UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-QSB
 
 [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934
 
   
 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934
 
  
 
  
 COMMUNICATE.COM INC.
  
 Nevada   33-0786959
 (State or other jurisdiction of                    (IRS Employer
 incorporation or organization)              Identification Number)
 
 #600  1100 Melville Street, Vancouver, B.C. V6E 4A6
 (Address of principal executive offices)
 
 (604) 697-0136
 (Issuer's telephone number)
 
 APPLICABLE ONLY TO CORPORATE ISSUERS
 
 State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.
 
 Common Stock  14,741,339 shares outstanding
 $.001 Par Value  as of May 14, 2004
 
 Transitional Small Business Disclosure Format (Check one): Yes [   ] No [X]
 
 
 Page - 1 
 COMMUNICATE.COM INC.
 REPORT ON FORM 10-QSB
 QUARTER ENDED MARCH 31, 2004
 TABLE OF CONTENTS
 
 PART I.  Financial Information
 
 Item 1.  Financial Statements
 
 Balance sheets as of March 31, 2004 and December 31, 2003
 Statements of Operations as of March 31, 2004 and March 31, 2003
 Statements of Cash Flows as of March 31, 2004
 Notes to the Financial Statements
 
 Page - 2
  
  Page - 3
   Item 2.  Management's discussion and analysis of financial condition and results of operations
 
 Item 3.  Controls and Procedures.
 
 
 PART II.   Other Information
 
 Item 1.  Legal Proceedings.
 
 Item 2.  Changes in Securities.
 
 Item 3.  Defaults Upon Senior Securities.
 
 Item 4.  Submission of Matters to a Vote of Security Holders.
 
 Item 5.  Other Information.
 
 Item 6.  Exhibits and Reports on Form 8-K.
 
 Signatures
 
 Certifications
 
 Page - 4 
 PART I
 
 
 Item 1: Financial Statements.
 
 The response to Item 1 has been submitted as a separate section of this Report beginning on page F-1.
 
 
 Item 2: Managements discussion and analysis of financial condition and results of operations
 
 Registrant, through its majority-owned subsidiaries, Domain Holdings, Inc. (DHI, formerly Communicate.com Inc.) and FrequentTraveller.com Inc.(FT) (together the "Subsidiaries"), is involved in businesses that exploit commercial uses of the Internet. The Subsidiaries market and license a portfolio of domain names, 25 of which generate high amounts of internet traffic because of, among other things, their generic description of a specific product or services category.
 
 Registrant has focused since the beginning of 2001 on developing revenue streams from its domain names and reducing the debt of DHI. Registrant generates revenue from leasing domain names, from sales commissions from the sale of third-party products and services utilizing the Internet, from "pay-per-click" revenue and from the sale of domain name assets that Registrant believes are not essential to its business. Since May 2003, Registrant has begun selling fragrances and other beauty products online directly to consumers and in October 2003 begun selling travel services.
 
 Registrant presently has seven full-time employees and three consultants. Whereas the Registrant previously has relied on hourly-contractors to meet its technical needs, improving business conditions enabled the hiring of full-time staff to sell its products and to service its websites.
 
 (a)  Selected Financial Data
 
 The following selected financial data was derived from Communicates unaudited financial statements. The information set forth below should be read in conjunction with the Companys financial statements and related notes included elsewhere in this report.
  Page - 5  
 For the Quarters EndedMarch 31, 2004


March 31, 2003Statements of Operations DataDomain Name Leasing and Advertising

$
66,548

$
81,157Domain Name Sales


200,000


--Product Sales and Other


229,561


--Total Revenues

$
496,109

$
81,157Cost of Domain Name Sales and Commission

$
74,857


--Product Purchases


179,582


--Total Cost of Revenues

$
254,439


--Gross Profit

$
241,670

$
81,157Marketing


($ 5,021
)

--General and Administrative


(135,078
)

($ 30,995
)Management Fees and Salaries


(58,500
)

(36,000
)Professional Fees


(9,587
)

(7,412
)Depreciation


(608
)

(880
)Operating Income

$
32,876

$
5,870Non-Controlling Interest Share of Loss

$
6,691


--Dilution Gain in Subsidiary


5,654


--Net Income for the Quarter

$
45,221

$
5,870Basic Earnings (Loss) per Share

$
0.00

$
0.00Weighted Average Shares Outstanding


14,737,493


14,691,339 
 Balance Sheet Data


As at March 31, 2004


As at December 31, 2003Current Assets

$
415,547

$
424,295Fixed Assets


9,009


9,618Intangible Assets


1,719,859


1,764,714Total Assets

$
2,144,415

$
2,198,627Accounts Payable & Accrued Liabilities

$
578,188

$
589,144Loan Payable


150,000


250,000Total Liabilities

$
728,188

$
839,144Non-Controlling Interest


--

$
2,345Common Stock

$
5,751

$
5,701Additional Paid in Capital


3,076,466


3,066,516Accumulated Deficit


(1,665,990
)

(1,715,079
)Total Stockholders Equity

$
1,416,227

$
1,357,138 
 Page - 6 
 (b)  Results of Operations
 
 REVENUES AND COSTS OF REVENUES .
 
