of acquisition. The purchase price in excess of the fair market value of the net tangible assets acquired and liabilities assumed by the Company amounted to $16.0 million and was allocated to goodwill. The goodwill was being amortized using the straight-line method over an estimated useful life of 3 years, the expected period of benefit. Chips & Bits and Strategy Plus's results of operations are included in the consolidated statement of operations from February 24, 2000.

On April 5, 1999, theglobe formed Bucky Acquisition Corp. ("Bucky"), a Delaware corporation and a wholly owned subsidiary of theglobe. Bucky was merged with and into Attitude Network, Ltd., a Delaware corporation ("Attitude"), with Attitude as the surviving corporation. The merger was effective pursuant to the Agreement and Plan of Merger, dated April 5, 1999, which closed on April 9, 1999. As a result of the merger, Attitude became a wholly owned subsidiary of theglobe.com. Attitude's properties published games information content and included HappyPuppy, Kids Domain, Console Domain and Games Domain. This transaction was accounted for under the purchase method of accounting.

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

The total purchase price for this transaction was approximately $46.8 million. Of this amount, approximately $0.2 million of the purchase price was allocated to net tangible liabilities. The historical carrying amounts of such net tangible liabilities approximated their fair values. The purchase price in excess of the fair value of the net tangible liabilities assumed in the amount of $47.0 million was allocated to goodwill and certain identifiable intangible assets which were being amortized using the straight-line method over an estimated useful life of 3 years, the expected period of benefit.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 3. IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

GOODWILL AND INTANGIBLE ASSET IMPAIRMENT (Continued)

During 2000 and 2001, the Company continually reevaluated the goodwill and other intangible assets associated with these and other operating companies by performing on-going business reviews and, based on quantitative and qualitative measures, assessed the need to record impairment losses on long-lived assets used in operations when impairment indicators were present. These evaluations of potential impairment were based on achievement of business plan objectives and milestones of each web based property, the fair value of each ownership interest relative to its carrying value, the financial condition and prospects of the web based property, and other relevant factors. The business plan objectives and milestones that were considered included, among others, those related to financial performance, such as achievement of planned financial results and completion of capital raising activities, if any, and those that are not primarily financial in nature, such as the launching or enhancements of a web site, the hiring of key employees, the number of people who have registered to be part of the associated properties' web community, and the number of visitors to the associated properties' web site per month. Where impairment indicators were identified, management determined the amount of the impairment charge by comparing the carrying values of goodwill and other long-lived assets to their fair values. Management determined fair value based on a market approach, which includes analysis of market price multiples of companies engaged in lines of business similar to the Company. The market price multiples were selected and applied to the Company based on the relative performance, future prospects and risk profile of the company in comparison to the guideline companies. The methodology used to test for and measure the amount of the impairment charge related to the intangible assets was based on the same methodology as used during the initial acquisition valuation of these web-based properties and other businesses.

It was determined that the fair value of goodwill and intangible assets related to web-based properties and other businesses were less than the recorded amount. See Restructuring and Impairment Charges below for further details. As of December 31, 2001, after giving effect to impairment charges, the total remaining amount of goodwill and other intangible assets, net, was $0 for Attitude Networks and $0 for Chips & Bits and Strategy Plus. In addition, all other goodwill had also been written off.

RESTRUCTURING AND IMPAIRMENT CHARGES

For the years ended December 31, 2001, and December 31, 2000, the Company recorded restructuring and impairment charges of $17.1 million and $41.3 million, respectively. As of December 31, 2002, all of the Company's restructuring liabilities have been paid in full.

YEAR ENDED DECEMBER 31, 2001

In the second quarter of 2001, the Company announced cost-reduction initiatives. These initiatives included the elimination of 59 positions, or 31% of the Company's workforce. The severance benefits of $470,000 were paid in the second quarter of 2001. Additionally, the Company closed the San Francisco office in May 2001 and an additional $54,000 security deposit was relinquished as settlement to terminate the remaining lease obligation.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 3. IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

RESTRUCTURING AND IMPAIRMENT CHARGES (Continued)

YEAR ENDED DECEMBER 31, 2001 (Continued)

In the second quarter of 2001, the Company recorded impairment charges of $4.5 million related to the servers and computers used for serving and hosting the former properties, www.webjump.com and www.theglobe.com, as a result of management's ongoing business review and impairment analysis performed under its existing policy regarding impairment of long-lived assets.

