UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER: 0-25053
THEGLOBE.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
| STATE OF DELAWARE | 14-1782422 |
| (STATE OR OTHER JURISDICTION OF | (I.R.S. EMPLOYER |
| INCORPORATION OR ORGANIZATION) | IDENTIFICATION NO.) |
5949 SHERRY LANE, SUITE 950, DALLAS, TX 75225
c/o Toombs Hall and Foster
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES
(214) 369-5695
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $.001 per share | tglo | None |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ¨ No x
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ¨ Large accelerated filer | ¨ Accelerated filer |
| x Non-accelerated filer | x Smaller reporting company |
| ¨ Emerging growth company |
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
The number of shares outstanding of the Registrant’s Common Stock, $.001 par value (the “Common Stock”) as of October 14, 2019 was 441,480,473.
THEGLOBE.COM, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
THEGLOBE.COM, INC.
| SEPTEMBER 30, | ||||||||
| 2019 | DECEMBER 31, | |||||||
| (Unaudited) | 2018 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 26,459 | $ | 5,895 | ||||
| Total current assets | $ | 26,459 | $ | 5,895 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accrued expenses and other current liabilities | $ | 23,907 | $ | 21,050 | ||||
| Accounts payable | 11,315 | 7,482 | ||||||
| Accrued interest due to related party | 32,872 | 9,068 | ||||||
| Notes payable due to related party | 465,000 | 300,362 | ||||||
| Total current liabilities | 533,094 | 337,962 | ||||||
| Stockholders’ Deficit: | ||||||||
| Common stock, $0.001 par value, 500,000 000 shares authorized, 441,480,473 issued and outstanding at September 30, 2019 and December 31, 2018 | 441,480 | 441,480 | ||||||
| Additional paid-in capital | 296,594,042 | 296,594,042 | ||||||
| Accumulated deficit | (297,542,157 | ) | (297,367,589 | ) | ||||
| Total stockholders’ deficit | (506,635 | ) | (332,067 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 26,459 | $ | 5,895 | ||||
See notes to unaudited condensed financial statements.
2
THEGLOBE.COM, INC.
CONDENSED STATEMENTS OF OPERATIONS
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| (UNAUDITED) | (UNAUDITED) | |||||||||||||||
| Net Revenue | $ | — | $ | — | $ | — | $ | — | ||||||||
| Operating Expenses: | ||||||||||||||||
| General and administrative | 53,996 | 68,896 | 151,099 | 202,939 | ||||||||||||
| Related party fees | — | — | — | 60,000 | ||||||||||||
| Operating Loss | (53,996 | ) | (68,896 | ) | (151,099 | ) | (262,939 | ) | ||||||||
| Other (Inc)/Exp: | ||||||||||||||||
| Other Misc Income | (335 | ) | — | (335 | ) | |||||||||||
| Related party interest expense | 9,376 | 2,430 | 23,804 | 4,066 | ||||||||||||
| Loss from Operations Before Income Tax | (63,037 | ) | (71,326 | ) | (174,568 | ) | (267,005 | ) | ||||||||
| Income Tax Provision | — | — | — | — | ||||||||||||
| Loss from Operations | (63,037 | ) | (71,326 | ) | (174,568 | ) | (267,005 | ) | ||||||||
| Net Loss | $ | (63,037 | ) | $ | (71,326 | ) | $ | (174,568 | ) | $ | (267,005 | ) | ||||
| Loss Per Share: | ||||||||||||||||
| Basic and Diluted: | ||||||||||||||||
| Operations | $ | — | $ | — | $ | — | $ | — | ||||||||
| Weighted Average Common Shares Outstanding | $ | 441,480,473 | $ | 441,480,473 | $ | 441,480,473 | $ | 441,480,473 | ||||||||
See notes to unaudited condensed financial statements
3
THEGLOBE.COM, INC.
UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT
Nine Month Period Ended September 30, 2019
| Common Stock | Additional Paid- | Accumulated | ||||||||||||||||||
| Shares | Amount | in Capital | Deficit | Total | ||||||||||||||||
| Balance, January 1, 2019 | 441,480,473 | 441,480 | 296,594,042 | (297,367,589 | ) | (332,067 | ) | |||||||||||||
| Net Loss | — | — | — | (174,568 | ) | (174,568 | ) | |||||||||||||
| Balance, September 30, 2019 | 441,480,473 | $ | 441,480 | $ | 296,594,042 | $ | (297,542,157 | ) | $ | (506,635 | ) | |||||||||
Nine Month Period Ended September 30, 2018
| Common Stock | Additional Paid- | Accumulated | ||||||||||||||||||
| Shares | Amount | in Capital | Deficit | Total | ||||||||||||||||
| Balance, January 1, 2018 | 441,480,473 | 441,480 | 296,594,042 | (297,061,083 | ) | (25,561 | ) | |||||||||||||
| Net Loss | — | — | — | (267,005 | ) | (267,005 | ) | |||||||||||||
| Balance, September 30, 2018 | 441,480,473 | $ | 441,480 | $ | 296,594,042 | $ | (297,328,088 | ) | $ | (292,566 | ) | |||||||||
Three Month Period Ended September 30, 2019
| Common Stock | Additional Paid- | Accumulated | ||||||||||||||||||
| Shares | Amount | in Capital | Deficit | Total | ||||||||||||||||
| Balance, June 30, 2019 | 441,480,473 | 441,480 | 296,594,042 | (297,479,120 | ) | (443,598 | ) | |||||||||||||
| Net Loss | — | — | — | (63,037 | ) | (63,037 | ) | |||||||||||||
| Balance, September 30, 2019 | 441,480,473 | $ | 441,480 | $ | 296,594,042 | $ | (297,542,157 | ) | $ | (506,635 | ) | |||||||||
Three Month Period Ended September 30, 2018
| Common Stock | Additional Paid- | Accumulated | ||||||||||||||||||
| Shares | Amount | in Capital | Deficit | Total | ||||||||||||||||
| Balance, June 30, 2018 | 441,480,473 | 441,480 | 296,594,042 | (297,196,762 | ) | (161,240 | ) | |||||||||||||
| Net Loss | — | — | — | (71,326 | ) | (71,326 | ) | |||||||||||||
| Balance, September 30, 2018 | 441,480,473 | $ | 441,480 | $ | 296,594,042 | $ | (297,268,088 | ) | $ | (232,566 | ) | |||||||||
See notes to unaudited condensed financial statements
4
THEGLOBE.COM, INC.
CONDENSED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | ||||||||
| 2019 | 2018 | |||||||
| (UNAUDITED) | (UNAUDITED) | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Loss | $ | (174,568 | ) | $ | (267,005 | ) | ||
| Adjustments to reconcile net loss from continuing operations to net cash flows used in operating activities | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts payable | 3,833 | 60,976 | ||||||
| Accrued expenses and other current liabilities | 2,857 | 57,500 | ||||||
| Accrued interest due to related party | 23,804 | 4,066 | ||||||
| Net cash flows used in operating activities | (144,074 | ) | (144,463 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Borrowings on notes payable | 164,638 | 144,959 | ||||||
| Net cash flows provided by financing activities | 164,638 | 144,959 | ||||||
| Net Increase in Cash | 20,564 | 496 | ||||||
| Cash at beginning of period | 5,895 | 440 | ||||||
| Cash at end of period | $ | 26,459 | $ | 936 | ||||
See notes to unaudited condensed financial statements.
5
THEGLOBE.COM, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
| (1) | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
DESCRIPTION OF THEGLOBE.COM
theglobe.com, inc. (the “Company,” “theglobe,” “we” or “us”) was incorporated on May 1, 1995 and commenced operations on that date. Originally, we were an online community with registered members and users in the United States and abroad. On September 29, 2008, we consummated the sale of the business and substantially all of the assets of our subsidiary, Tralliance Corporation (“Tralliance”), to Tralliance Registry Management Company, LLC, an entity controlled by Michael S. Egan, our former Chairman and Chief Executive Officer. As a result of and on the effective date of the sale of our Tralliance business, which was our last remaining operating business, we became a “shell company,” as that term is defined in Rule 12b-2 of the Exchange Act, with no material operations or assets.
