Item 1. BUSINESS
DESCRIPTION
OF BUSINESS
General
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 (“Tralliance Registry Management”), 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.
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 December 31, 2020, as reflected in
our accompanying Balance Sheet, our current liabilities exceed our total assets. 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 for any significant length of time in the future. Notwithstanding
the above, we currently intend to continue operating as a public company and make all the requisite filings under the Exchange
Act.
EMPLOYEES
As of March 1, 2021, we had no employees.
Our executive officer currently devotes very limited time to our business and receives no compensation from us. Our executive officer
is an officer, director and/or stockholder of other companies which may have ongoing business relationships with the Company. See
the section in this annual report entitled “Item 1A. Risk Factors—Our management may have other interests that may
conflict with the interests of our stockholders.”
Item 1A. RISK
FACTORS
Risks Relating to Our Business
We may not be able to continue as a going concern.
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 we be unable to continue as a going concern. However, for the reasons described below, we do 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 addition, our independent registered public accounting firm has issued a report that included an explanatory paragraph referring
to our significant net losses, working capital deficit and need to raise additional capital, which as it noted raised substantial
doubt about our ability to continue as a going concern.
Delfin Midstream LLC (“Delfin”),
the Company’s majority stockholder, has continued to fund the Company through loans to the Company. See the section of this
annual report entitled “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
– Liquidity and Capital Resources.” At December 31, 2020, the Company had a net working capital deficit of approximately
$707,000. This deficit included accrued expenses of approximately $24,000, accounts payable of approximately $2,000 and approximately
$689,000 in principal and accrued interest owed under the Promissory Note with Delfin.
On a short term liquidity basis, we must
receive capital contributions or loans from Delfin or its affiliates in order to continue as a going concern. We prefer to avoid
filing for protection under the U.S. Bankruptcy Code. However, based upon our current financial condition as discussed above, we
believe that we will need to raise additional debt or equity capital in order for us to continue to operate as a going concern
on a long-term basis. Any such capital would likely come from Delfin, as we currently have no access to credit facilities and have
traditionally relied on borrowings from related parties to meet short-term liquidity needs. Any equity capital raised may result
in substantial dilution in the number of outstanding shares of our common stock, par value $0.001 per share (“Common Stock”).
We intend to use the proceeds from the 2018 Promissory Note and seek other loans from Delfin and related entities, if necessary,
to fund our public company operating costs while we explore our options related to the future of theglobe.
Through December 2020, we borrowed a total
of $600,000 under an amended and restated promissory note from Delfin, which was increased to $637,500 in February 2021.
The
coronavirus (COVID-19) pandemic and its impact on debt and equity markets could have a material adverse effect on our financial condition
and ability to operate as a going concern.
In December 2019, a novel strain of coronavirus (COVID-19) was
reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout other parts of the world, including
the United States. The outbreak of the coronavirus has resulted in a widespread health crisis and has adversely affected the economies
and financial markets worldwide, business operations and the conduct of commerce generally. In particular, the global capital markets
are experiencing and may continue to experience periods of disruption and instability, which could be prolonged and which could
materially and adversely impact the broader financial and credit markets. Such disruption could have a material adverse effect
on our ability to raise additional funds through the offering of debt or equity securities, which in turn could impact our ability
to operate as a going concern beyond the next twelve months
Our management may have other interests that may conflict
with the interests of our stockholders.
Mr. Jones became our Chief Executive Officer
in 2018. Mr. Jones currently serves as the Chief Executive Officer of Fairwood, which is a material stockholder of Delfin, our
controlling stockholder. Mr. Jones is a material stockholder of Delfin and also maintains directorships, investments and participations
with and in other companies and entities, including those that may be involved in the gas and/or energy business. Although there
are currently no relationships between the Company and these entities, Mr. Jones, due to his relationship with such entities, will
have an inherent conflict of interest in making any decision related to transactions between the related entities and the Company.
Furthermore, since Mr. Jones is also the sole member of our Board of Directors (the “Board”), our Board presently is
not “independent.” In the event that we have independent directors in the future, we intend to review related party
transactions on a case-by-case basis.
We currently have no business operations and are a shell
company.
Immediately following the closing of the
Tralliance Purchase Transaction, we became a shell company with no material operations or assets, and no source of revenue other
than under the “net revenue” earn-out arrangement with Tralliance Registry Management. We expect that our future operating
expenses as a public shell company will consist primarily of customary public company expenses, including legal, audit and other
miscellaneous public company costs which will need to be paid by Delfin. In addition, our lack of operations, assets and current
prospects makes it difficult for investors to evaluate our future performance.
We may require additional financing to maintain our reporting
requirements and administrative expenses.
We have no meaningful revenues and are dependent
on our cash on hand to fund the costs associated with the reporting obligations under the Exchange Act, and other administrative
costs associated with our corporate existence. For the years ended December 31, 2020 and 2019, we incurred net losses of $163,836
and $211,374, respectively. General and administrative expenses include customary public company expenses, including outside legal
and audit fees, insurance and other related public company costs. We do not expect to generate any revenues unless and until we
commence business operations. In the past, we relied on funding from affiliated creditors and we may need additional funding beyond
those sources to continue as a going concern. In the event that our available funds prove to be insufficient, we will be required
to seek additional financing. Our failure to secure additional financing could have a material adverse effect on our ability to
pay the legal and audit fees and other administrative costs in order to continue to fulfill our reporting obligations. We do not
have any arrangements with any bank or financial institution to secure additional financing and such financing may not be available
on terms acceptable and in our best interests, if at all.
