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

During the year ended December 31, 2007 and the six months ended June 30, 2008, the Company was able to continue operating as a going concern due principally to funding of $1,250,000 received during 2007 from the sale of secured convertible demand promissory notes (the "2007 Convertible Notes") to an entity controlled by Michael Egan, its Chairman and Chief Executive Officer and additional funding of $380,000 provided from the sale of all of the Company's rights related to its www.search.travel domain name and website to an entity also controlled by Mr. Egan in December 2007.

On June 6, 2008, Dancing Bear Investments, Inc. ("Dancing Bear"), an entity which is controlled by the Company's Chairman and Chief Executive Officer, entered into a one year Revolving Loan Agreement with the Company pursuant to which the Company may, under certain conditions as described below, borrow up to a maximum of $500,000 from Dancing Bear (the "Revolving Debt"). During June 2008, the Company borrowed an aggregate of $200,000 from Dancing Bear under the Revolving Loan Agreement and subsequently in July and August 2008, the Company made additional borrowings aggregating $200,000 under the Revolving Loan Agreement. During the remainder of the one year term of the Revolving Loan Agreement, the Company may make borrowing requests to Dancing Bear, and if such requests are approved by Dancing Bear, may borrow additional funds of up to $100,000 under the Revolving Loan Agreement. All such funds borrowed may be prepaid in whole or in part, without penalty, at any time during the term of the Revolving Loan Agreement. The Company currently has no ability to repay this Loan. All unpaid borrowings, including accrued interest on borrowed funds at the rate of 10% per annum, are due and payable by the Company to Dancing Bear in one lump sum on the earlier of (i) June 6, 2009, or (ii) the occurrence of an event of default as defined in the Revolving Loan Agreement. All borrowings under the Revolving Loan Agreement are secured by a pledge of all of the assets of the Company and its subsidiaries, subordinate to existing liens on such assets related to the 2005 Convertible Notes and the 2007 Convertible Notes (the "Convertible Debt") (see Note 4, "Debt" for further details).

At June 30, 2008, the Company had a net working capital deficit of approximately $10,100,000, inclusive of a cash and cash equivalents balance of approximately $91,000. Such working capital deficit included an aggregate of $4,250,000 in Convertible Debt, related accrued interest of approximately $1,184,000, and accounts payable totaling approximately $763,000 due to entities controlled by Mr. Egan (see Note 4, "Debt" and Note 8, "Related Party Transactions" for further details). Additionally, such working capital deficit included approximately $1,900,000 of net liabilities of discontinued operations, with a significant portion of such liabilities related to charges which have been disputed by the Company, and $200,000 of secured debt recently borrowed under the Revolving Loan Agreement.

Notwithstanding previous cost reduction actions taken by the Company and its decision to shutdown its unprofitable computer games and VoIP telephony services businesses in March 2007 (see Note 5, "Discontinued Operations" for further details), the Company continues to incur substantial consolidated net losses, although reduced in comparison with prior periods, and management believes that the Company will continue to be unprofitable in the foreseeable future. Based upon the Company's current financial condition, as discussed above, and without further advances from Dancing Bear under the aforementioned $500,000 Revolving Loan Agreement or the infusion of other additional capital, management does not believe that the Company will be able to fund its operations beyond the end of August 2008. Assuming that the remaining $100,000 that may be available under the Revolving Loan Agreement is loaned to the Company sometime around the end of August 2008, such borrowing would be expected to allow us to fund our operations for only a few weeks thereafter.