 Domain Name Leasing and Advertising . In the first quarter of 2004, Registrant generated domain name leasing and advertising revenue of $66,548 as compared to $81,157 in the first quarter of 2003, a decrease of 18.0%. Revenues from leasing have not been generated as the sports domain names are currently not leased. While Management does not foresee any opportunistic leasing of the sports domain names in the short-term, the domains are generating advertising revenue during the quarter. While there are overall fewer domain names dedicated to advertising revenue, monthly revenues from advertising have been held steady as pay-per-click rates have increased and Internet traffic has increased. Pay-per-click advertising revenue is expected to increase for the second and subsequent quarters as Management have negotiated a new contract with new advertising products and an enhanced performance-based structure suitable to the Registrant.
 
 Domain Names Sales . In the first quarter of 2004, Registrant completed the sale of automobile.com with a carrying value of $54,857 pursuant to an option-to-purchase agreement entered into in 2003 and paid a finders fee of $20,000 to a related party who is a principal of Pacific Capital Markets Inc. which holds a promissory note issued by the Registrant. No such revenue was recorded in the first quarter of 2003. Other than the option-to-purchase agreement hereforth discussed, Registrant is not expected to generate any other trading revenue in the coming quarters; however Registrant will evaluate opportunities as they arise.
 
 Product Sales . Registrant began converting Internet traffic into customers by directly marketing and selling consumable goods. Beginning in May 2003, Registrant launched its cologne.com Internet site and perfume.com shortly thereafter. In the first quarter of 2004, the sites generated sales of $218,955, or approximately $2,400 per day, with cost of purchases and shipping totaling $168,330 resulting in gross profit margin of approximately 23.1% which is better than planned. Management expects to see sequential growth for the next quarter with sales currently averaging over $3,000 per day and with a profit margin averaging around 20%. Management plans to maintain or improve margins by negotiating with multiple suppliers for better pricing and by automating the fulfillment process.
 
 In the first quarter of 2004, Registrant generated travel services sales of $10,524 at a cost of $11,252. Management expects sales to increase in the second quarter of 2004 as a new sales office has been set up in Malaysia. Currently, efforts are made to form affiliations with partners in Southeast Asia and in Brazil, and Management do not expect any significant increase in this line of revenues until those affiliations are set in place likely by the third quarter of 2004.
 
 MARKETING. Registrant has begun to advertise online by paying-for-clicks and search-engine-placements and other media. In the first quarter of 2004, Registrant recorded marketing expenses of $5,021. There was no marketing expenditure in the first quarter of 2003 as Registrant was not selling online directly. Management expects marketing expense to increase as sales increase and has budgeted 5% of gross product sales for marketing use in 2004.
 
 Page - 7
  GENERAL AND ADMINISTRATIVE. Registrants general and administrative expenses consist of salaries and related costs for general and corporate functions, including facilities fees, travel, and investor relations. In the first quarter of 2004, Registrant recorded general and administrative expense of $135,078 as compared to $30,995 in 2003. General and administrative expense has increased by approximately 436% in the comparative first quarter year over year. Besides the hiring of new staff, travel expenses and investor relations expenses have increased for the quarter by approximately $30,000. Management expects expenses to increase as hiring continues and overhead adapts to increased sales activities albeit at a reasonable and controlled pace.
 
 MANAGEMENT FEES AND SALARIES. In the first quarter of 2004, Registrant incurred management fees of $58,500, an increase of 63% over the first quarter of 2003. In addition to adding a new management person, management fees paid increased by 33% as planned and disclosed at the end of 2003.
 
 PROFESSIONAL FEES. Professional fees include legal and auditing fees. During the first quarter of 2004, professional fees totaled $9,587 as compared to $7,412 in 2003, an increase of 29.3%. Management considers these expenses reasonable as most litigations are resolved. Legal fees will likely increase as Management explores various fund raising avenues in the second and third quarters. Other than professional fees related to raising funds, Management is unaware of factors which are likely to increase professional fees in the second quarter of 2004.
 
 (c)  Liquidity and Capital Resources
 
 Registrant seeks to generate revenue from (i) leasing domain names to third parties to conduct on-line businesses; (ii) selling products and services of owned inventory and of third parties; (iii) fees resulting from traffic click-throughs generated by the domain name assets; and (iv) trading of non-core domain name assets.
 
 At March 31, 2004 Registrant had current liabilities in excess of current assets resulting in a working capital deficit of $162,641. During the three-month ended March 31, 2004 Registrant had net income of $45,221 and a decrease in cash of $10,064, compared to net income of $5,870 and an increase in cash of $2,855 for the same period of last year. Operating activities generated cashflows of $26,068 from net income after adding back the non-cash cost of domain name sold and reduced by a decline in accounts payable during the first quarter. Registrant has accumulated a deficit of $1,651,577 since inception and has a stockholders equity of $1,416,227 as at March 31, 2004. While there is a working capital deficiency of $162,641, Registrant has completed the sale of exercise.com on May 3, 2004 and received $180,000 net-of-commission proceeds which will eliminate the working capital deficiency by the third quarter of 2004, assuming operations continue to be profitable. While Management cannot give assurance that operations can continue to be profitable, Management does believe that positive cashflows can be achieved in the second quarter of 2004.
 
 In October 2003, Registrant became a majority shareholder of FrequentTraveller.com which has developed and is operating travel sales websites utilizing non-exclusive access to the Registrants domain names Vietnam.com, Malaysia.com, Indonesia.com, Brazil.com and Canadian.com. Registrant will continue to own the aforementioned domain names and to develop other businesses other than travel sales for them. FrequentTraveller.com has three employees and is not expected to generate sufficient revenue to cover expenses for at least twelve months. Any fund shortfall will be covered by the Registrant or by raising outside capital.
 
