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SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,  D.C.  20549


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FORM 10-K





|ANNUAL    REPORT PURSUANT TO SECTION 13 OR 15(d)
|------------------------------------------------
|OF THE    SECURITIES EXCHANGE ACT OF 1934       
|FOR    THE FISCAL YEAR ENDED DECEMBER 31, 2002  
|COMMISSION    FILE NUMBER 000-29739             

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|REGISTER.COM,
        INC.                                               
|-------------------------------------------------------------------------
|(Exact
        name of registrant as specified in its charter)           
|                                                                         
|Delaware                                                                 
|(State
        of incorporation)                                         
|                                                                         
|575
        Eighth Avenue, 8th Floor                                     
|New
        York, New York 10018                                         
|(212)
        798-9100                                                   
|(Address,
        including zip code, and telephone number,              
|including
        area code, of registrants principal executive offices)
|                                                                         
|Securities
        registered pursuant to Section 12(b) of the Act:      
|None                                                                     
|                                                                         
|Securities
        registered pursuant to Section 12(g) of the Act:      
|Common
        Stock $0.0001 par value                                   
|Preferred
        Stock Purchase Rights                                  
|                                                                         




Indicate by check mark whether the registrant (1) has  filed all reports required to be filed by Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding 12 months (or for such shorter period  that the registrant was required to file such reports), and (2) has been  subject to such filing requirements for the past 90 days.





Yes     No





Indicate by check mark if disclosure of delinquent filers  pursuant to Item 405 of Regulation S-K is not contained herein, and will not be  contained, to the best of registrants knowledge, in definitive proxy or  information statements incorporated by reference in Part III of this Form 10-K  or any amendment to this Form 10-K.





Indicate by checkmark whether the registrant is an  accelerated filer (as defined in Exchange Act Rule 12b-2):





Yes     No





The aggregate market value
  of the voting stock held by non-affiliates of the registrant as of June 28,
  2002 was approximately $263,088,875 (based on the last reported sale price on
  the NASDAQ National Market on that date). The number of shares outstanding of
  the registrants common stock as of March 20, 2003 was 40,897,740. The
  registrant does not have any non-voting stock outstanding.





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REGISTER.COM,  INC.


2002  FORM 10-K ANNUAL REPORT


TABLE OF  CONTENTS





|                                                                                                                          | Page
|------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                          |     
|PART
        I                                                                                                            | 3   
|                                                                                                                          |     
|Item
        1.  Business.                                                                                                | 3   
|                                                                                                                          |     
|Item
        2.  Properties.                                                                                              | 38  
|                                                                                                                          |     
|Item
        3.  Legal Proceedings.                                                                                       | 39  
|                                                                                                                          |     
|Item
        4.  Submission of Matters to a Vote of Security Holders.                                                     | 40  
|                                                                                                                          |     
|PART
        II                                                                                                           | 41  
|                                                                                                                          |     
|Item
        5.  Market for Registrants Common Equity and Related Stockholder
        Matters.                           | 41  
|                                                                                                                          |     
|Item
        6.  Selected Financial Data.                                                                                 | 42  
|                                                                                                                          |     
|Item
        7.  Managements Discussion and Analysis of Financial Condition
        and Results of Operations.           | 43  
|                                                                                                                          |     
|Item
        7A.  Quantitative and Qualitative Disclosures About Market Risk.                                             | 57  
|                                                                                                                          |     
|Item
        8.  Financial Statements and Supplementary Data.                                                             | 58  
|                                                                                                                          |     
|Item
        9.  Changes in and Disagreements With Accountants on Accounting and
        Financial Disclosure.            | 86  
|                                                                                                                          |     
|PART
        III                                                                                                          | 87  
|                                                                                                                          |     
|Item
        10.  Directors and Executive Officers of the Registrant.                                                     | 87  
|                                                                                                                          |     
|Item
        11.  Executive Compensation.                                                                                 | 91  
|                                                                                                                          |     
|Item
        12.  Security Ownership of Certain Beneficial Owners and Management
        and Related Stockholder Matters. | 105 
|                                                                                                                          |     
|Item
        13.  Certain Relationships and Related Transactions.                                                         | 108 
|                                                                                                                          |     
|Item
        14.  Controls and Procedures.                                                                                | 108 
|                                                                                                                          |     
|Item
        15.  Exhibits, Financial Statement Schedules, and Reports on Form
        8-K.                               | 109 




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This  report contains forward-looking statements relating to future events and our  future performance within the meaning of Section 27A of the Securities Act of  1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as  amended, including, without limitation, statements regarding our expectations,  assumptions, estimates, projections, beliefs, intentions or future strategies  about our business and our industry that are signified by the words expects,  anticipates, intends, believes or similar language.  Actual results could differ materially from  those anticipated in such forward-looking statements.  All forward-looking statements included in this document are  based on information available to us on the date hereof.  It is routine for our internal projections  and expectations to change as the year or each quarter in the year progress,  and
therefore it should be clearly understood that the internal projections and  beliefs upon which we base our expectations may change prior to the end of each  quarter or the year.  Although these  expectations may change, we may not inform you if they do. Our company policy  is generally to provide our expectations only once per quarter, and not to  update that information until the next quarter.  We caution that our business and financial performance are  subject to substantial risks and uncertainties.  In evaluating our business, Investors and prospective investors  should carefully consider the information set forth below under the caption  Risk Factors in addition to the other information set forth herein and  elsewhere in our other public filings with the Securities and Exchange Commission.





PART I





Item 1.   Business.





Overview





We are a provider of global
  domain name registration and Internet services for businesses and consumers
  that wish to have a unique address and branded identity on the Internet. 
  Domain names serve as addresses and identities on the World Wide Web. 
  They enable a business or person to establish a Web presence and are integral
  to the use of websites (www.register.com), email (johndoe@register.com)
  and other types of Internet communication.





We began processing registrations in the generic top  level domains (gTLD) .com, .net and .org in June 1999 and, as such, were the  first registrar accredited by the Internet Corporation for Assigned Names and  Numbers (ICANN) to compete in the domain name registration market after ICANN  introduced competition in the industry.   We had approximately 3.3 million active domain name registrations under  management as of December 31, 2002, representing over 1.1 million customers.  Currently, we register, renew and transfer  domain names across the .com, .net and .org gTLDs, in new gTLDs such as .biz,  .info  and .name and in over 400 country  code top level domains (ccTLDs), including sub domains, such as .co.uk and  .org.uk for the United Kingdom, .de for Germany and .jp for Japan.





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We believe that we offer a quick and user-friendly  registration process as well as responsive and reliable customer support.  We also offer a range of value-added  products and services targeted to assist our customers in developing and  maintaining their Web presence, including:





|  | Products and Services    Provided by Us                                        |  |   | Products and Services    Resold By Us
|- | ------------------------------------------------------------------------------ |  | - | -------------------------------------
|  |                                                                                |  |   |                                      
| | website-creation tools under the names FirstStepSite®    and WebSiteNOW!      |  |  | email                                
|  |                                                                                |  |   |                                      
| | intellectual property and brand protection services    related to domain names |  |  | search engine submission services    
|  |                                                                                |  |   |                                      
| | domain name forwarding                                                         |  |  | website design services              
|  |                                                                                |  |   |                                      
|  |                                                                                |  |  | digital certificates                 




Domain name registration activity is driven by the use  of the Internet by businesses and consumers for electronic commerce and  communication, the promotion, marketing and protection of brands and identities  across the world and other online activities.   Our mission is to become the preferred partner for customers who seek to  create, enhance and manage their Web presence.





Our Global Web Services
  division focuses on customers who are typically small to medium-size businesses
  as well as small offices/home offices and individuals.  Generally, these
  customers purchase domain name registration services directly from our website
  located at www.register.com.  In order to extend our distribution we maintain
  a Global Partner Network of companies that resell our domain name registration
  and Web services.  Our network partners are typically Internet Service
  Providers (ISPs), web-hosting companies, telecom carriers and web portals, but
  also include online and offline retailers and business aggregators.   
  Using our software solutions, these companies resell our domain name registration
  services and related products and services to their customers.





With operations in the United States, Canada and  Europe, our Corporate Services division provides domain name registration and  related products and services to large corporate enterprises with specialized  registration needs including global registration and management services and  online brand and trademark protection.





Through our RegistryPro subsidiary, we are working  toward establishing a registry for the new gTLD .pro.  The .pro domain will be dedicated to certified professionals such  as lawyers, doctors and accountants.   All .pro domain names are planned to be issued with a digital  certificate to facilitate secure communications and transactions.  This product is intended to assist such  professionals with their heightened confidentiality obligations.  We also have a small equity stake in  Afilias, the consortium of  registrars,  which manages the registry for the new gTLD .info and provides outsourced  registry services to other top level domain registries including .org.





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Corporate History





We are the successor
    by merger to Forman Interactive Corp.  Forman Interactive commenced
     operations in 1994 as a developer of electronic commerce software, and began
    offering web-hosting and related products and services in 1997.  In
    February 1998, we began to distribute domain names.  In April 1999,
    we commenced offering registration services for ccTLDs.  In June 1999,
    Forman Interactive merged with and into the then newly formed Register.com,
    Inc. and we began operating as a paid registrar in the .com, .net and .org
    domains.  In  June 2000, we acquired Inabox, Inc. and we have used Inaboxs
    software to develop our FirstStepSiteâ  and
    WebsiteNOW! products.  In September  2000, we acquired Afternic.com,
    Inc., a secondary market exchange for domain names, but we decided to abandon
    the Afternic business in September 2002.  In March 2002, we
acquired Virtual Internet  plc, a U.K. based company, whose global domain name
    registration and online intellectual property protection business became
    our European Corporate Services division (formerly known as Net Searchers).  In
    addition, Virtual Internet had been our joint venture partner in RegistryPro,
    which we now own in its entirety.  For more information regarding these
    acquisitions, see Note 13  Acquisitions to Item 8 Financial
    Statements and Supplementary Data.





Domain Name Registration System





The Internet domain name registration system consists  of two principal functions: registry and registrar.  A registry maintains a master database of domain names, and their  corresponding Internet Protocol (IP) addresses, registered in a particular top  level domain, such as .com, .us or .uk.   Some registries outsource the technical function associated with this  task.  A registrar, such as  Register.com, acts as an intermediary between the registry and the businesses  and consumers, referred to as registrants, seeking to register domain  names.  Registrars typically handle  billing, customer service and the technical management of a domain name  registration.  As of March 10, 2003,  there were 163 registrars accredited by ICANN to accept registration in one or  more of the gTLDs, however not all of these accredited registrars are  operational.  In addition, there are  many resellers that are not ICANN
accredited registrars, but compete in the  marketplace as a reseller of domain name registrations.





The domain name system is organized according to  industry nomenclature by levels, so that, for example, in the domain name  mybrand.com, .com is the top level domain and mybrand is the second level  domain.  Top level domains are  classified as either gTLDs or ccTLDs.   Although the most common gTLDs continue to be .com, .net and .org, in  November 2000, ICANN approved bids for seven new gTLD registries:  .biz, .info, .name, .pro, .museum, .coop and  .aero.





There are currently 477
    different ccTLDs, including sub domains, such as .co.uk and .org.uk for the
    United Kingdom, .de for Germany and .jp for Japan representing over 240 countries.  Each
    registry for a ccTLD is responsible for maintaining and operating its own
    database of registered domain names.  Some ccTLDs are unrestricted and
    allow anyone, from anywhere, to register their domain names on a first-come,
    first-served basis.  Others require that  registrants have a local presence
    in the country.  Several high profile ccTLDs that have recently relaxed
    previous restrictions include .us (United States) and .cn (China).  While
    there have been movements by ICANN directed at creating uniform domain name
    registration rules and registrar administration guidelines, to date there
    has been no international consensus.





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From January 1993 until April 1999, Network Solutions,  Inc., now a part of VeriSign, Inc., was the sole entity authorized by the U.S.  government to act as registrar and registry for domain names in the .com, .net  and .org top level domains.  In November  1998, ICANN was selected by the U.S. Department of Commerce to oversee the  management of the .com, .net and .org domains.   In April 1999, as a preliminary step to introducing competition into the  domain name registration system for .com, .net and .org domains, ICANN selected  us as one of five registrars to participate in a testbed to evaluate whether  the registration system could accommodate multiple registrars.  In June 1999, we were the first of these  five competitive registrars to launch our registration services.  In November 1999, the testbed was completed,  and all registrars meeting ICANNs standards for accreditation were permitted  to register
domain names in the .com, .net and .org domains.





For a more detailed discussion of the regulatory  background of the domain name registration system, see Administration of the  Internet; Government Regulation and Legal Uncertainties.  For risks associated with the domain name  system, see Risk Factors.





The Register.com Strategy





Our objective is to develop a long-term relationship  with our customers by helping them utilize the Internet to establish an online  presence and communicate and conduct commerce simply and effectively.  Domain names serve as the cornerstone for  establishing a Web presence.  We believe  customers will increasingly purchase additional products and services from us  to help put their domain names to use in order to achieve their online  goals.  In 2002, the percentage of our  new customers who, when purchasing a domain name registration, took advantage  of our value-added services including email, website building tools and site  promotion services, more than doubled.





We therefore focus our marketing efforts on attracting  and retaining customers who use their domain names and are more likely to renew  them and to take advantage of the additional products and services we  offer.  By focusing on the quality of  our customer base, rather than the volume of domain names registered, we  believe we will succeed in increasing our revenue per customer.





We believe that by delivering superior levels of  customer service and enhancing our current product and service offerings, we  can strengthen customer loyalty and increase the lifetime value of our  customers.  To the extent we succeed in  these efforts, we can leverage that success by positioning Register.com as a  preferred registrar for partners whose products and services may appeal to our  target customers.  We are trying to  anticipate and meet our customers needs by improving our website features and  technology and by entering into new business alliances through which we can  offer new products and services.





Restructuring





In late 2002, we began
    a restructuring process to address the challenges our business faced.   In
    2001, we established an organizational structure based on customer segmentation.
    This structure proved to be inefficient,  particularly as the growth that
    we had anticipated in our marketplace did not
  materialize.  The goals of our restructuring program are to reduce costs,
   improve our technology and systems, improve operating efficiencies and increase

  productivity and flexibility.  We intend to achieve these goals primarily
   by improving our systems performance and are actively working to make
    our technology architecture more flexible in order to enable us to introduce

  new products and services more rapidly and cost-effectively.





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We have begun projects throughout our company to  improve our financial systems, our database architecture and our business  processes.  We made a decision to focus  only on our core businesses and closed down two of our customer segments   Afternic (a secondary market exchange for domain names that we had acquired in  September 2000) and Registry Advantage (an outsourced registry service business  that we had launched in August 2001).   We also combined our Retail and Global Partner Network into our Global  Web Services division.  In so doing, we  eliminated certain managerial positions, including the Chief Operating Officer  position, and refocused our general managers on revenue growth by creating  separate operations and product development groups and unifying all application  developers and technology related personnel into one group.





Distribution Channels





We believe that our multiple distribution channels enable  us to reach a broad range of potential customers with products and services  targeted to their needs and to increase our exposure across the market.  We believe that we provide our customers  with quick, easy-to-use, value-added and flexible solutions across all of our  distribution channels.





www.register.com.Through our www.register.com  website, our customers can quickly and easily register a domain name, purchase  the value-added products and services we offer to establish, maintain and  enhance their Web presence and manage their account.  Our marketing efforts focus on maximizing our return on  investment by improving customer retention, upselling additional products and  services to our domain name registrants and lowering customer acquisition  costs.  We have used a combination of  direct response and targeted mass marketing vehicles, including email, direct  mail and online marketing tactics to reach our target customers efficiently.  We also maintain an affiliate program  through which we pay a commission for customer referrals that result in domain  name registrations to encourage others to provide links to our register.com  website.





Corporate  Services.  Our  Corporate Services division is dedicated to meeting the needs of larger, global  and brand-intensive companies with respect to domain name registration and  management, and online brand and trademark protection.  We expanded the international reach of this  division in 2002 through our acquisition of Virtual Internet.  Many companies currently rely on internal  personnel to monitor and protect their name brands and trademarks on the  Internet by registering and renewing these domain names on a worldwide basis,  across hundreds of ccTLDs.  We believe  that we can provide these services more efficiently through our dedicated team  of account executives and associates.   We reach these customers principally through our direct sales forces in  the U.S. and Europe, supported by our marketing efforts.  Our clients include over 60 of the top 100  worlds most valuable
brands, as ranked by Interbrand in 2002.





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Global  Partner Network.  We  offer our products and services indirectly through our Global Partner Network  (GPN) of companies that resell our domain name registration and Web  services.  Our network partners are  typically Internet Service Providers (ISPs), web-hosting companies, telecom  carriers and web portals, but also include online and offline retailers and  business aggregators.  These companies  seek to generate revenue and increase their own customer retention by offering  our domain name registration and related Web services to their customers.  In addition to providing our GPN partners  with software solutions to enable them to resell our services, we provide them  with tools that allow them to control aspects of domain name registrations for  their customers directly and to monitor their customers domain name  registration activity.  We offer  partners a choice between software
solutions that are distinguishable primarily  based upon the complexity of implementation and the degree of integration they  provide.  As part of our restructuring  efforts and in order to increase efficiencies, we are currently exploring  opportunities to outsource certain back-end operations necessary to maintain  and grow our Global Partner Network.





NameBargain.  Through our www.namebargain.com website, we offer  registrations at a substantial discount to our standard registration fees.  Domain names registered through this service  come with limited services and limited customer support.





Products and Services





We are committed to introducing new best of breed  products and services in order to empower our customers to establish their Web  presence and drive its success.  We  offer the following key products and services:





Registration Services. 
  Our core expertise is providing domain name registration and management services. 
  We register, renew and transfer domain names in the .com, .net and .org gTLDs,
  register and transfer in the new .biz, .info and .name gTLDs and are able to
  register domain names in over 400 ccTLDs, including sub domains, of which 41
  may currently be registered through our www.register.com website.  We generally
  offer one-, two-, five- and ten-year registration periods for the initial domain
  name registration and one to nine year terms for renewals.  We provide
  the following basic products and services, for no additional fee, together with
  our registration services:





| |  | FirstStepSiteâ. 
        We provide our customers who have registered domain names through www.register.com
        the ability to create a three-page website and post it on the Internet. 
        Customers can select from a multitude of layouts, themes and colors and
        also upload images to customize their FirstStepSites.                                                                                                                                                                                   
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | Domain Name
        Forwarding.  We allow customers to forward any domain name to any
        website page they choose.  Our basic service adds a small navigation
        bar with advertising in a frame at the bottom of the websites screen.                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | Domain Manager. 
        This online application enables our customers to view and modify important
        account information online, on a real-time basis, including their email
        address, the location of the server that hosts their website and all billing
        information, as well as enables customers to renew their registrations. 
        On a more technical level, Domain Manager allows our customers to modify
        certain information about their domain names such as zone file addresses.




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| |   |                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | DNS Services.     We are one of the largest authoritative Domain Name Server (DNS)    providers in the world.  DNS provides    the Internet and Internet users with authoritative routing information for    domain names.




Renewal  Services.  Encouraging  our customers to renew their domain name registrations with us is of great  importance, as their renewals will allow us to increase profitability by  lowering overall marketing costs.  We  are committed to making our renewal services more efficient and easier to  use.  In addition, to strengthen our  renewal efforts, and to help our customers protect their domain name  registrations from inadvertent lapse and deletion, we have developed  retention-based initiatives and maintain services such as QuickRenew, a  one-step renewal process, SafeRenew, our automatic renewal service, and  Renewal Manager, an easy way to renew multiple domain name registrations at  one time.





Domain  Name Registrant and Registrar Transfers.  We facilitate the processing of domain name  registration transfers between registrants.   Also, we enable customers to transfer registrations they originally  registered with a different registrar to us.





Web  Services.  Promoting  usage of domain names is important to improving our renewal stream and  increasing our customers lifetime value.   To achieve this, we offer value-added products and services, some of  which we provide directly and some of which are provided by third parties  contracted by us, including advertisers.   These products and services include:





| |  | Branded Email.     We resell comprehensive email services to our customers.  These email services enable our customers    to use their unique domain names to create branded email addresses, such as myname@mybrand.com.    Our current email offering allows our customers to access their email via a    web-based interface on their own email client.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                           
| |  | WebSiteNOW!.     We offer our customers the ability to create, host and track traffic    on easy to build, template driven, professional-looking websites.  Our WebSiteNOW! offering has greater    storage space and is more flexible to customize than FirstStepSiteâ.                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                           
| |  | Web-hosting.     We offer complete web-hosting
      services to our customers primarily by referring them to the offerings
      of our advertisers.                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                           
| |  | Website design services.  We offer professional
      design services through a partner that can help our customers  build a
      customized website.                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                           
| |  | Platinum FirstStepPortal®.  Our premium domain name forwarding service    allows customers to point their domain names to existing sites on the    Internet without a navigation bar or advertising appearing on the screen.                                                                                                                              




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| |  | Website promotion.     We offer services facilitating the submission of our customers domain    names and keywords to various search engines.  This helps our customers promote their websites.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                 
| |  | Email marketing.     We resell services that allow our customers to design, conduct and    track the performance of their own email marketing campaigns.                                        
| |   |                                                                                                                                                                                                 
| |  | Digital Certificates.  We offer digital certificates to our customers to provide a    security key for their services which facilitates conducting e-commerce with    confidence.               




In addition, we pursue advertisers for our websites to  offer additional products and services that are complementary to our own  offerings and appeal to our customers.   These include:





| |  | trademark protection services;                                               
| | - | -----------------------------------------------------------------------------
| |   |                                                                              
| |  | incorporation services;                                                      
| |   |                                                                              
| |  | online marketing;                                                            
| |   |                                                                              
| |  | site monitoring statistics; and                                              
| |   |                                                                              
| |  | virtual intranet applications for the small office    and home office market.




Corporate  Services.  Through our  Corporate Services division, we offer an array of products and services to  assist our global and brand-intensive customers with high volume domain name  registration and management and online brand protection needs including:





| |  | Multiple Domain Registrations and Transfers.  We enable our customers to register and    transfer large numbers of domain names in both the gTLD and ccTLD name    spaces.  For those customers who    consolidate their domain names under our management, we can administer the    renewal process with greater ease.      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                              
| |  | International Brand Protection.  We are able to register domain names in    over 400 ccTLDs, including sub domains, thereby assisting customers in    protecting and marketing their brands worldwide.                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                              
| |  | NameConsole.     We provide a web-based application which allows corporate customers to    provide their employees with managed registration capability, including bulk    registration of gTLDs and ccTLDs, online responding capabilities and user    permission levels through a customized password-protected interface.
| |   |                                                                                                                                                                                                                                                                                                                              
| |  | Internet Audit.     We assist our corporate customers in identifying how their    intellectual property is represented on the Internet, helping them to    identify domain names and web pages that contain references to their marks    and brands.                                                                         




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| |  | NameWatch.     Using this service, our corporate customers can monitor for newly    registered domain names that they believe are confusingly similar or    otherwise potentially infringing of their trademark rights.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                         
| |  | Brand Patrol.     This service helps our corporate customers to monitor non-domain name    related potential online intellectual property infringement, including  unauthorized retailing and metatag    infringement. 
| |   |                                                                                                                                                                                                                         
| |  | Account Masking.     We enable corporate customers to register domain names with anonymity    so that they can confidentially secure a name for a product, service or idea    before it comes to market.                
| |   |                                                                                                                                                                                                                         
| |  | Domain Lock Down®.  We offer domain name security services    that lock names at the registry level, which significantly reduces the risk    of unauthorized alterations to key registrar information.                




Customer Service





We believe that our ability to establish and maintain  long-term relationships with our customers and differentiate ourselves from the  competition depends significantly on the strength of our customer support  operations and staff.  Furthermore, we  value frequent communication with and feedback from our customers in order to  continually improve the quality of care provided by our customer service  representatives.  Our customer support  group seeks to provide dependable and timely resolution of customer inquiries,  24 hours per day, seven days per week.   Our customer service representatives handle general inquiries,  investigate the status of orders and payments and answer technical questions  about the Internet and domain name management.





We maintain a customer
care facility located in Canada.  Our customer care  center provides enhanced customer service and technical support, including a  complementary online and telephone ticketing system, a toll-free call-in  number, and a large staff, to provide faster and more specialized attention to  customer inquiries.  As a result of our  ongoing training, we have teams of customer service representatives who  specialize in key aspects of our business, and who are skilled in assisting our  customers with our products, services and technology.  We also handle a significant portion of customer inquiries made  online through an outsourced facility.





Advertising Sales





We believe that our user base provides advertisers and  merchants with an attractive platform from which to reach their respective  target audiences, particularly for advertisers who are interested in reaching  potential customers at the time they are establishing a Web presence or  starting or expanding a new enterprise.   Our advertising revenues for 2002 decreased by 54% from the previous  year, reflecting a challenging advertising market.  In addition to our Register.com and NameBargain.com websites, we  sell advertising space on FirstStepSiteâ  pages and on web pages to which we point our customers domain names following  their registration until they launch their own website or otherwise change  their DNS records.





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Technology





Our technology infrastructure for the provision of our  products and services is built and maintained to achieve reliability,  scalability, flexibility and security and is administered by our skilled  technical staff.





Facilities.  Our principal online systems supporting our  www.register.com website are located at a hosting facility in New York.  We continually monitor this system to  improve its redundancy.  We believe this  facility has ample power redundancy, fire suppression, peering to other ISPs,  bandwidth and backbone redundancy to support the current and anticipated growth  of our business.  We have additional  systems at four other co-located hosting facilities, two in the United States,  one in Asia and one in the United Kingdom.





Reliability.  Our technology platform is designed for  reliability.  Hardware components are  redundant to provide high availability.   We provide software and data reliability through a variety of processes  and quality-assurance procedures.  Our  standard procedures include daily database backups, offsite storage of critical  information and incremental backups of ongoing database modifications.





Scalability  and Flexibility.  We  designed our systems to handle a large volume of domain name registrations,  general website traffic and domain name server queries in an efficient,  scalable and fault-tolerant manner.  Our  application servers are clustered and use a highly available, redundant shared  file system that allows us to add additional capacity in a more flexible  manner.





Security.  Our technology incorporates a variety of  security techniques to protect domain name registration data, including  limiting access to users through a strict rule base implemented on the  networks router and encrypting user passwords at the time of account  creation.  We encrypt communications via  SSL and have initiated processes to maintain internal server passwords and to  ensure limited accessibility to critical components on the network.  Our team of engineers monitors our systems  24 hours per day, seven days per week.





Ongoing Improvements. 
  As part of our restructuring process, we have begun several projects to improve
  our technology infrastructure including systems, network and platform. 
  These improvements are being undertaken to maintain the high availability of
  our systems, improve system performance and enable us to introduce new products
  and services more rapidly and cost-effectively.





Administration of the Internet;  Government Regulation and Legal Uncertainties





Under a 1993 cooperative agreement with the U.S.  Department of Commerce, Network Solutions (now a VeriSign company) was  authorized to act as the sole registry and sole registrar for domain names in  the .com, .net and .org top level domains.    In October 1998, following President Clintons report entitled A Framework  for Global Electronic Commerce, the Department of Commerce amended  the Network Solutions cooperative agreement to call for the formation of a  not-for-profit corporation to oversee the management of, and create policies  regarding, domain names in the .com, .net and .org top level domains.  The Department of Commerce also proposed  that additional registrars be authorized to register domain names based upon  the idea that competitive registrars would benefit consumers and businesses.  ICANN was
recognized as this not-for-profit corporation by the Department of  Commerce in November 1998.





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ICANNs authority is based upon contracts with member  entities such as registrars and registries and compliance with its consensus  policies.  While these policies do not  constitute law in the United States or elsewhere, they have a significant  influence on the operation and future of the domain name registration system.





In April 1999, ICANN selected five testbed companies,  including us, to act as registrars to register domain names in the .com, .net  and .org domains and compete with Network Solutions.  On June 2, 1999, we became the first of the testbed companies to  begin directly registering domain names.   As of March 10, 2002, 163 companies were accredited by ICANN to act as  registrars in one or more gTLD.  Not all  of these accredited registrars are operational.  In November 2000, ICANN approved bids for the following seven new  gTLDs operated by new registries:  .biz,  .info, .name and .pro, and .museum, .coop and .aero, which are authorized only  for use in specific industry segments.