As more fully discussed in Note 3, "Proposed Sale of Tralliance and Share Issuance," on June 10, 2008, the Company announced that it had entered into a definitive agreement to sell substantially all of the business and net assets of its Tralliance Corporation subsidiary and to issue approximately 229,000,000 shares of its Common Stock to an entity controlled by Mr. Egan (the "Purchase Transaction"). Additionally, on June 10, 2008, the Company announced that Dancing Bear Investments, Inc., an entity controlled by Michael S. Egan, converted a portion of the Convertible Debt totaling $400,000 into 40,000,000 shares of the Company's Common Stock. Such conversion increased the ownership in the Company's Common Stock by Mr. Egan and certain family members and related parties (the "Egan Family") to approximately 51.25% and allows the Egan Family to control the vote on all corporate actions, including the Purchase Transaction (see Note 4, "Debt"), which was approved by written action dated July 9, 2008. In the event that the Purchase Transaction is consummated, all of the Company's remaining Convertible Debt, related accrued interest and accounts payable owed to entities controlled by Mr. Egan (which was approximately $6,200,000 at June 30, 2008) will be exchanged or cancelled. Consummation of the Purchase Transaction will not eliminate the Company's obligations related to the Revolving Debt.

Additionally, the consummation of the Purchase Transaction would also result in significant reductions in the Company's cost structure, based upon the elimination of Tralliance's operating expenses. Although substantially all of Tralliance's revenue would also be eliminated, approximately 10% of Tralliance's future net revenue through May 5, 2015 would be essentially retained through the contemplated net revenue earn-out provisions of the Purchase Transaction. Additionally, the consummation of the Purchase Transaction would increase Mr. Egan's beneficial ownership in the Company to approximately 77% (assuming exercise of all outstanding stock options and warrants) and would significantly dilute all other existing shareholders.

MANAGEMENT'S PLANS

Management expects that the consummation of the Purchase Transaction will significantly reduce the amount of net losses currently being sustained by the Company. However, management does not believe that the consummation of the Purchase Transaction will, in itself, allow the Company to become profitable and generate operating cash flows sufficient to fund its operations and pay its existing current liabilities (including those liabilities related to its discontinued operations) in the foreseeable future. Accordingly, assuming that the Purchase Transaction is consummated, management believes that additional capital infusions, including amounts significantly beyond the remaining $100,000 available under the Revolving Loan Agreement, will continue to be needed in order for the Company to continue to operate as a going concern.

Although management presently expects that the Purchase Transaction will be consummated, there can be no assurance that such closing will occur. In the event that the Purchase Transaction is not consummated, management expects that significantly more capital will need to be invested in the Company in the near term than would be required in the event that the Purchase Transaction is consummated. Also, inasmuch as substantially all of the assets of the Company and its subsidiaries secure the Convertible Debt and the Revolving Debt owed to entities controlled by Mr. Egan, in connection with any resulting proceeding to collect this debt, such entities could seize and sell the assets of the Company and it subsidiaries, any or all of which would have a material adverse effect on the financial condition and future operations of the Company, including the potential bankruptcy or cessation of business of the Company.

It is our preference to avoid filing for protection under the U.S. Bankruptcy Code. However, in order to continue operating as a going concern for any length of time beyond August of 2008, we believe that we must raise additional capital. Although there is no commitment to do so, any such funds would most likely come from Dancing Bear under the existing $500,000 Revolving Loan Agreement, or otherwise from Michael Egan or affiliates of Mr. Egan or the Company, as the Company currently has no access to credit facilities with traditional third parties and has historically relied upon borrowings from related parties to meet short-term liquidity needs. Any such equity capital raised would not be registered under the Securities Act of 1933 and would not be offered or sold in the United States absent registration requirements. Further, any securities issued (or issuable) in connection with any such capital raise will likely result in very substantial dilution of the number of outstanding shares of the Company's Common Stock.

The amount of capital required to be raised by the Company will be dependent upon a number of factors, including (i) whether or not the Purchase Transaction is consummated; (ii) whether ".travel" name registration net revenue levels are able to be increased; (iii) our ability to control and reduce operating expenses; and (iv) our ability to successfully settle disputed and other outstanding liabilities related to our discontinued operations. While the Company anticipates that the Purchase Transaction will be consummated in mid September 2008, there can be no assurance that the Purchase Transaction will be consummated nor that the Company will be successful in raising a sufficient amount of capital, executing any of its current or future business plans or in continuing to operate as a going concern on a long-term basis. The consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

(3) PROPOSED SALE OF TRALLIANCE AND SHARE ISSUANCE

On June 10, 2008, theglobe entered into a definitive agreement (the "Purchase Agreement") with The Registry Management Company, LLC ("Registry Management"), whereby theglobe will (i) sell the business and substantially all of the assets of its Tralliance Corporation subsidiary and (ii) issue 229,000,000 shares of its Common Stock to Registry Management (the "Purchase Transaction"). Registry Management is controlled by Michael S. Egan, theglobe's Chairman and Chief Executive Officer and principal stockholder and each of theglobe's two remaining Board members and executive officers, Mr. Edward A. Cespedes and Ms. Robin S. Lebowitz, have a minority interest in Registry Management.