 Page - 8
  The Registrant negotiated with the lender to refinance a term loan $375,000 due and payable on June 28, 2003 with otherwise similar terms but with a new due and payable date of June 28, 2005. As such, the note has been reclassified as a long-term liability. Since November 3, 2003, Registrant has used the proceeds from the sale of domain names to pay down the loan and has repaid $125,000 by March 31, 2004 and another $100,000 by May 3, 2004. As of May 14, the balance on the term loan outstanding is $150,000.
 
 As the Registrant is working to achieve a positive working capital position and is currently profitable, opportunities may arise which would require the Registrant to seek additional capital other than for operations from external sources. Registrant expects to raise any additional funds by way of equity and/or debt financing, and through the sale of non-strategic domain name assets. However, Registrant may not be able to raise the required funds from such financings, depending on volatile market conditions and the perception by investors of those companies that, like the Registrant, engage in e-commerce and related businesses.
 
 Registrant has no current plans to purchase any plant or significant equipment.
 
 (d)  Uncertainties Relating to Forward-Looking Statements
 
 Managements discussion and analysis of Registrants financial condition and the results of its operations and other sections of this report, contain forward looking statements, that are based upon the current beliefs and expectations of Registrants management, as well as assumptions made by, and information currently available to, Registrants management. Because these statements involve risks and uncertainties, actual actions and strategies and the timing and expected results may differ materially from those expressed or implied by the forward-looking statements. As well, Registrants future results, performance or achievements could differ materially from those expressed in, or implied by, any forward-looking statements. Future events and actual results could differ materially from those set forth in or underlying the forward-looking statements.
 
 Item 3: Controls and Procedures.
 
 Based on their most recent evaluation, which was completed within 90 days of the filing of this Form 10-QSB, the Registrants Chief Executive Officer and Chief Financial Officer believe the Registrants disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) are effective to ensure that information required to be disclosed by the Registrant in this report is accumulated and communicated to the Registrants management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. There were no significant changes in the Registrants internal controls or other factors that could significantly affect these controls subsequent to the date of their evaluation and there were no corrective actions with regard to significant deficiencies and material weaknesses.
  Page - 9 
 PART II
 OTHER INFORMATION
 
 
 Item 1. Legal Proceedings.
 
 In December 1999, the Subsidiary commenced a lawsuit in the Supreme Court of British Columbia (No. C996417) against Paul Green, the former chief executive officer of the Subsidiary, for breach of fiduciary duty for wrongfully attempting to appropriate the Subsidiarys business opportunities. The Subsidiary is seeking an undetermined amount of damages and a declaration that it had just cause to terminate Paul Green as the CEO in or about June 1999. No decision has been rendered in this case and the Company cannot predict whether it will prevail, and if it does, what the terms of any judgment may be.
 
 On March 9, 2000, Paul Green commenced a separate action in the Supreme Court of British Columbia (No. S001317) against the Subsidiary. In that action, Paul Green claimed wrongful dismissal and a breach of contract on the part of the Subsidiary. Paul Green is seeking an undetermined amount of damages and, among others, an order of specific performance for the issuance of a number of shares in the capital of the Subsidiary equal to 18.9% or more of the outstanding shares of the Subsidiary. On June 1, 2000, the Subsidiary filed a statement of defence and counterclaim. Management intends to defend this action vigorously.
 
 On July 14, 2003, Multinational Investment Corp. (MIC) commenced a legal action in the State of Virginia (No. L215105) against the Subsidiary for breach of contract regarding an agreement to purchase the domain name www.cricket.com and sought damages of $1.25 million plus interest at 9% from November 27, 2001 and title to the disputed domain name. On August 6, 2003 the Subsidiary filed its statement of defence and counterclaim alleging various breaches of contract, and on October 24, 2003, the Subsidiary filed an amended counterclaim, which includes Global Explorations, Inc. as a party defendant. On January 13, 2004, MIC and the Subsidiary entered into a Settlement Agreement and Mutual Release whereby all parties, including certain of their officers, agreed to settle their legal actions and mutually release each other, and on February 10, 2004, a Stipulation of Dismissal was filed into court dismissing all actions related to this dispute.
 
 Registrant is not aware of any other pending or threatened material legal proceedings.
 
 
 Item 2. Changes in Securities.
 
 On January 7, 2004, the Board of Directors issued 50,000 shares of common stock to two employees as bonuses recorded by DHI. Registrant relied on an exemption from registration under Section 4(2) of the Securities Act of 1933 in issuing the shares. These shares are restricted securities and are subject to resale restrictions under Rule 144.
 
 
 Page - 10 
 Item 3. Defaults Upon Senior Securities.
 
 None.
 
 
 Item 4. Submission of Matters to a Vote of Security Holders.
 
 No matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the three months of the fiscal year covered by this report.
 
 
 Item 5. Other Information.
 
 None.
 
 
 Item 6. Exhibits and Reports on Form 8-K.
 
 (A)  Index to and Description of Exhibits.
 
 EXHIBIT
DESCRIPTIONF-1
Financial Statements.31
Section 302 Certification of Chief Executive Officer and Chief Financial Officer32
Section 906 Certificate of Chief Executive Office and Chief Financial Officer 
 
 (B)  Reports on Form 8-K.
 