In May 2001, ICANN finalized agreements with VeriSign  that supercede the original agreements between the parties and enable VeriSign  to continue to operate the .com registry until at least 2007 and the .net  registry until at least June 30, 2005, even as it retained ownership and  control over its registrar business.  The  agreements also provide that under certain conditions, VeriSign may continue to  operate both registries beyond these dates.   VeriSign would be permitted to continue to operate its domain name  registrar business for .com and .net domains subject to the existing structural  separation between VeriSigns registry and registrar business.  Pursuant to these agreements, VeriSign  ceased to operate the .org registry in January 2003.





ICANN may create consensus policies governing the  domain name registration system if they pass through a consensus of the Domain  Name Supporting Organization and its constituencies, and the other Supporting  Organizations, and are adopted by the ICANN Board.  We would be affected by such policies, but none have been adopted  since the Uniform Dispute Resolution Policy (UDRP) which was created to address  the problem of cybersquatting.  We play  an active role in the development of ICANN policies.





There have been ongoing legislative developments and  judicial decisions with respect to trademark infringement claims, unfair  competition claims, and dispute resolution policies relating to the  registration of domain names.  To help  protect ourselves from liability in the face of these ongoing legal  developments, we have taken the following precautions:





| |  | in our standard registration agreement, we require    that each registrant indemnify, defend and hold us harmless for any dispute    arising from the registration or use of a domain name registered in that    persons name; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                    
| |  | on December 1, 1999, we implemented the UDRP as    approved by ICANN.                                                                                                                                                              




Despite these precautions, we cannot assure you that  our indemnity and dispute resolution policies will be sufficient to protect us  against claims asserted by various third parties, including claims of trademark  infringement and unfair competition in our capacity as registrar.





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New laws or regulations regarding domain names and  domain name registrars may be adopted at any time.  Our responses to uncertainty in the industry or new regulations  could increase our costs or prevent us from delivering our services over the  Internet, which could delay growth in demand for our services and limit the  growth of our revenues.  New and  existing laws may cover issues such as:





| |  | pricing controls at the registry level;                                                     
| | - | --------------------------------------------------------------------------------------------
| |   |                                                                                             
| |  | the creation of additional gTLDs;                                                           
| |   |                                                                                             
| |  | consumer protection;                                                                        
| |   |                                                                                             
| |  | privacy and data protection;                                                                
| |   |                                                                                             
| |  | cross-border domain name registration;                                                      
| |   |                                                                                             
| |  | trademark, copyright and patent infringement;                                               
| |   |                                                                                             
| |  | domain name dispute resolution; and                                                         
| |   |                                                                                             
| |  | other claims based on the nature of content of    domain names and domain name registration.




In November 1999, the Anticybersquatting Consumer  Protection Act was enacted by the United States government.  This law seeks to curtail a practice commonly  known in the domain name registration industry as cybersquatting. A  cybersquatter is generally defined in the Act as one who registers a domain  name that is identical or similar to another partys trademark, or the name of  another living person, in each case with the bad faith intent to profit from  use of the domain name.  The law states  that registrars may not be held liable for registration or maintenance of a  domain name for another person absent a showing of the registrars bad faith  intent to profit from the use of the domain name.  Registrars may be held liable, however, if they do not comply  promptly with procedural provisions of the law.  For example, if there is a litigation involving a domain name,  the registrar is
required to deposit a certificate representing the domain name  registration with the court.  To date,  there is no precedent to specify under what circumstances we may suffer  liability as a registrar under this law.   If we are held liable under this law, any liability could have a  material adverse effect on our business, financial condition and results of  operations.





Competition





We believe that our industry experience, product and  service offerings, customer service focus and distribution channels enable us  to compete favorably in providing domain name registration services and  ancillary products and services and in attracting advertisers.  However, some of our competitors have  greater name recognition, particularly internationally, longer operational  histories and greater financial, technical and managerial resources.  Others may undertake extensive marketing  campaigns for their brands and services, adopt aggressive pricing policies  and/or make more attractive offers to potential distribution partners,  advertisers and customers.





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Competition  in the Domain Name Registration Industry.  We compete with numerous other ICANN  accredited registrars, including BulkRegister.com, CORE, eNOM, Go Daddy  Software, DirectNic, DotRegistrar, Schlund, Dotster, Melbourne IT, Network  Solutions and Tucows.   Network  Solutions, the VeriSign registrar, presently has a significant competitive  advantage over us and the other registrars stemming from VeriSigns exclusive  control over the .com and .net registry.   The barriers for competitors seeking to enter the marketplace as domain  name registrars are not significant and include developing the requisite  technological infrastructure and meeting ICANNs accreditation  requirements.  As of March 10, 2002, 163  companies were accredited by ICANN to act as registrars in one or more  gTLD.  Not all of these accredited  registrars are operational.  In addition  to other registrars,
we face competition from such distribution partners who  align themselves with accredited registrars to offer domain name registration  services, including, among others, ISPs, web-hosting companies, Internet  portals and search engines, telecommunication and cable companies and Internet  professional service firms.  Many of  these competitors are companies with strong brand recognition and Internet  industry experience.





The growth of registrars who have entered the industry  and the continued introduction of registrars into the domain name registration  industry have made it difficult for us to maintain our industry competitive  position and, together with a reduction in the growth rate for domain names,  has contributed to a sequential quarterly decline in the number of paid registrations,  transfers and renewals we performed from the first quarter of 2000 until the  introduction of new gTLDs in the fourth quarter of 2001, and again from the  first quarter of 2002 through the fourth quarter of 2002.  Many entrants into the domain name  registration industry since we began operating as a paid registrar in June 1999  offer domain name registration at prices lower than our own.  Registrars such as eNOM, Go Daddys Wild  West Domains, Melbourne IT, Network Solutions and Tucows compete principally  with our Global Partner Network by
targeting indirect and wholesale  distribution partners.





Competition  with Respect to Our Web Services.  An important component of our business strategy is to offer  value-added products and services for the development of our customers Web  presence.  The marketplace for our  products and services are highly competitive.   Other registrars have developed or entered into strategic relationships  to offer products and services similar to those that we now provide, including  our email, domain name forwarding and website hosting, or products and services  that we anticipate offering in the future.   In addition to competing with other registrars, we also compete with  many other providers of these products and services, including application  service providers, Internet professional services firms and domain name  resellers.





Competition  for Advertisers.  We  compete for Internet advertising and sponsorship revenues with other domain  name registrars, content-based websites, ISPs, Internet content providers,  large web-based publishers, Internet search engines and portal companies and  various other companies that facilitate Internet advertising.  We also compete with traditional offline  media for a share of advertisers total advertising budgets.





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Intellectual Property and Proprietary  Rights





We believe that we are well positioned in the market  for domain name registration and related products and services in part due to  our highly recognized brand, register.com.   We regard our trademarks, copyrights, trade secrets and other  intellectual property as critical to our success.  We rely on trademark and copyright law, trade secret protection  and confidentiality and/or license agreements with our employees, customers,  partners and others to protect our intellectual property rights.  Despite our precautions, third parties could  obtain and use our intellectual property without authorization.  Furthermore, the validity, enforceability  and scope of protection of intellectual property in Internet-related industries  is uncertain and still evolving.  The  laws of some foreign countries do not protect intellectual property to the same  extent as do the laws of the United States.   We have several
registered trademarks including Register.com®,  Register®, FirstStepSite®, FirstStepPortal®,  Domain Lock Down®, and other trademark registration applications  pending.  Other trademarks and service  marks used in this annual report are the property of their respective owners.





Employees





As of March 1, 2003, we had approximately 507 employees.  None of our employees are represented by a  labor union or are subject to collective-bargaining agreements.  We believe that we maintain good  relationships with our employees.





Additional Information and Where to  Find It





Our Internet address is www.register.com .We  make the following filings available, as soon as reasonably practicable after  they are electronically filed with or furnished to the Securities and Exchange  Commission, on our Investor Relations web site, located at http://investor.register.com:





| | our annual
        report on Form 10-K;     
|- | --------------------------------------------
| | our quarterly
        reports on Form 10-Q; 
| | our current
        reports on Form 8-K; and




any amendments to those reports filed or furnished pursuant to  Section 13(a) or 15(d) of the Securities Exchange Act of 1934.  All such filings on our Investor Relations  web site are available free of charge.





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RISK  FACTORS





Any  investment in our common stock involves a high degree of risk.You should consider carefully the risks described  below, together with the other information contained in this report.If any of the following events actually  occurs, our business, financial condition and results of operations may suffer  materially.As a result,  the market price of our common stock could decline, and you could lose all or  part of your investment in our common stock.





Risks  Related to Our Industry and Our Business





Although we have had profitable  periods in the past, we have a recent history of losses and we cannot assure  you that we will return to profitability or sustain or increase positive cash  flow in future periods.





Although we achieved profitability for the year 2000,  we were not profitable for 2001 or 2002.   In addition, our year 2000 profitability was due, in part, to a one-time  gain of $4.6 million from the sale of our investment in a private company and  the recognition of interest income.  We  incurred losses from operations of approximately $9.7 million for the year  2000, $19.9 million for the year 2001 and $17.2 million for the year 2002.  As of December 31, 2002 our accumulated  deficit totaled $43.9 million.  Although  we have recently taken initiatives to reduce our operating expenses, these  expenses could still increase in future periods as we make efforts to improve our  operational and financial systems.  In  addition, losses at Virtual Internet and Registry Pro have contributed to a  decline in our profitability, and we expect losses at Virtual Internet and  RegistryPro to impact our profitability
negatively in 2003.  In addition, unless we lower our credit card  refunds and reduce our level of credit card chargebacks, we may continue to  incur significant penalties that impact our profitability.  Accordingly, we cannot assure you that we  will be able to operate profitably or sustain or increase our positive cash  flow in the future.





If our restructuring program is not  successful, our business, financial condition and results of operations could  be materially adversely affected.





In late 2002, we began a  restructuring program to address the challenges our business faced.  The goals of our restructuring program are  to reduce costs, improve our technology and systems, improve operating  efficiencies and increase productivity and flexibility.  We intend to achieve these goals primarily  by improving our systems and are actively working to make our technology  architecture more flexible in order to enable us to introduce new products and  services more rapidly and cost-effectively.   For further detail on our restructuring program, see BusinessRestructuring.  The planned  implementation of new systems is a complex process that will require  communication and coordination throughout our organization and has significant  execution risks.  Therefore, we cannot  assure you that our restructuring program will achieve the goals we have set  for it.  In addition, we
cannot assure  you that our business will ultimately realize the benefits we hope to achieve  from improved systems.  If our  restructuring program is not successful, our business, financial condition and  results of operations could be materially adversely affected.





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Certain of our stockholders have  notified us of their plans to wage a proxy contest that will increase our  expenses and could distract managements attention.





We received a proposal from  certain stockholders proposing for consideration at the 2003 annual meeting of  stockholders the nomination of eight new directors to be elected to our Board  in lieu of the director nominees to be proposed by the Board, certain  amendments to our Certificate of Incorporation and Bylaws, and the rescission  of our shareholder rights plan.   Evaluating these proposals and, to the extent our Board determines  appropriate, contesting them at the 2003 annual meeting, could distract  management from its focus on operating our business and implementing our  restructuring program, and will result in significant fees and expenses.





If the growth rate for domain names  continues to fall, our net revenues from domain name registrations may fall  below anticipated levels.





Although we believe the
    domain name marketplace is still in its early stages of development, we do
    not expect that it will experience the same high level of growth it has experienced
    in the past.  Based on VeriSign, Inc.s press releases,  the total
    number of domain registrations in the VeriSign registry decreased from a
    high of approximately 32 million as of September 30, 2001 to approximately
    28.3 million as of December 31, 2002.  While new domain registrations
    outside the VeriSign registry (e.g., .info, .biz and .us) may have made up
    for some of the decline in overall domain registrations, the decline in .com,
    .net and .org registrations highlights the slower growth rate for domain
    names.  Together with increased competition, this declining  growth
    has contributed to a sequential quarterly decline in the number of our paid
    domain name registrations, transfers and renewals from the first quarter
    of  2000 until the introduction of new gTLDs in the fourth quarter of 2001
    and again from the first quarter of 2002 through the fourth quarter of 2002.  If
    the domain name industry does not recover from this slowdown and competition
    continues to intensify, our business, financial condition and results of
    operations could be materially adversely affected.





If we do not maintain a low rate of  credit card chargebacks and reduce our rate of credit card refunds, we will  continue to face the prospect of financial penalties and could lose our ability  to accept credit card payments from customers, which would have a material  adverse affect on our business, financial condition and results of operations.





A substantial majority
    of our revenues originate from online credit card transactions.  Under
    current credit card industry practices, we are liable for fraudulent and
    disputed credit card transactions because we do not obtain the cardholders
    signature at the time of the transaction, even though the financial institution
    issuing the credit card may have authorized the transaction.  We  have
    experienced high rates of refunds to customers and chargebacks from credit
    card associations that have resulted in the assessment of financial penalties
    by two credit card associations.  We had  not incurred penalties from
    one of those associations until August 2002, at which time we were assessed
    a penalty of $0.3 million applicable to the year 2001.  Under that associations
    rules, additional penalties may be imposed at the discretion of the association.  Any
    such potential penalties would be imposed on  our credit card processor by
    the association, and under our contract with our processor, we are required
    to reimburse it for such penalties.  We have previously posted a $1.0
    million letter of credit with our processor as security for potential obligations
    to it.  Because the imposition of any  potential penalties is at the
    discretion of the credit card association, we accrued a $3.7  million charge
    to general and administrative expense in the year 2002 to cover what we estimate
    to be the potential penalties that could be imposed under that card associations
    rules for transactions through December 31, 2002.  If the penalty amount
    ultimately imposed is less, we would reverse any excess amounts accrued as
    a reduction of general and administrative expense at that time.  If
    we cannot reduce our refund and chargeback rates to levels that are acceptable
    to the credit card associations, we will continue to face the risk that one
    or more credit card associations may, at any time, assess penalties against
    us or terminate our ability to accept credit card payments from customers,
    which would have a material adverse affect on our business, financial condition
    and results of operations.





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Some of the measures we are  implementing to reduce our rate of chargebacks and credit card refunds may  reduce our net revenues.





By implementing aggressive
  online fraud screens and post-transaction verifications designed to prevent
  fraudulent credit card transactions on our website, we may block legitimate
  customers from purchasing our services, thereby reducing our net revenues. 
  Our efforts to reduce our chargebacks and refunds included a modification of
  our SafeRenew program to an opt in program with respect to international
  transactions beginning October 2002.  In an effort to protect our customers
  online identities, our SafeRenew program was implemented in January 2001 on
  an opt out basis to .com, .net and .org registrations registered
  through the www.register.com website, and was subsequently expanded to cover
  certain ccTLDs registered through this website.  Under the terms of our
  services agreement, at the time a covered registration comes up for renewal,
  we attempt to charge a registrants on-file credit card a one-year renewal
  fee and, if the charge is successful, to renew the registration for that additional
  one-year period.  Our modification of a portion of this program to an opt
  in basis with respect to international transactions beginning October
  2002 may result in the lapse of a significant number of domain name registrations
  that would have been renewed through the SafeRenew program, which could damage
  our relationship with customers that had relied upon the SafeRenew program to
  renew their domain name registrations.  In addition, implementing this
  change may have an adverse affect on our renewal rates in future periods and,
  as a result, may materially adversely affect our net revenues.





If our customers do not renew their  domain name registrations or if they transfer their registrations to our  competitors, and we fail to replace their business or develop alternative  sources of revenue, our business, financial condition and results of operations  would be materially adversely affected.





Our business depends
    in great part on our customers  renewal of their domain name registrations
    through us.  Our first expirations for .com, .net and  .org domain names
    occurred in January 2001.   As such, we have only limited experience
    to date with registration renewals.  We have difficulty predicting
    the number of registration renewals and related revenues we should expect
    for a particular period and cannot assure you that those customers who will
    renew their registrations will do so through us.   Our renewal rate
    for paid registrations for the year ended December 31, 2002 was approximately
    50%.   We have experienced and anticipate very low renewal rates for
    promotional and other speculative registrations.  Our total domain name
    registrations under management declined from approximately 3.8 million as
    of September 30, 2001 to approximately 3.3  million as of December 31,

2002.   Also, as discussed above, our renewal rates may be adversely affected
by our modification of our SafeRenew program to an opt in basis for
international transactions.  If we are unable to increase our overall renewal
rate or number of new registrations, the combination of our customers deciding
not to renew their registrations through us and the transfers of registrations
to other registrars will have the cumulative effect of decreasing the number
of domain name registrations under our management.  This could cause our
revenues from domain name registrations to decrease and could materially adversely
affect our business, financial condition and results of operations.





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If not remedied, weaknesses in our  internal accounting controls may materially adversely affect our ability to  accurately report our financial position and results of operations on a timely  basis and collect certain accounts receivable.





We have experienced significant
    growth and increased complexity in our operations, which have strained our
    existing financial systems.  As a result, aspects of our  financial
    systems and internal accounting controls need to be updated and improved.  We
    have material weaknesses in our internal accounting controls that may impair
    our ability to accurately record, track, and amortize deferred revenues and
    prepaid registry fees through our systems; reconcile, on a detailed transaction
    basis, accounts receivable from our credit card processors; completely reconcile,
    on a detailed transaction basis, invoices from registries to our database
    of domain names; and generate accurate invoices to corporate customers.   To
    mitigate risks that might result from such material weaknesses, we have implemented
    a number of processes designed to ensure the accuracy, in all material respects,
    of our reported financial position and results of
operations.  Due to growth in the  complexity of our operations, the processes
and procedures we have used in the past may not be adequate to compensate for
these material weaknesses in the future.  We are in the process of  implementing
new accounting system modules, including modules to perform certain reconciliations
and to record, track and amortize deferred revenues and prepaid registry fees,
and new control processes in our Corporate Services group.  When fully implemented,
these new financial system modules and control processes are expected to correct
these weaknesses.  However, we cannot assure you that these  systems or
control processes will be implemented on a timely basis and within anticipated
budgets, nor can we assure you that their implementation will adequately remedy
the weaknesses identified in our internal accounting systems and controls.  If
our efforts to implement these solutions are not successful, our ability to accurately
report our financial  position and results of operations on a timely basis, and
to collect all of our accounts receivable from corporate customers, may be materially
adversely affected.





The increased size and complexity of  our business has strained our managerial, operational, financial, accounting  and information systems, customer service operations and business processes,  and until we successfully upgrade and improve these systems and processes we  cannot focus all our resources on meeting the needs of our customers and  launching new products and services in a cost effective and timely manner.





Our rapid growth resulted
     in a substantial expansion of our operations in a short period of time.

  The demands on our network infrastructure, technical staff, customer service
     operations and fulfillment and billing functions have grown especially rapidly
    with our customer base, partner network, our expansion of operations to Canada
    and Europe, our acquisitions and the increasing
  complexity of our product and service offerings.  This has placed a significant
  strain on our resources and all aspects of our business, including our financial
  and managerial controls and systems, computer systems, database architecture
  and business processes and affects our ability to service customers.  In
  our efforts to compensate for systems weaknesses, we have utilized manual processes,
  which result in increased personnel costs and may be more prone to error. As
  a result, we are working to improve our financial and managerial controls,
  billing systems, reporting systems and procedures, and to train and manage
  our workforce.  In connection with these efforts, we may be required to
  incur significant capital and operating expenditures to expand and improve
  our computer systems.  We have dedicated personnel to effect these improvements
  while continuing to maintain our current systems with other personnel.  While
  our focus on improving our systems and business processes is integral to our
  continued growth, it requires the active involvement of employees in almost
  every sector of our business, which limits the time we may focus on launching
  new products and responding to the day-to-day needs of our customers.  Any
  delays in the launch of new products or services or upgrade of current ones
  and services or our inability to meet the needs of our customers, especially
  large corporate customers and resellers in our partner network, will affect
  our ability to effectively compete, to attract and retain customers and to
  market new products and services in the future.  If we fail to manage
  our business effectively and in particular fail to upgrade and improve our
  internal systems in a timely and cost-effective manner, our business, financial
  condition and results of operation could be materially adversely affected.





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VeriSigns  exclusive control over the registry for the .com and .net domains gives Network  Solutions an advantage over all other registrars.





Pursuant to its agreements with ICANN, VeriSign will continue  to operate the .com registry until at least 2007 and the .net registry until at  least June 30, 2005 while it can retain ownership and control over its  registrar business.  The agreements also  provide that, under certain conditions, VeriSign may continue to operate both  registries beyond these dates.  VeriSign  also controlled the .org registry through December 2002.  As the exclusive registry for these domains,  VeriSign receives from us, and from every other registrar, $6 per domain name  per year.  The substantial net revenues  from these registry fees, and the certainty of receiving them, provide VeriSign  significant advantages over other registrars.   We cannot assure you that developments under these ICANN-VeriSign  agreements, or any future amendments to them will not materially harm our  business, financial condition and results of
operation.





We may not be able to maintain or  improve our competitive position because of strong competition from new and  existing registrars and resellers, and we expect this competition to continue  to intensify.





Competition in the domain name registration  services industry continues to intensify among the market participants.





When we began providing
  online domain name registrations in the .com, .net and .org domains in June
  1999, we were one of only five testbed competitive registrars accredited by
  ICANN to interface directly with Network Solutions registry for .com,
  .net and .org domain names.  The four other testbed competitive registrars
  were America Online, CORE, France Telecom and Melbourne IT.  Since the
  end of the testbed period on November 30, 1999, ICANN has continued to accredit
  new registrars, including several significant competitors such as BulkRegister.com,
  eNOM, Go Daddy Software , DirectNic, DotRegistrar, Schlund, Dotster and Tucows. 
  As of March 10, 2003, ICANN had accredited 163 registrars, including us, to
  register domain names in one or more of the gTLDs, though not all of these accredited
  registrars are operational.  We also face substantial competition from
  many resellers that are not accredited registrars but offer domain name registrations
  through a competing accredited registrars system.  The continued
  introduction of registrars and resellers into the domain name registration industry
  and the rapid growth of some who have entered the industry have made it difficult
  for us to maintain our industry competitive position.  This, together with
  a decline in the growth of registered domain names, contributed to a sequential
  quarterly decline in the number of paid domain name registrations, transfers
  and renewals we performed from the first quarter of 2000 until the introduction
  of new gTLDs in the fourth quarter of 2001 and again from the first quarter
  of 2002 through the fourth quarter of 2002.  If we continue to experience
  a decline in paid domain name registrations, transfers and renewals our business,
  financial condition and results of operations could be materially adversely
  affected.





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We face competition from registrars  and resellers that may have longer operating histories, greater name  recognition, particularly internationally, better systems or greater resources.





Our competitors in the domain name registration  industry include companies with strong brand recognition and Internet industry  experience, such as major telecommunications firms, cable companies, ISPs,  web-hosting providers, Internet portals, systems integrators, consulting firms  and other registrars.  Many of these  companies also possess core capabilities to deliver ancillary services, such as  customer service, billing services and network management and have a broad  array of value-added products and services that they can bundle with domain  name registrations.  Some of our  competitors have designed their systems and built their businesses in a manner  that, we believe, enables them to be lower cost providers than we currently  are.  In addition, our position could be  harmed by any of these existing or future competitors, some of which may have  longer operating histories, greater name recognition, particularly
internationally,  and greater and more efficient financial, technical, marketing, distribution  and other resources than we do.





Increasing competition in the domain  name registration industry could force us to reduce our prices for our core  products and services, which would negatively impact our results of operations.





Some of our competitors offer domain name registration  services at a wholesale price level minimally above the $6 registry fee for  .com, .net and .org domains.  Other  competitors have lower pricing or have reduced and may continue to reduce their  pricing for domain name registrations, renewals and transfers both for  short-term promotions and on a permanent basis.  Some of these competitors have experienced a significant increase  in their registrations, suggesting that customers are becoming more price  sensitive.  Further, some of our  competitors have, in the past, offered domain name registrations for free,  deriving their revenues from other sources.   In response to increasing competition in the domain name registration  industry, we may be required, by marketplace factors or otherwise, to reduce,  perhaps significantly, the prices we charge for our core domain name  registration and related products and
services, especially if our competitors  who charge these reduced fees are able to maintain customer service comparable  to ours.  Reducing the prices we charge  for domain name registration services in order to remain competitive could  materially adversely affect our results of operations.





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If we are unable to improve our sales  of existing gTLDs, generate alternate revenue streams or improve our renewal  rate, our business, financial condition and results of operations could be  materially adversely affected.





Although the overall number of registrations in each  new gTLD that has been launched has been significantly lower than the number of  .com registrations, the new gTLDs and the products and services that we sold in  connection with their respective launches contributed to our revenue for 2001  and the first quarter of 2002.  We do  not currently anticipate the introduction of any additional commercial gTLDs in  the near future other than the launch of the .pro gTLD.  As a result, in order to grow our revenues we  need to increase sales of existing gTLDs, renewals, transfers or other products  and services in lieu of the opportunities that were presented by the new gTLDs  in 2001 and early 2002.  Our business  and results of operations could be materially adversely affected if the market  for new gTLDs does not develop, additional new top level domains are not  introduced, or if substantial numbers of our customers turn to
other registrars  for their new gTLD registration needs.





Our revenues from advertising may  continue to be adversely affected by a perceived weakness of Internet  advertising and the continued weakness in the Internet advertising market.





Our revenues from advertising depend on the use of the  Internet as an advertising and marketing medium.  The overall market for  Internet advertising has been characterized by continuing and significant  reduction in demand, a reduction or cancellation of advertising contracts, a  significant increase in the estimated amounts of uncollectable receivables from  advertisers, and a significant reduction of Internet advertising budgets,  especially by Internet-related companies.   In addition, an increasing number of Internet-related companies have  experienced deteriorating financial results and liquidity positions, and/or  ceased operations or filed for bankruptcy protection.





For the year ended December 31, 2001, our  advertising revenues were down 23% compared to the year ended December 31,  2000, and constituted 8% of our net revenues.   For the year ended December 31, 2002, this trend continued as our  advertising revenues were down 54% from the year ended December 31, 2001,  and constituted 4% of our net revenues.   This decline has had, and any continued decline will have, an adverse  impact on our overall gross margin because the gross profit margin on  advertising revenue is 100% and, accordingly, any decrease in advertising  revenue would represent a reduction of our gross profit in the same  amount.  The price we are able to charge  for advertisements has been negatively affected by the overall Internet  advertising market, which negatively affects our business.  Given the current market conditions, some of  our advertising customers may be anticipating or
experiencing difficulty  raising capital and therefore may elect to scale back the resources they devote  to advertising.  Others may have  difficulty paying outstanding accounts receivable.  Since the majority of our  advertising revenue is generated by a limited number of customers, the loss of  any of these customers would have an adverse affect on our results of  operations.  The ongoing softness  in the market for Internet advertising and the actual or perceived  ineffectiveness of Internet advertising in general, or our websites as  advertising media in particular, could materially adversely affect our  business, financial condition and results of operations.





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If our customers do not find our  expanded product and service offerings appealing, or if we fail to establish  ourselves as a reliable source for these products and services, we may remain  dependent on domain name registrations as a primary source of revenue and our  net revenues may fall below anticipated levels.





A key part of our long-term strategy is to diversify  our revenue base by offering value-added products and services.  Although, we did experience increased sales  in 2002 for other products and services such as email and website creation  tools, our efforts to date have still not resulted in substantial  diversification.  Further, it will be  difficult to achieve substantial diversification in the near future as we focus  substantial resources on improving our systems in order to drive efficiencies  in our core domain name registration business.   Our primary business, domain name registration services, generated 91%  of our net revenues during the year ended December 31, 2002.  We cannot assure you that we will be able to  attain the markets confidence in us as a reliable provider of products and  services outside of our core business.   If, over time, we fail to offer products and services that
meet our  customers needs and that are competitive with those offered in the  marketplace, or our customers elect not to purchase our products and services,  our anticipated net revenues may fall below expectations, we may not generate  sufficient revenue to offset the related costs and we will remain dependent on  domain name registrations as our primary source of revenue.  Our inability to successfully diversify our  revenue base from domain name registrations could, together with a decline in  that market, materially adversely affect our business, financial condition and  results of operations.





We cannot assure you that the  RegistryPro and Afilias ventures will be successful.  In addition, we intend to incur additional expenditures to  establish and develop RegistryPros products and services, which could cause  our results of operations to suffer.





