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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.
June 1, 2005 0-25053
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Date of Report (Date of earliest event Commission File Number
reported)
THEGLOBE.COM, INC.
(Exact name of registrant as specified in its charter)
Delaware 14-1782422
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
110 East Broward Boulevard ,Suite 1400
Fort Lauderdale, Florida 33301
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(Address of Principal Executive Offices) (Zip Code)
(954) 769-5900
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(Registrant's telephone number, including area code)
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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,
including our annual report on Form 10-KSB for the fiscal year ended December
31, 2004 and our quarterly report on Form 10-Q for the fiscal quarter ended
March 31, 2005. 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 3.02. Unregistered Sales of Equity Securities.
Convertible Note Financing
On April 22, 2005, E&C Capital Partners, LLLP and E&C Capital Partners II, Ltd.
(collectively, the "Noteholders") entered into a Note Purchase Agreement with
the Company pursuant to which they acquired convertible promissory notes (the
"Convertible Notes") in the aggregate principal amount of $1,500,000, together
with an option to acquire an additional $2,500,000 of convertible Notes on or
before July 22, 2005 (the "Option"). We filed a Current Report on Form 8-K on
April 26, 2005, relating to the initial issuance of the Convertible Notes. On
June 1, 2005, the Noteholders exercised a portion of the Option and acquired an
additional $1,500,000 of the Convertible Notes. Accordingly, as of June 1, 2005
each Noteholder held Convertible Notes with an aggregate principal amount of
$1,500,000 and held an Option to acquire up to $500,000 in additional
Convertible Notes.
The Noteholders are controlled by our Chairman, Michael Egan. The Convertible
Notes are convertible at anytime prior to payment into shares of the Company's
common stock at the rate of $.05 per share. Assuming the Option is fully
exercised and all Convertible Notes are thereafter converted at the initial
conversion rate, and without regard to the potential anti-dilutive adjustments
described below, approximately 80,000,000 shares of common stock could be
issued. The Convertible Notes are due 5 days after demand from the holder, and
are secured by a pledge of all of the assets of the Company and its
subsidiaries. The Convertible Notes bear interest at the rate of ten (10)
percent per annum.
The Convertible Notes were not registered under applicable securities laws and
were sold in reliance on an exemption from such registration. Each of the
Noteholders is an "accredited investor" and the Company believes that the
issuance and sale of the Convertible Notes qualified for an exemption from
registration pursuant to Section 4(2) of the Securities Act of 1933.
The Noteholders are entitled to certain demand and piggy-back registration
rights in connection with their investment. The conversion price of the
Convertible Notes is subject to adjustment upon the occurrence of certain
events, including with respect to stock splits or combinations.
The Company intends to use the proceeds from the sale of the Convertible Notes
for general working capital. The proceeds are intended to provide the Company
with temporary liquidity to conduct its business while it seeks to raise
additional capital, including with respect to the potential sale of one or more
of the Company's subsidiaries, including SendTec.
Absent additional financing, in the event demand is made for repayment of the
Convertible Notes, the Company will not have the resources to repay the
Convertible Notes. Inasmuch as substantially all of the assets of the Company
and its subsidiaries secure the Convertible Notes, in connection with any
resulting proceeding to collect the indebtedness relating to the Convertible
Notes, the Noteholders could seize and sell the assets of the Company and its
subsidiaries, any or all of which would have a material adverse effect on the
Company and its operations.
Item 9.01 Financial Statements and Exhibits
(a)(b) None
(c) Exhibits
4.1 Form of Secured Demand Convertible Promissory Note. (1)
4.2 Security Agreement dated April 22, 2005 by and theglobe.com, inc. and
certain other parties named therein. (1)
4.3 Unconditional Guaranty Agreement dated April 22, 2005. (1)
10.1 Note Purchase Agreement dated April 22, 2005 between thegloble.com, inc.
and certain named investors. (1)
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(1) Incorporated by reference to the exhibits filed as part of our Current
Report on Form 8-K dated April 26, 2005.
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: June 2, 2005 theglobe.com, inc.
By: /s/ Edward Cespedes
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Edward Cespedes, President
EXHIBIT INDEX
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Exhibit
No. Document Description
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4.1 Form of Convertible Promissory Note. (1)
4.2 Security Agreement dated April 22, 2005 by and theglobe.com, inc. and
certain other parties named therein. (1)
4.3 Unconditional Guaranty Agreement dated April 22, 2005. (1)
10.1 Note Purchase Agreement dated April 22, 2005 between thegloble.com, inc.
and certain named investors. (1)
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(1) Incorporated by reference to the exhibits filed as part of our Current
Report on Form 8-K dated April 26, 2005.