 There were no report on Form 8-K filed by Registrant, during the three months of the fiscal year covered by this report.
 
 
 Page - 11 
 PART II - SIGNATURES
 
 In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 COMMUNICATE.COM INC.
 
 
 
 
 /s/ David M. Jeffs
 Name:  David M. Jeffs
 Title :  Director and CEO
 Dated:  May 14, 2004
 
 
 
 By :  /s/ J. Cameron Pan
 Name:  J. Cameron Pan
 Title :  CFO
 Dated:  May 14, 2004
 
 
 
 Page - 12 
 
 Exhibit 31
   
 
 Page - 13 
 CERTIFICATIONS
 
 I, David M Jeffs, certify that:
 
 1. I have reviewed this quarterly report on Form 10-QSB of Communicate.com Inc.;
 
 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
 
 a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
 b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
 
 c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
 
 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
 
 a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
 
 b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
 
 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
 Date: May 14, 2004
 
 
 
 /s/ David M Jeffs    David M Jeffs, Director and CEO
  Page - 14 
 CERTIFICATIONS
 
 I, J Cameron Pan, certify that:
 
 1. I have reviewed this quarterly report on Form 10-QSB of Communicate.com Inc.;
 
 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
 
 a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
 b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
 
 c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
 
 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
 
 a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
 
 b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
 
 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
 Date: May 14, 2004
 
 
 
 /s/ J Cameron Pan    J Cameron Pan - CFO
  
 Page - 15 
 
   Exhibit 32
 
 
 
 Page - 16 
 CERTIFICATION PURSUANT TO  18 U.S.C. SECTION 1350,  AS ADOPTED PURSUANT TO  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
  
 In connection with the Quarterly Report of Communicate.com Inc. (Communicate) on Form 10-QSB for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, David M. Jeffs, President, Chief Executive Officer of Communicate and the sole member of the Board of Directors, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:
 
 (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 (2) The information contained in the Report fairly represents, the financial condition and result of operations of Communicate.
 
 /s/ David M. Jeffs  David M. Jeffs  Chief Executive Officer
 May 14, 2004
  
 Page - 17
  
 CERTIFICATION PURSUANT TO  18 U.S.C. SECTION 1350,  AS ADOPTED PURSUANT TO  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
  
 In connection with the Quarterly Report of Communicate.com Inc. (Communicate) on Form 10-QSB for the period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, J. Cameron Pan, Secretary, Treasurer, and Chief Financial Officer of Communicate, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:
 
 (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 (2) The information contained in the Report fairly represents, the financial condition and result of operations of Communicate.
 
 /s/ J. Cameron Pan  J. Cameron Pan  Chief Financial Officer
 May 14, 2004
  
 Page - 18 
 COMMUNICATE.COM INC.
 
 INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 MARCH 31, 2004
 
 
 (UNAUDITED)
 
 
 
 Page - 19
  
  CONSOLIDATED BALANCE SHEETS
 
 INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
 
 INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
 Page - 20 
 COMMUNICATE.COM INC.
 INTERIM CONSOLIDATED BALANCE SHEETS
 
 March 31,
2004


December 31,
2003(Unaudited)ASSETSCURRENT ASSETSCash and cash equivalents

$
382,975

$
393,039Accounts receivable


31,440


27,968Advances receivable


1,132


1,221Prepaid expenses


-


2,067415,547


424,295FIXED ASSETS


9,009


9,618INTANGIBLE ASSETS(Note 2)


1,719,859


1,764,714$
2,144,415

$
2,198,627LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable and accrued liabilities

$
475,746

$
536,214Loan payable (Note 4)


102,442


52,930578,188


589,144LOAN PAYABLE(Note 4)


150,000


250,000728,188


839,144NON-CONTROLLING INTEREST


-


2,345COMMITMENTS AND CONTINGENCIES(Notes 1 and 10)STOCKHOLDERS EQUITYCapital stock(note 5)Authorized50,000,000 Common shares, $.001 par valueIssued and outstanding14,741,339 (2003  14,691,339) Common shares


5,751


5,701Additional paid in capital


3,076,466


3,066,516Accumulated deficit


(1,651,577
)

(1,696,798
)Accumulated other comprehensive loss


(14,413
)

(18,281
)1,416,227


1,357,138$
2,144,415

$
2,198,627
 
 The accompanying notes are an integral part of these interim consolidated financial statements.
 
 Page - 21 
 COMMUNICATE.COM INC.
 INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 
 Three months ended March 31, 2004


Three months ended March 31, 2003REVENUESDomain name leasing and advertising

$
66,548

$
81,157Domain name sales (Note 11)


200,000


-Product sales and other


229,561


-Total revenues


496,109


81,157COST OF REVENUESCost of domain name sales and commissions


74,857


-Product purchases and other


179,582


-Total cost of revenues


254,439


-GROSS PROFIT


241,670


81,157EXPENSESMarketing


5,021


-General and administrative


135,078


30,995Management fees and salaries


58,500


36,000Professional fees


9,587


7,412Depreciation


608


880208,794


64,654INCOME BEFORE OTHER ITEMS


32,876


5,870NON-CONTROLLING INTEREST SHARE OF LOSS IN SUBSIDIARY


6,691


-DILUTION GAIN (LOSS) IN SUBSIDIARY


5,654


-INCOME BEFORE INCOME TAXES


45,221


5,870INCOME TAXESCurrent


10,000


1,800Recovery of deferred tax assets


(10,000
)

(1,800
)NET INCOME FOR THE PERIOD

$
45,221

$
5,870EARNINGS PER SHARE:Basic

$
0.00

$
0.00Fully diluted

$
0.00

$
0.00WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:Basic


14,737,493


14,691,339Fully diluted


18,098,743


14,691,339
 
  The accompanying notes are an integral part of these interim consolidated financial statements.
 
