****
 **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**
 
 For the
quarterly period ended March 31, 2005
 or
 
 **[
] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**
 **SECURITIES
EXCHANGE ACT OF 1934**
 
 For the
transition period from ______ to ______
 
 
 Commission
File Number 000-29929
 
 **COMMUNICATE.COM
INC.**
 (Exact
name of small business as specified in its charter)
 
 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  15,596,339 shares
outstanding
 $.001 Par
Value  as of May 13,
2005
 
 Transitional
Small Business Disclosure Format (Check one): Yes [  ] No [X]
 
 
  ***Page
- 1***
  **** **COMMUNICATE.COM
INC.**
 **REPORT
ON FORM 10-QSB**
 **QUARTER
ENDED MARCH 31, 2005**
 **TABLE
OF CONTENTS**
 
 **PART
I.****Financial
Information**
 
 Item
1.Financial
Statements
 
 Consolidated Balance sheets as of March 31, 2005 and December
31, 2004
 Consolidated Statements of Operations for the periods ended
March 31, 2005 and March 31, 2004
 Consolidated Statements of Cash Flows for the periods ended
March 31, 2005 and March 31, 2004
 Notes to the Consolidated Financial Statements
 
 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
- 2***
  **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. (“FrequentTraveller”)
(together the "Subsidiaries"), is involved in businesses that exploit commercial
uses of the Internet. DHI markets and licenses a portfolio of domain names, a
number 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 its debts. 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 beauty and
sports products online directly to consumers and in October 2003 begun selling
travel services through its website FrequentTraveller.com.
 
 Registrant
presently has twenty-two full-time employees and three consultants and occupies
approximately 5,000 square feet of office space in Vancouver, British Columbia
and Bellingham, Washington.
 
 **(a)**  **Selected
Financial Data**
 
 The
following selected financial data was derived from Registrant’s unaudited
consolidated financial statements. The information set forth below should be
read in conjunction with Registrant’s financial statements and related notes
included elsewhere in this report.
  ***Page
- 3***
  
 For
      the Quarters EndedMarch
      31, 2005
    
    
    March
      31, 2004Statements
      of Operations DataDomain
      Name Leasing and Advertising
    
    $
    337,337
    
    $
    66,548Domain
      Name Sales
    
    
    --
    
    
    200,000eCommerce
      Sales
    
    
    640,989
    
    
    229,561Total
      Revenues
    
    
    978,326
    
    
    496,109Cost
      of Domain Name Sales and Commission
    
    
    --
    
    
    74,857eCommerce
      Direct Costs
    
    
    553,116
    
    
    179,582Total
      Cost of Revenues
    
    
    553,116
    
    
    254,439Gross
      Profit
    
    
    425,210
    
    
    241,670Marketing
    
    
    (32,696
    )
    
    (5,021
    )General
      and Administrative
    
    
    (65,446
    )
    
    (90,980
    )Management
      Fees and Salaries
    
    
    (186,905
    )
    
    (102,598
    )Professional
      Fees
    
    
    (10,601
    )
    
    (9,587
    )Depreciation
    
    
    (2,134
    )
    
    (608
    )Operating
      Income
    
    
    127,428
    
    
    32,876Gain
      on Debt Settlement
    
    
    6,044
    
    
    --Non-Controlling
      Interest Share of Loss
    
    
    --
    
    
    6,691Dilution
      Gain in Subsidiary
    
    
    --
    
    
    5,654Net
      Income for the Period
    
    $
    133,472
    
    $
    45,221Basic
      Earnings (Loss) per Share
    
    $
    0.01
    
    $
    0.00Weighted
      Average Shares Outstanding
    
    
    15,024,188
    
    
    14,737,493
 
 Balance
      Sheet Data
    
    As
      at
      March
      31, 2005
    
    As
      at
      December
      31, 2004Current
      Assets
    
    $
      1,243,260
    
    $
      1,064,928Fixed
      Assets
    
    
    32,102
    
    
    26,394Intangible
      Assets
    
    
    1,503,725
    
    
    1,503,725Total
      Assets
    
    $
    2,779,087
    
    $
    2,606,711Accounts
      Payable & Accrued Liabilities
    
    $
    489,899
    
    $
    665,195Total
      Liabilities
    
    
    489,899
    
    
    665,195Common
      Stock
    
    
    6,331
    
    
    6,331Additional
      Paid in Capital
    
    
    3,133,886
    
    
    3,133,886Share
      Subscriptions
    
    
    100,000
    
    
    --FT
      obligation to issue shares
    
    
    50,200
    
    
    --Obligation
      to issue shares
    
    
    64,000
    
    
    --Accumulated
      Deficit
    
    
    (1,065,229
    )
    