As part of the consideration for the Purchase Transaction, Mr. Egan and certain of his affiliates, will exchange and surrender to theglobe all of their right, title and interest to (i) certain secured demand convertible promissory notes (the "2005 and 2007 Convertible Notes") in the aggregate outstanding principal amount of $4,250,000, together with all accrued and unpaid interest thereon (approximately $1,184,000 at June 30, 2008) and (ii) accrued and unpaid rent and miscellaneous fees due and outstanding as of the date of closing of the Purchase Transaction (approximately $763,000 at June 30, 2008).

As additional consideration, Registry Management will pay an earn-out to theglobe equal to 10% (subject to certain minimums) of Registry Management's "net revenue" (as defined) derived from ".travel" names registered by Registry Management from the date of closing through May 5, 2015. The minimum earn-out amount payable by Registry Management will be at least $300,000 in the first year, increasing by $25,000 in each subsequent year (pro-rated for the final year of the earn-out). The total net present value of the minimum earn-out payments is estimated to be approximately $1,300,000, bringing the total purchase consideration for the Purchase Transaction to approximately $7,600,000 (assuming that the Purchase Transaction closes in mid-September 2008).

Inasmuch as theglobe will be a shell company with no significant assets or business operations after the sale of Tralliance, as a condition to closing of the Purchase Transaction, theglobe will enter into Termination Agreements with theglobe's executive management providing for the termination of their existing employment agreements effective upon the closing of the Purchase Transaction. Notwithstanding the termination of their employment agreements, each such person is expected to remain on the Board of Directors and continue to hold their existing respective officer positions with theglobe. Further, effective on or shortly after the closing date of the Purchase Transaction, it is expected that theglobe will enter into a management services agreement with an affiliate of Mr. Egan whereby such affiliate will provide various managerial, financial, accounting and administrative services to theglobe for approximately $200,000 to $300,000 per annum. As a result, upon the closing of the Purchase Transaction, it is expected that theglobe's future operating expenses as a public shell company will consist primarily of expenses incurred under the Management Services Agreement and other customary public company expenses, including legal, audit and other miscellaneous public company costs.

On June 12, 2008, Mr. Michael S. Egan, the Chairman and CEO of theglobe, together with certain of his affiliates and other related parties, whom collectively are the record owners of approximately 51.25% of the issued and outstanding shares of theglobe Common Stock, the sole class of voting securities of theglobe, executed a written consent of the stockholders adopting the Purchase Agreement described above and approving the transactions contemplated thereby in accordance with Section 228 of Delaware Law. On July 9, 2008, the same stockholders further ratified their prior action of June 12, 2008 and approved anew the Purchase Transaction. The actions by written consent are sufficient to approve the Purchase Agreement and the other transaction contemplated by the Purchase Agreement without any further action or vote of the stockholders of theglobe.com

In connection with the Purchase Transaction, on July 25, 2008, theglobe filed a Definitive Information Statement and related Notice of Internet Availability of Information Statement (the "Notice") with the Securities and Exchange Commission, and shortly thereafter commenced mailing the Notice to its stockholders. The Company presently expects the Purchase Transaction to close in mid-September 2008.