 Page - 22
    COMMUNICATE.COM INC.
 INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 Three months ended March 31, 2004


Three months ended March 31, 2003CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss) for the period

$
45,221

$
5,870Adjustments to reconcile net income (loss) to net cash
used in operating activities- non-controlling interest share of losses


(6,691
)

-- non-controlling interest dilutions


(5,654
)

-- non-cash cost of domain name sales


54,857


-- depreciation


608


880- accrued interest


(488
)

-- deferred revenue


-


12,158- accounts and advances receivable


(3,384
)

(7,182
)- prepaid expenses


2,067


-- accounts payable and accrued liabilities


(60,468
)

15,495CASH FROMOPERATING ACTIVITIES


26,068


27,221CASH FLOWS FROM FINANCING ACTIVITIES- lease obligation repayments


-


(10,344
)- issuance of common stock by Frequent Traveller.com Inc.


10,000


-- loan proceeds (repayments)


(50,000
)

(277,898
)CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES


(40,000
)

(288,242
)EFFECT OF EXCHANGE RATE CHANGES


3,868


(1,538
)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(10,064
)

2,855CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


393,039


52,672CASH AND CASH EQUIVALENTS, END OF PERIOD

$
382,975

$
55,527SUPPLEMENTAL CASH FLOW INFORMATION(Refer to Note 9)
 
 
  The accompanying notes are an integral part of these interim consolidated financial statements.
 
 
 Page - 23
    COMMUNICATE.COM INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2004
 (Unaudited)
  NOTE 1  NATURE OF OPERATIONS AND BASIS OF PRESENTATION
 
 The Company was incorporated October 10, 1995 under the laws of the State of Nevada and effective August 24, 2000 changed its name from Troyden Corporation to Communicate.com Inc. (CMNN or the Company). Effective November 10, 2000 the Company acquired a 52% controlling interest in Communicate.com Inc., an Alberta private company that changed its name to Domain Holdings Inc. on April 5, 2002 (DHI). During December 2000, CMNN acquired from minority shareholders an additional 31% of the outstanding shares of DHI. In the second quarter of 2002, CMNN acquired a further 10% of the outstanding shares of DHI from minority shareholders and in the end of the third quarter of 2003, acquired another 1% of the outstanding shares of DHI from a minority shareholder. CMNN owns 94% of the outstanding shares of DHI.
 
 DHI owns a portfolio of generic domain names. DHIs current business strategy is to develop or to seek partners to develop its domain names to include content, commerce and community applications. DHI has developed websites that sell fragrance and beauty care products to North American consumers. DHI is developing other sites with the goal of facilitating business transactions both at the wholesale level and at the consumer level. DHI sells advertising services on its domains held for development and seeks to acquire other domains to complement its retail strategy or its advertising strategy. DHI has an in-house development team that develops its corporate websites.
 
 On October 1, 2003 the Company acquired a 71% controlling interest in FrequentTraveller.com Inc. (FT), a Nevada private company incorporated on October 29, 2002. FT is a full service travel agency that caters to Internet-based customers seeking tours and other travel services to geographic destinations currently owned by DHI. At March 31, 2004, CMNN owns 55% of the outstanding shares of FT. (Refer to Note 3.)
 
 These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America with the on-going assumption applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The continued operations of the Company and the recoverability of the carrying value of its assets is dependent upon the ability of the Company to maintain profitable operations. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of assets carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty. To date, the Company has a limited history of profitable operations and at March 31, 2004 had a working capital deficiency of $162,641 (2003 - $668,230).
 
 Unaudited Interim Financial Statements
 The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB of Regulation S-B. They do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2003 included in the Companys Annual Report on Form 10-KSB filed with the Securities and Exchange Commission. The interim unaudited consolidated financial statements should be read in conjunction with those financial statements included in the Form 10-KSB. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.
 
 
 NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of presentation
 The accompanying financial statements are presented in United States dollars and are prepared in accordance with accounting principles generally accepted in the United States.
 
 Principles of Consolidation
 The financial statements include the accounts of the Company, the 94% interest in its subsidiary, DHI, and the 55% interest in FT. All significant intercompany balances and transactions are eliminated on consolidation.
  Page - 24
  COMMUNICATE.COM INC.
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2004
 (Unaudited)
 NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd)
 
 Fixed assets
 Fixed assets are recorded at cost. Depreciation is computed at the following rates over the estimated useful lives of the assets:
 
 Computer equipment

30% declining balanceFurniture and fixtures

20% declining balanceOffice equipment

20% declining balance
 
 One-half year depreciation is taken in the year of acquisition on certain capital assets.
 
 Revenue recognition
 Revenue from the sale and lease of domain names, whose carrying values are recorded as intangible assets, consists primarily of funds earned for the transfer of rights to domain names that are currently in the Companys control. Collectibility of revenues generated is subject to a high level of uncertainty; accordingly revenues are recognized only as received. Lease payments paid in advance are recorded as deferred revenue.
 