We own a minority stake
     in Afilias, the registry operator for the .info gTLD, and 100% of RegistryPro,

  which has been selected by ICANN to operate a registry for the .pro gTLD. 
  The .pro domain will be dedicated to certified or accredited professionals
  such  as lawyers, doctors and accountants.  All .pro domain names are
  planned  to be issued with a digital certificate to facilitate secure communications

  and transactions.  While Afilias launched real time .info registrations
   in October 2001, RegistryPro signed its contract with ICANN only in May 2002

  and still faces many operational challenges prior to launch, including finalizing
   the overall technological integration and functionality of the different aspects

  of the .pro top level domain product.  The anticipated launch date for
   RegistryPro was recently delayed as a result of our decision to shut down
  our
  Registry Advantage division, which had been anticipated to provide registry
   services to RegistryPro on an outsourced basis.  In their early stages,
    we anticipate that RegistryPro and Afilias will require additional funding
   as
  they establish themselves as registries of new top level domains.  We
  have  committed to provide up to $8.5 million in funding and other non-cash
  contributions
  to our wholly owned subsidiary, RegistryPro, for RegistryPros activities
   in establishing, operating and marketing the .pro top level domain through
  the
  first anniversary of its commencement-of-service date. However, we do not believe
   that RegistryPros agreement with ICANN requires RegistryPro to spend
    a specified amount to establish, operate and market the .pro top level domain. 
  Accordingly, our contributions for these purposes could be less than $8.5 million. 
  Through December 31, 2002 we had contributed approximately $1.6 million in
  cash,  and had also made non-cash contributions.  We incurred $1.0 million
  of  startup costs for RegistryPro in 2002, and we anticipate additional net
  losses
  from RegistryPro in 2003.  We may also have to invest our own funds to
   support Afilias and market its services.  Inadequate funding could impact
    RegistryPros ability to launch its services or either registrys
     ability to promote the new top level domains in the marketplace.  We
     cannot  predict whether there will be a demand for the domain names for
     which these
  ventures would serve as the registry, when or the extent to which we will be
      able to generate revenues from Afilias or RegistryPro, or if either of
     these
  ventures will be profitable.  If there is no demand, or demand is lower
   than anticipated, for these new gTLDs, or if the returns on our invested funds

  are lower than expected or take longer to materialize, our business, financial
  condition and results of operation could be materially adversely affected.





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Our acquisitions, including Virtual  Internet, subject us to significant risks, any of which could harm our  business.





Our long-term growth strategy may include identifying  and acquiring or investing in suitable candidates on acceptable terms.  In particular, over time, we may acquire or  make investments in providers of product offerings that complement our business  and other companies in the domain name registration industry.





Acquisitions, including our acquisition in 2002 of  Virtual Internet, involve a number of risks and present financial, managerial  and operational challenges, including:





| |  | diversion of management attention from running our    existing business;                                                                
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                         
| |  | increased expenses, including travel, legal,    administrative and compensation expenses resulting from newly hired    employees;       
| |   |                                                                                                                                         
| |  | increased costs to integrate the technology,    personnel, customer base and business practices of the acquired company with    our own;
| |   |                                                                                                                                         
| |  | adverse effects on our reported operating results    due to possible write-down of goodwill associated with acquisitions;               
| |   |                                                                                                                                         
| |  | potential disputes with the sellers of acquired    businesses, technologies, services or products; and                                  
| |   |                                                                                                                                         
| |  | inability to utilize tax benefits related to    operating losses incurred by acquired businesses.                                       




Moreover, performance problems with an acquired  business, technology, service or product could also have a material adverse  impact on our reputation as a whole.  In  addition, any acquired business, technology, service or product could  significantly under-perform relative to our expectations, and we may not  achieve the benefits we expect from our acquisitions.





We acquired Virtual Internet in March 2002, sold its  hosting division in May 2002 and are in the process of integrating its  business, technology, operations and personnel with those of our U.S. and  Canadian operations.  Our efforts to  transition the back and front-end  systems that we previously used in our U.S. Corporate Services division to  those we acquired through Virtual Internet resulted in fulfillment delays and  invoice issuance delays and inhibited the effectiveness of our U.S. Corporate  Services support and sales teams.  We  may face similar issues as we make efforts to further integrate the  businesses.  We anticipate that fully  integrating Virtual Internets corporate services business into ours and  creating sustainable synergies between the two businesses will take time.  Virtual Internet incurred a pre-tax loss of  $10.5 million in 2002, including a charge of $8.3 million for goodwill
impairment and we may not be able to increase revenues or cut expenses  sufficiently to turn it profitable in 2003.   We were not able to utilize Virtual Internets losses in 2002 against  our U.S. income tax returns for 2002.





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For all these reasons, our pursuit of an acquisition  and investment strategy or any individual acquisition or investment, including  our recent acquisition of Virtual Internet, could have a material adverse  effect on our business, financial condition and results of operations.





Our international expansion exposes  us to business risks that could limit the effectiveness of our growth strategy  and cause our results of operations to suffer.





We recently expanded our business into international  markets through our acquisition of Virtual Internet, and we now maintain a  large base in the United Kingdom and we have offices in France, Italy and  Germany.  Prior to this acquisition, our  customer service operation in Canada was our only experience with operations  outside of the United States.   Introducing and marketing our products and services internationally,  developing direct and indirect international sales and support channels and  managing foreign personnel and operations will require significant management  attention and financial resources.  We  face a number of risks associated with our conducting business internationally  that could negatively impact our results of operation, including:





| |  | management and integration problems resulting from    cultural differences;                   
| | - | ----------------------------------------------------------------------------------------------
| |   |                                                                                               
| |  | political and economic instability in some    international markets;                          
| |   |                                                                                               
| |  | competition with foreign companies;                                                           
| |   |                                                                                               
| |  | legal uncertainty regarding liability and compliance    with foreign laws;                    
| |   |                                                                                               
| |  | currency fluctuations and exchange rates;                                                     
| |   |                                                                                               
| |  | potentially adverse tax consequences or inability to    realize tax benefits;                 
| |   |                                                                                               
| |  | difficulties in protecting intellectual property    rights in international jurisdictions; and
| |   |                                                                                               
| |  | the level of adoption of the Internet in    international markets.                            




We may not succeed in our efforts to expand into  additional international markets and if we do, we cannot assure you that one or  more of the factors described above will not have a material adverse effect on  our future international operations, if any, and consequently, on our business,  financial condition and results of operation.





If we are unable to retain highly  qualified management and technical personnel, particularly through our  restructuring process, our business may be harmed.





Our success depends in
    large part on the contributions of our management team and key sales and
    technology personnel.  Over the past several years, we have  experienced
    high turnover among our employees and added a significant number of new members
    to our management team, most recently a new Executive Chairman of the Board
    of Directors in November 2002, a new Chief Financial Officer in June 2002
    and a new Chief Technology Officer in November 2001.  In addition, following
    our termination of the employment of our Chief Operating Officer in October 2002,
    his responsibilities were assumed by Richard D. Forman, our President and
    Chief Executive Officer.  Many of our key employees have not worked
    with one another for long periods of time and may not be able to develop
    an effective working relationship.  Moreover, many of our managers are
    still learning about our company and our industry while working to expand
    our business into new areas.  If our management team cannot work together
    effectively and cannot master the details of our business and our market,
    then our business will be harmed, and we will incur additional costs in seeking
    and retaining new management personnel.





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We compete with other
  technology and Internet companies, as well as companies in other industries,
  in hiring and retaining qualified personnel.  Our restructuring process
  has resulted in significant organizational changes including the closing of
  our Afternic and Registry Advantage businesses, the combination of our Retail
  and Global Partner Network into our Global Web Services division, the creation
  of separate operations and product development groups, the unification of all
  application developers and technology related personnel into one group and the
  elimination of certain managerial positions, including the Chief Operating Officer
  position.  As we continue to navigate through our restructuring process,
  we must motivate employees and keep them focused on our strategies and goals,
  which may be particularly difficult due to morale challenges posed by workforce
  reductions, the potential for a proxy contest and general uncertainty. 
  The loss or demotivation of such employees, particularly from our sales and
  technology teams, could harm our business.





We cannot predict with any certainty  the effect that new governmental and regulatory policies, or industry reactions  to those policies, will have on our business.





Before April 1999, Network Solutions managed the  domain name registration system for the .com, .net and .org domains pursuant to  a cooperative agreement with the U.S. government.  In November 1998, the Department of Commerce recognized ICANN to  oversee key aspects of the Internet domain name registration system.  Since that time and particularly because the  domain name industry is in its early stages of development, ICANN has been  subject to strict scrutiny by the public and the government.  Although it recently undertook a  restructuring, ICANN continues to face significant questions regarding its financial  viability and efficacy as a private sector entity.  While these issues will take time to sort out, the long term  structure and mission of ICANN may evolve, even in the coming year, to address  perceived shortcomings.  Accordingly, we  continue to face the risks that:





| |  | the U.S. government may, for any reason, reassess    its decision to introduce competition into, or ICANNs role in overseeing,    the domain name registration market;                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                        
| |  | the Internet community or the Department of Commerce    or U.S. Congress may become dissatisfied with ICANN and refuse to recognize    its authority or support its policies, which could create instability in the    domain name registration system;
| |   |                                                                                                                                                                                                                                                        
| |  | ICANN may attempt to impose additional fees on    registrars if it fails to obtain funding sufficient to run its operations;                                                                                                                           
| |   |                                                                                                                                                                                                                                                        
| |  | accreditation criteria could change in ways that are    disadvantageous to us;                                                                                                                                                                         




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| |  | ICANNs limited resources may seriously affect its    ability to carry out its mandate; and                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                      
| |  | International regulatory    bodies, such as the International Telecommunications Union or the European    Union, may gain increased influence over the management and regulation of the    domain name registration system, leading to increased regulation in areas    such as taxation and privacy.




Our business will be materially  harmed if in the future the administration and operation of the Internet no  longer relies upon the existing domain name system.





The domain name registration industry continues to  develop and adapt to changing technology.   This development may include changes in the administration or operation  of the Internet, including the creation and institution of alternate systems  for directing Internet traffic without the use of the existing domain name  system.  Some of our competitors have  begun registering domain names with extensions that rely on such alternate  systems.  These competitors are not  subject to ICANN accreditation requirements and restrictions.  Other competitors have attempted to  introduce naming systems that use keywords rather than traditional domain  names.  The widespread acceptance of any  alternative systems could eliminate the need to register a domain name to  establish an online presence and could materially adversely affect our  business, financial condition and results of operations.





Working with the different country  code registries exposes us to a number of operational, legal and business  challenges, which if not properly addressed, could have a material adverse  effect on our business, financial condition and results of operations.





Country code registries may be administered by the  host country, entrepreneurs or other third parties.  Different country code registries require registrars to comply  with specific regulations.  Many of  these regulations vary from country code to country code.  If we fail to comply with the regulations  imposed by country code registries, these registries will likely prohibit us  from registering or continuing to register domain names in their country  codes.  Further, in most cases, our  rights to provide country code domain name registration services are not  governed by written contract.  In the  case of our existing written contracts, there is uncertainty as to which  countrys law may govern.  As a result,  we cannot be certain that we will continue to be able to register domain names  in the ccTLDs we currently offer.  If  these registry businesses cease operations or otherwise fail to
process domain  name registrations or the related information in ccTLDs, we would be unable to  honor the subscriptions of registrants who have registered, or are in the  process of registering, domain names in the applicable ccTLD.  If we are unable to honor a substantial  number of subscriptions for our customers for any reason or if the country code  registries fail to process our customers registrations in a timely and  accurate fashion, we could face claims of loss from our registrants and our  business, financial condition and results of operations could be materially  adversely affected.





We cannot assure you that our  standard agreements will be enforceable.





We rely on several agreements
    that govern the terms of the services we provide to our users.   These
    agreements contain a number of provisions intended to limit our potential
    liability arising from our providing services for our customers including
    liability resulting from our failure to register or maintain domain names.  As
    most of our customers use our services online, execution of our agreements
    by customers occurs electronically or, in the case of our terms of use, is
    deemed to occur because of a users continued use of the website following
    notice of those terms.  We believe that our reliance on these agreements
    is consistent with the practices in our industry, but if a court were to
    find that either one of these methods of execution is invalid or that key
    provisions of our services agreements are unenforceable, we could be subject
    to liability that could have a materially adverse effect on our business,
    financial condition and results of operations.





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Our failure to register or maintain  or renew the domain names that we process on behalf of our customers, may  subject us to negative publicity or claims of loss, which could have a material  adverse effect on our business.





Clerical errors and system and process failures have  resulted in our failure to properly register or to maintain or renew the  registration of domain names that we process on behalf of our customers.  Our failure to properly register or to  maintain or renew the registration of our customers domain names, even if we  are not at fault, may subject us to negative publicity or claims of loss,  which, together with the rising costs associated with insuring against and  defending such claims, could have a material adverse effect on our business,  financial condition and results of operations.





We may be held liable if third  parties misappropriate our users personal information.





If third parties succeed in penetrating our network  security or otherwise misappropriate our customers personal or credit card  information, we could be subject to liability.   Our liability could include claims for unauthorized purchases with  credit card information, impersonation or other similar fraud claims as well as  for other misuses of personal information, including for unauthorized marketing  purposes.  These claims could result in  penalties from credit card associations, potential termination by credit card  associations of our ability to accept credit card payments, litigation and  adverse publicity, any of which could have a material adverse effect on our  business, financial condition and results of operations, as well as our  reputation, as any well-publicized compromise of security could deter people from  using online services such as the ones we offer.





In addition, the Federal Trade Commission and state  agencies have investigated various Internet companies regarding their use of  personal information.  The federal  government has enacted legislation protecting the privacy of consumers  nonpublic personal information.  We  cannot guarantee that our current information-collection procedures and  disclosure policies will be found to be in compliance with existing or future  laws or regulations.  Our failure to comply  with existing laws, including those of foreign countries, the adoption of new  laws or regulations regarding the use of personal information that require us  to change the way we conduct our business or an investigation of our privacy  practices could increase the costs of operating our business.





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We may not be able to protect and  enforce our intellectual property rights or protect ourselves from the claims  of third parties.





We may be unable to protect and  enforce our intellectual property rights from infringement.





We rely upon copyright, trade secret and trademark  law, invention assignment agreements and confidentiality agreements to protect  our proprietary technology and other assets, including software, applications  and trademarks, and other intellectual property to the extent that protection  is sought or secured at all.  We do not  currently have patents on any of our technologies or processes.  While we typically enter into  confidentiality agreements with our employees, consultants and strategic  partners, and generally control access to and distribution and use of our  proprietary information, we cannot ensure that our efforts to protect our  proprietary information will be adequate against infringement or  misappropriation of our intellectual property by third parties, particularly in  foreign countries where laws or law enforcement practices may not protect our  proprietary rights as fully as in the United
States.





Furthermore, because the validity, enforceability and  scope of protection of proprietary rights in Internet-related industries is  uncertain and still evolving, we cannot assure you that we will be able to  defend our proprietary rights.  In  addition to being difficult to police, once any infringement is detected,  disputes concerning the ownership or rights to use intellectual property could  be costly and time-consuming to litigate, may distract management from  operating the business and may result in our losing significant rights and our  ability to operate our business.





We cannot assure you that third  parties will not develop technologies or processes similar or superior to ours.





We cannot ensure that third parties will not be able  to independently develop technology, processes or other intellectual property  that is similar to or superior to ours.   The unauthorized reproduction or other misappropriation of our  intellectual property rights, including copying the content, look, feel or  functionality of our website, could enable third parties to benefit from our  technology without our receiving any compensation and could materially  adversely affect our business, financial condition and results of operations.





We may be subject to claims of  alleged infringement of intellectual property rights of third parties.





We do not conduct comprehensive
    patent searches to determine whether our technology infringes patents held
    by others.  These matters are inherently uncertain in  Internet-related
    industries due to the rapidly evolving technological environment.  There
    may be numerous patent applications pending, many of which are confidential
    when filed, with regard to technologies similar to our own.   Third
    parties may assert infringement claims against us with respect to past, current
    or future technologies, and these claims and any resultant litigation, should
    it occur, could subject us to significant liability for damages.  Even
    if we prevail, litigation could be time-consuming and expensive to defend,
    and could result in the diversion of managements time and attention.  Any
    claims from third parties may also result in limitations on our ability to
    use the intellectual property subject to these claims unless  we are able
    to enter into agreements with the third parties making these claims.  Such
    royalty or licensing agreements, if required, may be unavailable on terms
    acceptable to us, if at all.  If a successful claim of infringement
    is brought against us and we fail to develop non-infringing technology or
    to license the infringed or similar technology on a timely basis, it could
    materially adversely affect our business, financial condition and results
    of operations.





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We rely on certain technologies that we license from  other parties.  We cannot assure you  that these third-party technology licenses will not infringe on the proprietary  rights of others or will continue to be available to us on commercially  reasonable terms, if at all.  The loss  of such technology could require us to obtain substitute technology of lower  quality or performance standards or at greater cost, which could materially  harm our business.





The nature of our services may  subject us to alleged infringement and other claims relating specifically to  domain names.





As a registrar of domain names and a provider of  additional Web services, we may be subject to various claims, including claims  from third parties asserting trademark infringement or dilution, unfair  competition and violations of publicity and privacy rights, to the extent that  such parties consider their rights to be violated by the registration of  particular domain names by our users or our hosting of our users websites or  secondary market activities.





For example, we provide an automated service enabling  users to register domain names and do not monitor or review the content of such  domain names.  Users might register  domain names which, based on the nature and content of such domain names, could  be considered obscene, hateful or defamatory, or which could infringe or dilute  a third partys intellectual property.   The law relating to the liability of registrars stemming from the  activities of registrants in this regard is currently unsettled in certain  jurisdictions, and the actions of our users may therefore expose us to  significant liability.  Even if we were  to prevail in a dispute concerning such actions, litigation could be  time-consuming and expensive to defend, and could result in the diversion of  managements time and attention.





In addition, the Anticybersquatting Consumer Protection  Act was enacted in November 1999 to curtail a practice commonly known in the  industry as cybersquatting. A cybersquatter is generally defined in this Act  as one who registers a domain name that is identical or similar to another  partys trademark or the name of a living person, in each case with the bad  faith intent to profit from use of the domain name.  Cybersquatting is a problem that could be exacerbated with any  additional top level domain names that may be established by ICANN.  Although the Act states that registrars may  not be held liable for registering or maintaining a domain name for another  person absent a showing of the registrars bad faith intent to profit from the  use of the domain name, registrars may be held liable if they fail to comply  promptly with procedural provisions under the Act.  If we are held liable under
this law, any liability could have a  material adverse effect on our business, financial condition and results of  operations.





Although established
    case law and statutory law have, to date, shielded us from liability relating
    to cybersquatting registrations on our site in the primary registration market,
    this law remains new and unsettled in many jurisdictions and the application
    of these laws and precedent to other domain name registration related services
    is still developing.  Any determination that our other domain name registration
    related services facilitate cybersquatting could have a material adverse
    effect on our business, financial condition and results of operations.





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Risks  Related to Our Technology and the Internet





Systems disruptions and failures  could cause our customers, partners and advertisers to become dissatisfied with  us and may impair our business.





Our  customers, advertisers and participants in our Global Partner Network may  become dissatisfied with our products and services due to interruptions in  access to our website or our failure to adopt and adapt to changing technology.





Our ability to maintain
  our computer and telecommunications equipment in working order and to reasonably
  protect them from interruption is critical to our success.  Our website
  must accommodate a high volume of traffic and deliver frequently updated information. 
  In addition, the technology underlying the Internet and the applications available
  to simplify electronic commerce are continuously being enhanced or upgraded
  and to remain competitive, we must incorporate these emerging technologies into
  our infrastructure on a cost-effective and timely basis.  We occasionally
  experience system application failures, as well as slower response times. 
  We also conduct planned site outages and experience unplanned site outages. 
  To date, these disruptions of service and slower response times have had minimal
  impact on our business. Our customers, advertisers and business partners may
  become
  dissatisfied by any systems failure that interrupts our ability to provide
  our products and services to them or increased response times.  Substantial
  or repeated system failures would significantly reduce the attractiveness of
  our website and could cause our customers, advertisers and business partners
  to switch to another domain name registration service provider.





As part of our restructuring process, we expect to  incur substantial expenses to update our technology, improve our systems performance, develop new applications to  meet the evolving needs of our customers and ensure the compatibility of our  current systems with emerging technologies.   We cannot assure you that we will be able to achieve these goals on a  timely basis as changes in technologies occur.   Also as part of our restructuring efforts to increase efficiencies, we  are currently exploring opportunities to outsource certain back-end  operations.  A decision to outsource  these operations may raise concerns among partners or customers regarding our  ability to control the services we offer them if certain elements are managed  by another company.   In addition, we  cannot assure you that we will be able to effectively transition those  functions that we may choose to outsource, as any such process involves  com
plexity and risk.





Although we carry general liability and professional  liability insurance, our insurance may not cover any claims by dissatisfied  customers, advertisers, affiliates, or participants in our Global Partner  Network, or may be inadequate to indemnify us for any liability that may be  imposed in the event that a claim were brought against us.  Our business could be materially harmed by  any system failure, security breach or other damage that interrupts or delays our  operations.





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Our customers, advertisers and  business partners may become dissatisfied with our products and services due to  interruptions in our access to the registration systems of generic top level  domain or country code registries.





We depend on the registration systems of generic top  level domain and country code registries to register domain names on behalf of  our customers.  We have in the past  experienced problems with the registration systems of these top level domain  registries, including outages, particularly during their implementation  phase.  Any significant outages in the  registration systems of these registries would prevent us from delivering or  delay our delivery of our services to our customers.  Prolonged or repeated interruptions in our access to the  registries could cause our customers, advertisers and business alliances to  switch to another domain name registration service provider.





Our business would be materially  harmed if our computer systems become damaged.





Our network and communications systems are located  primarily at hosting facilities in New York, New Jersey, Canada and the United  Kingdom.  We are continually building  out our systems located at our New York facility, but have recently scaled down  our New Jersey facility and have no immediate plans to add additional  facilities to make our systems geographically redundant.  We currently do not have a comprehensive  disaster recovery plan in effect and our systems redundancies are not  geographically distributed.  Fires,  floods, earthquakes, power losses, telecommunications failures, break-ins and  similar events could damage these systems and severely harm our business  because our services could be interrupted for an indeterminate length of time.  Computer viruses, electronic break-ins,  human error or other similar disruptive problems could also adversely affect  our systems.





Despite any precautions we may take, the occurrence of  a natural disaster, a decision to close a facility we are using without  adequate notice for financial reasons or other unanticipated problems at any of  our facilities including our hosting facilities, could result in lengthy  interruptions in our services.  In  addition, the failure by our hosting facilities to provide our required data  communications or any damage to or failure of our systems could result in  interruptions in our service.  Such  interruptions would reduce our revenues and profits, and our future revenues  and profits would be harmed if our users were to believe that our systems are  unreliable.  In addition, our business  interruption insurance may not be adequate to compensate us for losses that may  occur.  Accordingly, any significant  damage to our systems or disruption in our ability to provide our services  would have a material
adverse effect on our business, financial condition and  results of operations.





Our ability to deliver our products  and services and our financial condition depend on our ability to license  third-party software, systems and related services on reasonable terms from  reliable parties.





We depend upon various third parties for software,  systems and related services, including access to the various registration  systems of domain name registries.  Many  of these parties have a limited operating history or may depend on reliable  delivery of services from others.  If  these parties fail to provide reliable software, systems and related services  on agreeable license terms, we may be unable to deliver our products and  services.





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Failure by our third-party service  providers to deliver their services will have a negative effect on our  business.





We have engaged third parties to process credit card  payments for our customers.  Therefore,  if these third parties or their systems fail for any reason to process credit  card payments in a timely fashion, the domain name reservation process will be  delayed and customers may be unable to obtain their desired domain name.





In addition, we offer services to our users, including  electronic mail and digital certificates, through various third party service  providers engaged to perform on our behalf.   In the event that these service providers fail to maintain adequate  levels of support or otherwise discontinue their lines of business, our customer  relations may be impacted negatively and we may be required to pursue  replacement third party relationships.





Finally, the domain names registered by customers of  our European corporate services business resolve to name servers that are owned  and controlled by a third party.  If  these domain name servers are shut down for financial reasons or other  unanticipated problems, our services may be interrupted, which could damage our  relationship with our customers, our reputation and our business.





Our failure to respond to the rapid  technological changes in our industry may harm our business.





If we are unable, for technological, legal, financial  or other reasons, to adapt in a timely manner to changing market conditions or  customer requirements, we could lose customers, strategic alliances and market  share.  The Internet and electronic  commerce are characterized by rapid technological change.  Sudden changes in user and customer  requirements and preferences, the frequent introduction of new products and services  embodying new technologies and the emergence of new industry standards and  practices could render our existing products, services and systems  obsolete.  The emerging nature of  products and services in the domain name registration industry and their rapid  evolution will require that we continually improve the performance, features  and reliability of our products and services.   Our success will depend, in part, on our ability:





| |  | to enhance our existing products and services;                                                                                                                                                    
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                   
| |  | to design, develop, launch and/or license new    products, services and technologies that address the increasingly    sophisticated and varied needs of our current and prospective customers; and
| |   |                                                                                                                                                                                                   
| |  | to respond to technological advances and emerging    industry standards and practices on a cost-effective and timely basis.                                                                       




The development of additional
    products and services and other proprietary technology involves significant
    technological and business risks and requires substantial expenditures and
    lead time.  We may be unable to use new technologies  effectively or
    adapt our websites, internally developed technology or transaction-processing
    systems to customer requirements or emerging industry standards.  Updating
    our technology internally and licensing new technology from third parties
    may require us to incur significant additional capital expenditures.





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If Internet usage does not grow, or  if the Internet does not continue to expand as a medium for commerce, our  business may suffer.





Our success depends upon the continued development and  acceptance of the Internet as a widely used medium for commerce and  communication.  Rapid growth in the uses  of and interest in the Internet is a relatively recent phenomenon, and we  cannot assure you that use of the Internet will continue to grow at its current  pace.  A number of factors could prevent  continued growth, development and acceptance, including:





| |  | the unwillingness of companies and consumers to    shift their purchasing from traditional vendors to online vendors;                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                       
| |  | the Internet infrastructure may not be able to    support the demands placed on it, and its performance and reliability may    decline as usage grows;                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                       
| |  | security and authentication issues may create    concerns with respect to the transmission over the Internet of confidential    information, such as credit card numbers, and attempts by unauthorized    computer users, so-called hackers, to penetrate online security systems; and
| |   |                                                                                                                                                                                                                                                                                       
| |  | privacy concerns, including those related to the    ability of websites to gather user information without the users knowledge    or consent, may impact consumers willingness to interact online.                                                                                  




Any of these issues could slow the growth of the  Internet, which could have a material adverse effect on our business, financial  condition and results of operations.





We depend on the technological  stability and maintenance of the Internet infrastructure.





Our success and the viability of the Internet as an  information medium and commercial marketplace will depend in large part upon  the stability and maintenance of the infrastructure for providing Internet  access and carrying Internet traffic.   Failure to develop a reliable network system or timely development and  acceptance of complementary products, such as high-speed modems, could  materially harm our business.  In  addition, the Internet could lose its viability due to delays in the  development or adoption of new standards and protocols required to handle  increased levels of Internet activity or due to increased government  regulation.





We may become subject to burdensome  government regulations and legal uncertainties affecting the Internet.





To date, government regulations have not materially  restricted the use of the Internet.  The  legal and regulatory environment pertaining to the Internet, however, is  uncertain and may change.





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Both new and  existing laws may be applied to the Internet by state, federal or foreign  governments, covering issues that include:





| |  | sales and other taxes;                                                
| | - | ----------------------------------------------------------------------
| |   |                                                                       
| |  | user privacy;                                                         
| |   |                                                                       
| |  | the expansion of intellectual property rights;                        
| |   |                                                                       
| |  | pricing controls;                                                     
| |   |                                                                       
| |  | characteristics and quality of products and    services;              
| |   |                                                                       
| |  | consumer protection;                                                  
| |   |                                                                       
| |  | cross-border commerce;                                                
| |   |                                                                       
| |  | libel and defamation;                                                 
| |   |                                                                       
| |  | copyright, trademark and patent infringement;                         
| |   |                                                                       
| |  | security;                                                             
| |   |                                                                       
| |  | pornography; and                                                      
| |   |                                                                       
| |  | other claims based on the nature and content of    Internet materials.




The adoption of any new laws or regulations or the new  application or interpretation of existing laws or regulations to the Internet  could hinder the growth in use of the Internet and other online services  generally and decrease the acceptance of the Internet and other online services  as media of communications, commerce and advertising.  Our business may be harmed if any slowing of the growth of the  Internet reduces the demand for our services.   In addition, new legislation could increase our costs of doing business  and prevent us from delivering our products and services over the Internet,  thereby harming our business, financial condition and results of operations.