On December 20, 2017, Delfin Midstream LLC (“Delfin”) entered into a Common Stock Purchase Agreement with certain of our stockholders for the purchase of a total of 312,825,952 shares of our Common Stock, par value $0.001 per share (“Common Stock”), representing approximately 70.9% of our Common Stock (the “Purchase Agreement”). On December 31, 2017 (the “Closing Date”), Mr. Egan, Edward A. Cespedes and Robin S. Lebowitz resigned from their respective positions as officers and directors of the Company. William “Rusty” Nichols was appointed the sole member of our Board and our sole executive officer. Effective June 29, 2018, our Board of Directors (the Board) appointed Mr. Frederick Jones as President, Chief Executive Officer, Chief Financial Officer, and Director of the Company, and Mr. Nichols resigned from his positions of President, Chief Executive Officer, Chief Financial Officer, Director, and any other directorships, offices or other positions with the Company.
As a shell company, our operating expenses have consisted primarily of, and we expect them to continue to consist primarily of, customary public company expenses, including personnel, accounting, financial reporting, legal, audit and other related public company costs.
As of September 30, 2019, as reflected in our accompanying balance sheet, our current liabilities exceed our total assets. Additionally, we received a report from our independent registered public accountants, relating to our December 31, 2018 audited financial statements, containing an explanatory paragraph regarding our ability to continue as a going concern. We prefer to avoid filing for protection under the U.S. Bankruptcy Code. However, unless we are successful in raising additional funds through the offering of debt or equity securities, we may not be able to continue to operate as a going concern beyond the next twelve months. Notwithstanding the above, we currently intend to continue operating as a public company and making all the requisite filings under the Exchange Act.
UNAUDITED INTERIM CONDENSED FINANCIAL INFORMATION
The unaudited interim condensed financial statements of the Company at September 30, 2019 and for the three and nine months ended September 30, 2019 and 2018 included herein have been prepared in accordance with the instructions for Form 10-Q under the Securities Exchange Act of 1934, as amended, and Article 10 of Regulation S-X under the Securities Act of 1933, as amended. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations relating to interim condensed financial statements.
In the opinion of management, the accompanying unaudited interim condensed financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company at September 30, 2019 and the results of its operations and its cash flows for the three and nine months ended September 30, 2019 and 2018. The results of operations and cash flows for such periods are not necessarily indicative of results expected for the full year or for any future period.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates and assumptions relate primarily to estimates of accounts payable and accrued expenses.
NET INCOME PER SHARE
The Company reports basic and diluted net income per common share in accordance with FASB ASC Topic 260, “Earnings Per Share.” Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Common equivalent shares consist of the incremental common shares issuable upon the exercise of stock options (using the treasury stock method). Common equivalent shares are excluded from the calculation if their effect is anti-dilutive. There were no potentially dilutive securities and common stock equivalents for the period ended September 30, 2019.
6
RECENT ACCOUNTING PRONOUNCEMENTS
Management has determined that all recently issued accounting pronouncements will not have a material impact on the Company’s financial statements or do not apply to the Company’s operations.
| (2) | LIQUIDITY AND GOING CONCERN CONSIDERATIONS |
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. However, for the reasons described below, Company management does not believe that cash on hand and cash flows generated internally by the Company will be adequate to fund its limited overhead and other cash requirements over the next twelve months. These reasons raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
Delfin, the Company’s majority shareholder, has continued to fund the Company through loans to the Company (see Note 3). At September 30, 2019, the Company had a net working capital deficit of approximately $507,000. Such working capital deficit included accrued expenses of approximately $24,000, accounts payable of approximately $11,000 and approximately $498,000 in principal and accrued interest owed under the Promissory Note with Delfin.
MANAGEMENT’S PLANS
Management anticipates continued funding from Delfin over the next twelve months as it determines the direction of the Company.
| (3) | DEBT |
In March 2018, the Company executed a Promissory Note with Delfin, which was amended and restated in May 2018 to $150,000, November 2018 to $350,000 and then again on June 3, 2019 to increase the principal amount to up to $465,000 to pay certain accrued expenses, accounts payable and to allow the Company to have working capital. Interest accrues on the unpaid principal balance at a rate of eight (8%) per annum, and is payable on the maturity date, calculated on a 365/366-day year, as applicable. The Promissory Note is due upon demand. It may be prepaid in whole or in part at any time prior to the maturity date. The Company expects continued funding from Delfin.
