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 estimates with respect to our ability to continue as a going concern;
? 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, 2020. 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, 2020.
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.
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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, 2021, as reflected in our accompanying condensed 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, 2020 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.
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, 2021 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2020NET 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, 2021 and 2020 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 $36,000 in the third quarter of 2021 as compared to
approximately $31,000 for the same quarter of the prior year.The increase was
primarily due to increased legal fees.
RELATED PARTY INTEREST EXPENSE. Related party interest expense for the
three months ended September 30, 2021 totaled $13,611 compared to $11,475 for
the three months ended September 30, 2020. This increase consisted of interest
due and payable to Delfin for additional loan amounts.
NET LOSS. Net loss for the three months ended September 30, 2021 was
approximately $50,000 as compared to a net loss of approximately $42,000 for the
three months ended September 30, 2020.The increase was primarily due to
increased legal fees and related party interest.
NINE MONTHS ENDED SEPTEMBER 30, 2021 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 2020
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, 2021 and 2020 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 $98,000 for the first nine months of 2021 as compared to
approximately $98,000 for the same period of the prior year.
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RELATED PARTY INTEREST EXPENSE. Related party interest expense for the nine
months ended September 30, 2021 totaled $38,810 compared to $33,578 for the nine
months ended September 30, 2020. This increase consisted of interest due and
payable to Delfin as the loan amount has increased.
NET LOSS. Net loss for the nine months ended September 30, 2021 was
approximately $136,000 as compared to a net loss of approximately $131,000 for
the nine months ended September 30, 2020. The increase was primarily due to
increased legal fees and related party interest.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW ITEMS
As of September 30, 2021, we had $1,561 in cash as compared to $7,624 as of
December 31, 2020. Net cash flows used in operating activities totaled
approximately $81,000 for the nine months ended September 30, 2021 compared to
net cash flows used in operating activities of $105,000 for the nine months
ended September 30, 2020. The decrease in net cash flows used in operating
activities during the nine months ended September 30, 2021 was primarily due to
the change in accounts payable balance. As of September 30, 2021 we had a larger
accounts payable balance associated with general and administrative fees that
were paid in the first week of October 2021.
Net cash flows provided by financing activities totaled $75,000 for the nine
months ended September 30, 2021 compared to $45,900 for the nine months ended
September 30, 2020. The increase reflects additional capital provided by Delfin
pursuant to its amended and restated Promissory Note. See the section titled
"Future and Critical Need For Capital" below for further details.
FUTURE AND CRITICAL NEED FOR CAPITAL
The accompanying condensed 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. Additionally, the COVID
19 pandemic could have an adverse effect on our ability to continue operating.
Please see Item 1A. RISK FACTORS.
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, in November 2019 to $554,100, in August 2020 to $600,000,
in February 2021 to $637,500, in June 2021 to $675,000 and then again in October
2021 to increase the principal amount to up to $705,000 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 8% per annum,
calculated on a 365/66 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 demand.
Management anticipates continued funding from Delfin over the next twelve months
as it determines the direction of the Company.
At September 30, 2021, the Company had a net working capital deficit of
approximately $844,000. Such working capital deficit included accrued expenses
of approximately $32,000, accounts payable of approximately $11,000 and
approximately $803,000 in principal and accrued interest owed under the
Promissory Note with Delfin.
EFFECTS OF INFLATION
Management believes that inflation has not had a significant effect on our
results of operations during 2021 and 2020.
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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.
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