The introduction of tax laws  targeting companies engaged in electronic commerce could materially adversely  affect our business, financial condition and results of operations.





We file tax returns in such countries and states as  required by law based on principles applicable to traditional businesses.  However, one or more states could seek to  impose additional income tax obligations or sales tax collection obligations on  out-of-state companies, such as ours, which engage in or facilitate electronic  commerce.  A number of proposals have  been made at state and local levels that could impose such taxes on the sale of  products and services through the Internet or the income derived from such  sales.  Such proposals, if adopted,  could substantially impair the growth of electronic commerce and materially  adversely affect our business, financial condition and results of operations.





On November 28, 2001,
    President Bush signed the Internet Tax Nondiscrimination Act, which limits
    the ability of the states to impose taxes on Internet-based transactions.   While
    this legislation provides significant benefits to Internet-based businesses,
    it will expire on November 1,
    2003 and if not renewed, would allow various states to impose taxes on Internet-based
    commerce.  The imposition of such taxes, which may be heavily lobbied
    for by states, many of which face increasing budget deficits, could materially
adversely affect our business, financial condition and results of operations.





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Investment  Risks





Our stock price is highly volatile.





The market price of our common stock has been and is  likely to continue to be highly volatile and significantly affected by a number  of factors, including:





| |  | general market and economic conditions and market    conditions affecting technology companies generally;                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                             
| |  | limited availability of our shares on the open    market;                                                                                   
| |   |                                                                                                                                             
| |  | actual or anticipated fluctuations in our quarterly    or annual operating results;                                                         
| |   |                                                                                                                                             
| |  | announcements of technological innovations,    acquisitions or investments, developments in Internet governance or corporate    actions; and
| |   |                                                                                                                                             
| |  | industry conditions and trends.                                                                                                             




The stock market has experienced extreme price and  volume fluctuations that have particularly affected the market prices of the  securities of technology related companies.   These fluctuations may adversely affect the market price of our common  stock.





The market price for our shares could  be negatively affected if we use a significant portion of our cash and  marketable securities.





The market price for our shares could be negatively  affected if we utilize a significant portion of our cash and marketable securities.  If the market price of our stock declined  significantly, it could, among other things, also result in:





| |  | our possible noncompliance with the Nasdaq National    Markets listing requirements and the possible delisting of our shares;                                     
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                    
| |  | reduced trading volumes, an illiquid market for the    trading of our shares, and more difficulties involved with the selling of our    shares by our stockholders;
| |   |                                                                                                                                                                    
| |  | our shares losing their appeal as a currency for    future acquisitions; or                                                                                        
| |   |                                                                                                                                                                    
| |  | an impairment in our ability to access the capital    markets should we desire or need to raise additional capital.                                                




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Our directors, executive officers and  principal stockholders own a significant percentage of our shares, which will  limit your ability to influence corporate matters.





As of March 20, 2003, our directors, executive  officers and principal stockholders beneficially owned approximately 20.7% of  our common stock.  Accordingly, these  stockholders could have significant influence over the outcome of any corporate  transaction or other matter submitted to our stockholders for approval,  including mergers, consolidations and the sale of all or substantially all of  our assets, and also could prevent or cause a change in control.  The interests of these stockholders may  differ from the interests of our other stockholders.  In addition, third parties may be discouraged from making a  tender offer or bid to acquire us because of this concentration of ownership.





Shares eligible for public sale could  adversely affect our stock price.





As of March 15, 2003, 583,052 shares of common stock  held by the former stockholders of Afternic.com were subject to lock-up  agreements, which expire on September 15, 2004.  Of these shares, 32,932 shares are released from the lock-up each  month, of which 2,796 shares are covered by a registration statement and 29,596  shares are not covered by a registration statement.  Additionally, a number of holders of our common stock and common  stock issuable upon the exercise of warrants have the right to require us to  register their shares under the Securities Act.  If we register these shares, they can be sold in the public  market.  The market price of our common  stock could decline as a result of sales by these existing stockholders of  their shares of common stock in the market or the perception that these sales  could occur.  These sales also might  make it difficult for us to sell equity securities in the
future at a time and  price that we deem appropriate.





Our charter documents, our  Stockholder Rights Plan and Delaware law may inhibit a takeover that  stockholders may consider favorable.





Provisions in our amended and restated certificate of  incorporation, our amended and restated bylaws, our Stockholder Rights Plan and  Delaware law could delay or prevent a change of control or change in management  that would provide stockholders with a premium to the market price of their  common stock.  Our Stockholder Rights  Plan has significant anti-takeover effects by causing substantial dilution to a  person or group that attempts to acquire us on terms not approved by our Board  of Directors.  The authorization of  undesignated preferred stock, for example, gives our board the ability to issue  preferred stock with voting or other rights or preferences that could impede  the success of any attempt to change control of the company.  If a change of control or change in  management is delayed or prevented, this premium may not be realized or the  market price of our common stock could decline.





Item 2.   Properties.





We currently lease approximately
     40,000 square feet of space in one location in New York City, New York under

  two contracts, one contract, which is for 10,000 square feet, expires in December
     2003, and the other contract for 30,000 square feet expires in September
    2009. 
  We also lease 6,500 square feet of space in Maryland under a contract that
  expires  in January 2005.  In addition, we have entered into a five-year
  lease expiring  in August 2006, renewable at our option for up to two additional
  five-year terms,
for 20,000 square feet of space in Canada.  Virtual Internet, our subsidiary
that we acquired in March 2002, owns a building containing approximately 2,000
square feet of space in London, England.  In addition, Virtual Internet
leases approximately 6,100 square feet of space in London, under contracts with
a third party, that expire in February 2004.  We also maintain leases for
smaller facilities in Cardiff, Paris, Milan and Munich and maintain a lease in
Princeton, New Jersey, which we have subleased.  We believe that the foregoing
space will meet our needs for at least the next twelve months.





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Item 3.   Legal  Proceedings.





In November 2001, the Company, its Chairman,  President, Chief Executive Officer Richard D. Forman and its former Vice  President of Finance and Accounting, Alan G. Breitman (the Individual  Defendants), and Goldman Sachs & Co. and Lehman Brothers, Inc. two of the  underwriters in the syndicate for our March 3, 2000 initial public offering,  were named as defendants in a class action complaint alleging violations of the  federal securities laws in the United States District Court, Southern District  of New York.  Goldman Sachs & Co. and  Lehman Brothers, Inc. distributed 172,500 of the 5,750,000 shares in the  IPO.  On April 19, 2002, the Company and  the Individual Defendants were named as defendants in a Consolidated Amended  Complaint (now the operative complaint) filed in the Southern District of New  York and captioned In re: Register.com, Inc. Initial Public Offering  Securities
Litigation.  The  Consolidated Amended Complaint seeks unspecified damages as a result of various  alleged securities law violations arising from activities purportedly engaged  in by the underwriters in connection with our initial public offering.  Plaintiffs allege that the underwriter  defendants agreed to allocate stock in the Companys initial public offering to  certain investors in exchange for excessive and undisclosed commissions and  agreements by those investors to make additional purchases of stock in the  aftermarket at pre-determined prices.   Plaintiffs allege that the prospectus for the Companys initial public  offering was false and misleading in violation of the securities laws because  it did not disclose these arrangements.   On October 9, 2002, the Court dismissed the Individual Defendants from  the case without prejudice based on Stipulations of Dismissal filed by the  plaintiffs and the Individual Defendants.   On February 19, 2003, the
Court denied the motion to dismiss the  complaint against the Company.  The  action is being coordinated with approximately three hundred other nearly  identical actions filed against other companies before one judge in the U.S.  District Court for the Southern District of New York.





Register.com has been
    named as a defendant in a lawsuit filed on May 2, 2002, which alleges that
    our SafeRenew program violates New York law.  This lawsuit was filed
    by Brian Wornow, on behalf of himself and all others similarly situated,
    in the Supreme Court of the State of New York.   Our SafeRenew program
    was implemented in January 2001 on an opt-out  basis to .com,
    .net and .org registrations registered through the www.register.com website,
    and was subsequently expanded to cover certain ccTLDs registered through
    this website.  Under  the terms of our services agreement, at the time
    a covered registration comes up for renewal, we attempt to charge a registrants
    on-file credit card a one year renewal fee and, if the charge is successful,
    to renew the registration for that additional one-year period.   Register.com
    believes that the SafeRenew program was properly adopted as an effort to

protect our customers online identities.  Plaintiff seeks class certification
and alleges violation of certain New York statutes as well as a breach of contract,
money had and received and unjust enrichment.   Plaintiff further seeks
to enjoin Register.com from automatically renewing domain name  registrations,
an award of compensatory damages, restitution, disgorgement of profits (plus
interest), cost and expenses, attorneys fees, and punitive damages.  Register.com
has moved to dismiss all causes of action in the complaint.  This motion
was argued to the Court on November 18, 2002 and the parties are awaiting a decision
on that motion.





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On or about January 17, 2003, individual stockholders  of the Company filed complaints in the Delaware Court of Chancery purporting to  commence class action lawsuits against the Company and each of the individual  members of the Companys Board of Directors.   The complaints were styled as Lanza v. Morten, et al (C.A.  No. 20123) and Norton v. Morten, et al (C.A. No. 20124).  The complaints allege, among other things,  breaches of fiduciary duty by the directors in connection with certain publicly  disclosed indications of interest in the acquisition of Company.  The complaints further allege that the directors  are not fulfilling their fiduciary duties in connection with their review and  response to such indications of interest and seek an order requiring the  defendants to, among other things, undertake an appropriate evaluation of the  Companys worth as a merger or acquisition
candidate and to take all  appropriate steps to effectively sell of the Company.  Among other remedies, the complaints seek to enjoin the members  of the Board from continuing their purported breaches of fiduciary duty and  unspecified damages from the defendants.





There are various other claims, lawsuits and pending  actions against the Company incidental to the operations of its business.  It is the opinion of management, after  consultation with counsel, that the ultimate resolution of such claims,  lawsuits and pending actions will not have a material adverse effect on the  Companys financial position, results of operations or liquidity.





Item 4.   Submission  of Matters to a Vote of Security Holders.





No matter was submitted to a vote of security holders  during the fourth quarter of 2002.





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PART II





Item 5.   Market for  Registrants Common Equity and Related Stockholder Matters.





Our common stock has been quoted on the Nasdaq  National Market under the symbol RCOM since our initial public offering on  March 3, 2000.  Prior to that date,  there was no public market for our common stock.  The following table sets forth, for the periods indicated, the  high and low sales prices per share of the common stock as reported on the  Nasdaq National Market.





|                               |  | High |       | Low |  
|------------------------------ |  | ---- | ----- | --- | -
|                               |  |      |       |     |  
|Year Ending December 31, 2002: |  |      |       |     |  
|Fourth Quarter                 |  | $    | 5.25  |     | $
|Third Quarter                  |  |      | 7.66  |     |  
|Second Quarter                 |  |      | 9.07  |     |  
|First Quarter                  |  |      | 11.60 |     |  




|Year Ending December 31, 2001: |  |   |       |  |   |      | 
|------------------------------ |  | - | ----- |  | - | ---- | 
|Fourth Quarter                 |  | $ | 12.00 |  | $ | 7.26 | 
|Third Quarter                  |  |   | 14.76 |  |   | 8.30 | 
|Second Quarter                 |  |   | 15.50 |  |   | 5.15 | 
|First Quarter                  |  |   | 8.25  |  |   | 5.00 | 




On March 20, 2003, the last sale price of our common stock reported by  the Nasdaq National Market was $5.30 per share.  As of March 20, 2003, we had approximately 99 holders of record  of our common stock.





For information regarding securities authorized for  issuance under our equity compensation plans, see Item 12.





DIVIDEND  POLICY





We have never declared
or paid any cash dividends on our common stock.  In connection with our restructuring
 program we have been reviewing our operations, including the ongoing capital
  requirements of our business.  While we are unable to predict the outcome
  of this review, the utilization of a significant portion of our cash and
  marketable securities is a possible result.





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Item 6.Selected Financial Data.

The following table sets forth certain selected consolidated
    financial data of the Company for the years ended December 31, 2002, 2001,
    2000, 1999 and 1998. The selected consolidated data is derived from our consolidated
    financial statements. You should read the following selected consolidated
    financial data together with our consolidated financial statements and their
    notes as well as Managements Discussion and Analysis of Financial
    Condition and Results of Operations.


|                                                                                                                                        |   | Year
      Ended December 31,                  |  
|--------------------------------------------------------------------------------------------------------------------------------------- | - | ---------------------------------------------- | -
|                                                                                                                                        |   |                                                |  
|                                                                                                                                        |   | 2002                                           |  
|                                                                                                                                        |   |                                                |  
|                                                                                                                                        |   | (in
      thousands, except per share amounts) |  
|Statement of Operations Data:                                                                                                           |   |                                                |  
|Net revenues                                                                                                                            | $ | 106,288                                        |  
|Cost of revenues                                                                                                                        |   | 35,299                                         |  
|                                                                                                                                        |   |                                                |  
|Gross profit                                                                                                                            |   | 70,989                                         |  
|                                                                                                                                        |   |                                                |  
|Operating expenses:                                                                                                                     |   |                                                |  
|Sales
        and marketing                                                                                                             |   | 31,222                                         |  
|Research
        and development                                                                                                        |   | 13,357                                         |  
|General
        and administrative (including non-cash
        compensation of $1,937, $1,771, $2,173, $4,929, and $150, respectively). |   | 26,312                                         |  
|Amortization
        and writedown of goodwill and other
        intangibles                                                            |   | 17,290                                         |  
|                                                                                                                                        |   |                                                |  
|Total
        operating expenses                                                                                                        |   | 88,181                                         |  
|                                                                                                                                        |   |                                                |  
|Loss from operations                                                                                                                    |   | (17,192                                        | )
|Other income (expense), net                                                                                                             |   | 5,588                                          |  
|Gain on sale of investment                                                                                                              |   |                                               |  
|                                                                                                                                        |   |                                                |  
|Income
        (loss) before provision (benefit) for income taxes                                                                       |   | (11,604                                        | )
|Provision (benefit) for income
      taxes                                                                                              |   | (1,195                                         | )
|                                                                                                                                        |   |                                                |  
|Net income (loss)                                                                                                                       | $ | (10,409                                        | )
|                                                                                                                                        |   |                                                |  
|Basic income (loss) per share                                                                                                           | $ | (0.26                                          | )
|                                                                                                                                        |   |                                                |  
|Diluted income (loss) per share                                                                                                         | $ | (0.26                                          | )
|                                                                                                                                        |   |                                                |  
|Weighted
        average number of shares outstanding:                                                                                  |   |                                                |  
|Basic                                                                                                                                   |   | 40,046                                         |  
|                                                                                                                                        |   |                                                |  
|Diluted                                                                                                                                 |   | 40,046                                         |  
|                                                                                                                                        |   |                                                |  

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|                                |   | December
      31,   | 
|------------------------------- | - | -------------------- | 
|                                |   |                      | 
|                                |   | 2002                 | 
|                                |   |                      | 
|                                |   | (in
      thousands) | 
|Balance
      Sheet Data:       |   |                      | 
|Cash and
      cash equivalents | $ | 50,557               | 
|Short-term investments          |   | 105,283              | 
|Working capital                 |   | 125,636              | 
|Available-for-sale securities   |   | 61,205               | 
|Total assets                    |   | 285,604              | 
|Total deferred revenues         |   | 87,110               | 
|Total liabilities               |   | 111,962              | 
|Stockholders equity            |   | 173,642              | 
|                               

Item 7. Managements Discussion
  and Analysis of Financial Condition and Results of Operations.

This report contains forward-looking statements relating to
    future events and our future performance within the meaning of Section 27A
    of the Securities Act of 1933, as amended, and Section 21E of the Securities
    Exchange Act of 1934, as amended, including, without limitation, statements
    regarding our expectations, beliefs, intentions or future strategies that
    are signified by the words expects, anticipates,
    intends, believes or similar language. Actual
    results could differ materially from those anticipated in such forward-looking
    statements. All forward-looking statements included in this document are based
    on information available to us on the date hereof. It is routine for our internal
    projections and expectations to change as the year or each quarter in the
    year progress, and therefore it should be clearly understood that the internal
    projections and beliefs upon which we base our expectations may change prior
    to the end of each quarter or the year. Although these expectations may change,
    we may not inform you if they do. Our company policy is generally to provide
    our expectations only once per quarter, and not to update that information
    until the next quarter. We caution investors that our business and financial
    performance are subject to substantial risks and uncertainties. In evaluating
    our business, prospective investors should carefully consider the information
    set forth under the caption Risk Factors in addition to the
    other information set forth herein and elsewhere in our other public filings
    with the Securities and Exchange Commission.


Overview

We are a provider of global domain name registration and Internet
    services for businesses and consumers that wish to have a unique address and
    branded identity on the Internet. Domain names serve as addresses and identities
    on the World Wide Web. They enable a business or person to establish a Web
    presence and are integral to the use of websites (www.register.com), email
    (johndoe@register.com) and other types of Internet communication. We began processing registrations
    in the generic top level domains (gTLD) .com, .net and .org in June 1999 and,
    as such, were the first registrar accredited by the Internet Corporation for
    Assigned Names and Numbers (ICANN) to compete in the domain name registration
    market after ICANN introduced competition in the industry. We had approximately
    3.3 million active domain name registrations under management as of December
    31, 2002, representing over 1.1 million customers. Currently, we register,
    renew and transfer domain names across the .com, .net and .org gTLDs, in new
    gTLDs such as .biz, .info and .name and in over 400 country code top level
    domains (ccTLDs), including sub domains, such as .co.uk and .org.uk for the
    United Kingdom, .de for Germany and .jp for Japan. We believe that we offer a quick
    and user-friendly registration process as well as responsive and reliable
    customer support.


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We also offer a range of value-added products and services
    targeted to assist our customers in developing and maintaining their Web presence,
    including:


|  | Products and
      ServicesProvided by Us                                         |  |   | Products and
      ServicesResold By Us
|- | --------------------------------------------------------------------------------- |  | - | ---------------------------------------
|  |                                                                                   |  |   |                                        
| | website-creation tools under the names FirstStepSite®
      and WebSiteNOW!      |  |  | email                                  
|  |                                                                                   |  |   |                                        
| | intellectual property and brand protection services related
      to domain names |  |  | search engine submission services      
|  |                                                                                   |  |   |                                        
| | domain name forwarding                                                            |  |  | website design services                
|  |                                                                                   |  |   |                                        
|  |                                                                                   |  |  | digital certificates                   

Domain name registration activity is driven by the use of
    the Internet by businesses and consumers for electronic commerce and communication,
    the promotion, marketing and protection of brands and identities across the
    world and other online activities. Our mission is to become the preferred
    partner for customers who seek to create, enhance and manage their Web presence. Our Global Web Services division
       focuses on customers who are typically small to medium-size businesses

    as well as small offices/home offices and individuals. Generally, these customers
       purchase domain name registration services directly from our website located

    at www.register.com. In order to extend our distribution we maintain a Global
       Partner Network of companies that resell our domain name registration
      and
    Web services. Our network partners are typically Internet Service Providers
       (ISPs), web-hosting companies, telecom carriers and web portals, but also

    include online and offline retailers and business aggregators. Using our
      software  solutions, these companies resell our domain name registration
      services and
    related products and services to their customers. With operations in the United States,
    Canada and Europe, our Corporate Services division provides domain name registration
    and related products and services to large corporate enterprises with specialized
    registration needs including global registration and management services and
    online brand and trademark protection. Through our RegistryPro subsidiary,
    we are working toward establishing a registry for the new gTLD .pro. The .pro
    domain will be dedicated to certified professionals such as lawyers, doctors
    and accountants. All .pro domain names are planned to be issued with a digital
    certificate to facilitate secure communications and transactions. This product
    is intended to assist such professionals with their heightened confidentiality
    obligations. We also have a small equity stake in Afilias, the consortium
    of registrars, which manages the registry for the new gTLD .info and provides
    outsourced registry services to other top level domain registries including
    .org. In June 2000, we acquired Inabox,
    Inc. and we used Inaboxs software to develop our FirstStepSite® and
    WebSiteNOW! products and My.register.com, one of the reseller solutions
    offered to our Global Partner Network. We acquired Inabox, Inc. for $1.0 million
    cash and 280,019 shares of our common stock. In September 2000, we acquired
    Afternic.com, Inc., a secondary market exchange for domain names, for $10.0
    million cash and 4,378,289 shares of our common stock. Each of these transactions
    was accounted for using the purchase method of accounting. As a result, the
    financial results of Inabox and Afternic.com are consolidated with our financial
    results from the dates of their respective acquisitions. We made a decision
    to abandon the Afternic business in September 2002.


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On March 8, 2002 we acquired Virtual
    Internet plc for £11.99 million (US $16.9 million at date of acquisition).
    Virtual Internet plc, a U.K. based company, has operations in the United States
    and Europe and, at the time of acquisition, operated through two divisions:
    the Corporate Services division and the Hosting division. The Corporate Services
    division provides online intellectual property management and protection services
    and the Hosting division provided web-hosting services. In May 2002, we sold
    Virtual Internet plcs Hosting division for $0.5 million. Virtual Internet
    plc shareholders, other than shareholders in certain jurisdictions outside
    of the U.K., were given the opportunity to elect to receive loan notes from
    Register.com (U.K.) Limited in exchange for their shares and $9.6 million
    of these loan notes were outstanding at December 31, 2002. We expect these
    notes to be repaid on or before June 30, 2003. Our results of operations for
    2002 include those of Virtual Internets Corporate Services business
    since March 8, 2002.


Significant Accounting Policies

Net Revenues

We derive our net revenues from domain name registrations,
    other products and services and advertising. We earn registration fees in
    connection with new, renewed, extended and transferred-in registrations. Registration
    periods generally range from one to ten years. Domain name registration revenues
    are deferred at the time of the registration and are recognized ratably over
    the term of the registration period. Under this subscription-based model,
    we recognize revenue over the period of the subscription term during which
    we provide the registration services, including customer service and maintenance
    of the individual domain name records. We require prepayment via credit card
    for most online domain name registration sales, which provides us with the
    full cash fee at the beginning of the registration period while we recognize
    the revenues over the registration period. For many of our customers who register
    domain names through our Corporate Services division, and for many participants
    in our Global Partner Network, we establish lines of credit based on credit
    worthiness. Under current credit card industry
       practices, we are liable for fraudulent and disputed credit card transactions

    because we do not obtain the cardholders signature at the time of the
     transaction, even though the financial institution issuing the credit card

    may have approved the transaction. As a result, we must estimate the amount
     of credit card chargebacks we will receive in the future related to credit

    card sales in the current period. In determining our estimate, we review
    historical  rates of credit card chargebacks, current economic trends and
    changes in acceptance
    of our products and services on a monthly basis. Deferred revenues and revenues
     recognized are presented net of provisions recorded for estimated refunds

    to customers and chargebacks from credit card associations. The credit card
     associations may impose financial penalties if our chargebacks and refunds

    exceed certain thresholds. Such penalties are not charged to revenues, but
     are classified as general and administrative expense. If a significant percentage

    of customers continue to request refunds from us or contact their bank to
     request that the amount charged to their credit card be charged back to
    us
    based on claims that their credit card was used fraudulently or without their
     consent, our business could be materially adversely affected. See Risk
      Factors and Note 14 to the Consolidated Financial Statements Contingencies
      and Commitments
     Credit Card Penalties for additional information in connection
     with the penalties that may be imposed by credit card associations and other

    risks associated with the Companys excessive credit card chargebacks
     and refunds.


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In addition to our standard registration fees published on
    our www.register.com website, we have a number of different fee structures
    for our domain name registration services. Our Corporate Services division
    delivers a diversified range of higher-priced services for our corporate customers
    and extends volume-based discounts for domain name registrations and transfers.
    We pay referral commissions to certain participants in our Global Partner
    Network and to participants in our affiliate network. Other participants in
    our Global Partner Network pay us a wholesale price per registration, discounted
    off of our standard registration fee.


We believe that the high growth rate experienced in the domain
    name registration marketplace in late 1999 and 2000 is not an indication of
    anticipated future growth rates. During that period substantial numbers of
    domain name registrations were driven by factors including: (i) the desire
    by businesses to establish an online presence; (ii) significant registration
    activity by domain name speculators, who register names with the intention
    of reselling them; and (iii) extremely strong growth in new business start-ups
    in the Internet sector. In late 2000, the domain name registration markets
    growth rate began to decrease. The overall number of domain names in
    the VeriSign registry decreased from a high of approximately 32 million as
    of September 30, 2001 to approximately 28.3 million as of December 31, 2002.
    We believe this was due, in large part, to the large number of names registered
    in 1999 and 2000 by domain name speculators that were not renewed. The decline
    in the overall market, together with increased competition, contributed to
    a sequential quarterly decline in the number of our paid domain name registrations,
    transfers and renewals from the first quarter of 2000 until the introduction
    of new gTLDs in the fourth quarter of 2001 and again from the first quarter
    of 2002 through the fourth quarter of 2002. As a result of all of these factors,
    which were slightly offset by the acquisition of Virtual Internet in March
    2002, we experienced a decrease in our total names under management from approximately
    3.8 million as of September 30, 2001 to approximately 3.3 million as of December
    31, 2002.


Other products and services, which primarily consist of email,
    domain name forwarding, web-hosting, site submission to search engines, applications
    for new gTLDs, intellectual property protection services related to the introduction
    of new gTLDs and software, are sold either as one time offerings or annual
    or monthly subscriptions, depending on the product or service offering. Revenues
    from domain name applications, which may or may not result in domain registrations,
    and other intellectual property protection services related to the introduction
    of new gTLDs are recognized upon the sale of the applications and related
    services. Revenues from our other products and services, such as email and
    domain name forwarding, are recognized ratably over the period in which we
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Advertising revenues are derived from the sale of sponsorships
    and banner advertisements, typically under short-term contracts that range
    from one month to one year in duration. We recognize these revenues ratably
    over the period in which the advertisements are displayed provided that no
    significant company obligation remains and collection of the resulting receivable
    is probable.


Cost of Revenues

Our cost of revenues consists of the costs associated with
    providing domain name registrations and other products and services. Cost
    of revenues for domain name registrations represents amortization on a straight-line
    basis over the life of the registration term of registry fees, depreciation
    on the equipment used to process the domain name registrations, fees paid
    to the co-location facilities maintaining our equipment, and fees paid to
    the financial institutions to process credit card payments on our behalf.
    Cost of revenues does not include penalties for excessive credit card chargebacks
    and refunds, as such penalties are classified as general and administrative
    expense. We pay registry fees for gTLDs ranging from $5.30 per year for each
    .biz and .info domain name registration to $6 per year for each .com, .net
    and .org domain name registration. We pay registry fees ranging from $6 to
    $1,000 per year for one to ten-year country code domain name registrations.
    The largest component of our cost of revenues is the registry fees, which,
    while paid in full at the time the domain name is registered, are recorded
    as a prepaid expense and amortized to cost of revenues ratably over the terms
    of the registrations. Cost of revenues for our other products
    and services consists of fees paid to third-party service providers, depreciation
    on the equipment used to deliver the services, fees paid to the co-location
    facilities maintaining our equipment and fees paid to the financial institutions
    to process credit card payments on our behalf. The cost of revenues for other
    products and services is recognized ratably over the periods in which the
    services are provided. We have no direct cost of revenues
    associated with our advertising revenue and we have no incremental cost of
    revenues associated with delivering advertisements since we use the same equipment
    to deliver the advertisements as we use for our domain name registration services.
    Therefore, the gross profit margin on advertising revenue is 100%, and accordingly,
    any decrease in advertising revenue would represent a reduction of our gross
    profit of the same amount. We incur operational costs including salaries and
    commissions for our advertising sales staff, which are classified as operating
    expenses.


Operating Expenses

Our operating expenses consist of sales and marketing, research
    and development, general and administrative (including non-cash compensation),
    and amortization and writeoffs of intangible assets. Prior to January 1, 2002
    our operating expenses also included amortization of goodwill; effective January
    1, 2002 we adopted SFAS 142 and ceased amortization of goodwill. Our sales
    and marketing expenses consist primarily of employee salaries, marketing programs
    such as advertising, and commissions paid to our sales representatives. Research
    and development expenses consist primarily of employee salaries, fees for
    outside consultants, software licensing fees and related costs associated
    with the development and integration of new products and services, the enhancement
    of existing products and services, and quality assurance. General and administrative
    expenses, excluding non-cash compensation, consist primarily of employee salaries
    and other personnel-related expenses for executive, financial and administrative
    personnel, as well as professional services fees, insurance premiums, penalties
    for excessive credit card chargebacks and refunds, and provisions for uncollectible
    receivables. Facilities expenses are allocated across our different operating
    expense categories. Non-cash compensation expense relates to grants of restricted
    stock, stock options and warrants to employees, directors, consultants and
    vendors with exercise prices below fair market value on the date of grant.
    Based on such grants through December 31, 2002, we expect to record approximately
    $1.4 million in additional non-cash compensation expense through 2009 as follows:
    $1.0 million in 2003, $0.3 million in 2004 and $0.1 million thereafter. Non-cash
    compensation expense will reduce our earnings or increase our losses, as applicable,
    in future periods.