On November 1, 2019 the Company executed the Fourth Amended and Restated Promissory Note (the “Note”) with Delfin to increase the principal amount of the previous bridge promissory note, executed June 3, 2019 to $554,100. The Note is due upon demand by Delfin, and bears interest at a rate of eight (8%) per annum prior to the maturity date and ten percent (10%) per annum if unpaid following the maturity date. It may be prepaid in whole or in part at any time prior to maturity date without penalty. The note is an unsecured obligation of the Company.
| (4) | STOCK OPTION PLANS |
As of September 30, 2019, all of the Company’s stock option plans have been terminated and there are no shares available for grant under these plans. Remaining stock options outstanding and exercisable expired in August 2016.
There were no stock option grants or exercises during each of the nine months ended September 30, 2019 and 2018.
| (5) | RELATED PARTY TRANSACTIONS |
In March 2018, the Company executed a Promissory Note with Delfin, which was amended and restated in May 2018 to $150,000, November 2018 to $350,000, in June 2019 to $465,000, and then again in November 2019 to increase the principal amount to up to $554,100 to pay certain accrued expenses, accounts payable, and to allow the Company to have some working capital. The Company expects continued funding from Delfin. Related party interest expense associated with such debt totaling $23,804 and $4,066 has been recognized in our condensed statement of operations for the nine months ended September 30, 2019 and 2018, respectively. See Note 3, “Debt,” for a more complete discussion of related party debt. There were also $60,000 in payments to a former officer in the nine months ended September 30, 2018.
| (6) | SUBSEQUENT EVENTS |
The Company’s management evaluated subsequent events through the time of the filing of this report on Form 10-Q. The Company’s management is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on its financial statements.
7
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
FORWARD LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terminology, such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “intend,” “potential” or “continue” or the negative of such terms or other comparable terminology, although not all forward-looking statements contain such terms. In addition, these forward-looking statements include, but are not limited to, statements regarding:
| • | our need for additional equity and debt capital financing to continue as a going concern, and the sources of such capital; |
| • | our intent with respect to future dividends; |
| • | the continued forbearance of certain related parties from making demand for payment under certain contractual obligations of, and loans to, the Company; and |
| • | our estimates with respect to certain accounting and tax matters. |
These forward-looking statements reflect our current view about future events and are subject to risks, uncertainties and assumptions. Unless required by law, we do not intend to update any of the forward-looking statements after the date of this Form 10-Q or to conform these statements to actual results. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. A description of risks that could cause our results to vary appears under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward- looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:
| • | our ability to raise additional and sufficient capital; |
| • | our ability to continue to receive funding from related parties; and |
| • | our ability to successfully estimate the impact of certain accounting and tax matters. |
The following discussion should be read together in conjunction with the accompanying unaudited condensed financial statements and related notes thereto and the audited financial statements and notes to those statements contained in the Annual Report on Form 10-K for the year ended December 31, 2018.
OVERVIEW
theglobe.com, inc. (the “Company,” “theglobe,” “we” or “us”) was incorporated on May 1, 1995 and commenced operations on that date. Originally, we were an online community with registered members and users in the United States and abroad. On September 29, 2008, we consummated the sale of the business and substantially all of the assets of our subsidiary, Tralliance Corporation (“Tralliance”), to Tralliance Registry Management Company, LLC, an entity controlled by Michael S. Egan, our former Chairman and Chief Executive Officer. As a result of and on the effective date of the sale of our Tralliance business, which was our last remaining operating business, we became a “shell company,” as that term is defined in Rule 12b-2 of the Exchange Act, with no material operations or assets. We currently have no material operations or assets.
On December 20, 2017, our former Chief Executive Officer and majority stockholder, Mr. Egan entered into the Purchase Agreement with Delfin for the purchase by Delfin of shares owned by Mr. Egan representing approximately 70.9% of our Common Stock. On the Closing Date, Mr. Egan, Mr. Cespedes and Ms. Lebowitz resigned from their respective positions as officers and directors of the Company. William “Rusty” Nichols was appointed the sole member of our Board and our sole executive officer. Effective June 29, 2018, our Board appointed Mr. Frederick Jones as President, Chief Executive Officer, Chief Financial Officer, and Director of the Company, and Mr. Nichols resigned from his positions of President, Chief Executive Officer, Chief Financial Officer, Director, and any other directorships, offices or other positions with the Company.
As a shell company, our operating expenses have consisted primarily of, and we expect them to continue to consist primarily of, customary public company expenses, including personnel, accounting, financial reporting, legal, audit and other related public company costs.