In the third quarter of 2001, the Company continued cost cutting measures. The Company eliminated 60 additional positions, or 58% of the workforce. As a result, severance benefits of $1.0 million were paid in the third quarter of 2001.

Additionally, the Company terminated the lease at 120 Broadway in New York and relocated its operations to a significantly smaller temporary facility in New York, in September 2001. In August 2002, the Company relocated their executive offices to Ft. Lauderdale, Florida. The Company also decided to shut down the www.theglobe.com and www.webjump.com websites effective August 15, 2001. The servers located in a facility in Staten Island, New York were in use through August 31, 2001. The Company discontinued the use of these servers on August 31, 2001 and is now using outsourced hosted facilities for their live websites. As a result of these measures, the Company recorded net restructuring and impairment charges related to the fixed assets consisting of computer hardware and software, furniture and fixtures, communications equipment and leasehold improvements at the two locations totaling approximately $3.67 million, and miscellaneous net restructuring credit amounts related to the settlement of prepaid items, accruals and capital lease obligations totaling approximately $0.26 million.

Further, in the third quarter of 2001, the Company recorded additional impairment charges of $4.2 million, of which $3.6 million related to Chips & Bits and Strategy Plus and $0.6 million related to Attitude Network, Ltd. related to goodwill and other intangible assets, as a result of management's ongoing business review and impairment analysis performed under its existing policy regarding impairment of long-lived assets.

In the fourth quarter of 2001, severance benefits of $0.1 million were paid out relating to the cost cutting measures initiated in the third quarter 2001. The Company recorded an additional impairment charge of $3.3 million in goodwill related to Chips & Bits and Strategy Plus as a result of management's ongoing business review and impairment analysis performed under its existing policy regarding impairment of long-lived assets.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 3. IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

RESTRUCTURING AND IMPAIRMENT CHARGES (Continued)

YEAR ENDED DECEMBER 31, 2001 (Continued)

Where impairment indicators were identified, management determined the amount of the impairment charge by comparing the carrying values of goodwill and other long-lived assets to their fair values. Management determines fair value based on a market approach, which during 2001, mainly included proposals for sale of its business properties. As a result, during management's quarterly review of the value and periods of amortization of both goodwill and other long-lived assets, it was determined that the carrying values of goodwill and certain other tangible and intangible assets were not fully recoverable.

During 2001, the revaluation of goodwill and intangible assets related to Attitude Network, Ltd., Strategy Plus, Inc. and Chips & Bits, Inc. and certain acquired tangible assets such as the servers and computers used for serving and hosting the Company's various websites was triggered by the continued and prolonged decline in Internet advertising throughout 2000 and 2001, which significantly impacted current projected advertising revenue generated from these web-based properties and downturn in computer games e-commerce business and has resulted in declines in operating and financial metrics over the past several quarters, in comparison to the metrics forecasted at the time of their respective acquisitions.

It was determined that the fair value of goodwill and intangible assets related to the Company's web-based properties, other businesses and tangible assets were less than the recorded amount. The methodology used to test for and measure the amount of the impairment charge related to the intangible assets was based on the same methodology as used during the initial acquisition valuation of these web-based properties and other businesses. The impairment related to the tangible assets was based on the estimated net realizable value of these assets. The impairment factors evaluated by management may change in subsequent periods, given that the Company's business operates in a highly volatile business environment. This could result in material impairment charges in the future.

As of December 31, 2001, after giving effect to the fourth quarter of 2000 and full-year 2001 impairment charges, the total remaining amount of goodwill and other intangible assets, net, is $0 for Attitude Networks, which was acquired in April 1999, and $0 for Chips & Bits and Strategy Plus, which was acquired in February 2000. The impairment factors evaluated by management may change in subsequent periods, given that the business operates in a highly volatile business environment.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 3. IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

RESTRUCTURING AND IMPAIRMENT CHARGES (Continued)

YEAR ENDED DECEMBER 31, 2000

In the second quarter of 2000, the Company recorded a $15.6 million restructuring charge as a result of a strategic decision made by management to shut down their electronic commerce operations in Seattle, Washington in order to realign the electronic commerce operations to focus on the direct sale of video games and related products, as well as revenue share relationships with third parties who are interested in reaching their targeted audiences. The $15.6 million charge incurred primarily related to a $12.8 million write-off of the remaining goodwill and intangibles associated with the 1999 acquisition of Factorymall.com, costs associated with the closing of the Seattle operations of $0.5 million, write-offs related to the disposal of inventory, equipment and other assets of $1.7 million, as well as $0.6 million of employee severance and related benefits incurred primarily related to the termination of 30 employees.