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We review our goodwill and intangible assets for impairment
    whenever events or changes in circumstances indicate that the carrying amount
    of these assets may not be recoverable. We assess the recoverability of goodwill
    using estimated undiscounted cash flows. These cash flows include an estimated
    terminal value based on a hypothetical sale of an acquisition at the end of
    the related goodwill amortization period. We also compare the total market
    value of our common stock with the book value of our stockholders equity.
    Based on the foregoing factors, if we conclude that an other-than-temporary
    impairment of goodwill has occurred, we record an impairment writedown.


Income Taxes

In preparing our financial statements, we make estimates of
    our current tax obligations and temporary differences resulting from timing
    differences for reporting items for book and tax purposes, the most significant
    of which is deferred revenue. We recognize deferred taxes by the asset and
    liability method of accounting for income taxes. Under the asset and liability
    method, deferred income taxes are recognized for differences between the financial
    statement and tax bases of assets and liabilities at enacted statutory tax
    rates in effect for the years in which the differences are expected to reverse.
    The effect on deferred taxes of a change in tax rates is recognized in income
    in the period that includes the enactment date. In addition, valuation allowances
    are established when appropriate to reduce the carrying value of deferred
    tax assets to the amounts expected to be realized.


Net Income (Loss)

Although we achieved profitability for the year 2000, we were
    not profitable for 2001 or 2002. Our profitability in 2000 was due, in part,
    to a gain of $4.6 million from the sale of our investment in a private company,
    and to interest income. Our net loss for 2001 included a writedown of $32.5
    million of intangible assets associated with the acquisition of Afternic,
    and the reversal of a $2.5 million tax valuation allowance which increased
    income by that amount. Our net loss for 2002 included a goodwill impairment
    writedown of $17.0 million. Although we have recently taken several initiatives
    to reduce our operating expenses, these expenses could still increase in future
    periods as we make efforts to improve our operational and financial systems.
    In addition, losses at Virtual Internet and RegistryPro have contributed to
    a decline in our profitability, and we expect losses at Virtual
    Internet and RegistryPro to impact our profitability negatively in 2003. In addition, unless
    we lower our credit card refunds and reduce our level of credit card chargebacks,
    we may continue to incur significant penalties from credit card companies
    that impact our profitability (see Risk Factors for additional
    information). Accordingly, we cannot assure you that we will be able to operate
    profitably or sustain or increase our positive cash flow in the future.


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Results of Operations

Years Ended December 31, 2002 and 2001

Net Revenues

Total net revenues decreased 9% to $106.3 million for the
    year 2002 from $116.3 million in 2001.


Domain name registrations. Recognition of revenues from domain
    name registrations decreased 4% to $97.3 million in 2002 from $101.4 million
    in 2001. This decrease was due in part to lower average prices and a longer
    dollar-weighted-average subscription term for domain names registered in 2002
    compared with 2001, and in part to a writeoff related to credit card receivables
    in 2002. These reductions were offset in part by the inclusion of Virtual
    Internet in our results of operations after March 8, 2002, for which revenues
    of $7.2 million were recognized in 2002. We may face continued pricing pressure. At December 31, 2002, we had $87.1
    million of deferred revenue compared with $77.4 million at December 31, 2001,
    representing an increase of $9.7 million for the year 2002. The increase was
    due primarily to the acquisition of Virtual Internet on March 8, 2002, whose
    balance sheet included deferred revenue of $6.9 million at the date of acquisition.
    Our deferred revenue balance is an indicator of revenue to be recognized in
    future periods.


Other Products and Services. Revenues from other products
    and services decreased 13% to $4.8 million in 2002 from $5.5 million in 2001.
    The decrease was due primarily to the nonrecurrence in 2002 of $2.9 million
    of revenues received during 2001 from sales of intellectual property services
    in connection with the launch of new gTLDs, offset in part by increased sales
    in 2002 of email and WebSiteNOW! services. Advertising. Revenues from
    advertising decreased 54% to $4.2 million in 2002 from $9.4 million in 2001,
    primarily as a result of softness in the Internet advertising market. We anticipate
    continued softness in the Internet advertising market.


Cost of Revenues

Total cost of revenues increased 1% to $35.3 million in 2002
    from $34.8 million in 2001. Cost of Domain Name Registrations.
    Costs recognized for domain name registrations increased 5% to $34.9 million
    in 2002 from $33.3 million in 2001. The increase was due to the inclusion
    of Virtual Internet in our results of operations after March 8, 2002, for
    which costs of $2.4 million were recognized in 2002, more than offsetting
    the decreased cost of domain name registrations that resulted from the lower
    registration revenues recognized in 2002.


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Cost of Other Products and Services. Cost of other
    products and services declined to $0.4 million in 2002 from $1.5 million,
    primarily because 2001 included $1.2 million of costs related to sales of
    intellectual property services in connection with the launch of new gTLDs,
    which did not recur in 2002.


Gross Profit Margin

Our gross profit margin declined to 66.8% in 2002 from 70.1%
    in 2001, in part due to lower advertising revenues, in part to lower average
    prices, in part to fixed costs for depreciation and data center operations
    which comprised a higher percentage of the lower level of revenues.


Operating Expenses

Total operating expenses decreased 13% to $88.2 million in
    2002 from $101.3 million in 2001. Sales and Marketing. Sales
    and marketing expenses decreased 7% to $31.2 million in 2002 from $33.5 million
    in 2001. The decrease was primarily due to lower expenses related to media
    advertising, direct mail and other promotional activities, offset in part
    by the inclusion of Virtual Internet in our results of operations after March
    8, 2002. Research and Development.
    Research and development expenses increased 74% to $13.4 million in 2002 from
    $7.7 million in 2001. The increase resulted primarily from higher salaries
    and consulting fees for personnel working to improve our systems and operations,
    and in part from increased costs for software licenses.


General and Administrative. General and administrative expenses
    increased 78% to $26.3 million in 2002 from $14.8 million in 2001. The higher
    expense level was due to (i) an increase of $4.3 million in credit card penalties
    as a result of excessive chargebacks and refunds, of which $0.8 million was
    paid and $3.7 million was accrued to cover our estimate of potential penalties
    which could be imposed for 2002 under one card associations rules, (ii)
    the inclusion of $3.4 million of expenses for Virtual Internet which was acquired
    March 8, 2002, (iii) an increase of $1.3 million in bad debt expense, (iv)
    the costs of operating our customer service center in Canada which commenced
    operations in the third quarter of 2001, and (v) startup costs of $1.0 million
    for RegistryPro. For additional information in connection with credit card
    penalties, see Risk Factors and Note 14 to Consolidated Financial
    Statements Contingencies and Commitments Credit Card Penalties.


Amortization and Writedown of Goodwill and Other Intangibles.
    Amortization and writedown of goodwill and other intangibles was $17.3 million
    in 2002 compared with $45.3 million in 2001. During 2001 the Company recorded
    a goodwill impairment writedown of $32.5 million related to Afternic, which
    was acquired in September 2000. In September 2002, the Company made a decision
    to abandon the Afternic business. As a consequence of that decision, as well
    as negative industry and economic trends affecting the Company and the general
    decline in technology company valuations, including the valuation of the Companys
    common stock, the Company performed an impairment analysis of the goodwill
    and intangible assets recorded in connection with its various acquisitions.
    Because the total market value of the Companys common stock at September
    30, 2002 was lower than the book value of its stockholders equity, the
    Company recorded a goodwill impairment loss of $17 million in September 2002.
    Also in accordance with SFAS 142, the Company ceased amortization of goodwill
    effective January 1, 2002.


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Other Income, Net

Other income, net, which consisted primarily of interest income,
    net of interest expense, decreased to $5.6 million in 2002 from $8.7 million
    in 2001. The decrease was primarily due to lower prevailing interest rates
    in 2002.


Provision for Income Taxes

The provision for income taxes in 2002 was a benefit of $1.2
    million, representing an effective tax rate of 11% of the pre-tax loss. That
    effective tax rate was lower than the statutory rate of 43% in part because
    only a portion of the goodwill impairment writedown is tax-deductible, in
    part because no tax benefits were recorded in connection with losses generated
    by Virtual Internet in the United Kingdom as realization is not assured, and
    in part because a substantial portion of our interest income is exempt from
    taxes. In 2001, the provision for income taxes was an expense of $10.4 million,
    rather than a benefit, because goodwill amortization and the impairment writedown
    recorded in 2001 were not tax-deductible.


Years Ended December 31, 2001 and 2000

Net Revenues

Total net revenues increased to $116.3 million in 2001 from
    $86.1 million in 2000. Domain name registrations.
    Revenues from domain name registrations increased 43% to $101.4 million in
    2001 from $70.8 million in 2000. Revenues from sales of new, renewed and transferred
    domain name registrations in 2001 were lower than 2000. This decrease was
    offset by the recognition of a greater amount of deferred revenue during 2001
    compared with 2000. We had a net decrease in deferred revenue during 2001
    of $11.1 million as compared to a $56.4 million increase in deferred revenue
    for 2000. The decrease in 2001 was primarily the result of a decrease in paid
    new domain registrations since March 31, 2000 compared with an increase in
    paid new domain registrations for periods prior to March 31, 2000, as well
    as a shorter average registration term in 2001. We had $77.4 million of deferred
    revenue at December 31, 2001, decreasing from $88.5 million at December 31,
    2000. Online Products and Services.
    Revenues from online products and services increased to $5.5 million in 2001
    from $3.0 million in 2000. The increase resulted primarily from sales of services
    offered in connection with the launch of new gTLDs. Advertising. Revenues from
    advertising decreased 23% to $9.4 million in 2001 from $12.3 million in 2000,
    primarily as a result of lower rates and volume of advertising and sponsorships
    sold on our www.register.com, FirstStepSite® and other web
    pages.


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Cost of Revenues

Total cost of revenues increased to $34.8 million in 2001
    from $23.9 million in 2000. Cost of Domain Name Registrations.
    Cost of domain name registrations increased 41% to $33.0 million in 2001 from
    $23.5 million in 2000. The dollar amounts of registry fees paid were lower
    in 2001 than in 2000. This decrease was offset by the recognition of a significantly
    greater amount of prepaid registry fees during 2001 as compared to the amounts
    recognized during 2000. Cost of Online Products and Services.
    Cost of online products and services increased to $1.8 million in 2001 from
    $0.4 million in 2000, primarily due to fees paid to the .biz registry in connection
    with sales of services in connection with the launch of the .biz new gTLD.


Operating Expenses

Total operating expenses increased to $101.3 million in 2001
    from $71.9 million in 2000. Sales and Marketing. Sales
    and marketing expenses decreased 29% to $33.5 million in 2001 from $47.3 million
    in 2000. The decrease was primarily due to a decrease in media advertising
    expenditures. In addition, sales and marketing expenses in 2000 included registry
    fees associated with free registrations effected through promotional campaigns
    run principally in September 2000 and registrations effected through NameDemo.com,
    which we stopped accepting in February 2001. Research and Development.Research
    and development expenses increased by 39% to $7.7 million in 2001 from $5.6
    million in 2000. The increase resulted primarily from salaries associated
    with new personnel in technology to support our growth. General and Administrative.
    General and administrative expenses increased 10% to $14.8 million in 2001
    from $13.4 million in 2000. The increase was primarily due to salaries associated
    with newly hired personnel and related costs required to manage our growth
    and facilities expansion. Non-cash compensation expenses, included herein,
    decreased to $1.8 million in 2001 from $2.2 million in 2000. The non-cash
    compensation expenses were primarily attributable to the amortization of deferred
    compensation related to employee stock options. Amortization and write-down of
    Goodwill and Other Intangibles. Amortization and write-down of goodwill
    and other intangibles increased to $45.3 million in 2001 from $5.6 million
    in 2000. Amortization and write-down of goodwill and other intangibles are
    related to the acquisitions of Inabox in June 2000 and Afternic in September
    2000, and included an impairment charge of $32.5 million in 2001. Amortization
    of goodwill was higher in 2001 compared with 2000 because 2001 included a
    full year of amortization for both acquisitions.


Other Income, Net

Other Income (expense), net. Other income, net, which
    consisted primarily of interest income, net of interest expense, decreased
    to $8.7 million in 2001 from $9.5 million in 2000, primarily due to a shift
    in our portfolio from higher rate taxable securities to lower rate tax exempt
    securities, and lower interest rates in 2001.


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Gain on Sale of Investment.
    Gain on sale of investment of $4.6 million in 2000 was the result of a gain
    on the sale of shares of a private company after that company was acquired
    by a public company.


Income Tax Expense

The provision for income taxes was an expense of $10.4 million
    in 2001, which was net of the reversal of $2.6 million in valuation reserves
    previously recorded against our deferred tax assets. Amortization and write-down
    of goodwill and other intangibles is not deductible for income tax purposes.
    Income tax expense in 2000 was $4.2 million.


Quarterly Results of Operations

The following table sets forth selected unaudited quarterly
    statement of operations data, in dollar amounts and as percentages of net
    revenue, for the eight quarters ended December 31, 2002. In our opinion
    this information has been prepared on substantially the same basis as the
    audited financial statements appearing elsewhere in this annual report, and
    all necessary adjustments, consisting only of normal recurring adjustments,
    have been included in order to present fairly the unaudited quarterly results
    of operations data. The quarterly data should be read in conjunction with
    our annual financial statements and related notes appearing elsewhere in this
    annual report. The operating results for any quarter are not necessarily indicative
    of results for any future period.


|                                                                                                                                                    |  |   | Quarter Ended           |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ----------------------- | -
|                                                                                                                                                    |  |   |                         |  
|                                                                                                                                                    |  |   | December
      31, 2002 |  
|                                                                                                                                                    |  |   |                         |  
|                                                                                                                                                    |  |   | (in
      thousands)    |  
|Net revenues                                                                                                                                        |  | $ | 26,531                  |  
|Cost of revenues                                                                                                                                    |  |   | 9,207                   |  
|                                                                                                                                                    |  |   |                         |  
|Gross profit                                                                                                                                        |  |   | 17,324                  |  
|                                                                                                                                                    |  |   |                         |  
|Operating expenses:                                                                                                                                 |  |   |                         |  
|Sales
        and marketing                                                                                                                         |  |   | 7,424                   |  
|Research and development                                                                                                                            |  |   | 3,985                   |  
|General
        and administrative(including non-cashcompensationof $521,
        $492, $469, $455, $453,452,
        $441, and $424, respectively) |  |   | 7,619                   |  
|Amortization and writedown
        of goodwill and other intangibles                                                                                |  |   | 134                     |  
|                                                                                                                                                    |  |   |                         |  
|Total operating
      expenses                                                                                                                      |  |   | 19,162                  |  
|                                                                                                                                                    |  |   |                         |  
|Income (loss) from operations                                                                                                                       |  |   | (1,838                  | )
|Other income (expense), net                                                                                                                         |  |   | 1,351                   |  
|                                                                                                                                                    |  |   |                         |  
|Income (loss) before provision
        (benefit) for income taxes                                                                                   |  |   | (487                    | )
|Provision (benefit)
      for income
        taxes                                                                                                  |  |   | (140                    | )
|                                                                                                                                                    |  |   |                         |  
|Net income (loss)                                                                                                                                   |  | $ | (347                    | )
|                                                                                                                                                    |  |   |                         |  

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|                                                             |                         |   | Quarter Ended |                         
|------------------------------------------------------------ | ----------------------- | - | ------------- | ------------------------
|                                                             |                         |  
|                                                             | December
      31, 2002 |   |               | September
      30, 2002
|                                                             |                         |   |               |                         
|Basic (loss) income
      per
      share                    |                         | $ | (0.01         | )                       
|                                                             |                         |   |               |                         
|Diluted (loss) income
      per
      share                  |                         | $ | (0.01         | )                       
|                                                             |                         |   |               |                         
|Weighted average
      number of
        shares outstanding: |                         |   |               |                         
|Basic                                                        |                         |   | 40,057        |                         
|                                                             |                         |   |               |                         
|Diluted                                                      |                         |   | 40,057        |                         
|                                                             |                         |   |               |                         

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|                                                                     |  |  | Quarter Ended     |   
|-------------------------------------------------------------------- |  |  | ----------------- | --
|                                                                     |  |  |                   |   
|                                                                     |  |  | December 31, 2002 |   
|                                                                     |  |  |                   |   
|Net revenues                                                         |  |  | 100               | % 
|Cost of revenues                                                     |  |  | 35                |   
|                                                                     |  |  |                   |   
|Gross profit                                                         |  |  | 65                |   
|                                                                     |  |  |                   |   
|Operating costs
      and expenses                                   |  |  |                   |   
|Sales
        and marketing                                          |  |  | 28                |   
|Research
        and development                                     |  |  | 15                |   
|General
        and administrative (including non-cash compensation) |  |  | 29                |   
|Amortization
        and writedown of goodwill and other intangibles |  |  |                  |   
|                                                                     |  |  |                   |   
|Total operating
      costs and expenses                             |  |  | 72                |   
|                                                                     |  |  |                   |   
|Income (loss) from operations                                        |  |  | (7                | ) 
|Other income (expenses), net                                         |  |  | 5                 |   
|                                                                     |  |  |                   |   
|Income (loss) before provision
        (benefit) for income taxes    |  |  | (2                | ) 
|Provision (benefit)
      for income
        Taxes                   |  |  | (1                | ) 
|                                                                     |  |  |                   |   
|Net income (loss)                                                    |  |  | (1                | )%
|                                                                     |  |  |                   |   

Recent accounting pronouncements

SFAS 146 Accounting for Costs Associated with Exit
    or Disposal Activities was issued in June 2002, and requires that costs
    associated with exit or disposal activities be recognized when the liability
    is incurred, rather than at the date of commitment to an exit or disposal
    plan. Examples of covered costs are lease termination and certain employee
    severance. SFAS 146 is applicable to exit or disposal activities initiated
    after December 31, 2002. SFAS 148 Accounting for Stock-Based
    Compensation  Transition and Disclosure  an amendment of FAS
    123 was issued in December 2002, and provides for alternative methods
    of transition for a voluntary change to the fair market value based method
    of accounting for stock-based employee compensation.


Liquidity and Capital Resources

Historically, we have funded our operations and met our capital
    expenditure requirements primarily through cash generated from operations,
    sales of equity securities and borrowings. We issued 5,222,279 shares of our
    common stock to the public on March 3, 2000, which generated approximately
    $115.3 million in proceeds after deducting the underwriting discount and other
    offering expenses.


At December 31, 2002, our cash and cash equivalents, short-term
    investments and marketable securities totaled $217.0 million, representing
    an increase of $19.3 million for the year 2002. At December 31, 2002, $7.7
    million of our cash was pledged to support letters of credit, and $9.6 million
    was pledged to support a bank guarantee of a like amount of notes payable
    in connection with our acquisition of Virtual Internet. We generated $16.1
    million of cash from operations in 2002, compared with $24.3 million in 2001.
    In 2002 we used $3.2 million for capital expenditures, we received $6.6 million
    from the exercise of options and warrants, and we used $1.6 million to repurchase
    370,100 shares of our common stock.


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We issued notes payable in connection with our acquisition
    of Virtual Internet in March 2002. As of December 31, 2002 the dollar value
    of those notes was $9.6 million. The notes are repayable at the option of
    the holders at any time until June 30, 2003, at which time they mature. Although we have no material commitments
    for capital expenditures or other long-term obligations, other than lease
    obligations for office space, we anticipate that we will increase our capital
    expenditures in connection with several ongoing and planned projects to enhance
    our systems. Additional capital expenditures could arise in connection with
    the potential addition of new products and services or additional co-location
    facilities. We currently anticipate that our
    operating expenses will continue to represent a material use of our cash resources.
    We believe that our existing cash and anticipated cash to be provided from
    operations will be sufficient to meet our anticipated cash needs for working
    capital and capital expenditures for at least the next 12 months.


Under an agreement with ICANN, RegistryPro, our wholly owned
    subsidiary, is obligated to launch the .pro top level domain. We have committed
    to provide up to $8.5 million in funding and other non-cash contributions
    to RegistryPro for RegistryPros activities in establishing, operating
    and marketing the .pro top level domain through the first anniversary of its
    commencement-of-service date. However, we do not believe that RegistryPros
    agreement with ICANN requires RegistryPro to spend a specified amount to establish,
    operate and market the .pro top level domain. Accordingly, our contributions
    for these purposes could be less than $8.5 million. Through December 31, 2002
    we had contributed approximately $1.6 million in cash, and had also made non-cash
    contributions. We incurred $1.0 million of startup costs for RegistryPro in
    2002, and we anticipate additional net losses from RegistryPro in 2003.


A summary of our contractual cash obligations
    for operating leases as of December 31, 2002 is as follows:


|Year ending December 31,           |   | (in thousands) | 
|---------------------------------- | - | -------------- | 
|2003                               | $ | 1,365          | 
|2004                               |   | 1,043          | 
|2005                               |   | 878            | 
|2006                               |   | 903            | 
|2007                               |   | 850            | 
|Thereafter                         |   | 1,649          | 
|                                   |   |                | 
|Total contractual cash obligations | $ | 6,688          | 
|                                   |   |                | 

The Board of Directors has authorized the repurchase of up
    to $10.0 million of our Common Stock through October 2004, and we have purchased
    370,100 shares for a total of $1.6 million through December 31, 2002. Purchases
    under the stock repurchase program may be made from time to time in the open
    market, through block trades or otherwise. Depending on market conditions
    and other factors, such purchases may be commenced or suspended at any time
    or from time to time without prior notice. We have hired advisors in connection with the unsolicited acquisition proposals we received in January 2003. Although the fees payable to the advisors and the related expenses are not yet determinable, we expect that such fees and expenses will be significant. In addition, in connection with our restructuring program we have been reviewing our operations, including the ongoing capital requirements of our business. While we are unable to predict the outcome of this review, the utilization of a significant portion of our cash and marketable securities is a possible result.


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Item 7A.Quantitative and
  Qualitative Disclosures About Market Risk.

Our exposure to market risk is primarily related to interest
    income sensitivity, which is affected by changes in the general level of U.S.
    interest rates. We believe that we are not subject to a material interest
    rate risk because substantially all of our investments are in fixed-rate,
    short-term securities having a maturity of not more than two years, with a
    majority having a maturity of less than one year. Accordingly, the fair value
    of our investment portfolio would not be significantly impacted by a 100 basis
    point increase or decrease in interest rates. From time to time we also invest
    in publicly traded stocks, and we are subject to market price risk with respect
    to such investments. At December 31, 2002 the fair value of our investments
    in publicly traded stocks was $0.3 million. We did not have any foreign currency
    hedging or derivative instruments at December 31, 2002. We generally do not enter into financial
    instruments for trading or speculative purposes and do not currently utilize
    derivative financial instruments. While we have no present intention of utilizing
    derivative financial instruments in the future, it is possible that we may
    enter into such transactions or similar transactions. At December 31, 2002
    we had no long-term debt. Our consolidated financial statements
    are denominated in U.S. dollars. We derived 7% of our net revenues for
    the year 2002 from operations outside of the United States. We face foreign
    currency risks primarily as a result of the revenues that we receive from
    services delivered through our foreign subsidiaries. These subsidiaries incur
    most of their expenses in the local currency. Accordingly, our foreign subsidiaries
    use the local currency as their functional currency.  We are also exposed
    to foreign exchange rate fluctuations, primarily with respect to the Euro
    and the Canadian Dollar, as the financial results of foreign subsidiaries
    are translated into U.S. dollars for consolidation. As exchange rates vary,
    such financial results, when translated into U.S. dollars, may vary from expectations
    and may adversely impact our operating results and our net income (loss).


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Item 8.Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                            | PAGE
|--------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                            |     
|Report of PricewaterhouseCoopers
      LLP, Independent Accountants                                                         | 59  
|Consolidated Balance Sheets as
      of December 31, 2002 and 2001                                                          | 60  
|Consolidated Statements of Operations
      for the years ended December 31, 2002, 2001 and 2000                            | 61  
|Consolidated Statements of Changes
      in Stockholders Equity for the years ended December 31, 2002, 2001
      and 2000 | 62  
|Consolidated Statements of Cash
      Flows for the years ended December 31, 2002, 2001 and 2000                            | 63  
|Notes to Consolidated Financial
      Statements                                                                            | 64  

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors andStockholders of Register.com, Inc.