(4) DEBT

Debt consists of notes payable due to related parties, as summarized below:

                                                    June 30, 2008     December 31, 2007

2008 Revolving Loan Notes due to affiliates        $       200,000   $                 -

2007 Convertible Notes due to affiliates; due on
demand                                                     850,000             1,250,000

2007 Convertible Notes due to affiliates; due on
demand                                                   3,400,000             3,400,000
                                                         4,450,000             4,650,000

LESS: Short-term portion                                 4,450,000             4,650,000

Long-term portion                                  $             -   $                 -

On June 6, 2008, Dancing Bear Investments, Inc. ("Dancing Bear"), an entity which is controlled by Michael S. Egan, the Company's Chairman and Chief Executive Officer, entered into a one year Revolving Loan Agreement with the Company pursuant to which the Company may, under certain conditions as described below, borrow up to a maximum of $500,000 from Dancing Bear. Additionally, on June 6, 2008, the Company borrowed an initial amount of $100 thousand and then on June 19, 2008 borrowed an additional $100 thousand, under the Revolving Loan Agreement. Subsequently, on July 10, 2008 and on August 6, 2008, the Company made additional borrowings of $100 thousand each under the Revolving Loan Agreement. During the remainder of the one year term of the Revolving Loan Agreement, the Company may make borrowing requests to Dancing Bear, and if such requests are approved by Dancing Bear, may borrow additional funds up to the $500,000 maximum limit under the Revolving Loan Agreement. All such funds borrowed may be prepaid in whole or in part, without penalty, at any time during the term of the Revolving Loan Agreement. The Company currently has no ability to repay this Loan. All unpaid borrowings, including accrued interest on borrowed funds at the rate of 10% per annum, are due and payable by the Company to Dancing Bear in one lump sum on the earlier of (i) June 6, 2009, or (ii) the occurrence of an event of default as defined in the Revolving Loan Agreement. All borrowings under the Revolving Loan Agreement are secured by a pledge of all of the assets of the Company and its subsidiaries, subordinate to existing liens on such assets related to the 2005 Convertible Notes and 2007 Convertible Notes.

Additionally, on June 10, 2008, Dancing Bear converted an aggregate of $400,000 of outstanding 2007 Convertible Notes due to them by the Company into an aggregate of 40,000,000 shares of the Company's Common Stock. Such conversion increased the ownership in the Company's Common Stock by Mr. Egan and certain family members and related parties (the "Egan Family") to approximately 51.25% and allows the Egan Family to control the vote on all corporate actions (see Note 3 "Proposed Sale of Tralliance and Share Issuance").

(5) DISCONTINUED OPERATIONS

In March 2007, management and the Board of Directors of the Company made the decision to cease all activities related to its Computer Games businesses, including discontinuing the operations of its magazine publications, games distribution business and related websites. The Company's decision to shutdown its computer games businesses was based primarily on the historical losses sustained by these businesses during the recent past and management's expectations of continued future losses. As of June 30, 2008, all significant elements of its computer games business shutdown plan have been completed by the Company, except for the resolution and payment of remaining outstanding accounts payables.

In addition, in March 2007, management and the Board of Directors of the Company decided to discontinue the operating, research and development activities of its VoIP telephony services business and terminate all of the remaining employees of the business. The Company's decision to discontinue the operations of its VoIP telephony services business was based primarily on the historical losses sustained by the business during the past several years, management's expectations of continued losses for the foreseeable future and estimates of the amount of capital required to attempt to successfully monetize its business. On April 2, 2007, theglobe agreed to transfer to Michael Egan all of its VoIP intellectual property in consideration for his agreement to provide the Security in connection with the MySpace litigation Settlement Agreement (See Note 7, "Litigation," for further discussion). The Company had previously written off the value of the VoIP intellectual property as a result of its evaluation of the VoIP telephony services business' long-lived assets in connection with the preparation of the Company's 2004 year-end consolidated financial statements. As of June 30, 2008, all significant elements of its VoIP telephony services business shutdown plan have been completed by the Company, except for the resolution of certain vendor disputes and the payment of remaining outstanding vendor payables.

Results of operations for the Computer Games and VoIP telephony services businesses have been reported separately as "Discontinued Operations" in the accompanying consolidated statements of operations for all periods presented. The assets and liabilities of the computer games and VoIP telephony services businesses have been included in the captions, "Assets of Discontinued Operations" and "Liabilities of Discontinued Operations" in the accompanying condensed consolidated balance sheets.