In the fourth quarter of 2000, the Company incurred an additional $25.7 million in restructuring and impairment charges as follows:

- The Company recorded a restructuring charge of $1.8 million, including $398,000 of non-cash compensation, as a result of strategic decisions made by management to increase operational efficiencies, improve margins and further reduce expenses. The restructuring charge primarily related to a workplace reduction of 26 employees.

- In addition, the Company recorded an impairment charge of $4.3 million in connection with the termination of a distribution agreement with Sportsline in November 2000.

- The Company also recorded impairment charges of $19.6 million as a result of management's ongoing business review and impairment analysis performed under its existing policy regarding impairment of long-lived assets.

In 1999, the Company completed acquisitions of Attitude Network, Ltd. and the web hosting assets of Webjump.com that were financed principally with shares of Company common stock, and were valued based on the price of the Company's common stock at that time. The Company's revaluation was triggered by the continued decline in Internet advertising throughout 2000, which significantly impacted current projected advertising revenue generated from these web based properties. In addition, each of these web-based properties experienced declines in operating and financial metrics over the past several quarters, primarily due to the continued weak overall demand of on-line advertising and marketing services, in comparison to the metrics forecasted at the time of their respective acquisitions. The impairment analysis considered that these web-based properties were acquired during 1999 and that the intangible assets recorded at the time of acquisition was being amortized over useful lives of 2-3 years (3 years for goodwill). As a result, it was

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 3. IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

RESTRUCTURING AND IMPAIRMENT CHARGES (Continued)

YEAR ENDED DECEMBER 31, 2000 (Continued)

determined that the fair value of Attitude's and Webjump's goodwill and other intangible assets were less than the recorded amount, therefore, an impairment charge of $13.6 million and $6.0 million, respectively, were recorded. The methodology used to test for and measure the amount of the impairment charge was based on the same methodology used during the initial acquisition valuation of Attitude and Webjump in 1999.

SPORTSLINE.COM, INC. DISTRIBUTION AGREEMENT

In February 2000, the Company entered into a strategic two-year partnership with Sportsline.com, Inc. ("Sportsline"), whereby the Company became the exclusive developer and operator of community solutions on the Sportsline web site ("Sportsline Agreement"). In accordance with the Sportsline Agreement, Sportsline received $5.0 million, paid in the Company's Common Stock and the Company received the exclusive right to sell advertising, sponsorships and non-sports related e-commerce within the Sportsline community area. The total shares of Common Stock issued in connection with the Sportsline Agreement were 699,281 valued at $7.15 per share. The Company recorded the initial $5.0 million payment in connection with this firmly committed executory contract in other assets and began amortizing the amount under the straight-line method over the two year contractual term of the Sportsline Agreement which commenced upon Sportsline's launch of the Company's community solutions on its web site in April 2000.

In connection with the $5 million payment, the Company guaranteed that if Sportsline elected to sell any of its 699,281 shares during defined selling periods and Sportsline's net proceeds from the sale of these shares was less than the original issue price of $7.15 per share, the Company would be required to pay Sportsline the difference. However, the total guarantee was limited to $2,450,000 payable in cash and/or the Company's Common Stock at the Company's option. The Company was required to provide a $1.5 million security deposit for its obligation to pay the guarantee.