 Web advertising revenue consists primarily of commissions earned from the referral of visitors to the Companys sites to other parties. The amount and collectibility of these referral commissions is subject to uncertainty; accordingly revenues are recognized when the amount can be determined and collectibility can be reasonably assured.
 
 Revenues, and associated costs of goods sold, from the on-line sales of products, currently consisting primarily of fragrances and other beauty products, are recorded upon shipment of products and determination that collection is reasonably assured. The Company does not record inventory as an asset because all products sold are delivered to the customer on a just-in-time basis.
 
 Stock-based compensation
 In December 2002, the Financial Accounting Standards Board issued Financial Accounting Standard No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure (SFAS No. 148), an amendment of Financial Accounting Standard No. 123 Accounting for Stock-Based Compensation (SFAS No. 123). The purpose of SFAS No. 148 is to: (1) provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation, (2) amend the disclosure provisions to require prominent disclosure about the effects on reported net income of an entitys accounting policy decisions with respect to stock-based employee compensation, and (3) to require disclosure of those effects in interim financial information. The disclosure provisions of SFAS No. 148 were effective for the Company commencing December 31, 2002 and the required disclosures have been made below.
 
 The Company has elected to continue to account for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, (APB No. 25) and comply with the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148 as described above. In addition, in accordance with SFAS No. 123 the Company applies the fair value method using the Black-Scholes option-pricing model in accounting for options granted to consultants. Under APB No. 25, compensation expense is recognized based on the difference, if any, on the date of grant between the estimated fair value of the Companys stock and the amount an employee must pay to acquire the stock. Compensation expense is recognized immediately for past services and pro-rata for future services over the option-vesting period.
 
 The following table illustrates the pro forma effect on net income (loss) and net income (loss) per share as if the Company had accounted for its for stock-based employee compensation using the fair value provisions of SFAS No. 123 using the assumptions as described in Note 6:
 
 Three months ended
March 31, 2004


Three months ended
March 31, 2003Net income for the period


As reported

$
45,221

$
5,870SFAS 123 compensation expense


Pro-forma


(3,924
)

(6,143
)Net income (loss) for the period


Pro-forma

$
41,297

$
(273
)Pro-forma basic net income per share


Pro-forma

$
0.00

$
(0.00
)Pro-forma diluted net income per share


Pro-forma

$
0.00

$
(0.00
)
 
 Page - 25
 COMMUNICATE.COM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2004
(Unaudited)
NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd)
 
 The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force in Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring or in Conjunction with Selling Goods or Services (EITF 96-18). Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.
 
 The Company has also adopted the provisions of the Financial Accounting Standards Board Interpretation No.44, Accounting for Certain Transactions Involving Stock Compensation  An Interpretation of APB Opinion No. 25 (FIN 44), which provides guidance as to certain applications of APB 25. FIN 44 is generally effective July 1, 2000 with the exception of certain events occurring after December 15, 1998.
 
 Income taxes
 The Company follows the liability method of accounting for income taxes. Under this method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Future tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. A valuation allowance is provided for deferred tax assets if it is more likely than not that the Company will not realize the future benefit, or if the future deductibility is uncertain.
 
 Use of estimates
 The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management 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 for the periods that the financial statements are prepared. Actual amounts could differ from these estimates.
 
 Foreign currency transactions
 The financial statements are presented in United States dollars. In accordance with Statement of Financial Accounting Standards No. 52, Foreign Currency Translation, since the functional currency of the Company is U.S. dollars, the foreign currency financial statements of the Companys subsidiaries are re-measured into U.S. dollars. Monetary assets and liabilities are re-measured using the foreign exchange rate that prevailed at the balance sheet date. Revenue and expenses are translated at weighted average rates of exchange during the year and stockholders equity accounts and certain other non-monetary assets and liabilities are translated by using historical exchange rates. Resulting re-measurement gains or losses are reported as a component of other comprehensive income.
 
 Earnings (loss) per share
 Basic earnings (loss) per share is computed by dividing earnings (loss) for the period by the weighted average number of common shares outstanding for the period. Fully diluted earnings (loss) per share reflects the potential dilution of securities by including other potential common stock, including convertible preferred shares, in the weighted average number of common shares outstanding for a period and is not presented where the effect is anti-dilutive.
 
 Comprehensive income
 Comprehensive income is defined as the change in equity from transactions, events and circumstances, other than those resulting from investments by owners and distributions to owners. Comprehensive income to date consists only of the net loss resulting from translation of the foreign currency financial statements of DHI.
 
 Intangible assets
 The Company has adopted the provision of the Statement of Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Intangible Assets, which revises the accounting for purchased goodwill and intangible assets. Under SFAS 142, goodwill and intangible assets with indefinite lives are no longer amortized and are be tested for impairment annually. The determination of any impairment would include a comparison of estimated future operating cash flows anticipated during the remaining life with the net carrying value of the asset as well as a comparison of the fair value to book value of the Company.
 