    (1,198,701
    )Total
      Stockholders’ Equity
    
    $
    2,174,988
    
    $
    1,941,516
 
  ***Page
- 4***
  **(b)**  **Results
of Operations**
 
 REVENUES
AND COSTS OF REVENUES .
 
 Domain
Name Leasing and Advertising . In the
first quarter of 2005, Registrant generated domain name leasing and advertising
revenue of $337,337 as compared to $66,548 in the first quarter of 2004, an
increase of 407%. The increase is attributed to the new rate contract which has
become effective in the first quarter of 2004 and to the surge in Internet
advertising over the holiday season. While Management believes its advertising
revenue will continue to grow, it does not believe this 2005 first quarter
result is sustainable. Management believes monthly advertising revenue for 2005
realistically should be around $70,000 per month which represents a 40% increase
over the 2004 monthly average of approximately $50,000.
 
 Domain
Name Sales .
 
 In the
first quarter of 2005, the Registrant did not sell any domain names. Management
has concluded its strategy to recapitalize the Registrant through the selling of
non-strategic domain names. Proceeds from the prior sales in 2003 and 2004 were
used to repay a note payable and to enhance the Registrant’s financial ratios
and liquidity. Management has begun acquiring new domain names both individually
and as a portfolio to replenish its asset base and to increase its advertising
revenue. While Registrant has no immediate plans to sell any domain names in the
near future, it will evaluate opportunities as they arise.
 
 eCommerce
Sales .
Registrant began converting Internet traffic into customers by directly
marketing and selling consumable goods. Beginning in May 2003, Registrant
launched its cologne.com and perfume.com Internet retail sites and karate.com
Internet retail site in 2004. In the first quarter of 2005, the combined retail
sites generated sales of $524,049 (2004 Q1 - $219,037), or approximately $5,823
per day (2004 Q1 - $2,407 per day), with cost of purchases and shipping totaling
$446,621 (2004 Q1 - $168,333) resulting in gross profit margin of approximately
14.8% (2004 Q1 - 23.1%). While comparable quarterly sales have increased by
139%, gross profit margin as a percentage has declined by 36%. Management during
the quarter lowered the retail selling prices for its fragrance products to
acquire new customers and since the start of the second quarter has returned
selling prices to normal. Management expects overall gross profit margin to
return to between 18% and 20% in the second and subsequent quarters. Management
continues to maintain or improve margins by negotiating with multiple suppliers
for better pricing and by automating the fulfillment process.
 
 In the
first quarter of 2005, Registrant through its travel business subsidiary
generated product sales of $116,940 at a cost of $106,495 as compared to sales
of $10,524 at a cost of $11,252 in the first quarter of 2004. The travel
operation incurred a net loss of $22,723 in the first quarter of 2005 and an
accumulated deficit of $248,247 since inception in October 2002. While
Management has reduced the monthly loss by consolidating its base of operation
it has not reached its revenue target of $150,000 per quarter and will continue
to work to meet this goal. Management continues to build its travel business by
forming affiliations with partners in Southeast Asia and in Brazil and estimates
that the travel business will break-even when sales approach $150,000 per
quarter and believes the goal is achievable within six months.
  ***Page
- 5***
 
 MARKETING.
Registrant has begun to advertise online by paying-for-clicks and
search-engine-placements and other media in 2004 and has continued its effort
into 2005. In the first quarter of 2005, Registrant recorded marketing expenses
of $32,696 or 5.1% of eCommerce sales as compared to $5,021 or 2.2% of sales in
2004. Management expects marketing expenses to increase as sales increase and
has planned to use up to 10% of gross product sales for marketing in
2005.
 