As of June 30, 2000, the Company recorded an additional $2.45 million in other assets and additional paid-in capital in connection with this guarantee payment based upon the fair market value of the Company's Common Stock at June 30, 2000. This amount was being amortized over the remaining contractual terms of the agreement and was being adjusted accordingly at each interim balance sheet date for fluctuations in the fair market value of the Company's Common Stock.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 3. IMPAIRMENT AND RESTRUCTURING CHARGES AND DISPOSITIONS (Continued)

SPORTSLINE.COM, INC. DISTRIBUTION AGREEMENT (Continued)

On November 1, 2000, theglobe.com and Sportsline terminated this agreement, whereby theglobe.com agreed to settle its guarantee payment by releasing the $1.5 million security deposit held in escrow. As a result of the termination, the Company recorded an impairment charge in the fourth quarter of 2000 of $4,311,724, representing the write-off of the remaining unamortized initial and guarantee payments of $5,261,724 in the aggregate, the relinquishment of the security deposit of $1,500,000, offset by the $2,450,000 guarantee liability originally recorded as additional paid-in capital, as the Company originally intended to satisfy any potential guarantee payments under this agreement through the issuance of Common Stock. The total amount of amortization costs recorded during 2000 in connection with the Sportsline Agreement, excluding the $4,311,724 impairment charge, was $2,188,276. These costs are included within sales and marketing. In addition, the Company also agreed to purchase the 699,281 shares of Common Stock held by Sportsline for $371,458 based upon the closing trading price on that date, or $0.531 per share. This transaction was accounted for as treasury stock within stockholders' equity.

DISPOSITIONS

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

On October 17, 2001, the Company sold to British Telecommunications, plc all of the assets used in connection with the Games Domain and Console Domain web sites. The total consideration for the purchase was $715,000 consisting of: $420,000 paid upon contract completion and two installment payments of $147,500, each of which were received in 2002. In 2001, the Company recognized a loss on the sale of the Games Domain and Console Domain assets of approximately $32,000. The December 31, 2001 consolidated balance sheet had a $358,293 receivable from British Telecommunications, PLC included in prepaid expenses, which was collected in 2002.

On October 30, 2001, the Company sold to the management of Kaboose.com, Inc. all of the assets used in connection with the KidsDomain.com web site for $75,000. As a result, the Company recognized a gain on the sale of Kids Domain assets of approximately $5,000.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 4. STOCK OPTION REPRICING

On May 31, 2000, the Company offered to substantially all of its employees, excluding executive officers and the Board of Directors, the right to cancel certain outstanding stock options and receive new options with an exercise price equal to the then current fair market value of the stock. Options to purchase a total of approximately 1.1 million shares, approximately 20% of outstanding options, were canceled and approximately 856,000 new options were granted at an exercise price of $1.594 per share, which was based on the closing price of the Company's Common Stock on May 31, 2000. The new options vest at the same rate that they would have vested under previous option plans. The Company is accounting for these re-priced stock options using variable accounting in accordance with FIN No. 44. In addition, as a result of options which were granted within six months of the cancellations, an additional 244,000 options also require variable accounting in accordance with FIN No. 44. For the years ended December 31, 2002 and 2001, there has been no compensation charge relating to these re-pricing due to the decrease in value of the Common Stock price. As of December 31, 2002, 32,240 options remain outstanding. The Company cannot estimate the impact of FIN No. 44 on its future results of operations as the charge is dependent on the future market price of the Company's Common Stock, which cannot be predicted with any degree of certainty. Depending upon movements in the market value of the Company's Common Stock, this accounting treatment may result in significant non-cash compensation charges in future periods.

                                         Gross Carrying    Accumulated
                                             Amount       Amortization
                                         ---------------  ------------
Balance at December 31, 2002:
   Digital Telephony                     $       164,960  $          -
                                         ===============  ============

There were no intangible assets as of December 31, 2001.

There was no amortization expense for intangible assets during the year ended December 31, 2002. Estimated amortization expense for the two succeeding fiscal years is as follows:

2003 $110,000 2004 64,960

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

                                              Year Ended December 31
                                  --------------------------------------------
                                      2002          2001            2000
                                  ------------  -------------  ---------------

Net loss - as reported            $(2,614,661)  $(40,620,026)  $ (103,865,721)
                                  ------------  -------------  ---------------
Add back:
   Goodwill amortization                    -      8,439,174       43,893,747
                                  ------------  -------------  ---------------

Net loss per share - as adjusted  $(2,614,661)  $(32,180,852)  $(  59,971,974)
                                  ============  =============  ===============

Net loss per share - as reported  $     (0.09)  $      (1.34)  $        (3.43)
Add back:
   Goodwill amortization                    -           0.28             1.46
                                  ------------  -------------  ---------------
Net loss per share - as adjusted  $     (0.09)  $      (1.06)  $        (1.97)
                                  ============  =============  ===============

Although SFAS No. 142 requires disclosure of these amounts to reflect the impact of adoption on the Company's results for the years ending December 31, 2001 and 2000, had goodwill not been amortized and been added back, the effect would have resulted in additional impairment charges being recorded in each of the respective years.