In our opinion, the accompanying consolidated balance sheets
    and the related consolidated statements of operations, of stockholders
    equity and of cash flows present fairly, in all material respects, the financial
    position of Register.com, Inc. at December 31, 2002 and 2001, and the results
    of its operations and its cash flows for each of the three years in the period
    ended December 31, 2002 in conformity with accounting principles generally
    accepted in the United States of America. These financial statements are the
    responsibility of the Companys management; our responsibility is to
    express an opinion on these financial statements based on our audits. We conducted
    our audits of these statements in accordance with auditing standards generally
    accepted in the United States of America, which require that we plan and perform
    the audit to obtain reasonable assurance about whether the financial statements
    are free of material misstatement. An audit includes examining, on a test
    basis, evidence supporting the amounts and disclosures in the financial statements,
    assessing the accounting principles used and significant estimates made by
    management, as well as evaluating the overall financial statement presentation.
    We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 2 to the Consolidated
  Financial Statements, effective January 1, 2002, the Company adopted Statement
  of Financial Accounting Standards No. 142, Goodwill and Other Intangible
  Assets


|/s/ PricewaterhouseCoopers LLP
|------------------------------
|                              

PricewaterhouseCoopers LLPNew York, New YorkFebruary 14, 2003

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REGISTER.COM, INC.CONSOLIDATED BALANCE SHEETS(in thousands)

|                                                                                                                                                                                                       |  |   | December 31, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | - | ------------ | -
|                                                                                                                                                                                                       |  |   | 2002         |  
|                                                                                                                                                                                                       |  |   |              |  
|Assets:                                                                                                                                                                                                |  |   |              |  
|Current Assets:                                                                                                                                                                                        |  |   |              |  
|Cash
        and cash equivalents                                                                                                                                                                      |  | $ | 50,557       |  
|Short-term
        investments                                                                                                                                                                         |  |   | 105,283      |  
|Accounts
        receivable, less allowance of $2,695 and $2,179, respectively                                                                                                                         |  |   | 8,453        |  
|Prepaid
        domain name registry fees                                                                                                                                                              |  |   | 15,457       |  
|Deferred
        tax asset, net                                                                                                                                                                        |  |   | 23,052       |  
|Other
        current assets                                                                                                                                                                           |  |   | 3,303        |  
|                                                                                                                                                                                                       |  |   |              |  
|Total current assets                                                                                                                                                                                   |  |   | 206,105      |  
|Fixed assets, net                                                                                                                                                                                      |  |   | 8,450        |  
|Prepaid domain name
      registry fees, net of current portion                                                                                                                                        |  |   | 7,131        |  
|Other investments                                                                                                                                                                                      |  |   | 396          |  
|Marketable securities                                                                                                                                                                                  |  |   | 61,205       |  
|Goodwill and other
      intangible assets, net                                                                                                                                                        |  |   | 2,317        |  
|                                                                                                                                                                                                       |  |   |              |  
|Total assets                                                                                                                                                                                           |  | $ | 285,604      |  
|                                                                                                                                                                                                       |  |   |              |  
|Liabilities and
      Stockholders Equity:                                                                                                                                                            |  |   |              |  
|Current Liabilities:                                                                                                                                                                                   |  |   |              |  
|Accounts
        payable and accrued expenses                                                                                                                                                          |  | $ | 15,227       |  
|Deferred
        revenue, net                                                                                                                                                                          |  |   | 55,617       |  
|Acquisition
        note payable                                                                                                                                                                       |  |   | 9,625        |  
|                                                                                                                                                                                                       |  |   |              |  
|Total current liabilities                                                                                                                                                                              |  |   | 80,469       |  
|                                                                                                                                                                                                       |  |   |              |  
|Deferred revenue,
      net of current portion                                                                                                                                                         |  |   | 31,493       |  
|                                                                                                                                                                                                       |  |   |              |  
|Total liabilities                                                                                                                                                                                      |  |   | 111,962      |  
|                                                                                                                                                                                                       |  |   |              |  
|Commitments and
      contingencies                                                                                                                                                                    |  |   |              |  
|                                                                                                                                                                                                       |  |   |              |  
|Stockholders
      equity:                                                                                                                                                                            |  |   |              |  
|Preferred
        stock$.0001 par value, 5,000,000 shares authorized; none issued
        and outstanding at December 31, 2002 and 2001                                                               |  |   |             |  
|Common
        stock$.0001 par value, 200,000,000 shares authorized; 40,624,502
        and 38,296,581 shares issued and outstanding at December 31, 2002 and
        December 31, 2001, respectively |  |   | 4            |  
|Additional
        paid-in capital                                                                                                                                                                     |  |   | 216,713      |  
|Unearned
        compensation                                                                                                                                                                          |  |   | (1,376       | )
|Accumulated
        other comprehensive income                                                                                                                                                         |  |   | 2,179        |  
|Accumulated
        deficit                                                                                                                                                                            |  |   | (43,878      | )
|                                                                                                                                                                                                       |  |   |              |  
|Total stockholders
      equity                                                                                                                                                                       |  |   | 173,642      |  
|                                                                                                                                                                                                       |  |   |              |  
|Total liabilities
      and stockholders equity                                                                                                                                                       |  | $ | 285,604      |  
|                                                                                                                                                                                                       |  |   |              |  

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

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REGISTER.COM, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands)

|                                                                                                                       |  |   | Year
        ended December 31, |  
|---------------------------------------------------------------------------------------------------------------------- |  | - | ------------------------------- | -
|                                                                                                                       |  |   | 2002                            |  
|                                                                                                                       |  |   |                                 |  
|Net revenues                                                                                                           |  | $ | 106,288                         |  
|Cost of revenues                                                                                                       |  |   | 35,299                          |  
|                                                                                                                       |  |   |                                 |  
|Gross
        profit                                                                                                   |  |   | 70,989                          |  
|Operating expenses:                                                                                                    |  |   |                                 |  
|Sales
        and marketing                                                                                            |  |   | 31,222                          |  
|Research
        and development                                                                                       |  |   | 13,357                          |  
|General
        and administrative (including non-cash compensation of $1,937, $1,771
        and $2,173 respectively) |  |   | 26,312                          |  
|Amortization
           and writedown of goodwill and other intangibles                                                |  |   | 17,290                          |  
|                                                                                                                       |  |   |                                 |  
|Total
        operating expenses                                                                                       |  |   | 88,181                          |  
|                                                                                                                       |  |   |                                 |  
|Loss from operations                                                                                                   |  |   | (17,192                         | )
|Other income (expense), net                                                                                            |  |   | 5,588                           |  
|Gain on sale of investment                                                                                             |  |   |                                |  
|                                                                                                                       |  |   |                                 |  
|Income (loss) before provision
      for income taxes                                                                  |  |   | (11,604                         | )
|Provision (benefit) for income
      taxes                                                                             |  |   | (1,195                          | )
|                                                                                                                       |  |   |                                 |  
|Net
        income (loss)                                                                                              |  |   | (10,409                         | )
|Other comprehensive income (loss):                                                                                     |  |   |                                 |  
|Unrealized
        gain (loss) on marketable securities                                                                |  |   | (595                            | )
|Gain
        on foreign currency translation                                                                           |  |   | 1,388                           |  
|                                                                                                                       |  |   |                                 |  
|Comprehensive
        income (loss)                                                                                    |  | $ | (9,616                          | )
|                                                                                                                       |  |   |                                 |  
|Basic
        income (loss) earnings per share                                                                         |  | $ | (0.26                           | )
|                                                                                                                       |  |   |                                 |  
|Diluted
        income (loss) earnings per share                                                                       |  | $ | (0.26                           | )
|                                                                                                                       |  |   |                                 |  
|Weighted average
      number of shares outstanding:                                                                   |  |   |                                 |  
|Basic                                                                                                                  |  |   | 40,046                          |  
|                                                                                                                       |  |   |                                 |  
|Diluted                                                                                                                |  |   | 40,046                          |  
|                                                                                                                       |  |   |                                 |  

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

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REGISTER.COM, INC.CONSOLIDATED STATEMENT OF STOCKHOLDERS
  EQUITY(in thousands, except share data)

|                                                                    |  |  | Series A Convertible
      Preferred Stock |   |   | Common
        Stock |  |  | Additional Paid-in
      Capital |   |   | Unearned Compen-sation |  |   | Accumulated
      other comprehensive income |   |   | Accumu-lated
      Deficit |   |   | Total |  
|------------------------------------------------------------------- |  |  | ------------------------------------------ | - | - | -------------------- |  |  | -------------------------------- | - | - | ---------------------- |  | - | -------------------------------------------- | - | - | -------------------------- | - | - | ----- | -
|                                                                    | 
|                                                                    |  |  | Shares                                     |   |   | Amount               |  |  | Shares                           |   |   | Amount                 | 
|                                                                    |  |  |                                            |   |   |                      |  |  |                                  |   |   |                        |  |   |                                              |   |   |                            |   |   |       |  
|Balance
      at January 1, 2000                                    |  |  | 4,694,333                                  |   | $ |                     |  |  | 21,065,047                       |   | $ | 2                      |  | $ | 36,710                                       |   | $ | (2,647                     | ) | $ |      |  
|Sale
        and issuance of common stock                           |  |  |                                           |   |   |                     |  |  | 5,222,279                        |   |   | 1                      |  |   | 115,293                                      |   |   |                           |   |   |      |  
|Issuance
        of common stock for acquisitions                   |  |  |                                            |   |   |                      |  |  | 4,658,308                        |   |   | 1                      |  |   | 47,428                                       |   |   |                            |   |   |       |  
|Conversion
        of exchangeable preferred stock to common stock  |  |  | (4,694,333                                 | ) |   |                     |  |  | 4,694,333                        |   |   |                       |  |   |                                             |   |   |                           |   |   |      |  
|Issuance
        of compensatory stock options                      |  |  |                                           |   |   |                     |  |  |                                 |   |   |                       |  |   | 3,895                                        |   |   | (3,895                     | ) |   |      |  
|Issuance
        of shares for the Employee Stock Purchase Plan     |  |  |                                           |   |   |                     |  |  | 33,619                           |   |   |                       |  |   | 200                                          |   |   |                           |   |   |      |  
|Amortization
        of unearned compensation                       |  |  |                                           |   |   |                     |  |  |                                 |   |   |                       |  |   | (81                                          | ) |   | 2,254                      |   |   |      |  
|Exercise
        of stock options, inclusive of related tax benefit |  |  |                                           |   |   |                     |  |  | 427,457                          |   |   |                       |  |   | 893                                          |   |   |                           |   |   |      |  
|Exercise
        of warrants                                        |  |  |                                           |   |   |                     |  |  | 722,238                          |   |   |                       |  |   | 339                                          |   |   |                           |   |   |      |  
|Net
        unrealized holding gain in marketable securities        |  |  |                                           |   |   |                     |  |  |                                 |   |   |                       |  |   |                                             |   |   |                           |   |   | 384   |  
|Net
        income                                                  |  |  |                                           |   |   |                     |  |  |                                 |   |   |                       |  |   |                                             |   |   |                           |   |   |      |  
|                                                                    |  |  |                                            |   |   |                      |  |  |                                  |   |   |                        |  |   |                                              |   |   |                            |   |   |       |  
|Balance
      at December 31, 2000                                  |  |  |                                           |   |   |                     |  |  | 36,823,281                       |   |   | 4                      |  |   | 204,677                                      |   |   | (4,288                     | ) |   | 384   |  
|Issuance

        of shares for the Employee Stock Purchase Plan    |  |  |                                           |   |   |                     |  |  | 66,774                           |   |   |                       |  |   | 399                                          |   |   |                           |   |   |      |  
|Amortization
        of unearned compensation                       |  |  |                                           |   |   |                     |  |  |                                 |   |   |                       |  |   | (10                                          | ) |   | 1,771                      |   |   |      |  
|Exercise
        of stock options, inclusive of related tax benefit |  |  |                                           |   |   |                     |  |  | 794,011                          |   |   |                       |  |   | 4,905                                        |   |   |                           |   |   |      |  
|Exercise
        of warrants                                        |  |  |                                           |   |   |                     |  |  | 570,428                          |   |   |                       |  |   | 208                                          |   |   |                           |   |   |      |  
|Issuance
        of restricted stock                                |  |  |                                           |   |   |                     |  |  | 42,087                           |   |   |                       |  |   | 500                                          |   |   | (490                       | ) |   |      |  
|Net
        unrealized holding gain in marketable securities        |  |  |                                           |   |   |                     |  |  |                                 |   |   |                       |  |   |                                             |   |   |                           |   |   | 1,002 |  
|Net
        income (loss)                                           |  |  |                                           |   |   |                     |  |  |                                 |   |   |                       |  |   |                                             |   |   |                           |   |   |      |  
|                                                                    |  |  |                                            |   |   |                      |  |  |                                  |   |   |                        |  |   |                                              |   |   |                            |   |   |       |  
|Balance
      at December 31, 2001                                  |  |  |                                           |   |   |                     |  |  | 38,296,581                       |   |   | 4                      |  |   | 210,679                                      |   |   | (3,007                     | ) |   | 1,386 |  
|Issuance
        of shares for the Employee Stock Purchase Plan     |  |  |                                           |   |   |                     |  |  | 62,470                           |   |   |                       |  |   | 349                                          |   |   |                           |   |   |      |  
|Amortization
        of unearned compensation                       |  |  |                                           |   |   |                     |  |  |                                 |   |   |                       |  |   |                                              |   |   | 1,937                      |   |   |      |  
|Exercise
        of stock options, inclusive of related tax benefit |  |  |                                            |   |   |                      |  |  | 1,537,899                        |   |   |                       |  |   | 6,969                                        |   |   |                            |   |   |       |  
|Exercise
        of warrants                                        |  |  |                                           |   |   |                     |  |  | 1,063,406                        |   |   |                       |  |   | 42                                           |   |   |                           |   |   |      |  
|Issuance
        of restricted stock                                |  |  |                                           |   |   |                     |  |  | 34,246                           |   |   |                       |  |   | 306                                          |   |   | (306                       | ) |   |      |  
|Repurchase
        and retirement of treasury stock                 |  |  |                                           |   |   |                     |  |  | (370,100                         | ) |   |                       |  |   | (1,632                                       | ) |   |                           |   |   |      |  
|Other
        comprehensive income:                                 |  |  |                                            |   |   |                      |  |  |                                  |   |   |                        |  |   |                                              |   |   |                            |   |   |       |  
|Net
        unrealized holding loss on marketable securities        |  |  |                                           |   |   |                     |  |  |                                 |   |   |                       |  |   |                                             |   |   |                           |   |   | (595  | )
|Foreign
        currency translation                                |  |  |                                           |   |   |                     |  |  |                                 |   |   |                       |  |   |                                             |   |   |                           |   |   | 1,388 |  
|Net
        income (loss)                                           |  |  |                                           |   |   |                     |  |  |                                  |   |   |                       |  |   |                                             |   |   |                           |   |   |      |  
|                                                                    |  |  |                                            |   |   |                      |  |  |                                  |   |   |                        |  |   |                                              |   |   |                            |   |   |       |  
|Balance
      at December 31, 2002                                  |  |  |                                           |   | $ |                     |  |  | 40,624,502                       |   | $ | 4                      |  | $ | 216,713                                      |   | $ | (1,376                     | ) | $ | 2,179 |  
|                                                                    |  |  |                                            |   |   |                      |  |  |                                  |   |   |                        |  |   |                                              |   |   |                            |   |   |       |  

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

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REGISTER.COM, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)

|                                                                                                         |  |   | Year ended December
      31, |  
|-------------------------------------------------------------------------------------------------------- |  | - | ----------------------------- | -
|                                                                                                         |  |   | 2002                          |  
|                                                                                                         |  |   |                               |  
|Cash flows from operating
      activities                                                               |  |   |                               |  
|Net income (loss)                                                                                        |  | $ | (10,409                       | )
|Adjustments to reconcile net
      income (loss) to net cash provided by (used in) operating activities: |  |   |                               |  
|Deferred
        revenues                                                                                |  |   | 1,864                         |  
|Depreciation,
        amortization and writedown of goodwill and other intangible assets                 |  |   | 21,802                        |  
|Compensatory
        stock options and warrants expense                                                  |  |   | 1,631                         |  
|Deferred
        income taxes                                                                            |  |   | (4,637                        | )
|Tax
        benefit from exercise of employee stock options                                              |  |   | 1,061                         |  
|Changes in assets and liabilities
      affecting operating cash flows, net of acquisitions:             |  |   |                               |  
|Accounts
        receivable                                                                              |  |   | 6,190                         |  
|Prepaid
        domain name registry fees                                                                |  |   | (638                          | )
|Prepaid
        income taxes                                                                             |  |   |                              |  
|Other
        current assets                                                                             |  |   | 2,730                         |  
|Accounts
        payable and accrued expenses                                                            |  |   | (3,447                        | )
|                                                                                                         |  |   |                               |  
|Net
        cash provided by operating activities                                                        |  |   | 16,147                        |  
|                                                                                                         |  |   |                               |  
|Cash flows from investing
      activities                                                               |  |   |                               |  
|Capital
        expenditures                                                                             |  |   | (3,247                        | )
|Deferred
        offering costs                                                                          |  |   |                              |  
|Purchases
        of investments                                                                         |  |   | (300,185                      | )
|Maturities
        of investments                                                                        |  |   | 270,416                       |  
|Acquisitions,
        net                                                                                |  |   | (9,359                        | )
|                                                                                                         |  |   |                               |  
|Net
        cash used in investing activities                                                            |  |   | (42,375                       | )
|                                                                                                         |  |   |                               |  
|Cash flows from financing
      activities                                                               |  |   |                               |  
|Issuance
        of notes payable                                                                        |  |   | 8,552                         |  
|Repayment
        of notes payable                                                                       |  |   | (219                          | )
|Net
        proceeds from issuance of common stock and warrants                                          |  |   | 6,605                         |  
|Purchase of treasury stock                                                                               |  |   | (1,632                        | )
|Principal
        payments on capital lease obligations                                                  |  |   |                              |  
|                                                                                                         |  |   |                               |  
|Net
        cash provided by financing activities                                                        |  |   | 13,306                        |  
|                                                                                                         |  |   |                               |  
|Effect
        of exchange rate changes on cash                                                          |  |   | 1,547                         |  
|                                                                                                         |  |   |                               |  
|Net increase (decrease) in
      cash and cash equivalents                                               |  |   | (11,375                       | )
|Cash and cash equivalents at
      beginning of period                                                   |  |   | 61,932                        |  
|                                                                                                         |  |   |                               |  
|Cash and cash equivalents
      at end of period                                                         |  | $ | 50,557                        |  
|                                                                                                         |  |   |                               |  
|Supplemental disclosure of cash
      flow information:                                                  |  |   |                               |  
|Cash paid for interest                                                                                   |  | $ | 123                           |  
|Cash paid for income taxes                                                                               |  | $ | 1,731                         |  

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

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REGISTER.COM, INC.Notes to Financial Statements

1. Nature of Business And Organization

Nature of Business

Register.com, Inc. (the Company or Register.com)
    provides Internet domain name registration and other online products and services
    such as web-site creation tools, email, domain name forwarding and advertising. The Company is an ICANN-accredited
    registrar of domain names. ICANN is an independent non-profit organization
    selected by the U.S. Department of Commerce to manage and oversee the domain
    name system. In March 2000, the Company completed
    an initial public offering of 5,222,279 shares of its common stock and received
    net proceeds of $115.3 million (see Note 6). In June 2000, the Company acquired
    Inabox, Inc., a developer of website creation software. In September 2000,
    the Company acquired Afternic.com, Inc., a secondary market exchange for domain
    names. In March 2002, the Company acquired Virtual Internet plc, which provides
    domain name registrations and online intellectual property management and
    protection services. See Note 13 for additional information.


Stock Split

In January 2000, the Company effected a 3.5 to 1 stock split.
    All common and preferred shares, options, warrants and related per-share data
    reflected in the accompanying financial statements and notes thereto have
    been adjusted to give retroactive effect to the stock split.


2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts
    of the Company and its wholly owned subsidiaries. Intercompany balances and
    transactions have been eliminated.


Cash equivalents

The Company considers all highly liquid investments purchased
    with an initial maturity of 90 days or less to be cash equivalents. The Company
    maintains its cash balances in highly rated financial institutions. At most
    times, such cash balances exceed the Federal Deposit Insurance Corporation
    limit. The Company has pledged $7.7 million and $7.4 million of its cash as
    of December 31, 2002 and 2001, respectively, as security deposits, primarily
    to support outstanding letters of credit. The Company has also deposited 6.0
    million pounds sterling (approximately $9.6 million at December 31, 2002)
    in support of a bank guarantee of a like amount of notes payable in connection
    with the acquisition of Virtual Internet plc in March 2002 (see Note 13).


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Investments

The Company classifies its investments in debt securities
    as marketable securities in accordance with the provisions of Statement of
    Financial Accounting Standards (SFAS) No. 115, Accounting
    for Certain Investments in Debt and Equity Securities. These securities
    are carried at fair market value, with unrealized gains and losses reported
    in stockholders equity as a component of other comprehensive income
    (loss). Gains or losses on securities sold are based on the specific identification
    method. Securities with maturities of less
    than one year are classified as current, and securities with maturities of
    greater than a year are classified as non-current.


Fixed assets

Depreciation and amortization is calculated using the straight-line
    method. Estimated useful lives are as follows: equipment, furniture and fixtures
    - three to five years; buildings - fifty years; leasehold improvements - shorter
    of the estimated useful life of each improvement or the lease term. The costs
    of additions and improvements are capitalized, and repairs and maintenance
    costs are charged to operations as incurred.


Revenue recognition

The Companys revenues are primarily derived
    from domain name registration fees, advertising and online products and services.


Domain name registration fees

Registration fees charged to end-users for registration services
      are recognized on a straight-line basis over the life of the registration
      term. A majority of end-user subscribers pay for services with credit cards
      for which the Company receives remittances from the credit card associations,
      generally within two business days after the sale transaction. A provision
      for estimated refunds to customers and chargebacks from credit card associations
      is recorded as a reduction of deferred revenue and accounts receivable.
      For many of our corporate customers who register domain names through our
      Corporate Services division and our Global Partner Network, we establish
      lines of credit based on credit worthiness. Referral commissions earned
      by participants in our Global Partner Network are deducted from gross registration
      revenue for presentation in our financial statements.


Online products and services

Revenue from other products and services is recognized on
    a straight-line basis over the period in which services are provided. Payments
    received in advance of services rendered are included in deferred revenue.


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Advertising

Advertising revenues are derived principally from short-term
    advertising contracts. Advertising revenues are recognized in the periods
    in which the advertisements are displayed, or the required number of impressions
    are achieved.


Deferred revenue

Deferred revenue represents the unearned portion
    of payments received and invoices rendered, net of provisions for estimated
    refunds to customers and chargebacks from credit card associations, and referral
    commissions for certain Global Partner Network partners.


Prepaid domain name registry fees

Prepaid domain name registry fees represent advance payments to registries for domain name registrations.  Registry fees are amortized to expense on a straight-line basis over the terms of the registrations.

Research and development and software development costs

Research and development costs are charged to
    expense as incurred. Software development costs incurred subsequent to the
    establishment of technological feasibility and prior to the general release
    of the product or service to the public, are capitalized and amortized to
    cost of revenues over the estimated useful life of the related product or
    service. Capitalized software development costs totaled $1.6 million and $0.2
    million for the years 2002 and 2001, respectively.


Advertising costs

Advertising costs include media advertising,
    direct mail and other promotional activities, and are charged to expense as
    incurred. Advertising expense was $11.9 million, $15.5 million, and $36.7
    million for the years 2002, 2001 and 2000, respectively.


Income taxes

The Company recognizes deferred taxes by the
    asset and liability method. Under that method, deferred income taxes are recognized
    for differences between the financial statement and tax bases of assets and
    liabilities at enacted statutory tax rates in effect for the years in which
    the differences are expected to reverse. The effect of a change in tax rates
    on deferred taxes is recognized in income in the period of the enactment date.
    In addition, valuation allowances are established when appropriate to reduce
    deferred tax assets to the amounts expected to be realized.


Fair value of financial instruments

The carrying values of cash and cash equivalents,
    accounts receivable, and accounts payable approximate fair value because of
    the relatively short-term nature of these instruments.


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Concentration of credit risk

Concentration of credit risk associated with
    accounts receivable is limited due to the large number of customers, as well
    as their dispersion across various industries and geographic areas. The Company
    has no derivative financial instruments.


Use of estimates

The preparation of financial statements in conformity
    with generally accepted accounting principles requires management to make
    estimates and assumptions that affect the amounts reported in the financial
    statements and accompanying notes. The Companys most significant estimates
    relate to potential refunds to customers and chargebacks from credit card
    associations, the realizability of accounts receivable and deferred tax assets,
    the potential liability to credit card associations for penalties for excessive
    credit card chargebacks and refunds, potential liability for various matters
    in litigation, and the amortization period of intangible assets. Actual results
    could differ from managements estimates. The markets for the Companys
    products and services are characterized by intense competition, technology
    advances and new product/service introductions, all of which could impact
    the future realizability of the Companys assets.


Stock based compensation

The Company accounts for stock-based compensation in accordance
    with Accounting Principles Board Opinion No. 25, Accounting for Stock
    Issued to Employees, (APB 25) and related interpretations.
    The Company provides the disclosures required by SFAS 123, Accounting
    for Stock-Based Compensation. The Companys stock-based
    incentive plans are more fully described in Note 8. The following table illustrates
    the effect on the Companys net income (loss) and net income (loss)
    per share had compensation cost for the stock-based incentive plans been determined
    in accordance with the fair value based method of accounting for stock-based
    compensation as prescribed by SFAS 123. Since option grants awarded during
    2002, 2001 and 2000 vest over several years and additional awards are expected
    to be issued in the future, the pro forma results shown below are not likely
    to be representative of the effects on future years of the application of
    the fair value based method.


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|                                                                                                           |  |   | Year
      ended December 31,               |  
|---------------------------------------------------------------------------------------------------------- |  | - | ------------------------------------------- | -
|                                                                                                           |  |   | (in
      thousands, except per share data) |  
|                                                                                                           |  |   | 2002                                        |  
|                                                                                                           |  |   |                                             |  
|Net income (loss):                                                                                         |  |   |                                             |  
|As reported                                                                                                |  | $ | (10,409                                     | )
|Add: Stock-based employee compensation
      included in reported net income                               |  | $ | 1,937                                       |  
|Deduct: Total stock-based employee
      compensation expense determined under the fair value based method |  | $ | (3,650                                      | )
|                                                                                                           |  |   |                                             |  
|                                                                                                           |  |   |                                             |  
|Pro forma                                                                                                  |  | $ | (12,122                                     | )
|Net income (loss) per share:                                                                               |  |   |                                             |  
|As reported  basic and
      diluted                                                                      |  | $ | (0.26                                       | )
|Pro forma  basic and diluted                                                                              |  | $ | (0.30                                       | )

Other disclosures required by SFAS 123 have been
    included in Note 8.


Net Income (loss) per share

The Company calculates earnings per share in accordance with
    SFAS 128, Earnings Per Share. Basic net income (loss) per share
    (Basic EPS) is computed by dividing net income (loss) available
    to common stockholders by the weighted average number of common shares outstanding
    during the period. Diluted net loss per share is the same as basic net loss
    per share. Diluted net income per share (Diluted EPS) gives
    effect to all dilutive potential common shares outstanding during a period.
    In computing Diluted EPS, the treasury stock method is used to determine the
    number of shares assumed to be purchased from the conversion of common stock
    equivalents or the proceeds of exercises of options and warrants. Details
    of the calculation net income (loss) per share are as follows:


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|                                                         |  |   | Year
      Ended December 31,                  |  
|-------------------------------------------------------- |  | - | ---------------------------------------------- | -
|                                                         |  |   | 2002                                           |  
|                                                         |  |   | (in
      thousands, except per share amounts) |  
|Net income (loss) per share
      - basic:               |  |   |                                                |  
|Net income (loss) available to
      common Shareholders |  | $ | (10,409                                        | )
|                                                         |  |   |                                                |  
|Weighted average shares - basic                          |  |   | 40,046                                         |  
|                                                         |  |   |                                                |  
|Net income (loss) per share -
      basic                |  | $ | (0.26                                          | )
|                                                         |  |   |                                                |  
|Net income (loss) per share
      - diluted:             |  |   |                                                |  
|Net income (loss)                                        |  | $ | (10,409                                        | )
|                                                         |  |   |                                                |  
|Weighted average shares outstanding
      - basic        |  |   | 40,046                                         |  
|Diluted effect of stock options                          |  |   | 606                                            |  
|Diluted effect of warrants                               |  |   | 2,193                                          |  
|                                                         |  |   |                                                |  
|Weighted average shares - diluted                        |  |   | 42,845                                         |  
|                                                         |  |   |                                                |  
|Net income (loss) per share -
      diluted              |  |   | *                                              |  
|                                                         |  |   |                                                |  

* Inclusion of common stock equivalent
  shares would result in an anti-dilutive net loss per share. As a result, diluted
  net loss per share is the same as basic net loss per share.

Comprehensive income

The Company follows SFAS 130, Reporting Comprehensive
    Income. This statement requires that items of comprehensive income
    be classified by their nature in the financial statements, with accumulated
    balances shown separately. The Company has chosen to present Comprehensive
    Income in the Consolidated Statements of Changes in Stockholders Equity. The difference between net income
    and comprehensive income was $0.8 million for the year 2002, representing
    the net unrealized loss on marketable securities of $0.6 million, offset by
    an unrealized gain on foreign currency translation of $1.4 million. For the
    years 2001 and 2000, the difference between net income and comprehensive income
    was $1.0 million and $0.4 million, respectively, which represented the net
    unrealized gain on marketable securities.


Segment reporting

The Company follows SFAS 131, Disclosures
    about Segments of an Enterprise and Related Information, which established
    standards for reporting operating segments in annual financial statements,
    and related disclosures about products and services, geographic areas and
    major customers. The Company operates in one business segment. Since revenues
    and long-lived assets outside of the United States are not deemed material,
    no separate disclosure is provided.


Goodwill and other intangibles

In June 2001, SFAS 141 Business Combinations
    and SFAS 142 Goodwill and Other Intangible Assets were issued.
    These statements became effective for the Company on January 1, 2002 with
    respect to business combinations completed on or after June 30, 2001.


Under SFAS 142, effective January 1, 2002 goodwill
    is no longer subject to amortization. Management evaluates the recoverability
    of the carrying amount of intangible assets annually, or whenever events or
    changes in circumstances indicate that the carrying amount may not be recoverable.
    Current and estimated future profitability, undiscounted cash flows, and the
    total market value of the companys common stock compared with the carrying
    value of stockholders equity, are the primary indicators used to assess
    the recoverability of intangible assets. (See Note 13).


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Following is a reconciliation of net income (loss) between
    the historical amounts reported for years 2001 and 2000, and the adjusted
    amounts reflecting this new accounting standard:


|                                                        |  |   | Year 2001                                      |   |   | Year 2000 | 
|------------------------------------------------------- |  | - | ---------------------------------------------- | - | - | --------- | 
|                                                        |  |   |                                                |   |   |           | 
|                                                        |  |   | (in
      thousands, except per share amounts) |  
|Net income (loss):                                      |  |   |                                                |   |   |           | 
|Reported net income (loss)                              |  | $ | (21,587                                        | ) | $ | 270       | 
|Amortization of goodwill and other intangibles          |  |   | 12,799                                         |   |   | 5,582     | 
|                                                        |  |   |                                                |   |   |           | 
|                                                        |  |   |                                                |   |   |           | 
|Adjusted net income (loss)                              |  | $ | (8,788                                         | ) | $ | 5,852     | 
|                                                        |  |   |                                                |   |   |           | 
|                                                        |  |   |                                                |   |   |           | 
|Basic net income (loss) per share:                      |  |   |                                                |   |   |           | 
|Reported basic net income (loss) per share              |  | $ | (0.58                                          | ) | $ | 0.01      | 
|Amortization of goodwill and other intangiblesper share |  |   | 0.34                                           |   |   | 0.18      | 
|                                                        |  |   |                                                |   |   |           | 
|Adjusted basic net income (loss)
      per share        |  | $ | (0.23                                          | ) | $ | 0.19      | 
|                                                        |  |   |                                                |   |   |           | 
|Diluted net income (loss) per
      share:              |  |   |                                                |   |   |           | 
|Reported diluted net income (loss) per share            |  | $ | (0.58                                          | ) | $ | 0.01      | 
|Amortization of goodwill and other intangiblesper share |  |   | 0.34                                           |   |   | 0.14      | 
|                                                        |  |   |                                                |   |   |           | 
|Adjusted diluted net income (loss) per share            |  | $ | (0.23                                          | ) | $ | 0.15      | 
|                                                        |  |   |                                                |   |   |           | 

Long-lived assets (excluding Goodwill)

The Company evaluates potential impairment of
    long-lived assets (excluding goodwill) whenever events or circumstances indicate
    that the carrying amount of an asset may not be recoverable. An impairment
    loss would be recognized when the estimated future cash flow expected to result
    from the use of the asset and its eventual disposition is less than its carrying
    amount. If an asset is considered impaired, the impairment loss is measured
    as the amount by which the carrying value of the asset exceeds its fair value.
    Fair value is determined based upon discounted cash flows or appraised values,
    depending on the nature of the asset. To date, the Company has identified
    no such impairment losses.