 GENERAL
AND ADMINISTRATIVE. Registrant’s general and administrative expenses consist of
costs for general and corporate functions, including facility fees, travel,
telecommunications and investor relations. In the first quarter of 2005,
Registrant recorded general and administrative expense of $65,446 as compared to
$90,980 in the first quarter of 2004 - a decrease of 28.1%. The decline is
primarily attributable to a decline in travel and financing expenses which were
not incurred in the current quarter. Management expects general and
administrative expenses to remain at their current level for the second quarter
of 2004.
 
 MANAGEMENT
FEES AND SALARIES. In the first quarter of 2005, Registrant incurred management
fees and staff salaries of $186,905, an increase of 82.2% over the first quarter
of 2004 of $102,598 as the number of employees has more than doubled over the
year from 10 staff to 22 staff. Management expects staff salaries to increase as
hiring continues in the coming quarters.
 
 PROFESSIONAL
FEES. Professional fees include legal and auditing fees. During the first
quarter of 2005, professional fees totaled $10,601 as compared to $9,621 in
2004, an increase of 10.2%. No significant legal expenses have been incurred in
the first quarter of 2005. The Registrant’s subsidiary is pursuing equity
financing and plans to file its prospectus in the second quarter of 2005 thus
professional fees are expected to increase subsequent to the first quarter in
2005. Other than professional fees related to raising capital, Management is
unaware of factors which are likely to increase professional fees in the second
quarter of 2005.
 
 
 **(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 Internet traffic
click-throughs generated by the domain name assets; and (iv) trading of non-core
domain name assets.
 
 Management’s
previously stated goal of eliminating the working capital deficiency has been
achieved in the third quarter of 2004 and maintained into the first quarter of
2005. At March 31, 2005 Registrant had current assets in excess of current
liabilities resulting in a positive working capital of $753,361 as compared to a
working capital of $411,397 at the fiscal year ending December 31, 2004. During
the three-months ended March 31, 2005 Registrant had net income of $133,472 and
an increase in cash of $164,751, compared to net income of $45,221 and a
decrease in cash of $10,064 for the same three-month period of last year.
Operating activities generated cashflows of $72,593 from net income after
primarily reducing accounts payable during the three-month period ended March
31, 2005. To date, Registrant has reduced its accumulated deficit to $1,065,229
and has stockholders’ equity of $2,289,188 as at March 31, 2005.
  ***Page
- 6***
 
 In
October 2003, Registrant became a majority shareholder of FrequentTraveller
which has developed and is operating travel sale websites utilizing
non-exclusive access to 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 businesses other than travel sales
for them. FrequentTraveller has two managers and is not expected to generate
sufficient revenue to cover expenses for at least twelve months. Any fund
shortfall, currently requiring $10,000 per month, will be covered by Registrant
or by raising outside capital. As of March 31, 2005, FT has raised $191,826 in
private placement equity, including $70,000 invested by the Registrant, and
accumulated a deficit of $248,247. FT’s working capital is expected to increase
in the second quarter of 2005 as FT completes its private placement. Currently,
$50,200 is classified as an obligation to issue shares by FT.
 
 As
Registrant is working to achieve a positive working capital position and is
currently profitable, opportunities may arise which would require 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 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.
 
  ***Page
- 7***
  **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, Registrant’s Chief Executive Officer and Chief Financial
Officer believe 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 Registrant in this report is accumulated and
communicated to 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
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
- 8***
  **PART II**
 **OTHER
INFORMATION**
 
 
 Item 1. Legal Proceedings.
 
 In
December 1999, DHI commenced a lawsuit in the Supreme Court of British Columbia
(No. C996417) against Paul Green, the former chief executive officer of DHI, for
breach of fiduciary duty for wrongfully attempting to appropriate the
Subsidiary’s business opportunities. DHI 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
Registrant cannot predict whether DHI will prevail, and if it does, what the
terms of any judgment may be.
 
 The
former Chief Executive Officer of DHI, Paul Green, commenced a legal action
against DHI on March 9, 2000 in the Supreme Court of British Columbia (No.
S001317) 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 approximate amount of $30,000, aggravated and
punitive damages, interest and costs. On June 1, 2000, DHI 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.
 
 Registrant
is not aware of any other pending or threatened material legal
proceedings.
 