                                                  2002      2001
                                                --------  --------
Computer equipment and software                 $613,000  $588,000
Land and building                                181,000   181,000
Furniture and fixtures                           142,000   130,000
                                                --------  --------
                                                 936,000   899,000
Less accumulated depreciation and amortization   762,000   656,000
                                                --------  --------
                                                $174,000  $243,000
                                                ========  ========

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

                                                                                   December 31,
                                                                                       2002
                                                                                   -------------
  Mortgage note payable due in monthly installments of interest only; interest at
  9%; principal due May 2003.                                                      $      91,202

  Related party obligations payable due in monthly installments of $4,239 plus
  interest at prime plus 2-3%, final installment due September 2006.                     120,233
                                                                                   -------------
                                                                                         211,435
  Less short-term portion                                                                123,583
                                                                                   -------------

  Long-term portion                                                                $      87,852
                                                                                   =============

Repayment  of  long-term  debt  is  due  as  follows:

  Year ending December 31:
     2003                                                                          $     123,583
     2004                                                                                 32,408
     2005                                                                                 32,408
     2006                                                                                 23,036
                                                                                   -------------
                                                                                   $     211,435
                                                                                   =============

                                              2002                  2001
                                       -------------------  --------------------
Deferred tax assets:
   Net operating loss carryforwards    $       53,820,000   $        52,974,000
   Allowance for doubtful accounts                 53,000             1,069,000
   Issuance of warrants                           725,000               813,000
   Other                                          182,000                     -
                                       -------------------  --------------------
      Total gross deferred tax assets          54,780,000            54,856,000
Less valuation allowance                      (54,780,000)          (54,856,000)
                                       -------------------  --------------------
      Total net deferred tax assets    $                -   $                 -
                                       ===================  ====================

Because of the Company's lack of earnings history, the deferred tax assets have been fully offset by a 100% valuation allowance. The valuation allowance for deferred tax assets was $54.8 million and $54.9 million as of December 31, 2002 and 2001, respectively. The net change in the total valuation allowance was $(.1) million and $4.3 million for the years ended December 31, 2002 and 2001, respectively.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 8. INCOME TAXES (Continued)

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets, which consist of tax benefits primarily from net operating loss carryforwards, is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Of the total valuation allowance of $54.8 million, subsequently recognized tax benefits, if any, in the amount of $5.8 million will be applied directly to contributed capital.

At December 31, 2002, the Company had net operating loss carryforwards available for US and foreign tax purposes of approximately $134 million. These carryforwards expire through 2022.

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

NOTE 9. STOCKHOLDERS' EQUITY

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

In August 1997, the Company authorized and issued 51 shares of Series D Preferred Stock for an aggregate cash amount of $20,000,000 in connection with the investment by Dancing Bear Investments, Inc., an entity controlled by the Chairman, which holds a majority interest in the Company. These shares constituted 51% of the fully diluted capital stock of the Company at the time of exercise, as defined. In addition to the Series D Preferred Stock, Dancing Bear Investments, Inc. also received warrants which provided the right to purchase up to 10 shares of Series E Preferred Stock ("Series E Warrants") representing 10% of the fully diluted capital stock of the Company at the time of exercise for an aggregate purchase price of $5,882,353, if exercised in total.

The number of common shares that the outstanding Series E Warrants are convertible into upon exercise became fixed as a result of the consummation of the initial public offering at 4,046,018 shares. These warrants are immediately exercisable at approximately $1.45 per share. In May 1999, 100,000 shares of the Series E Warrants were exercised. As of December 31, 2002, 3,946,018 warrants remain outstanding.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 10. STOCK OPTION PLAN

During 1995, the Company established the 1995 Stock Option Plan, which was amended (the "Amended Plan") by the Board of Directors in December 1996 and August 1997. Under the Amended Plan, the Board of Directors may issue incentive stock options or nonqualified stock options to purchase up to 1,582,000 common shares, as amended. Incentive stock options must be granted at the fair market value of the Company's Common Stock at the date the option is issued.