As of September 30, 2019, as reflected in our accompanying balance sheet, our current liabilities exceed our total assets.
BASIS OF PRESENTATION OF CONDENSED FINANCIAL STATEMENTS; GOING CONCERN
We received a report from our independent registered public accountants, relating to our December 31, 2018 audited financial statements, containing an explanatory paragraph regarding our ability to continue as a going concern. As a shell company, our management believes that we will not be able to generate operating cash flows sufficient to fund our operations and pay our existing current liabilities. Based upon our current limited cash resources and without the infusion of additional capital and/or the continued forbearance of our creditors, our management does not believe we can operate as a going concern beyond the next twelve months. See “Future and Critical Need for Capital” section of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further details.
| 8 |
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, our condensed financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable to continue as a going concern.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2019 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2018
NET REVENUE. Commensurate with the sale of our Tralliance business on September 29, 2008, we became a shell company, and we have not had any material operations since then. As a result, net revenue for both the three months ended September 30, 2019 and 2018 was $0.
GENERAL AND ADMINISTRATIVE. General and administrative expenses include only customary public company expenses, including accounting, legal, audit, insurance and other related public company costs. General and administrative expenses totaled approximately $54,000 in the third quarter of 2019 as compared to approximately $69,000 for the same quarter of the prior year.
RELATED PARTY INTEREST EXPENSE. Related party interest expense for the three months ended September 30, 2019 totaled $9,376 compared to $2,430 for the three months ended September 30, 2018. This increase consisted of interest due and payable to Delfin as the loan amount has increased.
NET LOSS. Net loss for the three months ended September 30, 2019 was approximately $63,000 as compared to a net loss of approximately $71,000 for the three months ended September 30, 2018.
NINE MONTHS ENDED SEPTEMBER 30, 2019 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2018
NET REVENUE. Commensurate with the sale of our Tralliance business on September 29, 2008, we became a shell company, and we have not had any material operations since then. As a result, net revenue for both the nine months ended September 30, 2019 and 2018 was $0.
GENERAL AND ADMINISTRATIVE. General and administrative expenses include only customary public company expenses, including accounting, legal, audit, insurance and other related public company costs. General and administrative expenses totaled approximately $151,000 for the first nine months of 2019 as compared to approximately $203,000 for the same period of the prior year. This decrease was primarily due to decreased legal expenses.
RELATED PARTY TRANSACTIONS. Related party interest expense for the nine months ended September 30, 2019 totaled $23,804 compared to $4,066 for the nine months ended September 30, 2018. This increase consisted of interest due and payable to Delfin as the loan amount has increased. There were also $60,000 in payments to a former officer in the nine months ended September 30, 2018.
NET LOSS. Net loss for the nine months ended September 30, 2019 was approximately $175,000 as compared to a net loss of approximately $267,000 for the nine months ended September 30, 2018. This decrease was primarily due to decreased legal expenses.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW ITEMS
As of September 30, 2019, we had $26,459 in cash as compared to $5,895 as of December 31, 2018. Net cash flows used in operating activities of continuing operations totaled approximately $144,000 for the nine months ended September 30, 2019 compared to net cash flows used in operating activities of continuing operations of approximately $144,000 for the nine months ended September 30, 2018.
Net cash flows provided by financing activities totaled approximately $165,000 for the nine months ended September 30, 2019 compared to approximately $145,000 for the nine months ended September 30, 2018.
FUTURE AND CRITICAL NEED FOR CAPITAL
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable to continue as a going concern. However, for the reasons described below, our management does not believe that cash on hand and cash flow generated internally by us will be adequate to fund our limited overhead and other cash requirements beyond the next twelve months. These reasons raise significant doubt about our ability to continue as a going concern.
In March 2018, the Company executed a Promissory Note with Delfin, which was amended and restated in May 2018 to $150,000, in November 2018 to $350,000, in June 2019 to $465,000, and then again in November 2019 to increase the principal amount to up to $554,100 to pay certain accrued expenses, accounts payable, and to allow the Company to have working capital. Interest accrues on the unpaid principal balance at a rate of eight (8%) per annum, and is payable on the maturity date, calculated on a 365/366 day year, as applicable. The Promissory Note is due upon demand. It may be prepaid in whole or in any part at any time prior to the maturity date. Management anticipates continued funding from Delfin as it determines the direction of the Company.