 
 **Item 2. Changes in Securities.**
 
 On March
22, 2005, the Board of Directors issued 275,000 shares of common stock to Carl H
Jackson pursuant to a domain purchase agreement. 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
- 9***
  **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 first quarter ending
March 31, 2005.
 
 
  ***Page
- 10***
  **PART II - SIGNATURES**
 
 In
accordance with the requirements of the Exchange Act, Registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 **COMMUNICATE.COM
INC.**
 
 
 
 By:*/s/
David M. Jeffs*
 Name:  **David
M. Jeffs**
 Title **:**  **Director
and CEO**
 Dated:  **May
16, 2005**
 
 
 By:*/s/
J. Cameron Pan*
 Name:  **J.
Cameron Pan**
 Title **:**  **CFO**
 Dated:  **May
16, 2005**
 
 
  ***Page
- 11***
  
  
 **Exhibit
31**
 
 
 
 
  ***Page
- 12***
  **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
16, 2005
 
 
 
 ***/s/
David M Jeffs***
 David M
Jeffs, Director and CEO
  ***Page
- 13***
  **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
16, 2005
 
 ***/s/
J Cameron Pan***
 J Cameron
Pan - CFO
  ***Page
- 14***
  
  
 **Exhibit
32**
 
 
  
   ***Page
- 15***
   **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, 2005 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 16,
2005
   
 ***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 May 16, 2005 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 16,
2005
  
  ***Page
- 17***
  
 **EXHIBIT F-1**


**COMMUNICATE.COM
INC.**



**INTERIM
CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH
31, 2005**


(UNAUDITED)








**CONSOLIDATED BALANCE SHEETS**

**INTERIM CONSOLIDATED STATEMENTS OF
OPERATIONS**

**INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWS**

**NOTES TO INTERIM CONSOLIDATED FINANCIAL
STATEMENTS**

***Page
- 18*****COMMUNICATE.COM
INC.**

**CONSOLIDATED BALANCE SHEETS**

March
      31,2005
    December
      31,2004(unaudited)**ASSETS****CURRENT
      ASSETS**Cash
      and cash equivalents
    
    $
    1,229,679
    
    $
    1,064,928Accounts
      receivable
    
    
    13,581
    
    
    9,373Advances
      receivable
    
    
    -
    
    
    2,2911,243,260
    
    
    1,076,592**FIXED
      ASSETS**
    
    
    32,102
    
    
    26,394**INTANGIBLE
      ASSETS**(Note
      2)
    
    
    1,503,725
    
    
    1,503,725$
    2,779,087
    
    $
    2,606,711**LIABILITIES
      AND STOCKHOLDERS’ EQUITY****CURRENT
      LIABILITIES**Accounts
      payable and accrued liabilities
    
    $
    489,899
    
    $
    665,195**STOCKHOLDERS’
      EQUITY**Capital
      stock(note
      4)Authorized50,000,000
      Common shares, $0.001 par valueIssued
      and outstanding15,321,339
      Common shares
    
    
    6,331
    
    
    6,331Additional
      paid in capital
    
    
    3,133,886
    
    
    3,133,886Share
      subscriptions (Note 11)
    
    
    100,000
    
    
    -FT
      obligation to issue shares (Note 3)
    
    
    50,200
    
    
    -Obligation
      to issue shares (Note 4)
    
    
    64,000
    
    
    -Accumulated
      deficit
    
    
    (1,065,229
    )
    
    (1,198,701
    )2,289,188
    
    
    1,941,516$
    2,779,087
    
    $
    2,606,711


The
accompanying notes are an integral part of these interim consolidated financial
statements.
***Page
- 19*****COMMUNICATE.COM
INC.**
**INTERIM CONSOLIDATED STATEMENTS OF
OPERATIONS**
(unaudited)

Three
      months ended March 31, 2005
    
    
    Three
      months ended March 31, 2004**REVENUES**Domain
      name leasing and advertising
    