 Page - 26
  **COMMUNICATE.COM INC.**
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2004
 (Unaudited)
 NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd)
 
 Effective January 1, 2002, the Company adopted the provisions of SFAS 142 which, upon adoption, required the Company to make an initial determination as to whether an impairment of its intangible assets held for resale had occurred as a result of adopting this new accounting policy. In accordance with the provisions of SFAS 142, the Company is required to compare its net book value to the overall market capitalization of the Company and if the market capitalization is less than the Companys net book value, to record an impairment of its intangible assets accordingly. As a result of applying this impairment test in the first quarter of 2002, the Company recorded a charge in the period of $1,426,736 as a cumulative effect of an accounting change. The balance of the Companys intangible assets, has been determined to have an indefinite life and management has determined, based upon projected cash flows and market capitalization, that the value of its intangible assets does not require a further impairment charge.
 
 Website development costs
 The Company has adopted the provisions of EITF 00-2 "Accounting for Web Site Development Costs" and AICPA SOP 98-1 Accounting for the Costs of Computer Software Developed or Obtained for Internal Use whereby costs incurred in the preliminary project phase are expensed as incurred; costs incurred in the application development phase are capitalized; and costs incurred in the post-implementation operating phase are expensed as incurred. The Company has not currently incurred any significant development costs relating to its operational websites.
 
 Comparative figures
 Certain of the comparative figures have been restated to conform to the current years presentation.
 
 
 NOTE 3  ACQUISITION OF FREQUENTTRAVELLER.COM, INC. (FT)
 
 By agreement dated October 1, 2003 the Company acquired 350,000 common shares of FT, representing 71% of the outstanding shares of FT, in consideration for a $35,000 debt owing to the Company by FT for previous consulting work provided. Subsequent to October 1, 2003, FT issued 113,637 shares of its common stock to non-controlling interests for total proceeds of $50,000 resulting in a gain on dilution of $30,555 in 2003 and issued 22,727 shares for total proceeds of $10,000 resulting in a gain of $5,654 in 2004. As a result, at March 31, 2004, CMNN owns 55% of the outstanding shares of FT.
 
 
 NOTE 4  LOAN PAYABLE
 
 In connection with the acquisition of DHI, the Company entered into a Loan and Security Agreement dated November 10, 2000 with Pacific Capital Markets Inc. (PCMI), a British Columbia corporation. Under the terms of the agreement, PCMI agreed to loan the Company up to $1,500,000 to satisfy its obligation pursuant to the DHI purchase agreement dated November 10, 2000. Amounts loaned by PCMI are secured by a promissory demand note (subsequently amended to a promissory note due June 28, 2005), bearing interest at the Royal Bank of Canada United States dollar prime rate plus 2%. In the event that the Company fails to repay the amounts due under this agreement, PCMI may, at its option, convert the balance of principal and interest due pursuant to this agreement into shares of the Companys common stock at a price equal to 80% of the average selling price of the Companys common stock for the fifteen days prior to conversion. As at March 31, 2004, $250,000 (2003 - $375,000) has been loaned by PCMI to the Company and a total of $7,656 (2003 - $10,633) of interest has been incurred for the quarter ended March 31, 2004.
 
 On May 3, 2004, the Company repaid $100,000 to PCMI to bring the balance on the promissory note to $150,000. (See Note 12.)
 
 
 NOTE 5  CAPITAL STOCK
 
 The authorized capital of the Company consists of 50,000,000 Common Shares with a par value of $.001.
 
 During the quarter ended March 31, 2004, the Company issued 50,000 shares of restricted common stock of the Company to two employees in satisfying bonuses of $10,000 granted and recorded by DHI in 2003.
 
 Page - 27
  **COMMUNICATE.COM INC.**
 NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2004
 (Unaudited)
 NOTE 6  CAPITAL STOCK (contd)
 
 Stock options
 The Company does not have a formal Stock Option Plan, however, options may be granted with terms and conditions at the discretion of the Companys board of directors.
 
 On July 24, 2002 the Company granted an officer 580,000 stock options at an exercise price of $0.10 per share. The options vest evenly over two years commencing July 24, 2002. No compensation expense will be recorded upon vesting of these options in accordance with the provisions of APB No. 25 as the exercise price of the options awarded approximated the market price of the Companys common shares as at the date of the award.
 
 In accordance with the provisions of SFAS No. 123, for stock options granted to officers, directors and employees, the Company has provided pro forma information regarding net income (loss) and net income (loss) per share as if the Company had accounted for these stock options using the fair value method. The fair value of the options vested in the period was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: risk free interest rate of 4%; dividend yield of 0%; volatility factor of the expected market price of the Company's common stock of 205% and a weighted average expected life of the option of 2 years.
 
 For purposes of the pro-forma disclosures, the estimated fair value of the options of $49,823 is amortized to expense over the vesting period. In accordance with the provisions of SFAS 148, the Companys pro-forma information relating to the granting and vesting of stock options has been shown in Note 2.
 
 
 NOTE 6  RELATED PARTY TRANSACTIONS
 
 During the quarter ended March 31, 2004 consulting fees and salaries totalling $58,500 (2003 - $36,000) were incurred and paid to the executives of the Company. At March 31, 2004 $76,000 of prior years consulting fees, included in accounts payable, remains owing to one officer. The $76,000 payable is unsecured and non-interest bearing and has no fixed terms of repayment however, management plans on paying the officer during the first six months of 2004.
 
 During the quarter ended March 31, 2004 commissions totalling $20,000 from the sales of domain names were paid to a principal of Pacific Capital Markets Inc. (See Notes 4, 11 and 12.)
 