At September 30, 2019, we had a net working capital deficit of approximately $507,000. This deficit included accrued expenses of approximately $24,000, accounts payable of approximately $11,000 and approximately $498,000 in principal and accrued interest owed under the Promissory Note with Delfin, the Company’s majority shareholder.
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EFFECTS OF INFLATION
Management believes that inflation has not had a significant effect on our results of operations during 2019 and 2018.
MANAGEMENT’S DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.
Certain of our accounting policies require higher degrees of judgment than others in their application. Primarily, these include valuation of accounts payable and accrued expenses.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Management has determined that all recently issued accounting pronouncements will not have a material impact on the Company’s financial statements or do not apply to the Company’s operations.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK |
Not applicable to smaller reporting companies such as the Company.
| ITEM 4. | CONTROLS AND PROCEDURES |
We maintain disclosure controls and procedures that are designed to ensure (1) that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms, and (2) that this information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures.
Our Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2019. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer has concluded that, as of September 30, 2019, our disclosure controls and procedures were effective in alerting him in a timely manner to material information regarding us that is required to be included in our periodic reports to the SEC.
Our Chief Executive Officer and Chief Financial Officer has evaluated any change in our internal control over financial reporting that occurred during the quarter ended September 30, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, and has determined there to be no reportable changes.
| ITEM 1. | LEGAL PROCEEDINGS |
None.
| 10 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
| (a) | Unregistered Sales of Equity Securities. |
None.
| (b) | Use of Proceeds From Sales of Registered Securities. |
Not applicable.
| (c) | Repurchases. |
None.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
None.
| ITEM 6. | EXHIBITS |
| 32.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.1NS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema Document |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | XBRL Taxonomy Extension Definitions Linkbase Document |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
| 11 |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: November 12, 2019 | theglobe.com, inc. | |
| By: | /s/ Frederick Jones | |
| Name: | Frederick Jones | |
| Title: | Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive Officer and Duly Authorized Officer) | ||
| 12 |
EXHIBIT INDEX
| 32.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.1NS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema Document |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | XBRL Taxonomy Extension Definitions Linkbase Document |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
| 13 |
Exhibit 10.27
FOURTH AMENDED AND RESTATED BRIDGE PROMISSORY NOTE
| Principal Amount: $554,100.00 | Issue Date: | November 1, 2019 |
FOR VALUE RECEIVED, the undersigned, theglobe.com, inc, a Delaware corporation (the “Borrower”), with offices located at 5949 Sherry Lane, Suite 950 c/o Toombs Hall and Foster, Dallas TX 75225, hereby promises to pay to Delfin Midstream Inc. (the “Holder”), on order, without demand, in lawful currency of the United States of America, the principal sum of Five Hundred and Fifty-Four Thousand and One Hundred Dollars and 00/100 ($554,100.00) (the “Loan”), in accordance with the provisions of this promissory note (this “Note”). This Note evidences the Loan made by the Holder to the Borrower, and there is no separate loan agreement or other written agreement relating to its terms.
1. Amended and Restated. The parties originally entered into a Bridge Note dated March 9, 2018 in the principal amount of $50,000 (the “Original Note”), which Original Note was amended and restated in full pursuant to an Amended and Restated Bridge Promissory Note dated May 9, 2018 in the principal amount of $150,000 (the “Amended Note”), which was further was amended and restated in full pursuant to a Second Amended and Restated Bridge Promissory Note dated November 2, 2018 in the principal amount of $350,000 (the “Second Amended Note”) and which was further was amended and restated in full pursuant to a Third Amended and Restated Bridge Promissory Note dated May 23, 2019 in the principal amount of $465,000 (the “Third Amended Note”) The Holder and the Borrower hereby agree to amend and restate the Third Amended Note with this Note.
2. Maturity Date. This Note shall be a DEMAND NOTE thereby allowing the Holder to call the Note at any time for any reason or no reason whatsoever requiring the immediate repayment of all principal and accrued and unpaid interest (the “Maturity Date”).
3. Prepayment. This Note may be prepaid in whole or part at any time prior to the Maturity Date without penalty and without consent of the Holder.
4. Interest Rate. Interest shall accrue on the unpaid principal balance of this Note at a rate of eight percent (8%) per annum and shall be payable on the Maturity Date, calculated on a 365/366 day year, as applicable.