    $
    337,337
    
    $
    66,548Domain
      name sales
    
    
    -
    
    
    200,000eCommerce
      sales
    
    
    640,989
    
    
    229,561Total
      revenues
    
    
    978,326
    
    
    496,109**COST
      OF REVENUES**Cost
      of domain name sales and commissions
    
    
    -
    
    
    74,857eCommerce
      direct costs
    
    
    553,116
    
    
    179,582Total
      cost of revenues
    
    
    553,116
    
    
    254,439**GROSS
      PROFIT**
    
    
    425,210
    
    
    241,670**EXPENSES**Marketing
    
    
    32,696
    
    
    5,021General
      and administrative
    
    
    65,446
    
    
    90,980Management
      fees and salaries
    
    
    186,905
    
    
    102,598Professional
      fees
    
    
    10,601
    
    
    9,587Depreciation
    
    
    2,134
    
    
    608297,782
    
    
    208,794**INCOME
      BEFORE OTHER ITEMS**
    
    
    127,428
    
    
    32,876**GAIN
      ON DEBT SETTLEMENT**
    
    
    6,044
    
    
    -**NON-CONTROLLING
      INTEREST SHARE OF LOSS IN SUBSIDIARY**
    
    
    -
    
    
    6,691**DILUTION
      GAIN IN****FREQUENT
      TRAVELLER.COM**(Note 3)
    
    
    -
    
    
    5,654**INCOME
      BEFORE INCOME TAXES**
    
    
    133,472
    
    
    45,221**INCOME
      TAXES**(Note
      7)Current
    
    
    53,389
    
    
    10,000Recovery
      of deferred tax assets
    
    
    (53,389
    )
    
    (10,000
    )**NET
      INCOME FOR THE PERIOD**
    
    $
    133,472
    
    $
    45,221**EARNINGS
      PER SHARE:**Basic****
    
    $
    0.01
    
    $
    0.01Diluted****
    
    $
    0.01
    
    $
    0.01**WEIGHTED
      AVERAGE NUMBER OF COMMON**
      **SHARES
      OUTSTANDING:**Basic
    
    
    15,024,188
    
    
    14,737,493Diluted
    
    
    17,024,188
    
    
    18,098,743



The
accompanying notes are an integral part of these interim consolidated financial
statements.***Page
- 20***
**COMMUNICATE.COM
INC.**

**INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWS**
(unaudited)
Three
      months ended March 31, 2005
    
    
    Three
      months ended March 31, 2004**CASH
      FLOWS FROM OPERATING ACTIVITIES**Net
      income for the period
    
    $
    133,472
    
    $
    45,221Adjustments
      to reconcile net income to net cash
      from
      operating activities-
      non-controlling interest share of losses
    
    
    -
    
    
    (6,691
    )-
      dilution gain in Frequent Traveller.com
    
    
    -
    
    
    (5,654
    )-
      non-cash cost of domain name sales
    
    
    -
    
    
    54,857-
      depreciation
    
    
    2,134
    
    
    608-
      accrued interest
    
    
    -
    
    
    (488
    )-
      accounts and advances receivable
    
    
    (1,917
    )
    
    (3,384
    )-
      prepaid expenses
    
    
    -
    
    
    2,067-
      accounts payable and accrued liabilities
    
    
    (175,296
    )
    
    (60,468
    )**CASH
      FROM********OPERATING
      ACTIVITIES**
    
    
    (41,607
    )
    
    26,068**CASH
      FLOWS FROM INVESTING ACTIVITIES**-
      purchase of computer equipment
    
    
    (7,842
    )
    
    -**CASH
      FLOWS USED IN INVESTING ACTIVITIES**
    
    
    (7,842
    )
    
    -**CASH
      FLOWS FROM FINANCING ACTIVITIES**-
      issuance of common stock
    
    
    -
    
    
    10,000-
      share subscriptions (Note 11)
    
    
    100,000
    
    
    --
      FT obligation to issue shares (Note 3)
    
    
    50,200
    
    
    --
      obligation to issue shares (Note 4)
    
    
    64,000
    
    
    --
      loan proceeds (repayments)
    
    
    -
    
    
    (50,000
    )**CASH
      FLOWS FROM (USED IN) FINANCING ACTIVITIES**
    
    
    214,200
    
    
    (40,000
    )**EFFECT
      OF EXCHANGE RATE CHANGES**
    
    
    -
    
    
    3,868**INCREASE
      (DECREASE) IN CASH AND CASH EQUIVALENTS**
    
    
    164,751
    
    
    (10,064
    )**CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD**
    
    
    1,064,928
    
    
    393,039**CASH
      AND CASH EQUIVALENTS, END OF PERIOD**
    
    $
    1,229,679
    
    $
    382,975**SUPPLEMENTAL
      CASH FLOW INFORMATION**(Refer
      to Note 8)


The
accompanying notes are an integral part of these interim consolidated financial
statements.


