THEGLOBE COM INC 10-K

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview As a shell company, we currently have no material operations or assets. Basis of Presentation of 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 in the foreseeable future. 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 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. All Note references relate to accompanying Notes to Financial Statements. Results of Operations Year Ended December 31, 2020 Compared to Year Ended December 31, 2019 Net Revenue Commensurate with the sale of our Tralliance business on September 29, 2008, we became a shell company, and have not had any material operations since then. As a result, net revenue was $0 for both of the years ended December 31, 2020 and 2019. General and Administrative General and administrative expenses include only those customary public company expenses, including outside legal and audit fees, insurance and other related public company costs. General and administrative expenses totaled approximately $118,000 for the year ended December 31, 2020 and $178,000 for the year ended December 31, 2019. The decrease was due to less legal fees and no proxy mailing fees in the current year as compared to prior year. 7 Related Party Interest Expense Related party interest expense for the years ended December 31, 2020 and 2019 was approximately $46,000 and $34,000, respectively, and consisted of interest due and payable to Delfin under the Bridge Note. The increase is due to an increase in the amount of money borrowed from Delfin. Net Loss Net loss for the year ended December 31, 2020 was approximately $164,000 as compared to a net loss of approximately $211,000 for the year ended December 31, 2019. Liquidity and Capital Resources 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. 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, and then again in February 2021 to increase the principal amount to up to $637,500 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. The Company expects continued funding from Delfin over the next twelve months. Delfin, the Company’s majority stockholder, has continued to fund the Company through loans to the Company (see Note 3). 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. Cash Flow Items Year Ended December 31, 2020 Compared to Year Ended December 31, 2019 As of December 31, 2020, we had $7,624 in cash as compared to $86,961 as of December 31, 2019. The decrease is due to timing of funding. We receive funding, then use most of those funds prior to receiving more funding. Net cash flows used in operating activities totaled approximately $125,000 for the year ended December 31, 2020 compared to cash flows used in operating activities of approximately $173,000 for the year ended December 31, 2019. 8 Net cash flows provided by financing activities totaled approximately $46,000 for the year ended December 31, 2020 compared to $254,000 for the year ended December 31, 2019. The decrease was due in part to timimg of funding, but also due to a significant decrease in legal costs, requiring less cash. Contractual Obligations As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we have elected scaled disclosure reporting and therefore are not required to provide the table required by (a)(5) of this Item. Off-Balance Sheet Arrangements As of December 31, 2020, we did not have any material off-balance sheet arrangements that have or are reasonably likely to have a material effect on our current or future financial condition, revenues or expenses, results of operations, liquidity, or capital resources. Effects of Inflation Management believes that inflation has not had a significant effect on our results of operations during 2020 and 2019. Critical Accounting Policies and Estimates The preparation of our financial statements in conformity with accounting principles generally accepted in the U.S. 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. These include valuations 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 our financial statements or do not apply to our operations. Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we have elected scaled disclosure reporting and therefore are not required to provide the information required by this Item. 9