5. Default Interest Rate. The entire unpaid principal balance of the Loan shall bear interest until paid at an annual rate equal to ten percent (10%) (the “Default Rate”) upon each of the following:
(a) after the occurrence and during the continuation of any Event of Default during the term of this Note, regardless of whether the Holder also elects to accelerate the maturity of the Loan; or
(b) from and after demand for payment has been made by the Holder after the Maturity Date in the event the Loan has not been paid in full on or before the Maturity Date;
provided, however, that after judgment all such sums shall bear interest at the lesser of the Default Rate or the greatest rate allowed by applicable law for judgments. Any amount of interest which shall be due and owing pursuant to this Section shall be paid on the daily outstanding balance of principal evidenced by this Note and shall be based upon a 365-day year for the actual number of days for which interest is payable, but such interest shall never exceed the maximum rate of interest permitted under applicable law.
6. Maximum Interest Rate. In no event shall any agreed to or actual exaction charge, reserved or taken as an advance or forbearance by the Holder as consideration, exceed the maximum interest rate permitted by law applicable from time to time to the Loan for the use or detention of money or for forbearance in seeking its collection; and the Holder hereby waives any right to demand such excess. If the interest provisions of this Note or any exactions provided for in this Note shall result at any time or for any reason in an effective rate of interest that exceeds the maximum interest rate permitted by applicable law (if any), then without further agreement or notice, the obligation to be fulfilled shall be automatically reduced to such limit and all sums received by the Holder in excess of those lawfully collectible as interest shall be applied against the principal of the Loan immediately upon the Holder’s receipt thereof, with the same force and effect as though the Borrower had specifically designated such extra sums to be so applied to principal and the Holder had agreed to accept such extra payment(s) as a premium-free prepayment or prepayments.
7. Events of Default. The entire unpaid principal balance of the Loan and all other sums owing under this Note, shall at the option of the Holder become immediately due and payable without notice or demand upon the occurrence of any one or more of the following events (“Events of Default”):
(a) The failure of the Borrower to pay the principal or other sum when due, which remains unpaid for thirty (30) calendar days; or
(b) The Borrower shall make an assignment for the benefit of creditors, file a petition in bankruptcy, apply to or petition any tribunal for the appointment of a custodian, receiver, intervenor or trustee for the Borrower or a substantial part of the Borrower’s assets; or
(c) The Borrower shall commence any proceeding under any bankruptcy, arrangement or readjustment of debt law or statute of any jurisdiction, whether now or hereafter in effect; or if any such petition or application shall have been filed or proceeding commenced against the Borrower or if any such custodian, receiver, intervenor or trustee shall have been appointed.
8. Rights and Remedies of Holder. The occurrence of any Event of Default shall allow the Holder, with written notice to Borrower, to: (a) accelerate the maturity of this Note and demand immediate payment of all outstanding principal and other sums due hereunder, and (b) immediately exercise and pursue any rights, privileges, remedies and powers as provided herein or under law. The Holder’s rights, privileges, remedies and powers, as provided in this Note are cumulative and concurrent, and may be pursued singly, successively or together against the Borrower at the sole discretion of the Holder. Additionally, the Holder may resort to every other right or remedy available at law and in equity without first exhausting the rights and remedies contained herein, all in the Holder’s sole discretion. The Holder’s delay in exercising or failure to exercise any rights or remedies to which the Holder may be entitled if any Event of Default occurs shall not constitute a waiver of any of the Holder’s rights or remedies with respect to that or any subsequent Event of Default, whether of the same or a different nature, nor shall any single or partial exercise of any right or remedy by the Holder preclude any other or further exercise of that or any other right or remedy. No waiver of any right or remedy by the Holder shall be effective unless made in writing and signed by the Holder, nor shall any waiver on one occasion apply to any future occasion, but shall be effective only with respect to the specific occasion addressed in that signed writing.
| - 2 - |
9. Waiver and Consent. Except as otherwise provided herein, to the fullest extent permitted by law, the Borrower hereby: (a) waives demand, presentment, protest, notice of dishonor, suit against or joinder of any other person, and all other requirements necessary to charge or hold the Borrower liable with respect to the Loan; (b) waives any right to immunity or exemption of any property, wherever located, from garnishment, levy, execution, seizure or attachment prior to or in execution of judgment, or sale under execution or other process for the collection of debts; (c) submits to the jurisdiction of the state and federal courts in the State of Delaware for purposes of any action or proceeding under this Note; (d) agrees that the venue of any such action or proceeding may be laid in the County of New Castle, Delaware and waives any claim that the same is an inconvenient forum. Until the Holder receives all sums due under this Note in immediately available funds, the Borrower shall not be released from liability with respect to the Loan unless the Holder expressly releases the Borrower in a writing signed by the Holder.