***Page
- 21*****COMMUNICATE.COM
INC.**
**NOTES TO INTERIM CONSOLIDATED FINANCIAL
STATEMENTS**
**March
31, 2005**
****
(unaudited)

**NOTE
1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION**

The
Company’s subsidiary Domain Holdings Inc. (“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. As at March
31, 2005, the Company owns 54% of the outstanding shares of FT. (Refer to Note
3.)

**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, 2004 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, 2005 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2005.

**Comparative
figures**
Certain
comparative figures have been reclassified in order to conform to the current
period’s financial statement presentation.

**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 54% interest in FT. All significant intercompany
balances and transactions are eliminated on consolidation.

**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.

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. In accordance with EITF 99-19 the
Company records web advertising revenue net of service costs.

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.

Revenues
from the sales of travel products, including tours, airfares and hotel
reservations, are non-refundable upon receipt of payment and are accordingly
recognized as received. All costs relating to travel related sales are accrued
at that time.***Page
- 22***
**COMMUNICATE.COM
INC.**
**NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
**March
31, 2005**
**(unaudited)**
**NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont’d)**

**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 and net earnings
per share as if the Company had accounted for itsstock-based employee compensation using the fair value provisions of SFAS No.
123 using the assumptions as described in Note 4:

Three
      months ended
      March
      31, 2005
    
    
    Three
      months ended
      March
      31, 2004Net
      income for the period
    
    
    As
      reported
    
    $
    133,472
    
    $
    45,221SFAS
      123 compensation expense
    
    
    Pro-forma
    
    
    -
    
    
    (3,924
    )Net
      income for the period
    
    
    Pro-forma
    
    $
    133,472
    
    $
    41,297Pro-forma
      basic net income per share
    
    
    Pro-forma
    
    $
    0.03
    
    $
    0.01Pro-forma
      diluted net income per share
    
    
    Pro-forma
    
    $
    0.03
    
    $
    0.01

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, deferred 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 .deferred 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 deferred 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.

***Page
- 23***

**COMMUNICATE.COM
INC.**
**NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
**March
31, 2005**
****
(unaudited)
**NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(cont’d)**

**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 intangible assets, stock
based compensation, disclosure of contingent assets and liabilities at the date
of the financial statements and 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”, 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
historical cost balances are translated by using historical exchange rates.
Resulting re-measurement gains or losses are reported on the consolidated
statement of operations.

**Earnings
per share**
Basic
earnings per share is computed by dividing earnings for the period by the
weighted average number of common shares outstanding for the period. Fully
diluted earnings 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.


**Cash
and cash equivalents**
The
company considers all highly liquid instruments with an original maturity of
three months or less at the time of issuance to be cash
equivalents.

**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 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.

The
Company’s intangible assets, which consist of its portfolio of generic domain
names, has been determined to have an indefinite life and management has
determined, based upon projected cash flows and market capitalization, that
there is no impairment of the carrying value of its intangible assets at March
31, 2005.

**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.

***Page
- 24***
**COMMUNICATE.COM
INC.**
**NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
**March
31, 2005**
**(unaudited)**
**NOTE
3 - FREQUENT TRAVELLER.COM (“FT”) OBLIGATION TO ISSUE
SHARES**

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
settlement of 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 fiscal 2003. In 2004, FT issued
350,000 shares to the Company in settlement of advances of $35,000 and issued
334,578 shares to non-controlling interests for total proceeds of $51,726
resulting in a net gain on dilution of $12,353 in fiscal 2004. On November 16,
2004, FT declared a nine share for every one share stock dividend. As of March
31, 2005, FT has 12,936,690 common shares issued and outstanding and the Company
owns 7,000,000 common shares representing 54% of FT’s issued and outstanding
common shares.