Recent accounting pronouncements

SFAS 146 Accounting for Costs Associated
    with Exit or Disposal Activities was issued in June 2002, requiring
    that costs associated with exit or disposal activities be recognized when
    the liability is incurred, rather than at the date of commitment to an exit
    or disposal plan. Examples of covered costs are lease termination and certain
    employee severance. SFAS 146 is applicable to exit or disposal activities
    initiated after December 31, 2002.


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SFAS 148 Accounting for Stock-Based Compensation
     Transition and Disclosure  an amendment of FAS 123 was
    issued in December 2002, providing for alternative methods of transition for
    a voluntary change to the fair market value based method of accounting for
    stock-based employee compensation.


Reclassification

For comparative purposes, certain amounts in
    the financial statements of prior periods have been reclassified to conform
    to the current years presentation.


3. Fixed Assets

Fixed assets consist of the following:

|                                                      |  |   | December
      31, |  
|----------------------------------------------------- |  | - | ------------------ | -
|                                                      |  |   | 2002               |  
|                                                      |  |   | (in thousands)     |  
|Computer equipment                                    |  | $ | 14,606             |  
|Furniture and fixtures                                |  |   | 426                |  
|Office equipment                                      |  |   | 631                |  
|Building                                              |  |   | 512                |  
|Leasehold improvements                                |  |   | 2,904              |  
|                                                      |  |   |                    |  
|                                                      |  |   | 19,079             |  
|Less: accumulated depreciation
      and amortization |  |   | (10,629            | )
|                                                      |  |   |                    |  
|                                                      |  |   |                    |  
|Fixed assets, net                                     |  | $ | 8,450              |  
|                                                      |  |   |                    |  

















4. Accounts Payable and Accrued
  Expenses

Accounts payable and accrued expenses consist of the following:

|                                                                                   |  |  |  |  |   | December
      31,   | 
|---------------------------------------------------------------------------------- |  |  |  |  | - | -------------------- | 
|                                                                                   |  |  |  |  |   | 2002                 | 
|                                                                                   |  |  |  |  |   | (in
      thousands) | 
|Trade accounts payable                                                             |  |  |  |  | $ | 1,095                | 
|Accrued compensation and benefits                                                  |  |  |  |  |   | 2,519                | 
|Accrued registry fees and related
      costs                                      |  |  |  |  |   | 3,264                | 
|Penalties for excessive credit
      card chargebacks 
      and refunds (Note 14) |  |  |  |  |   | 3,739                | 
|Accrued advertising expense                                                        |  |  |  |  |   | 1,627                | 
|Accrued professional fees                                                          |  |  |  |  |   | 878                  | 
|Other                                                                              |  |  |  |  |   | 2,105                | 
|                                                                                   |  |  |  |  |   |                      | 
|                                                                                   |  |  |  |  | $ | 15,227               | 
|                                                                                   |  |  |  |  |   |                      | 
|                                                                                   |  |  |  |  |   |                      | 

















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5. Investments

As of December 31, 2002 and 2001, short-term investments and marketable securities consisted of the following:

|2002 (in thousands)                    |  |   | Fair Value |  |   | Amortized Cost |  |   | Gross Unrealized
      Holding Gains |  |   | Gross unrealized
      Holding Losses |  
|-------------------------------------- |  | - | ---------- |  | - | -------------- |  | - | ------------------------------------ |  | - | ------------------------------------- | -
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Short-term investments:                |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Municipal
        debt obligations     |  | $ | 95,327     |  | $ | 94,872         |  | $ | 457                                  |  | $ | (2                                    | )
|Certificates
        of deposit        |  |   | 9,956      |  |   | 9,956          |  |   |                                     |  |   |                                      |  
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Total
        short-term investments   |  | $ | 105,283    |  | $ | 104,828        |  | $ | 457                                  |  | $ | (2                                    | )
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Marketable securities                  |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Municipal
        debt obligations     |  | $ | 60,887     |  | $ | 60,404         |  | $ | 486                                  |  | $ | (3                                    | )
|Equity
        securities              |  |   | 318        |  |   | 470            |  |   |                                     |  |   | (152                                  | )
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Total
        marketable securities    |  | $ | 61,205     |  | $ | 60,874         |  | $ | 486                                  |  | $ | (155                                  | )
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|2001 (in thousands)                    |  |   | Fair Value |  |   | Amortized Cost |  |   | Gross Unrealized Holding
      Gains |  |   | Gross Unrealized Holding
      Losses |  
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Short-term investments:                |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Municipal
        debt obligations     |  | $ | 38,913     |  | $ | 39,288         |  | $ |                                     |  | $ | (375                                  | )
|Corporate
        debt securities      |  |   | 34,266     |  |   | 34,971         |  |   |                                     |  |   | (705                                  | )
|International
        debt obligations |  |   | 5,007      |  |   | 5,123          |  |   |                                     |  |   | (116                                  | )
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Total
        short-term investments   |  | $ | 78,186     |  | $ | 79,382         |  | $ |                                     |  | $ | (1,196                                | )
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Marketable securities                  |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  
|Municipal
        debt obligations     |  | $ | 57,651     |  | $ | 57,788         |  | $ | 69                                   |  | $ | (206                                  | )
|                                       |  |   |            |  |   |                |  |   |                                      |  |   |                                       |  

The Company classifies its existing debt securities
    as marketable securities in accordance with the provisions of SFAS 115, Accounting
    for Certain Investments in Debt and Equity Securities. These securities
    are carried at fair market value, with unrealized gains and losses reported
    in stockholders equity as a component of other comprehensive income
    (loss). Gains or losses on securities sold are calculated based on the specific
    identification method. Net unrealized holding gains of $0.8 million and $1.4
    million on these securities are included in accumulated comprehensive income
    at December 31, 2002 and 2001, respectively.


Other investments at December 31, 2002 represents
    a $0.4 million investment in Afilias USA, Inc., the registry for the .info
    generic top level domain.


6.  Stockholders Equity

Common Stock

In March 2000, the Company sold 5,222,279 shares
    of common stock in an initial public offering. Net proceeds were approximately
    $115.3 million, after underwriting discount and other offering expenses. At
    the time of the initial public offering, all of the Companys preferred
    stock automatically converted into 4,694,333 common shares.


During 2001, the Company issued 56,377 shares
    of restricted stock to employees at exercise prices ranging from $0.00 to
    $11.49 per share. The Company recorded $0.5 million as deferred compensation,
    representing the fair value of the restricted stock at the date of issuance,
    which is being amortized to expense over the three-year vesting period of
    the grants.


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Preferred Stock Purchase Rights

In October 2002, the Company declared a dividend
    distribution of one preferred share purchase right (the Right)
    for each outstanding share of the Companys Common Stock, to stockholders
    of record at the close of business on November 12, 2002. Each Right entitles
    the registered holder to purchase from the Company a unit consisting of one
    one-thousandth of a share (a Unit) of Series A Junior Participating
    Preferred Stock (Series A Preferred) at a price of $32.00 per
    Unit. The Rights, which expire on November 12, 2012, will only become exercisable
    upon distribution. Distribution of the Rights will not occur until ten days
    after the earlier of (i) the public announcement that a person or group has
    acquired beneficial ownership of 15% or more of the outstanding shares of
    Common Stock (an Acquiring Person), or (ii) the commencement
    of, or announcement of an intention to make, a tender offer or exchange offer
    that would result in a person or group acquiring the beneficial ownership
    of 15% or more of the outstanding shares of the Companys Common Stock.
    Under specified circumstances, the holders of the Rights, other than the Acquiring
    Person, would be entitled to receive, upon exercise of the Rights, Series
    A Preferred having a value equal to two times the exercise price of the Rights.


Voting

Each share of common stock entitles the holder
    to one vote on all matters submitted to a vote of the Companys stockholders.


Treasury Stock Purchases

During 2002, the Company repurchased and retired
    370,100 shares of its common stock for $1.6 million.


7.  Warrants

Common shares issuable upon exercise of warrants
    outstanding at December 31, 2002 are as follows:


|Issuance Date                                 |  | Expiration Date |           | Shares Issuable
      Upon Exercise |       | Exercise Price
      Per Share
|--------------------------------------------- |  | --------------- | --------- | ----------------------------------- | ----- | ------------------------------
|                                              |  |                 |           |                                     |       |                               
|January 1998                                  |  | January 2003    |           | 135,625                             |       | $0.36                         
|January 1998                                  |  | January 2003    |           | 135,625                             |       | $0.86                         
|January 1998                                  |  | June 2005       |           | 2,304,813                           |       | $0.97                         
|April 1998                                    |  | May 2003        |           | 102,085                             |       | $0.36                         
|April 1998                                    |  | May 2003        |           | 74,085                              |       | $0.86                         
|September 1998                                |  | September 2008  |           | 1,500                               |       | $0.43                         
|March 1999                                    |  | March 2009      |           | 5,250                               |       | $0.57                         
|March 1999                                    |  | March 2004      |           | 185,490                             |       | $4.08                         
|May 1999                                      |  | May 2004        |           | 308,959                             |       | $4.08                         
|June 1999                                     |  | June 2009       |           | 5,250                               |       | $1.57                         
|June 1999                                     |  | June 2004       |           | 281,819                             |       | $3.43                         
|                                              |  |                 |           |                                     |       |                               
|Total shares and average exercise
      price |  |                 | 3,540,501 |                                     | $1.55
|                                              |  |                 |           |                                     |      



















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8. Stock Option Plans

Amended and Restated 2000 Stock Incentive Plan

The Companys Amended and Restated 2000
    Stock Incentive Plan (the 2000 Plan) supercedes the 1997 and
    1999 Stock Option Plans. The 2000 Plan permits grants of incentive stock options,
    non-qualified stock options, and other equity-based awards. Incentive stock
    options and certain other awards may be granted only to employees, whereas
    non-qualified stock options and certain other awards may be granted to employees,
    non-employee directors, and consultants. The number of shares reserved for
    issuance under the 2000 Plan is automatically increased on the first trading
    day of each calendar year by 2% of the total number of shares of common stock
    outstanding on the last trading day of the prior calendar year, up to a maximum
    annual increase of 1,750,000 shares. On January 2, 2003, 2002, and 2001 the
    number of shares reserved for issuance increased by 812,490, 765,932, and
    735,408, respectively. Accordingly, the maximum aggregate number of shares
    reserved for issuance under the 2000 Plan as of January 2, 2003 was 9,663,830.


The Compensation Committee determines the exercise
    price and other terms of options and other awards (except automatic option
    grants to non-employee directors) under the 2000 Plan. All non-employee Board
    members, other than 3% Stockholders, are automatically granted an option to
    acquire 25,000 shares of common stock on the date of initial election or appointment
    to the Board, which option exercise price will equal the fair market value
    of the Companys common stock on the date of grant, and which vests
    in annual installments over two years. In addition, each non-employee Board
    member, other than 3% Stockholders, who continues to serve as a director on
    the date of each regularly scheduled quarterly meeting of the Board will receive
    an option grant to purchase 2,500 shares of common stock on each such meeting
    date at an exercise price equal to the fair market value of the Companys
    common stock on the date of grant. Each 2,500 share option grant will vest
    upon the optionees completion of one year of board service measured
    from the grant date. 3% Stockholder means a non-employee Board member who,
    as of March 3, 2000, directly or indirectly, owned stock possessing at least
    3% of the total combined voting power of the outstanding securities of the
    Company (or any Parent or Subsidiary) or was affiliated with or was a representative
    of such a 3% or greater stockholder and is compensated for his/her membership
    on the Board of Directors by any such 3% or greater stockholder.


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Stock option activity under the 2000 Plan is
    summarized as follows:

|                                                                 |  | Number of shares |   |   | Weighted Average
      Exercise Price | 
|---------------------------------------------------------------- |  | ---------------- | - | - | ------------------------------------- | 
|                                                                 |  |                  |   |   |                                       | 
|Outstanding at January 1, 2000                                   |  | 1,492,435        |   | $ | 1.01                                  | 
|Granted                                                          |  | 3,501,674        |   |   | 23.81                                 | 
|Exercised                                                        |  | (420,590         | ) |   | 0.84                                  | 
|Forfeited                                                        |  | (999,087         | ) |   | 15.44                                 | 
|                                                                 |  |                  |   |   |                                       | 
|                                                                 |  |                  |   |   |                                       | 
|Outstanding at December 31, 2000                                 |  | 3,574,432        |   |   | 19.00                                 | 
|Granted                                                          |  | 2,674,088        |   |   | 8.92                                  | 
|Exercised                                                        |  | (356,550         | ) |   | 1.07                                  | 
|Forfeited                                                        |  | (1,079,895       | ) |   | 18.57                                 | 
|                                                                 |  |                  |   |   |                                       | 
|                                                                 |  |                  |   |   |                                       | 
|Outstanding at December 31, 2001                                 |  | 4,812,075        |   |   | 14.56                                 | 
|Granted                                                          |  | 3,038,827        |   |   | 6.47                                  | 
|Exercised                                                        |  | (286,834         | ) |   | 1.19                                  | 
|Forfeited                                                        |  | (1,691,907       | ) |   | 11.10                                 | 
|                                                                 |  |                  |   |   |                                       | 
|                                                                 |  |                  |   |   |                                       | 
|Outstanding at December 31, 2002                                 |  | 5,872,161        |   | $ | 12.18                                 | 
|                                                                 |  |                  |   |   |                                       | 
|                                                                 |  |                  |   |   |                                       | 
|Options available for future
      grant as of December 31, 2002 |  | 1,733,732        |   |   |                                       | 
|                                                                 |  |                  |   |   |                                       | 

Details of options outstanding under
  the 2000 Plan at December 31, 2002 are as follows:

|                |  | Options
      Outstanding                     |  |  | Options Exercisable                                             | 
|--------------- |  | --------------------------------------------- |  |  | --------------------------------------------------------------- | 
|Exercise Price  |  | Number Outstanding
      at December 31, 2002 |  |  | Weighted-Average
      Remaining Contractual
      Life (Years) | 
|                |  |                                               |  |  |                                                                 | 
|$ 0.17 - $ 4.43 |  | 920,727                                       |  |  | 8.84                                                            | 
|$ 4.45 - $ 4.45 |  | 600,000                                       |  |  | 9.90                                                            | 
|$ 4.51 - $ 6.55 |  | 596,746                                       |  |  | 8.43                                                            | 
|$ 7.00 - $ 8.30 |  | 599,090                                       |  |  | 8.92                                                            | 
|$ 8.52 - $ 8.72 |  | 200,962                                       |  |  | 6.17                                                            | 
|$ 8.76 - $ 8.76 |  | 736,022                                       |  |  | 9.34                                                            | 
|$ 8.81 - $11.45 |  | 603,930                                       |  |  | 8.61                                                            | 
|$11.50 - $24.00 |  | 710,796                                       |  |  | 7.78                                                            | 
|$26.40 - $38.40 |  | 606,411                                       |  |  | 7.20                                                            | 
|$40.88 - $58.06 |  | 297,477                                       |  |  | 7.42                                                            | 
|                |  |                                               |  |  |                                                                 | 
|$0.17 - $58.06  |  | 5,872,161                                     |  |  | 8.49                                                            | 
|                |  |                                               |  |  |                                                                 | 

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Prior to completion of the initial public offering
    in March 2000, the fair value of option grants to employees was estimated
    using the minimum value method of the Black-Scholes option-pricing model,
    which assumes no volatility of the stock price. The fair values were based
    on assumptions derived from information provided by the Companys management.
    Changes in the information would affect the assumptions and the fair values
    derived from the assumptions. Subsequent to the initial public offering, volatility
    assumptions have been utilized. The assumptions used to determine the fair
    value of option grants to employees in 2002, 2001 and 2000 were as follows:


|                        | Year Ended December
      31, |  
|----------------------- | ----------------------------- | -
|                        | 2002                          |  
|                        |                               |  
|Risk free interest rate | 3.8                           | %
|Expected lives (years)  | 5                             |  
|Expected dividends      | 0                             | %
|Volatility              | 68                            | %









The fair value of options and warrants (see Note
    7) granted to non-employees is estimated using the Black-Scholes option pricing
    model. The fair values were based on assumptions derived from information
    provided by the Companys management. Changes in the information would
    affect the assumptions and the fair values derived from the assumptions. The
    assumptions used to determine the fair value of grants to non-employees in
    2001 and 2000 were as follows: risk free interest rate of 3.8%, 4.5%, and
    6.2% respectively; expected lives of 5 to 10 years; expected dividends of
    0%; and volatility of 68%, 80%, and 100%, respectively.


The weighted average exercise prices and the
    fair values at grant dates of options granted during 2002, 2001 and 2000 were
    as follows:


|                                                                    |  |   | Year
      Ended December 31, | 
|------------------------------------------------------------------- |  | - | ----------------------------- | 
|                                                                    |  |   | 2002                          | 
|                                                                    |  |   |                               | 
|                                                                    |  |   | Exercise
      Price          | 
|                                                                    |  |   |                               | 
|Options granted to employees
      and consultants:                 |  |   |                               | 
|Exercise price less than fair
      value of stock on grant date    |  |   |                              | 
|Exercise price equal to fair
      value of stock on grant date     |  | $ | 6.47                          | 
|Exercise price greater than fair
      value of stock on grant date |  |   |                              | 













9.Employee Stock Purchase
  Plan

An Employee Stock Purchase Plan (the Plan),
    became effective on March 3, 2000, through which employees may purchase shares
    of common stock through payroll deductions up to 10% of eligible compensation.
    The price paid by the employee is 85% of the fair market value on the offering
    date or the last day of the purchase period. There are two 6-month purchase
    periods per year commencing May 1 and November 1. A total of 350,000 shares
    was initially reserved for purchase under the Plan. The number of shares reserved
    for issuance is automatically increased on the first trading day of January
    of each year by 0.25% of the total shares of common stock outstanding on the
    last trading day of the prior calendar year. In January 2003, 2002 and 2001,
    the number of shares reserved for issuance increased by 101,561, 95,741, and
    91,926 shares, respectively. Shares issued under the Plan were 62,470 and
    66,774 during 2002 and 2001, respectively.


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10.Related Party Transactions

Booz Allen & Hamilton Inc.

In October 2000, the Company entered into a consulting
    arrangement with Booz Allen & Hamilton Inc. (Booz Allen).
    Under the terms of this agreement, Booz Allen provided the Company with consulting
    services over a ten-week period for a fee of $0.6 million. Reginald Van Lee,
    a member of the Companys Board of Directors, is a Partner at Booz Allen.


11.Income Taxes

Temporary differences between the carrying amounts
    of assets and liabilities for financial reporting and income tax purposes
    resulted in a net deferred tax asset of $23.1 million and $18.4 million at
    December 31, 2002 and 2001, respectively.


The provision for income taxes for the years
    2002, 2001 and 2000 consists of the following:


|                              |  |   | December
        31, |  
|----------------------------- |  | - | -------------------- | -
|                              |  |   | 2002                 |  
|                              |  |   |                      |  
|                              |  |   |                      |  
|Current provision:            |  |   |                      |  
|Federal                       |  | $ | 2,395                |  
|State                         |  |   | 1,046                |  
|                              |  |   |                      |  
|Total current                 |  |   | 3,441                |  
|                              |  |   |                      |  
|Deferred provision (benefit): |  |   |                      |  
|Federal                       |  |   | (3,620               | )
|State                         |  |   | (1,016               | )
|                              |  |   |                      |  
|Total deferred                |  |   | (4,636               | )
|                              |  |   |                      |  
|                              |  |   |                      |  
|Total provision (benefit)     |  | $ | (1,195               | )
|                              |  |   |                      |  

The current provision in the above schedule excludes
    the effect of tax deductions related to exercises of non-qualified stock options
    and disqualifying dispositions of incentive stock options.  Under SFAS
    109, tax benefits resulting from the foregoing are treated as an increase
    in stockholders equity.  On a tax-return basis, after giving effect
    to such tax deductions, the Company expects to have a taxable loss for the
    year 2002 and accordingly, the Company has recorded a tax receivable of approximately
    $1.2 million which is included within accounts payable and accrued expenses.


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The components of the net deferred tax asset
    were as follows:

|                                        |   | December
      31, |  
|--------------------------------------- | - | ------------------ | -
|                                        |   | 2002               |  
|                                        |   |                    |  
|                                        |   | (in thousands)     |  
|Deferred tax assets:                    |   |                    |  
|Allowance for doubtful accounts         | $ | 1,142              |  
|Accrued expenses                        |   | 184                |  
|Depreciation and amortization           |   | 323                |  
|Unrealized gain                         |   |                   |  
|Stock-based compensation                |   | (55                | )
|Deferred revenue                        |   | 25,874             |  
|Credit card penalties                   |   | 1,584              |  
|                                        |   |                    |  
|Total deferred tax asset                |   | 29,052             |  
|                                        |   |                    |  
|                                        |   |                    |  
|Deferred tax liabilities                |   |                    |  
|Prepaid domain name registry
      fees |   | 6,101              |  
|Allowance for returns                   |   | (357               | )
|Deferred commissions                    |   | 40                 |  
|Restricted stock                        |   | 216                |  
|                                        |   |                    |  
|Total deferred tax liabilities          |   | 6,000              |  
|                                        |   |                    |  
|Net deferred tax asset                  | $ | 23,052             |  
|                                        |   |                    |  

The income tax provision (benefit) in the Statement of Operations
    differs from income tax provision (benefit) determined by applying the statutory
    Federal income tax rate to the net income (loss) shown in the financial statements
    as a result of the following:


|                                                                                        |  | Year ended December
      31, |   
|--------------------------------------------------------------------------------------- |  | ----------------------------- | --
|                                                                                        |  | 2002                          |   
|                                                                                        |  |                               |   
|Tax provision (benefit) at Federal
      statutory rate                                 |  | (35.0                         | )%
|State income tax benefit, net
      of Federal tax charge                               |  | 0.6                           |   
|Foreign tax rate differential                                                           |  | 34.9                          |   
|Tax exempt interest                                                                     |  | (12.7                         | ) 
|Non-deductible amortization and
      writedown of goodwill and other intangible assets |  | 26.1                          |   
|Abandonment of Afternic business
      (Note 13)                                        |  | (23.7                         | ) 
|Tax credits                                                                             |  | (5.5                          | ) 
|Other permanent items                                                                   |  | 5.0                           |   
|Valuation allowance                                                                     |  |                              |   
|                                                                                        |  |                               |   
|Tax provision (benefit) per statement
      of operations                               |  | (10.3                         | )%
|                                                                                        |  |                               |   

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12.Commitments

Operating leases

The Company leases office facilities under non-cancelable
    operating leases expiring through 2011. Future minimum lease payments are
    as follows:


|Years ending December 31,    | (in
      thousands)
|---------------------------- | --------------------
|2003                         | $                   
|2004                         |                     
|2005                         |                     
|2006                         |                     
|2007                         |                     
|Thereafter                   |                     
|                             |                     
|Total minimum lease payments | $                   
|                             |                     

Rent expense for the years 2002, 2001 and 2000
    was $1.5 million, $0.7 million and $0.4 million, respectively.


Employment agreements

In the normal course of business, the Company
    enters into employment agreements with certain executives of the company.


13.Acquisitions

In June 2000, the Company acquired all of the
    outstanding capital stock of Inabox, Inc. for $1.0 million cash and 280,019
    shares of common stock. The total value of the transaction at the time of
    the acquisition was approximately $11.7 million. The acquisition was accounted
    for using the purchase method of accounting, and accordingly the purchase
    price was allocated to assets acquired and liabilities assumed based on their
    respective fair values. Intangible assets of $11.6 million, representing the
    excess of the purchase price plus transaction expenses over the fair value
    of assets acquired less liabilities assumed, was allocated to goodwill and
    other intangibles, to be amortized on a straight-line basis over a period
    of 39 months.


In September 2000, the Company acquired Afternic.com,
    Inc. for $10.0 million cash and 4,378,289 shares of common stock. A portion
    of the cash and stock was used to satisfy existing obligations of Afternic.com.
    The total value of the transaction at the time of the acquisition was approximately
    $47.9 million. The acquisition was accounted for using the purchase method
    of accounting, and accordingly, the purchase price was allocated to assets
    acquired and liabilities assumed based on their respective fair values. Intangible
    assets of $47.9 million, representing the excess of the purchase price plus
    transaction expenses over the fair value of assets acquired, was allocated
    to goodwill and other intangibles, to be amortized on a straight-line basis
    over a period of 48 months.


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During 2001, due to significantly lower than
    expected demand for Afternics services experienced in the first year
    following the acquisition, as well as the fact that market conditions and
    attendant multiples used to estimate terminal values became and remained significantly
    depressed since the acquisition of Afternic, the Company concluded that an
    other than temporary impairment of goodwill has occurred. As a result, the
    Company recorded an impairment charge in the quarter ended September 30, 2001,
    in the approximate amount of $32.5 million. At December 31, 2001, there was
    a remaining balance of $8.6 million of goodwill and other intangible assets
    related to the acquisitions of Inabox and Afternic.


On March 8, 2002 the Company acquired Virtual
    Internet plc (VI) for £11.99 million (US $16.9 million
    at date of acquisition). VI, a U.K. based company, has operations in the United
    States and Europe and, at the time of acquisition, operated through two divisions:
    the Corporate Services division and the Hosting division. The Corporate Services
    division provides domain name registration and online intellectual property
    management and protection services, and the Hosting division provided web-hosting
    services. In May 2002, we sold VIs Hosting division for $0.5 million.
    VI shareholders, other than shareholders in certain jurisdictions outside
    of the U.K., elected to receive loan notes issued by the Company in exchange
    for their VI shares; $9.6 million of these loan notes were outstanding at
    December 31, 2002. These loan notes bear interest at a floating rate equal
    to LIBOR minus 1% (3.93% at December 31, 2002) and may be redeemed at the
    request of the holders at any time between September 8, 2002 and June 30,
    2003, at which time they mature. The loan notes are guaranteed by Barclays
    Bank plc, whose guarantee is supported by a cash deposit by the Company of
    6.0 million pounds sterling ($9.6 million at December 31, 2002). The cash
    portion of the VI acquisition was funded with the Companys available
    cash resources.


For the year 2002, VI recorded revenue of $7.2
    million, and incurred a loss of $10.5 million, which included a charge of
    $8.3 million related to an impairment of goodwill. The Company did not record
    a tax benefit in connection with that loss.