10. Costs, Indemnities and Expenses. The Borrower agrees to pay all filing fees and similar charges and all costs incurred by the Holder in collecting or securing or attempting to collect or secure the Loan, including reasonable attorneys’ fees, whether or not involving litigation and/or appellate, administrative or bankruptcy proceedings. In addition to the payment of the documentary stamp taxes due on this Note, the Borrower agrees to pay any applicable intangible taxes or other taxes (except for federal or state income or franchise taxes based on the Holder’s net income) which may now or hereafter apply to this Note or any payment made in respect of the Loan, and the Borrower agrees to indemnify and hold the Holder harmless from and against any liability, costs, attorney’s fees, penalties, interest or expenses relating to any such taxes, as and when the same may be incurred.
11. Order of Payments. Except as otherwise required by law, payments received by the Holder hereunder shall be applied first against expenses and indemnities and next to accrued but unpaid interest followed by a reduction of the outstanding principal balance of the Loan, except that during the continuance of any Event of Default, the Holder may apply such payments in any order of priority determined by the Holder in its exclusive judgment.
12. Governing Law. This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware. each of the parties hereto hereby consents to the exclusive jurisdiction of, and venue in, any federal or state court of competent jurisdiction located in the county of new castle, STATE OF delaware, solely in respect of the interpretation and enforcement of the provisions of this Agreement and in respect of the transactions contemplated herein, and hereby waives, and agrees not to assert, as a defense in any action for the interpretation or enforcement hereof, that it is not subject thereto or that such action may not be brought or is not maintainable in said courts or that the venue thereof may not be applicable or that this Agreement may not be enforced in or by said courts, and the parties hereto irrevocably agree that all claims with respect to such action shall be heard and determined in said courts. The parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of such dispute.
13. Notice. Any notices, requests, demands and other communications required or permitted to be given hereunder shall be given in writing and shall be deemed to have been duly given when delivered by hand, five (5) days following the date of deposit in the United States mail, by registered or certified mail, postage prepaid, return receipt requested, or on the delivery date shown on a written verification of delivery provided by a reputable private delivery service, if addressed to the mailing address as set forth in the preamble to this Note or such other address as last provided to the sender by the addressee in accordance with this Section.
| - 3 - |
14. Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns. This Note may not be assigned by either party without the prior written consent of the other party.
15. Amendment Provision; Cancellation of Amended Note. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented. The Holder hereby acknowledges and agrees that, with immediate effect as of such effective date, the Amended Note and all indebtedness arising thereunder are hereby cancelled, terminated and superseded in their entirety by this Note. The Holder agrees to deliver the original Amended Note to the Borrower for cancellation.
16. Severability. If any part of this Note is adjudged illegal, invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of this Note that can be given effect without such provision.
[Signature Page Follows]
| - 4 - |
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its name as of the date first above written.
| theglobe.com inc., a Delaware corporation | |||
| By: | /s/ Frederick P. Jones | ||
| Name: | Frederick P. Jones | ||
| Title: | Chief Executive Officer | ||
| - 5 - |
EXHIBIT 31.1
CERTIFICATE PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
I, Frederick Jones, Chief Executive Officer and Chief Financial Officer of theglobe.com, inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of theglobe.com, inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) for the Registrant and have:
a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, is made known to us by others within the entity, particularly during the period in which this report is being prepared;
b. designed such control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant’s auditors:
a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
| Dated: November 12, 2019 | ||
| By: | /s/ Frederick Jones | |
| Name: | Frederick Jones | |
| Title: | Chief Executive Officer and Chief Financial Officer | |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C.
SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of theglobe.com, inc. (the “Company”) on Form 10-Q for the period ending September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frederick Jones, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: November 12, 2019 | By: | /s/ Frederick Jones |
| Name: | Frederick Jones | |
| Title: | Chief Executive Officer and Chief Financial Officer |