In July 1998, the Company's 1998 Stock Option Plan (the "1998 Plan") was adopted by the Board of Directors and approved by the stockholders of the Company. The 1998 Plan authorized the issuance of 2,400,000 shares of Common Stock, subject to adjustment as provided in the 1998 Plan. In March 1999, the Board of Directors authorized an increase in the number of shares reserved for issuance under the 1998 Plan from 2,400,000 to 3,400,000. This increase was subsequently approved by the Company's stockholders in June 1999. The 1998 Plan provides for the grant of "incentive stock options" intended to qualify under Section 422 of the Code and stock options which do not so qualify. The granting of incentive stock options is subject to limitation as set forth in the 1998 Plan. Directors, officers, employees and consultants of the Company and its subsidiaries are eligible to receive grants under the 1998 Plan.

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

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

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 10. STOCK OPTION PLAN (Continued)

In July 2000, the Company granted options to purchase 1,250,000 shares of Common Stock to the Company's new Chief Executive Officer in connection with his employment. These options had an exercise price of $1.94 per share and had various vesting terms ranging from immediate to ten years. Certain options had automatic accelerated vesting provisions in which the options would vest if the Company's Common Stock share price reached certain thresholds. These options were granted pursuant to individual nonqualified stock option agreements between the CEO and the Company and not pursuant to any of the plans described above. These options expired unexercised in May 2002 when the CEO's employment terminated.

During 2000, the Company recorded approximately $398,000 of non-cash compensation expense in connection with the acceleration of vesting of options to purchase 210,000 shares of Common Stock pursuant to a severance agreement with a former executive officer of the Company. The charge represents the difference between the original exercise price of the option grants and the fair value of the Company's Common Stock on the date of termination. This non-cash compensation charge was included as part of severance costs in connection with the fourth quarter of 2000 restructuring charges.

On May 6, 2002, pursuant to the terms of his severance package, the former CEO was granted options to purchase 425,000 shares of Company common stock at an exercise price of $.035 per share (the closing price on May 6, 2002). These options were granted pursuant to his severance agreement and not pursuant to any of the plans above. These options immediately vested upon grant and have a life of ten years.

On June 20, 2002, the three directors were granted 7,500 options each to purchase shares of Company Common Stock at an exercise price of $0.04 per share (the closing price on June 20, 2002). These options vest over a period of four years and are exercisable for 10 years.

On August 12, 2002, options to purchase 4,875,000 shares of the Company's Common Stock at an exercise price of $0.02 per share (the closing price on August 12, 2002) were granted to employees. These options immediately vested upon grant and have a life of ten years. Of these options, 4,750,000 were granted to officers and directors of the Company. These options were granted pursuant to individual nonqualified stock option agreements and not pursuant to any of the plans above.

On November 13, 2002, options to purchase 25,000 shares of the Company's Common Stock at an exercise price of $0.11 per share (the closing price on November 13, 2002) were granted to an employee. These options immediately vested upon grant and have a life of ten years.

The Company applies APB Opinion No. 25 in accounting for grants to employees pursuant to stock option plans and, accordingly, compensation cost of $0, $0, and $62,570 has been recognized for stock options granted to employees below fair market value in 2002, 2001 and 2000, respectively, in the accompanying consolidated financial statements. Compensation cost recognized in connection with stock options granted in lieu of services rendered to non-employees was $13,000, $0 and $263,761 for the years ended December 31, 2002, 2001, and 2000, respectively. There were no stock options granted to non-employees, other than directors, during 2001.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

                                                                   Weighted
                                         Options     Options        Average
                                         Vested      Granted    Exercise Price
                                        ---------  -----------  ---------------
Outstanding at December 31, 1999                    4,301,887   $          8.06
Granted                                             4,143,182              2.21
Exercised                                            (663,799)             0.53
Canceled                                           (2,666,467)             9.42
                                                   -----------
Outstanding at December 31, 2000        2,352,574   5,114,803              3.59
                                        =========
Granted                                               340,000              0.32
Exercised                                              (2,000)             0.20
Canceled                                2,073,874  (2,348,454)             2.18
                                        =========  -----------
Outstanding at December 31, 2001                    3,104,349              5.77
Granted                                             5,347,500              0.02
Exercised                                                   -
Canceled                                           (2,480,409)             3.31
                                                   -----------
Outstanding at December 31, 2002        5,870,749   5,971,440              0.63
                                        =========  ===========  ===============
Options available at December 31, 2002              4,259,547
                                                   ===========