We may suffer adverse consequences if we are deemed an
investment company under the Investment Act of 1940 and we may incur significant costs to avoid investment company status.
We do not believe that we are an “investment
company” as defined by the Investment Company Act of 1940. If the Securities and Exchange Commission, or SEC, or a court
were to disagree with us, we could be required to register as an investment company. This would negatively affect our ability to
consummate a potential acquisition of an operating company, subjecting us to disclosure and accounting guidance geared toward investment,
rather than operating companies; limiting our ability to borrow money, issue options, issue multiple classes of stock and debt,
and engage in transactions with affiliates; and requiring us to undertake significant costs and expenses to meet disclosure and
regulatory requirements to which we would be subject as a registered investment company.
Risks Relating to Our Common Stock
We are controlled by our majority stockholder, which may
limit the ability of our other stockholders to influence future corporate action.
As of December 31, 2020, our majority stockholder,
Delfin Midstream LLC, holds approximately 70.9% of the issued and outstanding shares of our Common Stock. Accordingly, Delfin continues
to be in a position to control the vote on all corporate actions in the future.
The delisting of our Common Stock makes it more difficult
for investors to sell shares.
The shares of our Common Stock were delisted
from the NASDAQ national market in April 2001 and are now traded in the over-the-counter market on what is commonly referred to
as the electronic bulletin board or “OTCBB.” As a result, an investor may find it more difficult to dispose of or obtain
accurate quotations as to the market value of the securities, if at all. The delisting has made trading our shares more difficult
for investors. It has also made it more difficult for us to raise additional capital. We may also incur additional costs under
state blue-sky laws if we sell equity due to our delisting.
We do not currently intend to pay dividends on our Common
Stock and, consequently, the ability of our stockholders to achieve a return on their investment in our Common Stock will depend
on appreciation in the price of our Common Stock.
We do not expect to pay cash dividends on
our Common Stock. Any future dividend payment is within the absolute discretion of our Board and will depend on, among other things,
our results of operations, working capital requirements, capital expenditure requirements, financial condition, contractual restrictions,
business opportunities, anticipated cash needs, provisions of applicable law and other factors that our Board may deem relevant.
We may not generate sufficient cash from operations in the future to pay dividends on our Common Stock. As a result, the success
of an investment in our Common Stock will depend on future appreciation in its value. The price of our Common Stock may not appreciate
in value or even maintain the price at which our stockholders purchased shares. If our Common Stock does not appreciate in value,
investors could suffer losses in their investment in our Common Stock.
Our Common Stock is subject to certain “penny stock”
rules which may make it a less attractive investment.
Since the trading price of our Common Stock
is less than $5.00 per share and our net tangible assets are less than $2.0 million, trading in our Common Stock is subject to
the requirements of Rule 15g-9 of the Exchange Act. Under Rule 15g-9, brokers who recommend penny stocks to persons who are not
established customers and accredited investors, as defined in the Exchange Act, must satisfy special sales practice requirements,
including requirements that they make an individualized written suitability determination for the purchaser; and receive the purchaser’s
written consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also requires
additional disclosures in connection with any trades involving a penny stock, including the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the risks associated with that market. Such requirements
may severely limit the market liquidity of our Common Stock and the ability of purchasers of our equity securities to sell their
securities in the secondary market. For all of these reasons, an investment in our equity securities may not be attractive to our
potential investors.
As a shell company, we are subject to more stringent reporting
requirements.
We have no or nominal operations and assets,
and pursuant to Rule 405 and Exchange Act Rule 12b-2, we are a shell company. Applicable securities rules prohibit shell companies
from using a Form S-8 to register securities pursuant to employee compensation plans. However, the rules do not prevent us from
registering securities pursuant to certain other registration statements. Additionally, Form 8-K requires shell companies to provide
more detailed disclosure upon completion of a transaction that causes it to cease being a shell company. To the extent we acquire
a business in the future, we must file a current report on Form 8-K containing the information required in a registration statement
on Form 10, within four business days following completion of the transaction together with financial information of the private
operating company. In order to assist the SEC in the identification of shell companies, we are also required to check a box on
Form 10-Q and Form 10-K indicating that we are a shell company. To the extent that we are required to comply with additional disclosure
because we are a shell company, we may be delayed in executing any mergers or acquiring other assets that would cause us to cease
being a shell company.
Rule 144 is not generally available to holders of our
Common Stock which makes it difficult to resell shares in the future.
With limited exceptions related to restrictive
securities acquired before we became a “shell company,” holders of our restricted securities are limited in their ability
to resell their securities pursuant to Rule 144. Preclusion from the use of the resale exemption from registration afforded by
Rule 144 may make it more difficult for us to sell equity securities in the future, and for stockholders to resell their restricted
securities.
Our need for capital may create additional risks and create
dilution to existing stockholders.
As mentioned above, we will need to raise
additional capital in the future, which may be funded from unrelated third party sources, including the incurring of debt and/or
the sale of additional equity securities. In addition, we may require additional financing to fund working capital and operating
losses in the future should the need arise. The incurrence of debt creates additional financial leverage and therefore an increase
in the financial risk of our operations. The sale of additional equity securities may be dilutive to the interests of our current
stockholders. In addition, there can be no assurance that such additional financing, whether debt or equity, will be available
to us or that it will be available on acceptable commercial terms. Any inability to secure such additional financing on acceptable
terms could have a materially adverse impact on our business, financial condition and operating results.