During
the quarter ended March 31, 2005 FT had planned to raise $100,000 at $0.05 per
common share in an equity private placement by June 2005 and had received
$50,200 from investors. Upon completion of the private placement FT is expected
to issue up to 2,000,000 common shares and the Company will subscribe for an
amount sufficient to maintain its majority stake in FT, The monies raised will
be used as working capital for FT.


**NOTE
4 - 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, 2005, the Company authorized but has not yet issued
160,000 shares of restricted common stock of the Company to employees to satisfy
bonuses of $64,000 awarded and recorded by DHI in 2004.

During
the year ended December 31, 2004, the Company issued 50,000 shares of restricted
common stock of the Company to two employees in satisfaction of bonuses of
$10,000 granted and recorded by DHI in 2003 and issued 580,000 shares of
restricted common stock to an officer under an option agreement (see Stock
Options below).

**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 July 2004 the officer exercised his option for
$58,000, and accordingly, the Company issued 580,000 shares of restricted common
stock.

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 was amortized to expense over the vesting period which ended July 24,
2004. 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
5 - RELATED PARTY TRANSACTIONS**

During
the quarter ended March 31, 2005 consulting fees totalling $51,000 (2004 -
$48,000) were incurred and paid to three executives of the Company.

***Page
- 25***

**COMMUNICATE.COM
INC.**
**NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
**March
31, 2005**
****
(unaudited)
**NOTE
6 - 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 from 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, and accounts payable and accrued liabilities. The fair values of
these financial instruments approximate their carrying values.

**NOTE
7 - 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.

As at
March 31, 2005 the Company and its subsidiaries havenet
operating loss carryforwards of approximately $3,500,000that
result in deferred tax assets. The majority of the loss carryforwards will
expire, if not utilized, through 2025 with the majority expiring by 2006. The
Company’s subsidiary DHI also has approximately $1,500,000 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. Management
believes that the
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
8 - SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS**
Three
      month period ended March 31, 2005
    
    
    Three
      month period
      ended
      March 31, 2004Cash
      paid during the period for:Interest
    
    $
    -
    
    $
    7,656Income
      taxes
    
    $
    -
    
    $
    -

On
January 7, 2004, 50,000 shares were issued in settlement of $10,000 of DHI’s
bonus payable. (Refer to Note 4.)
On
January 7, 2005, 160,000 shares were authorized to be issued in settlement of
$64,000 of DHI’s bonus payable. (Refer to Note 4.)


**NOTE
9 - 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 approximate amount of $30,000, 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.

***Page
- 26***
**COMMUNICATE.COM
INC.**
**NOTES
TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**
**March
31, 2005**
****
(unaudited)

**NOTE
10 - 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 the 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. In September 2004, pursuant to an amendment between the parties to
the July 3, 2003 agreement of sale, DHI agreed to substitute call.com in place
of body.com. As of March 31, 2005, Manhatten Assets has paid $1,000,000 to DHI
under the terms of the contract and the Company has paid $100,000 in commissions
on the $1,000,000.

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 arising from the sale of products and
services marketed on webpages hosted on the domain names, or $2,500, commencing
January 2005. No value is ascribed to the perpetual royalty upon sale or
transfer of a domain name right as future royalty amounts are not readily
determinable and collectability is not reasonably assured. DHI has waived the
royalty receivable from Manhatten Assets until July 2005 while awaiting the
development of the websites.


**NOTE
11 - SUBSEQUENT EVENTS**

On March
22, 2005, the Company entered into an agreement to purchase from an unrelated
third party a portfolio of domain names and $100,000 cash in exchange for
275,000 restricted common shares issued from treasury. The undertakings were
completed and the common shares were released to the seller on April 5,
2005.

On May 5,
2005, DHI entered into an agreement with FT whereby FT would have to rights to
sell travel products on Brazil.com, Indonesia.com, Malaysia.com, Canadian.com
and GreatBritain.com by agreeing to pay at least a minimum royalty commencing
2006 of $150,000 per annum. The royalty, averaging 3% up to $100 million, is
based on sales of travel products by FT. DHI retains the rights to sell other
services, including advertising, on the websites. The agreement expires on
December 31, 2010 and may be extended in increments of 5 years thereafter with
the minimum annual royalty recalculated based on the average from the previous
5-year period.


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