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

                           Options Outstanding     Options Vested
                           -------------------  --------------------
                           Weighted  Weighted              Weighted
                Number     Average    Average    Number     Average
Range         Outstanding    Life      Price     Vested      Price
------------  -----------  --------  ---------  ---------  ---------
.020-$.020      4,875,000      10.0  $    0.02  4,875,000  $    0.02
.035-.035         425,000      10.0       0.04    425,000       0.04
.040-.040          22,500       9.5       0.04      2,814       0.04
.050-.110          50,000       4.5       0.08     31,251       0.10
.230-.230          15,000       8.5       0.23      4,952       0.23
.530-.530          66,200       7.8       0.53     33,094       0.53
.780-.780           2,000       7.8       0.78      1,000       0.78
1.59-1.59          32,240       7.2       1.59     23,080       1.59
1.67-2.50          31,000       7.6       2.40     22,058       2.42
4.50-4.50         287,298       7.8       4.50    287,298       4.50
4.95-6.69          45,202       6.4       5.91     45,202       5.91
15.75-15.75       120,000       6.0      15.75    120,000      15.75
              -----------                       ---------
                5,971,440                       5,870,749
              ===========                       =========

NOTE 11. EMPLOYEE STOCK PURCHASE PLAN

The Company's Employee Stock Purchase Plan ("ESPP") was adopted by the Board of Directors in February 1999 and subsequently approved by the Company's stockholders in June 1999. The ESPP provides eligible employees of the Company the opportunity to apply a portion of their compensation to the purchase of shares of the Company at a 15% discount. The Company has reserved 400,000 authorized shares of Common Stock for issuance under the ESPP. The Company no longer offers an ESPP.

NOTE 12. COMMITMENTS AND CONTINGENCIES

SEVERANCE AGREEMENT

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

OPERATING AND CAPITAL LEASES

The Company does not have any material non-cancelable operating or capital leases as of December 31, 2002.

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 12. COMMITMENTS AND CONTINGENCIES (Continued)

EMPLOYMENT AGREEMENT

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

TERMINATION OF 401(K) PLAN

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

LITIGATION

On or after August 3, 2001 and as of the date of this report, the Company is aware that six putative shareholder class action lawsuits were filed against the Company, certain of its current and former officers and directors, and several investment banks that were the underwriters of the Company's initial public offering. The lawsuits were filed in the United States District Court for the Southern District of New York. The lawsuits purport to be class actions filed on behalf of the purchasers of the stock of the Company during the period from November 12, 1998 through December 6, 2000. Plaintiffs allege that the underwriter defendants agreed to allocate stock in the Company's initial public offering to certain investors in exchange for excessive and undisclosed commissions and agreements by those investors to make additional purchases of stock in the aftermarket at pre-determined prices. Plaintiffs allege that the Prospectus for the Company's initial public offering was false and misleading and in violation of the securities laws because it did not disclose these arrangements. On December 5, 2001, an amended complaint was filed in one of the actions, alleging the same conduct described above in connection with both the Company's November 23, 1998 initial public offering and its May 19, 1999 secondary offering. The actions seek damages in an unspecified amount. On February 19, 2003, a motion to dismiss all claims against the Company was denied by the Court. The Company and its current and former officers and directors intend to vigorously defend the actions. The complaints have been consolidated into a single action. Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of the litigation. Any unfavorable outcome of this litigation could have a material adverse impact on our business, financial condition and results of operations.

NOTE 13. RELATED PARTY TRANSACTIONS

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

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

NOTE 13. RELATED PARTY TRANSACTIONS (Continued)

In 1998, the Company entered into an electronic commerce contract with AutoNation, Inc. ("AutoNation"), (formerly doing business as Republic Industries), an entity affiliated with a Director of the Company, pursuant to which the Company granted a right of first negotiation with respect to the exclusive right to engage in or conduct an automotive "clubsite" on theglobe website through AutoNation. Additionally, AutoNation agreed to purchase advertising from the Company for a three-year period at a price, which adjusted to match any more favorable advertising price quoted to a third party by the Company, excluding certain short-term advertising rates. For the years ended December 31, 2001 and 2000, the Company recognized revenue of $0.2 million and $0.3 million, respectively, in connection with the AutoNation agreement. For 2002, the contract had expired and the Company recognized no revenue.