 
 NOTE 7  FINANCIAL INSTRUMENTS
 
 Interest rate risk exposure
 The Company has limited exposure to any fluctuation in interest rates.
 
 Foreign exchange risk
 The Company is subject to foreign exchange risk for sales and purchases denominated in foreign currencies. Foreign currency risk arises form the fluctuation of foreign exchange rates and the degree of volatility of these rates relative to the United States dollar. The Company does not actively manage this risk.
 
 Concentration of credit risk
 Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and trade accounts receivable. The Company limits its exposure to credit loss by placing its cash and cash equivalents on deposit with high credit quality financial institutions. Receivables arising from sales to customers are generally not significant individually and are not collateralized. Management continually monitors the financial condition of its customers to reduce the risk of loss.
 
 Fair values of financial instruments
 The Companys financial instruments include cash and cash equivalents, accounts receivable, bank indebtedness, accounts payable and accrued liabilities and loan payable. The fair values of these financial instruments approximate their carrying values.
 
 Page - 28
  COMMUNICATE.COM INC.
 **NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 March 31, 2004
 (Unaudited)
 NOTE 8  INCOME TAXES
 
 The Companys subsidiary, DHI is subject to Canadian federal and British Columbia provincial taxes in Canada and the Company is subject to United States federal and state taxes.
 
 The Companys subsidiary, DHI is subject to Canadian federal and British Columbia provincial taxes in Canada and the Company and FT are subject to United States federal and state taxes.
 
 The Company and its subsidiaries have  net operating loss carry-forwards of approximately $3,300,000 that result in deferred tax assets. The majority of the loss carry-forwards will expire, if not utilized, over the next ten years, commencing in 2006. The Companys subsidiary DHI also has approximately $1,100,000 in undepreciated capital costs relating to fixed assets that have not been amortized for tax purposes. These costs may be amortized in future as necessary to reduce taxable income. M anagement believes that t he realization of the benefits from these deferred tax assets appears uncertain due to the Companys limited profitable operating history and current business plans. Accordingly, a full deferred tax asset valuation allowance has been provided and no deferred tax asset benefit has been recorded.
 
 
 NOTE 9  SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
 
 Quarter endedMarch 31, 2004


Quarter endedMarch 31, 2003Cash paid during the period for:Interest

$
7,656

$
10,633Income taxes

$
-

$
-
 
 On January 7, 2004, 50,000 shares were issued in settlement of $10,000 of DHIs bonus payable.
 
 
 NOTE 10  CONTINGENCIES
 
 The former Chief Executive Officer of DHI commenced a legal action against DHI on March 9, 2000 for wrongful dismissal and breach of contract. He is seeking, at a minimum, 18.39% of the outstanding shares of DHI, specific performance of his contract, special damages in an amount of CAN $37,537, aggravated and punitive damages, interest and costs. On June 1, 2000, Communicate.com filed a Defence and Counterclaim against this individual claiming damages and special damages for breach of fiduciary duty and breach of his employment contract. The outcome of these legal actions is currently not determinable and as such the amount of loss, if any, resulting from this litigation is presently not determinable.
 
 On July 14, 2003, Multinational Investment Corp. (MIC) commenced a legal action in the State of Virginia against DHI for breach of contract regarding an agreement to purchase the domain name www.cricket.com and sought damages of $1.25 million plus interest at 9% from November 27, 2001, and title to the disputed domain name. On August 6, 2003 DHI filed its statement of defence and counterclaim alleging various breaches of contract, and on October 24, 2003, DHI filed an amended counterclaim, which includes Global Explorations, Inc. (Global) as a party defendant. On January 13, 2004, MIC, Global and DHI entered into a Settlement Agreement and Mutual Release whereby all parties, including certain of their officers, agreed to settle their legal actions and mutually release each other, and on February 10, 2004, a Stipulation of Dismissal was filed into court dismissing all actions related to this dispute. No money was paid by DHI in reaching the settlement other than for legal representation.
 
 
 Page - 29
  COMMUNICATE.COM INC.
 **NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
 March 31, 2004
 (Unaudited)
 NOTE 11  DOMAIN NAME SALES
 
 On July 3, 2003, DHI entered into agreements to sell automobile.com, body.com, exercise.com and makeup.com to Manhattan Assets Corp. for a total sales price of $1,000,000. Upon entering into the agreements, DHI received a non-refundable $50,000 payment for each of the four domain names totalling $200,000 and granted Manhatten Assets the option to purchase four domain names for $200,000 each, with payments due beginning on November 3, 2003 and every three-months thereafter until August 3, 2004. If any of the payments are not made on the specified date, Manhattan Assets forfeits its rights to purchase under the agreement. As of March 31, 2004, Manhatten Assets has paid $600,000 to DHI under the terms of the contract and the Company has paid $60,000 in commissions on the $600,000.
 
 DHI retains a perpetual royalty right to each of the domain names sold commencing on the fourth month after each sale. The royalty is calculated and payable monthly as the greater of 5% of net revenues or $2,500. A commission of 10% is payable to a related party on the sales proceeds of $1,000,000, but only as the proceeds are received.
 
 
 NOTE 12  SUBSEQUENT EVENTS
 
 Sale of Exercise.com
 On May 3, 2004, the Company sold the domain name exercise.com for $200,000 with a carrying value of $87,794 and paid a commission of $20,000. Using the net proceeds, the Company repaid $100,000 principal on a note outstanding. (See Note 4.)
 
 Page - 30