UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934.
February 2, 2004 0-25053
------------------------------------------------ ----------------------
Date of Report (Date of earliest event reported) Commission File Number
THEGLOBE.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware 14-1782422
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
110 East Broward Boulevard ,Suite 1400
Fort Lauderdale, Florida 33301
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(954) 769-5900
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Preliminary Note: This Report contains financial information and includes
forward-looking statements related to theglobe.com, inc. that involve risks and
uncertainties, including, but not limited to, integration of newly acquired
businesses, product delivery, product launch dates, risks relating to the
Internet, further development of acquired technology, the availability of
financing or other capital to fund its plans and operations, the management of
growth, market acceptance of certain products, the Company's ability to compete
successfully against established competitors with greater resources, the
uncertainty of future governmental regulation and other risks. These
forward-looking statements are made in reliance on the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. For further information
about these and other factors that could affect theglobe.com's future results,
please see the Company's filings with the Securities and Exchange Commission.
Prospective investors are cautioned that forward-looking statements are not
guarantees of performance. Actual results may differ materially and adversely
from management expectations. Copies of these filings are available online at
http://www.sec.gov. Prospective investors are cautioned that forward-looking
statements are not guarantees of performance and actual results may, and often
do, differ adversely from these forward-looking statements.
Item 5. Other Events and Regulation FD Disclosure
Bridge Financing
On February 2, 2004, Michael S. Egan (our Chairman and Chief Executive Officer)
and his wife, S. Jacqueline Egan, entered into a Note Purchase Agreement with
the Company pursuant to which they acquired convertible promissory notes (the
"Bridge Notes") in the aggregate principal amount of $2,000,000. The Bridge
Notes are convertible at anytime into shares of the Company's common stock at an
initial rate of $.98 per share. The conversion rate will be adjusted to an
amount equal to the rate at which the Company sells its common stock in any
subsequent qualified private offering (defined as an offering which raises a
minimum of $7.5 million) (or at a 20% discount to such amount, depending upon
the timing of completion, and amount of, such private offering). Assuming the
conversion of the Bridge Notes at the initial conversion rate, and without
regard to the potential anti-dilutive adjustments described below, approximately
2,041,000 shares of common stock would be issued. The Bridge Notes are due on
demand from the holder, and are secured by a pledge of substantially all of the
assets of the Company. Such security interest is shared with the holders of the
Company's Secured Convertible Notes in the principal amount of $1,750,000 issued
on May 22, 2003 to various entities affiliated with Michael S. Egan. The Bridge
Notes bear interest at the rate of ten (10) percent per annum.
In addition, the Egans were issued a warrant to acquire 204,082 shares of
theglobe.com common stock at an exercise price of $1.22 per share (the "Warrant"
and together with the Convertible Notes, the "Bridge Investment"). The Warrant
is exercisable at any time on or before February 2, 2009. The Egans are entitled
to certain demand and piggy-back registration rights in connection with their
investment. The conversion price of the Bridge Note and the exercise price of
the Warrant (together with the number of shares for which such Warrant is
exercisable) is subject to adjustment upon the occurrence of certain events,
including with respect to the Bridge Notes only downward adjustment on a
weighted-average basis in the event the Company should issue securities in the
future at a purchase price below the conversion price of the Bridge Notes.
The Company intends to use the proceeds from the sale of the Bridge Notes for
its general working capital requirements. The Bridge Investment is intended to
provide the Company with temporary liquidity to conduct its business while it
seeks to raise additional capital. The Company intends to undertake a private
offering of its equity securities in the near future, which offering will not be
registered under the Securities Act of 1933 but will be conducted in accordance
with an exemption from such registration. That offering will be limited solely
to "accredited investors" and will entitle the purchasers thereof to certain
registration rights.
As of December 31, 2003, our sole source of liquidity consisted of approximately
$1.1 million of cash and cash equivalents and $.2 million of marketable
securities. We currently do not have access to any other sources of funding,
including debt and equity financing facilities. The Company has limited
operating capital and no current access to credit facilities. We have incurred
substantial losses since our inception and we expect that we will continue to
incur net losses for the foreseeable future. The Company will require
significant additional equity capital in order to meet its projected ongoing
operational needs, including fully launching and expanding our VoIP operations.
We intend to seek to raise additional funds, primarily through equity or debt
financings, but could also seek to raise capital through asset sales, strategic
relationships or other arrangements. The terms of the security agreements
relating to the Bridge Notes and the Convertible Notes restrict the Company's
ability to sell or pledge assets without the consent of the holders of such
Notes. Any new financing will likely dilute existing shareholders significantly.
We cannot assure you that any financing obtained will be available on reasonable
terms, or at all. Our failure to raise additional capital when needed would have
a material adverse effect on our business, results of operations and financial
condition and could cause us to curtail or suspend operations. Absent additional
financing, in the event demand is made for repayment of the Bridge Notes, the
Company will not have the resources to repay the Bridge Notes.
(c) Exhibits
4.1 Form of Warrant dated February 2, 2004 to acquire an aggregate of 204,082
shares of theglobe.com Common Stock.
4.2 Form of Convertible Promissory Note
4.3 Form of Security Agreement
99.1 Note Purchase Agreement dated February 2, 2004 between thegloble.com, inc.
and Michael S. Egan and S. Jacqueline Egan.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 2, 2004 theglobe.com, inc.
By: /s/ Edward Cespedes
-------------------------------------
Edward Cespedes, President
EXHIBIT INDEX
Exhibit No. Document Description
----------- --------------------
4.1 Form of Warrant dated February 2, 2004 to acquire an aggregate of
204,082 shares of theglobe.com Common Stock.
4.2 Form of Convertible Promissory Note
4.3 Form of Security Agreement
99.1 Note Purchase Agreement dated February 2, 2004 between
thegloble.com, inc. and Michael S. Egan and S. Jacqueline Egan.