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

STOCKHOLDERS' AGREEMENT

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

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

                    Balance
                       At        Additions     Additions                 Balance
                   Beginning      Due To      Charged To                At End Of
Year Ended,        of Period   Acquisitions     Expense    Deductions     Period
-----------------  ----------  -------------  -----------  -----------  ----------
December 31, 2002  $3,203,295  $           -  $         -  $ 3,074,682  $  128,613
December 31, 2001  $2,260,324  $           -  $ 1,373,521  $   430,550  $3,203,295
December 31, 2000  $1,408,092  $     262,426  $ 3,005,746  $ 2,415,940  $2,260,324

                                                        Quarter Ended
                                 ----------------------------------------------------------
                                  December 31,    September 30,     June 30,     March 31,
                                      2002            2002            2002         2002
                                 --------------  ---------------  ------------  -----------

Revenue                          $   2,464,000   $    2,259,000   $ 2,414,000   $2,530,000
Cost of revenues                     1,211,000        1,185,000     1,565,000    1,602,000
                                 --------------  ---------------  ------------  -----------
Gross profit                         1,253,000        1,074,000       849,000      928,000
Sales and marketing                    707,000          775,000     1,021,000    1,020,000
Product development                    136,000          139,000       192,000      186,000
General and administrative             275,000          688,000     1,281,000      625,000
                                 --------------  ---------------  ------------  -----------
Operating expenses                   1,118,000        1,602,000     2,494,000    1,831,000
                                 --------------  ---------------  ------------  -----------

Income (loss )from operations          135,000         (528,000)   (1,645,000)    (903,000)
Other income (loss), net              (107,000)          36,000         9,000      400,000
                                 --------------  ---------------  ------------  -----------
Income (loss) before provision
   for income taxes                     28,000         (492,000)   (1,636,000)    (503,000)
Provision (benefit) for income
   taxes                                17,000                -        (3,000)      (2,000)
                                 --------------  ---------------  ------------  -----------

Net income (loss)                $      11,000   $     (492,000)  $(1,633,000)  $ (501,000)
                                 ==============  ===============  ============  ===========

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

THEGLOBE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

                                                         Quarter Ended
                                 ------------------------------------------------------------
                                  December 31,    September 30,     June 30,      March 31,
                                      2001            2001            2001           2001
                                 --------------  ---------------  -------------  ------------

Revenue                          $   3,410,000   $    3,369,000   $  4,548,000   $ 4,747,000
Cost of revenues                     2,241,000        2,512,000      3,713,000     3,679,000
                                 --------------  ---------------  -------------  ------------
Gross profit                         1,169,000          857,000        834,000     1,068,000
Sales and marketing                    960,000        1,768,000      3,233,000     3,794,000
Product development                    254,000          643,000      1,114,000     1,800,000
General and administrative             871,000        1,706,000      1,934,000     2,083,000
Restructuring and impairment
   charges                           3,405,000        8,625,000      5,061,000             -
Amortization of goodwill and
   intangible assets                   746,000        2,040,000      2,840,000     2,843,000
                                 --------------  ---------------  -------------  ------------
Operating expenses                   6,236,000       14,782,000     14,182,000    10,520,000
                                 --------------  ---------------  -------------  ------------

Loss from operations                (5,067,000)     (13,925,000)   (13,349,000)   (9,453,000)
Other income, net                      291,000           79,000        723,000        96,000
                                 --------------  ---------------  -------------  ------------

Loss before provision for
   income taxes                     (4,776,000)     (13,847,000)   (12,625,000)   (9,356,000)
Provision for income taxes                   -           (6,000)       (79,000)     (101,000)
                                 --------------  ---------------  -------------  ------------

Net loss                            (4,776,000)     (13,841,000)   (12,546,000)   (9,457,000)
                                 --------------  ---------------  -------------  ------------

Basic and diluted net loss per
   share                         $       (0.15)  $        (0.46)  $      (0.41)  $     (0.31)
                                 ==============  ===============  =============  ============

Due to changes in the number of shares outstanding, quarterly loss per share amounts do not necessarily add to the totals for the years.