The following is a summary of the assets and liabilities of the discontinued operations of the computer games and VoIP telephony services businesses as included in the accompanying condensed consolidated balance sheets. A significant portion of the net liabilities of discontinued operations at June 30, 2008 relate to charges that have been disputed by the Company and for which estimates have been required.

                                                    June 30,     December 31,
                                                      2008           2007
      Assets:
      Computer Games
      Accounts receivable, net                      $       -   $       30,000
                                                            -           30,000
      VoIP Telephony Services                               -                -

      Total assets of discontinued operations       $       -   $       30,000



                                                June 30,      December 31,
                                                  2008            2007
Liabilities:
Computer Games
Accounts payable                               $    35,584   $       35,584
Subscriber liability, net                            4,989            5,397
                                                    40,573           40,981
VoIP Telephony Services
Accounts payable                                 1,595,845        1,632,653
Other accrued expenses                             228,710          228,710
                                                 1,824,555        1,861,363

Total liabilities of discontinued operations   $ 1,865,128   $    1,902,344

Summarized results of operations financial information for the discontinued operations of our computer games and VoIP telephony services businesses was as follows:

                                        Three Months Ended June 30,         Six Months Ended June 30,
                                          2008              2007             2008             2007

Computer Games:
Net revenue                          $       21,695    $        19,916   $     21,695    $       608,415

Income (Loss) from operations, net
of tax                               $       21,695    $       218,218   $     17,789    $      (146,256 )

VoIP Telephony Services
Net revenue                          $            -    $           256   $          -    $           630

 Income (Loss) from operations,
net of tax                           $         (700 )  $       (61,194 ) $      4,171    $      (857,756 )

The Company has estimated the costs expected to be incurred in shutting down its computer games and VoIP telephony services businesses and has accrued charges as of June 30, 2008, as follows:

                                       Contract
                                      Termination      Purchase       Other
Computer Games Division                  Costs        Commitment      Costs        Total

Shut-Down costs expected to be
incurred                             $           -   $          -   $   24,235   $   24,235

Included in liabilities:
Charged to discontinued operations   $     115,000   $    106,000   $   24,235      245,235
Payment of costs                                 -              -      (24,235 )    (24,235 )
Settlements credited to
discontinued operations                   (115,000 )     (106,000 )          -     (221,000 )
                                     $           -   $          -   $        -   $        -



                                                    Contract
                                                   Termination
VoIP Telephony Services Division                      Costs

Shut-Down costs expected to be incurred           $     416,466

Included in liabilities:
Charged to discontinued operations                      428,966
Payment of costs                                  $     (61,000 )
Settlements credited to discontinued operations         (12,500 )
                                                  $     355,466

Net current liabilities of discontinued operations at June 30, 2008 include accounts payable and accruals totaling $355,466 related to the estimated shut-down costs summarized above.

(6) STOCK OPTION PLANS

We have several stock option plans under which nonqualified stock options may be granted to officers, directors, other employees, consultants and advisors of the Company. In general, options granted under the Company's stock option plans expire after a ten-year period and generally vest no later than three years from the date of grant. 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. As of June 30, 2008, there were approximately 7,383,000 shares available for grant under the Company's stock option plans.

No stock options were granted by the Company during the six months ended June 30, 2008. A total of 100,000 stock options were granted during the six months ended June 30, 2007, with a weighted-average fair value of $0.07. There were no stock option exercises during the six months ended June 30, 2008 and 2007.

Stock option activity during the six months ended June 30, 2008 was as follows:

                                                                   Weighted
                                                               Average Exercise
                                            Total Options           Price
    Outstanding at December 31, 2007             16,340,660   $             0.40
    Granted                                               -
    Exercised                                             -
    Canceled                                       (739,500 )               0.39
    Outstanding at June 30, 2008                 15,601,160   $             0.41
    Options exercisable at June 30, 2008         15,357,417   $             0.41

The weighted-average remaining contractual terms of both stock options outstanding and stock options exercisable at June 30, 2008 was 5.7 years. The aggregate intrinsic value of both options outstanding and stock options exercisable at June 30, 2008 was $0.

. . .