Thursday, 12 May 2005

".travel" contract signed. Contractor sold.

ICANN signed a contract with Tralliance Corp. on 5 May 2005 to operate a ".travel" sponsored top-level Internet domain (sTLD), and today TheGlobe.com (a/k/a Voiceglo.com) exercised its option to purchase Tralliance Corp., according to a press release today from TheGlobe.com (you may have to register to view the release unless you navigate to it via Google News):

Tralliance Corporation signed a contract on May 5, 2005, with the Internet Corporation for Assigned Names and Numbers (ICANN), to be the registry for the .travel (dot travel) sponsored top level Internet domain name that will be for exclusive use of the travel and tourism industry. The designation of Tralliance Corporation as the .travel Registry concludes a four year process. Tralliance Corporation will oversee policies and procedures for authentication, registration and administrative support services, worldwide, for the travel industry's own top level domain.

There are many strange thing about this press release.

The press release says that Tralliance (i.e. TheGlobe.com now that it has acquired Tralliance) will "oversee policies" for ".travel", but Tralliance had claimed to ICANN in its application that those policies were to be set by a nominally-independent (although insolvent and financially dependent on Tralliance or other unnamed parties) entity, the Travel Partnership Corporation .

The press release doesn't mention that ICANN's decision to approve the agreement is subject to my pending request under ICANN's bylaws that it be referred to an independent review panel (IRP) to determine whether it was made in a manner consistent with ICANN's bylaws, which require that, "ICANN and its constituent bodies shall operate to the maximum extent feasible in an open and transparent manner".

Nor does the release mention that on 8 April 2005, well before the contract was signed on 5 May 2005, I asked for a stay of ICANN's "approval" of this agreement by the IRP, and asked ICANN itself to stay its action (which it clearly didn't do) pending the recommendation of the IRP on my request for a stay.

The portion of the (draft?) ICANN-Tralliance agreement that was published by ICANN on 24 March 2005 provides that:

Registry [i.e. Tralliance] may assign this Agreement as part of the transfer of its registry business if such transfer and assignment are approved in advance by ICANN in accordance with its procedures.

The press release today from TheGlobe.com does not mention whether such a request was made, or whether it was approved by ICANN. But it seems unlikely that TheGlobe.com would take the financial risk of exercising its option without having this approval from ICANN in hand. That strongly suggests either that ICANN had made an invalid secret "decision" on such a request (in violation of several of ICANN's bylaws), or that Tralliance and/or TheGlobe.com had received such strong informal assurance from someone at ICANN that the deal would be approved that they were willing to rely on that assurance in making their decision to exercise buy Tralliance (which has essentially no assets except its "franchise" from ICANN to run ".travel").

I attempted to ask ICANN about this at the press conference held by ICANN during its meeting in Mar del Plata, Argentina, on 5 April 2005, but I was not given access to the press conference, and my follow-up enquiries have not been answered.

Most of the documents and records related to ICANN's decision remain secret, despite my explicit requests for them and ICANN's bylaws requiring that they be released to "the maximum extent feasible".

ICANN itself has not announced the signing of the agreement with Tralliance, and has made no response whatsoever -- neither publicly nor to me -- to my requests more than a month ago for independent review and stay.

Link | Posted by Edward on Thursday, 12 May 2005, 13:19 ( 1:19 PM) | TrackBack (2)
Comments

I have the answer to the question, "Who will ultimately own and control the dot travel registry?" You observed that after ICAAN's secret decision to grant this registry to Tralliance, theglobe.com exercised it's option to acquire Tralliance. Tralliance was a joint venture between theglobe.com and the people that ran Tralliance in that theglobe.com financed Tralliance in the first place. Why? Theglobe.com is controlled by Michael Egan, majority stockholder and Chairman. Mr. Egan also owns and operates "Certified Vacations, Inc" which is located in the same office building and the same office as theglobe.com. Now, while theglobe.com is an OTCBB publicly traded company (TGLO) Egan directly or through companies he controls has approximately 60% of the stock. Theglobe.com lost approximately 24.2 million in 2004 and has huge ongoing losses due to their involvement in a Voice over Internet (VoIP) wholly owned subsidary Voiceglo. There was the "ongoing business" warning with the 2004 financials, stating that if additional financing was not found, there was a very good probability that operations would cease. They stated that as of early May 2005 there was only about 3 million in cash left from the 28 million they raised in a private placement in March 2004. Their 2004 financials were finally filed 3/31/05, and three weeks later they announced that Mike Egan and Edward Cespedes who control E&C Capital, had "loaned" $1.5 million dollars to theglobe.com for operating capital. Theglobe.com is controlled by Messrs Egan and Cespedes and so is E&C Capital. There was an "option" for E&C Capital to loan an additional $2.5 million to the globe.com. Thus the Lenders and the Borrowers are the same people. The "Lenders" drove a hard bargin because the "Note" given to the Lenders gave them 10% interest, ability to call the note on 5 days notice, the note would be due if Bankruptcy was filed, and the note gave as security all the assets of theglobe.com and all the subsidary companies which now include Tralliance. There was no guarantee that E&C would be obligated to loan the additional $2.5 million, only an option. Also the note could be converted into 80 million shares of common stock. (there is 175 million shares now) but why would you convert your note into stock when you can call your note when the company runs out of cash and end up owning all of the assets of theglobe.com for making a $1.5 million dollar loan. That "event" announced 4/22 is covered in an 8K filing 4/26. Subsequently they released Q-1 financials showing huge losses and re-stating the "ongoing business" statements. Also in this just released first quarter report in the Managment discussion is the mention that the $2.5 million dollar additional loan may not be available and that all of the assets of theglobe.com and subsidaries are used as collateral for the $1.5 million dollar note loan of 4/22. Ongoing costs to operate their VoIP business and losses in their other businesses almost guarantee theglobe.com will become insolvent shortly and E&C Capital will end up with all the assets, including Tralliance. Thus Mike Egan who owns Certified Vacations, a privately owned Travel Company, will end up controlling the dot travel registry.

I am a former sharholder of theglobe.com, buying stock at $1.50 per share in 2003 when they were hyping their VoIP business. The 28 million dollar private placement and Egan and Cespedes converted all their options and various series of Preferred Stock at the same time, causing a 240% dilution. The stock was trading at about $1.25 in March 2004 when they announced this dilution and by May 2004 the stock hit $.04. I lost 90% of my investment and have been following their manipulations and violations of Corporate Governance of a Public Company ever since. Read the filings and documents, you cannot come to any other conclusion. Egan and Cespedes took theglobe.com public in 1998 and it was the highest flying dot com IPO of 1998 and became the "dot bomb" posterchild in 2000-2001. There are still 6 major unsettled class action lawsuits pending and being defended by their insurance carriers. I predict this company will be in Chapter 7 and all assets including the dot travel registry will be directly controlled by Messrs Egan and Cespedes as E&C Capital. Bob Sterling, a very disappointed former TGLO stockholder.

Posted by: Bob Sterling, 14 May 2005, 18:06 ( 6:06 PM)
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