Presented below are the pro forma financial results
    for 2001 prepared under the assumption that the acquisition of VI and the
    disposition of its Hosting division had been completed as of January 1, 2001.
    These pro forma financial results include the following significant assumptions:


| | The acquisition was accounted
      for under the provisions of SFAS 141, Business Combinations
      and SFAS 142, Goodwill and Other Intangible Assets as if adopted
      January 1, 2001. Intangibles with a US dollar equivalent of $2.4 million
      were identified, consisting primarily of trademarks, customer relationships
      and software technology with a weighted average life of 5.4 years. Goodwill
      with a US dollar equivalent of $8.6 million was recognized at the acquisition
      date. Goodwill and identified intangibles reflect the allocation of the
      excess of the acquisition cost over the fair value of the assets and liabilities
      acquired. To enhance comparability with financial results for 2002, the
      pro forma financial results for 2001, reflect no amortization of goodwill
      or intangible assets with an indefinite life.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | The acquisition price of approximately $16.9
      million was funded with the issuance of $8.5 million of floating rate notes
      and $8.4 million of cash. The floating rate notes had an assumed interest
      rate of 4.75% in 2001 and 0.90% in 2002. An increase of 0.25% in the average
      short-term interest rate would result in a change to interest expense of
      $21,000 on an annual basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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The exchange rates used in the translation of
    the historical financial results of VI from U.K. pounds to U.S. dollars for
    the years 2002 and 2001 were US $1.59 per U.K. pound in 2002, and US $1.44
    per U.K. pound in 2001, respectively.


|                                               |  |   | Year
            ended December 31, |  
|---------------------------------------------- |  | - | ----------------------------------- | -
|                                               |  |   | Pro
            Forma (Unaudited)   |  
|                                               |  |   |                                    
|(In thousands)                                 |  |   | 2002                                |  
|                                               |  |   |                                     |  
|Net revenues                                   |  | $ | 108,016                             |  
|Net loss                                       |  | $ | (11,082                             | )
|Basic and diluted net loss
          per share |  | $ | (0.28                               | )

A breakdown of the Companys intangible
    assets and the related amortization is:


|                                |  |   | As of December
      31, 2002 | 
|------------------------------- |  | - | ----------------------------- | 
|                                |  |   |                               | 
|                                |  |   | Gross Book 
      Value       | 
|                                |  |   |                               | 
|Intangible assets:              |  |   |                               | 
|Software                        |  | $ | 497                           | 
|Tradename                       |  |   | 113                           | 
|Customer list                   |  |   | 2,150                         | 
|                                |  |   |                               | 
|Total                           |  | $ | 2,760                         | 
|                                |  |   |                               | 
|                                |  |   |                               | 
|Projected amortization expense: |  |   |                               | 
|Year 2003                       |  | $ | 543                           | 
|Year 2004                       |  | $ | 543                           | 
|Year 2005                       |  | $ | 407                           | 
|Year 2006                       |  | $ | 377                           | 
|Year 2007                       |  | $ | 377                           | 
|Year 2008                       |  | $ | 70                            | 

In September 2002 the Company made a decision
    to abandon its Afternic business. As a consequence of that decision, as well
    as negative industry and economic trends affecting the Company and the general
    decline in technology company valuations, including the valuation of the Companys
    common stock, the Company performed an impairment analysis of the goodwill
    and intangible assets recorded in connection with its various acquisitions.
    Because the total market value of the Companys common stock as of September
    30, 2002 was lower than the book value of its stockholders equity,
    the Company recorded a goodwill impairment writedown of approximately $17.0
    million in September 2002.


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14. Contingencies and Commitments

Litigation

In November 2001, the Company, its Chairman,
    President, Chief Executive Officer Richard D. Forman and its former Vice President
    of Finance and Accounting, Alan G. Breitman (the Individual Defendants),
    and Goldman Sachs & Co. and Lehman Brothers, Inc. two of the underwriters
    in the syndicate for our March 3, 2000 initial public offering, were named
    as defendants in a class action complaint alleging violations of the federal
    securities laws in the United States District Court, Southern District of
    New York. Goldman Sachs & Co. and Lehman Brothers, Inc. distributed 172,500
    of the 5,750,000 shares in the IPO. On April 19, 2002, the Company and the
    Individual Defendants were named as defendants in a Consolidated Amended Complaint
    (now the operative complaint) filed in the Southern District of New York and
    captioned In re: Register.com, Inc. Initial Public Offering Securities
    Litigation. The Consolidated Amended Complaint seeks unspecified damages
    as a result of various alleged securities law violations arising from activities
    purportedly engaged in by the underwriters in connection with our initial
    public offering. Plaintiffs allege that the underwriter defendants agreed
    to allocate stock in the Companys initial public offering to certain
    investors in exchange for excessive and undisclosed commissions and agreements
    by those investors to make additional purchases of stock in the aftermarket
    at pre-determined prices. Plaintiffs allege that the prospectus for the Companys
    initial public offering was false and misleading in violation of the securities
    laws because it did not disclose these arrangements. On October 9, 2002, the
    Court dismissed the Individual Defendants from the case without prejudice
    based on Stipulations of Dismissal filed by the plaintiffs and the Individual
    Defendants. On February 19, 2003, the Court denied the motion to dismiss the
    complaint against the Company. The action is being coordinated with approximately
    three hundred other nearly identical actions filed against other companies
    before one judge in the U.S. District Court for the Southern District of New
    York.


Register.com has been named as a defendant
        in a lawsuit filed on May 2, 2002, which alleges that the Companys
        SafeRenew program violates New York law. This lawsuit was filed by Brian
        Wornow, on behalf of himself and all others similarly situated, in the
        Supreme Court of the State of New York. The Companys SafeRenew
        program was implemented in January 2001 on an opt-out basis
        to .com, .net and .org registrations registered through the www.register.com
        website, and was subsequently expanded to cover certain ccTLDs registered
        through this website. Under the terms of the Companys services
        agreement, at the time a covered registration comes up for renewal, the
        Company attempts to charge a registrants on-file credit card a
        one year renewal fee and, if the charge is successful, to renew the registration
        for that additional one-year period. The Company believes that the SafeRenew
        program was properly adopted as an effort to protect our customers
        online identities. Plaintiff seeks class certification and alleges violation
        of certain New York statutes as well as a breach of contract, money had
        and received and unjust enrichment. Plaintiff further seeks to enjoin
        the Company from automatically renewing domain name registrations, an
        award of compensatory damages, restitution, disgorgement of profits (plus
        interest), cost and expenses, attorneys fees, and punitive damages.
        The Company has moved to dismiss all causes of action in the complaint.
        This motion was argued to the Court on November 18, 2002 and the parties
        are awaiting a decision on that motion.


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On or about January 17, 2003, individual stockholders
    of the Company filed complaints in the Delaware Court of Chancery purporting
    to commence class action lawsuits against the Company and each of the individual
    members of the Companys Board of Directors. The complaints were styled
    asLanza v. Morten, et al (C.A. No. 20123) and Norton
    v. Morten, et al (C.A. No. 20124). The complaints allege, among other
    things, breaches of fiduciary duty by the directors in connection with certain
    publicly disclosed indications of interest in the acquisition of Company.
    The complaints further allege that the directors are not fulfilling their
    fiduciary duties in connection with their review and response to such indications
    of interest and seek an order requiring the defendants to, among other things,
    undertake an appropriate evaluation of the Companys worth as a merger
    or acquisition candidate and to take all appropriate steps to effectively
    sell of the Company. Among other remedies, the complaints seek to enjoin the
    members of the Board from continuing their purported breaches of fiduciary
    duty and unspecified damages from the defendants.


There are various other claims, lawsuits and
    pending actions against the Company incidental to the operations of its business.
    It is the opinion of management, after consultation with counsel, that the
    ultimate resolution of such claims, lawsuits and pending actions will not
    have a material adverse effect on the Companys financial position, results
    of operations or liquidity.


Credit Card Penalties

The Company has experienced high rates of
        refunds to customers and chargebacks from credit card associations which
        have resulted in the assessment of financial penalties by two credit card
        associations. If the Company is unable to lower its refund and chargeback
        rates to levels deemed acceptable by the credit card associations, the
        Company could continue to face such penalties and may lose its rights
        to accept credit card payments from customers through one or more credit
        card associations. The Company had not previously incurred penalties from
        one of those associations until August 2002, at which time it was assessed
        a penalty of $0.3 million applicable to the year 2001. Under that associations
        rules, additional potential penalties may be imposed at the discretion
        of the association. Because the imposition of any potential penalties
        is at the discretion of the association, subject to contractual limitations,
        the Company accrued a $3.7 million charge to general and administrative
        expense in the year 2002 to cover what the Company estimates to be the
        potential penalties that could be imposed under that associations
        rules for transactions through December 31, 2002. Any such potential penalties
        would be imposed on the Companys credit card processor by the association,
        and under the Companys contract with its processor, the Company
        is required to reimburse such penalties. The Company had previously posted
        a $1 million letter of credit with its processor as security for its potential
        obligations. If the penalty amount ultimately imposed is less than
        the maximum contractual amount, the Company would reverse any excess accounts accrued
        as a reduction of general and administrative expense at that time.


Commitments

The Company has committed to provide up to $8.5
    million in funding and other non-cash contributions to its wholly owned subsidiary,
    RegistryPro, for RegistryPros activities in establishing, operating
    and marketing the .pro top level domain through the first anniversary of its
    commencement-of-service date. However, the Company does not believe that RegistryPros
    agreement with ICANN requires RegistryPro to spend a specified amount to establish,
    operate and market the .pro top level domain. Accordingly, the Companys
    contributions for these purposes could be less than $8.5 million. Through
    December 31, 2002 the Company had contributed approximately $1.6 million in
    cash, and had also made non-cash contributions.


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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors andStockholders of Register.com, Inc.

In connection with our audits of the financial statements of Register.com, Inc. as of December 31, 2002 and 2001 and for each of the three years in the period ended December 31, 2002, which financial statements are included in the Form 10-K, we have also audited the financial statement schedule listed in Part II herein.

In our opinion, this financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.

PricewaterhouseCoopers LLPNew York, New YorkFebruary 14, 2003

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Schedule II - Valuation and Qualifying Account

|                                            |  |   | Balance at Beginning
      of Period |  |   | Charged to Costs
      and Expense |  |   | Deductions |  |   | Balance
      at End of Period | 
|------------------------------------------- |  | - | ------------------------------------ |  | - | ---------------------------------- |  | - | ---------- |  | - | ------------------------------ | 
|For the year ended December
      31, 2002: |  |   |                                      |  |   |                                    |  |   |            |  |   |                                | 
|Provision for doubtful accounts             |  | $ | 2,179                                |  | $ | 2,608                              |  | $ | 2,092      |  | $ | 2,695                          | 
|                                            |  |   |                                      |  |   |                                    |  |   |            |  |   |                                | 
|For the year ended December
      31, 2001: |  |   |                                      |  |   |                                    |  |   |            |  |   |                                | 
|Provision for doubtful accounts             |  | $ | 1,749                                |  | $ | 430                                |  | $ |           |  | $ | 2,179                          | 
|                                            |  |   |                                      |  |   |                                    |  |   |            |  |   |                                | 
|For the year ended December
      31, 2000: |  |   |                                      |  |   |                                    |  |   |            |  |   |                                | 
|Provision for doubtful accounts             |  | $ | 315                                  |  | $ | 1,434                              |  | $ |           |  | $ | 1,749                          | 
|                                            |  |   |                                      |  |   |                                    |  |   |            |  |   |                                | 



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Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.

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PART III





Item 10.   Directors  and Executive Officers of the Registrant.





The following table sets forth our directors and  executive officers, their ages and the positions they hold:





|Name                         |  | Age |  | Position                                          
|---------------------------- |  | --- |  | --------------------------------------------------
|                             |  |     |  |                                                   
|Richard
      D. Forman      |  | 38  |  | President, Chief Executive Officer and Director   
|Mitchell
      I. Quain      |  | 51  |  | Executive Chairman of the Board of Directors      
|Dewain
      K. Cross        |  | 65  |  | Director                                          
|Taher
        Elgamal, Ph.D. |  | 47  |  | Director                                          
|Peter
      A. Forman        |  | 41  |  | Director                                          
|Stanley
      Morten         |  | 59  |  | Director                                          
|Jim
      Rosenthal          |  | 39  |  | Director                                          
|Reginald
      Van Lee       |  | 45  |  | Director                                          
|Jonathan Stern               |  | 58  |  | Chief Financial Officer                           
|Walt
      Meffert, Jr.      |  | 37  |  | Chief Technology Officer                          
|Lori Faye Fischler           |  | 46  |  | General Manager, Corporate Services - Europe      
|David W. Hirschler           |  | 41  |  | General Manager, Global Web Services              
|Alan Kipust                  |  | 41  |  | Vice President, Operations                        
|Jack S. Levy                 |  | 33  |  | Vice President, General Counsel and Secretary     
|Michael Pollack              |  | 38  |  | General
        Manager, Corporate Services - U.S.




INFORMATION  CONCERNING DIRECTORS





Richard D. Forman
  has been our Chief Executive Officer since March 1996 and our President since
  March 1998.  He has served as one of our directors since our inception
  in 1994 and as Chairman of the Board of Directors from May 1999 to September
  2002.  Since 1994, Mr. Forman has served as the President of Lease On Line,
  Inc., a real estate brokerage and management firm.  In addition, Mr. Forman
  has managed real estate in the New York City area since August 1992.  Mr.
  Forman was formerly a consultant with Booz Allen & Hamilton, Inc. in its
  New York City and Sydney, Australia offices.  In 1987, Mr. Forman graduated
  from the University of Pennsylvanias Management and Technology Program,
  and received his B.S. in Economics from the Wharton School of Business and B.S.
  in Electrical Engineering from the Moore School of Electrical Engineering. 
  In 1992, Mr. Forman received his M.S. in Real Estate from New York University. 
  Mr. Forman is the brother of Peter A. Forman, one of our directors and co-founders.









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Mitchell I. Quain has served as
    one of our directors since April 2001, as Chairman of our Board of Directors
    since September 2002, and as the Executive Chairman since November 2002. 
    Mr. Quain is a Principal at Charterhouse Group, a private equity firm. 
    He retired from ABN AMRO in December 2001, where he had served most recently
    as a Vice Chairman, having joined a predecessor company in 1997.  From
    June 1975 to May 1997, Mr. Quain was a Managing Director at Schroders plc. 
    He is currently a director of MagnaTek, Inc., Mechanical Dynamic, Inc., Strategic
    Distribution, Inc. and Titan International.  Mr. Quain received his B.S.
    in Electrical Engineering from the University of Pennsylvania in 1973 and
    his M.B.A. from Harvard Business School in 1975.





Dewain K. Cross has served as one
    of our directors since March 2003.  Mr. Cross served Cooper Industries,
    Inc., a diversified, worldwide manufacturer of electrical tools and products,
    in various financial capacities from 1966 until his retirement in 1995, including
    as Senior Vice President of Finance from 1980 to 1995, Vice President, Finance
    from 1972 to 1980 and as Director of Accounting and Taxation and Assistant
    Controller and Treasurer prior to that.  He is currently a director of
    Circor International, Inc. and Magnetek, Inc.  Mr. Cross has also been
    a member of the American Institute of Certified Public Accountants. 
    Mr. Cross received his B.B.A. from Clarkson University in 1961 and holds an
    AMP from Harvard University.





Taher Elgamal,
        Ph.D.  has served as one of our directors since April 2002.  Dr.
        Elgamal is the Chief Technical Officer and Co-Chairman of the Board at
        Securify, Inc.  From 1998 to  2001,  Dr. Elgamal served as
        Securifys  Chief Executive Officer.  Dr. Elgamal  was the
        Chief Scientist at Netscape Communications from April 1995 to June 1998.  He
        is currently a director of RSA Security, Inc., Phoenix Technologies,
        Hifn Inc. and ValiCert, Inc.  Dr.  Elgamal received his B.S. in
        Electrical Engineering from Cairo University in 1981, and his M.S. and
        Ph.D. in Computer Science from Stanford University in 1984.





Peter A. Forman,
    our co-founder, has served as one of our directors since our inception in
    1994.  Mr. Forman served as our  President from our inception until
    March 1998 and as Chairman of the Board of Directors from our inception until
    May 1999.   Since January 1998, Mr. Forman has been a Managing Member
    of Forman Capital Management, which specializes in investing and assisting
    early stage financial and technology companies.   From February 1999
    to July 2000, Mr. Forman served as President of WellSet, a consumer and commercial
    products manufacturing, marketing and distribution company.  From August
    1983 to February 1999, Mr. Forman served as the Chief Executive Officer of
    Ben Forman &  Sons, Inc., a wholesale consumer products manufacturer.  Mr.
    Forman received his B.S. in Economics from the Wharton School of Business
    in 1983.   Mr. Forman is the brother of the Companys
President and Chief Executive  Officer, Richard D. Forman.





Stanley Morten has served as one of our directors since  November 2002.  Mr. Morten, is a private  investor with a focus on the biotechnology industry.  Beginning
    in 1968, Mr. Morten served various research, management and corporate finance
    functions at Wertheim & Co. until the firms  acquisition by Schroders plc in 1994.   Mr. Morten was an Institutional Investor magazine-ranked analyst for ten  consecutive years. His subsequent roles at Wertheim & Co. included Director  of Research starting in 1982, General Partner starting in 1983, Executive  Committee Member starting in 1988 and Equity Services Division Head starting in  1991.  He is currently a director of WPP  Group, plc.  In 1977, Mr. Morten became  a Chartered Financial Analyst.  Mr.  Morten received his BA in Economics with honors from Lake Forest College in  1966 and his M.B.A. from Harvard Business School in
1968.





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Jim Rosenthal has  served as one of our directors since August 2000.  He is the President of  Television and New Media for New Line Cinema, a division of AOL Time Warner.  His responsibilities include TV Sales and  Distribution, TV Development and Production, Licensing and Merchandising as  well as managing the companys online store and online auction site and  overseeing web sites that promote the companys films and properties.  He joined New Line in 1992 as head of  Business Development.  Prior to joining  New Line, Mr. Rosenthal was a Senior Associate at Booz Allen & Hamilton,  where he focused on business strategy and new business evaluation for media and  entertainment clients.  Mr.  Rosenthal received his A.B. in Economics from Harvard College in 1985.





Reginald Van Lee has
    served as one of our directors since January 2000.  Mr. Van Lee joined
    Booz Allen & Hamilton,
Inc. in 1984 and was elected a Vice President and Partner in 1993 and was elected
    Senior Vice President as of April 1, 2003.  Mr.
Van Lee specializes in international business strategy and management of
technology-driven companies in the global communications, media and technology
industries.  Mr. Van Lee
received his B.S. in Civil Engineering in 1979 and his M.S. in Civil Engineering
in 1980 from the Massachusetts Institute of Technology.  In 1984, Mr. Van
Lee received his M.B.A. from Harvard Business School.





INFORMATION  CONCERNING EXECUTIVE OFFICERS





Jonathan Stern has
    served as our Chief Financial Officer since June 2002.  From September
    1998 to June 2002, Mr. Stern was Executive Vice President and Chief Financial
    Officer of Lexent Inc., a NASDAQ-listed infrastructure services company.   From
    September 1990 to September 1998, he was Vice President and Controller of
    International Specialty   Products Inc., a NYSE-listed specialty chemicals
    manufacturer.  Prior to that, he was Vice President and  Controller
    of Western Union Corp., a NYSE-listed telecommunications provider.  Prior
    to that he was with Price Waterhouse & Co (now PricewaterhouseCoopers
    LLP).  Mr. Stern received a B.A. in Economics from  Brooklyn College
    and an M.B.A. in finance from the Stern School of Business at New York University.  Mr.
    Stern is a Certified Public Accountant.





Walt Meffert, Jr. has
    served as our Chief Technology Officer since November 2001.  From October
    1999 to November 2001, Mr. Meffert served as the Vice President of Enterprise
    Application Engineering at Macromedia, Inc.  From January 1998 to  October
    1999, Mr. Meffert served as the Director of the Electronic Commerce-Internet
    Center at Bell Atlantic where his responsibilities included information technology
    software development.   From 1990 to 1998, Mr. Meffert managed the Internet
    Consulting and Systems Integration team at General Electric Company.  Mr.
    Meffert received his B.S. in Computer Science from the University of Maryland
    in 1990 and his M.S. in Computer Science from The Johns Hopkins University
    in 1993.





Lori Faye Fischler has
    served as our General Manager of Corporate Services - Europe, since February
    2003, after having served as Co-General Manager of Global Web Services from
    November 2002 to February 2003, General Manager of our Global Partner Network
    from July 2001 to November 2002, and Director of International Sales, Global
    Partner Network.  Ms. Fischler joined  Register.com in June 2000 as
    part of the Companys acquisition of Inabox, Inc.,  where she had served
    as Executive Vice President since September 1998.  From September 1995





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to April 1998, Ms. Fischler was a corporate partner in the law firm of  Leavy Rosensweig & Hyman, where she specialized in representing clients in  the cable television, Internet and telecommunications industries.  Ms. Fischler received a B.S. in Political  Science and Psychology from Tulane University and her J.D. from Columbia Law  School.





David W. Hirschler  has served as our General Manager of Global Web Services since November, 2002,  after having served as our General Manager of Retail since July 2001 and our  Vice President of Global Marketing from December 2000 until July 2001.  From January 2000 to January 2001, Mr.  Hirschler was the Vice President of Marketing for Vault.com, where he ran the  companys marketing and product development operations.  From June 1997 to December 2000, Mr.  Hirschler was the Category Director of oral care products for Unilever where he  ran the companys domestic oral care division.   From January 1996 to June 1997, Mr. Hirschler was the Director of  Marketing for Remy Cointreau S.A., where he managed the companys liqueur  business in North and South America.   Mr. Hirschler received his B.A. from the University of Rochester in 1983  and received his M.B.A. from the J.L. Kellogg School
of Management at  Northwestern University in 1988.





Alan Kipust has  served as our Vice President of Operations since November 2002, and from  February 2002 to November 2002, he served as a consultant to the Company in the  area of operations.  From October 2000  to February 2002, Mr. Kipust was the President of Awards.com, a promotional  product and employee recognition firm.   From May 1999 to October 2000, he was the Chief Operating Officer of  Checkout.com, a movie and music content and commerce site and from July 1997 to  May 1999, he was the Vice President of Operations at Genesis Direct, a direct  marketing company with over 30 direct marketing brands.  Prior to joining Genesis Direct, Mr Kipust  co-founded PaperDirect, a small business direct marketing firm that sells  desktop publishing supplies.  Mr. Kipust  received his B.S. from California State University  Northridge in 1985 and his  M.B.A. from Pepperdine University in
1987.





Jack S. Levy has  served as our Vice President, General Counsel and Secretary since August 2001  and was General Counsel and Secretary from October 1999 until August 2001.  From September 1996 until October 1999, Mr.  Levy was an associate in the corporate department of Willkie Farr &  Gallagher.  Mr. Levy received his B.A.  in Government from Harvard College in 1992 and his J.D. from Columbia Law  School in 1996.





Michael D. Pollack
  has served as our General Manager for Corporate Services Division - U.S. since
       July 2001.  From September 2000 to June 2001, Mr. Pollack was the
       Chief  Operating Officer at Mindswift, a marketing services and software
       company. 
  From February 1999 to September 2000, Mr. Pollack worked in American Express
  Small Business Services Division as Vice President for the Internet Group,
  previously,  and as Vice President of Corporate Strategic Planning and Business
  Development. 
  From May 1998 to February 1999, Mr. Pollack was Chief Operating Officer of
  Dispatch  Management Services Corp., a same day delivery firm.  From August
  1987  to May 1998, Mr. Pollack was a Consultant with Booz Allen & Hamilton. 
  Mr. Pollack received his B.A. in Computer Science from Princeton University
   and holds an M.B.A. from Stanford Graduate School of Business.





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Section 16(a) Beneficial Ownership  Reporting Compliance





The members of our Board of Directors, our executive  officers and persons who hold more than ten percent of the Companys  outstanding Common Stock are subject to the reporting requirements of  Section 16(a) of the Exchange Act, which requires them to file reports  with respect to their ownership of our Common Stock and their transactions in  such Common Stock.  Based upon  (i) the copies of Section 16(a) reports which the Company received  from such persons for their 2002 Fiscal Year transactions in the Common Stock  and their Common Stock holdings, and (ii) the written representations  received from one or more of such persons that no annual Form 5 reports were  required to be filed by them for the 2002 Fiscal Year, the Company believes  that all reporting requirements under Section 16(a) for such fiscal year  were met in a timely manner by its directors, executive officers and beneficial  owners of
greater than ten percent of our Common Stock.





Item 11.   Executive  Compensation.





Executive Compensation





The following table provides  certain summary information concerning the compensation earned for each of the  last three years by the Companys Chief Executive Officer and each of the four  other most highly compensated executive officers of the Company who were  serving as executive officers as of December 31, 2002.  In addition, Mr. Samant is also included in  the table because he would have been among the four most highly compensated  executive officers of the Company on the last day of the 2002 fiscal year had  he remained an executive officer of the Company until the end of the year.  The listed individuals are hereinafter  referred to as the Named Executive Officers.





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SUMMARY COMPENSATION TABLE





|                                    |  |      |      |           | Annual
        Compensation |          | Long-Term
        Compensation Awards Underlying |                                                                   |         |                                            | 
|----------------------------------- |  | ---- | ---- | --------- | --------------------------- | -------- | ------------------------------------------------ | ----------------------------------------------------------------- | ------- | ------------------------------------------ | 
|                                    |  |      |      |           |                             |          |                                                  |                                                                   |         |                                            | 
|Name
        and Principal Position |  | Year |      | Salary($) |                             | Bonus($) |                                                  | All
        Other
        Annual
        Compensation
        ($) |         | RestrictedStock
        Awards
        ($) | 
|                                    |  |      |      |           |                             |          |                                                  |                                                                   |         |                                            | 
|Richard
        D. Forman           |  |      | 2002 |           |                             | 277,885  |                                                  |                                                                   |        |                                            | 
|President
        and Chief         |  |      | 2001 |           |                             | 204,616  |                                                  |                                                                   | 200,000 |                                            | 
|Executive
        Officer           |  |      | 2000 |           |                             | 200,000  |                                                  |                                                                   | 25,000  |                                            | 
|                                    |  |      |      |           |                             |          |                                                  |                                                                   |         |                                            | 
|Jonathan
        Stern (2)          |  |      | 2002 |           |                             | 129,808  |                                                  |                                                                   | 80,800  |                                            | 
|Chief
        Financial Officer     |  |      |      |           |                             |          |                                                  |                                                                   |         |                                            | 
|                                    |  |      |      |           |                             |          |                                                  |                                                                   |         |                                            | 
|Walt
           Meffert, Jr.(3)     |  |      | 2002 |           |                             | 225,000  |                                                  |                                                                   | 12,000  |                                            | 
|Chief
        Technology            |  |      | 2001 |           |                             | 22,499   |                                                  |                                                                   | 12,000  |                                            | 
|Officer                             |  |      |      |           |                             |          |                                                  |                                                                   |         |                                            | 
|                                    |  |      |      |           |                             |          |                                                  |                                                                   |         |                                            | 
|Jack
        S. Levy                |  |      | 2002 |           |                             | 166,538  |                                                  |                                                                   | 37,000  |                                            | 
|Vice
        President, General     |  |      | 2001 |           |                             | 157,692  |                                                  |                                                                   | 40,000  |                                            | 
|Counsel
        and Secretary       |  |      | 2000 |           |                             | 121,811  |                                                  |                                                                   | 25,000  |                                            | 
|                                    |  |      |      |           |                             |          |                                                  |                                                                   |         |                                            | 
|Michael
        Pollack (6)         |  |      | 2002 |           |                             | 200,000  |                                                  |                                                                   | 10,000  |                                            | 
|General
        Manager,            |  |      | 2001 |           |                             | 109,615  |                                                  |                                                                   | 64,000  |                                            | 
|Corporate
        Services          |  |      |      |           |                             |          |                                                  |                                                                   |         |                                            | 
|                                    |  |      |      |           |                             |          |                                                  |                                                                   |         |                                            | 
|Rajiv
          Samant (8)          |  |      | 2002 |           |                             | 224,135  |                                                  |                                                                   |        |                                            | 
|Chief
        Operating Officer     |  |      | 2001 |           |                             | 118,269  |                                                  |                                                                   | 75,000  |                                            | 




---




|(1) | In accordance
        with Richard Formans employment agreement with the Company, he is
        entitled to reimbursements for car expenses and other perquisites up to
        $20,000 per annum.  Also pursuant to Mr. Formans employment
        agreement with the Company, we reimbursed him for certain expenses which
        he incurred in connection with obtaining professional tax and financial
        planning advice.                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(2) | Jonathan Stern
        started with us on June 11, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(3) | Walt Meffert,
        Jr. started with us in November 2001.  Mr. Meffert was issued a restricted
        stock award for 8,734 shares of Common Stock on December 20, 2001, at
        a purchase price of $0.0001 per share (par value) under our 2000 Plan. 
        The closing price per share was $11.35 on the grant date.  These
        shares are subject to our repurchase right which expires on November
        12, 2004.  At December 31, 2002, the aggregate market value of these
        shares was $39,303.  Mr. Meffert is entitled to receive regular cash
        dividends paid on these shares.




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|(4) | Consists    of a reimbursement of    $13,389 in connection with taxes due on the portion of Mr. Mefferts    restricted stock that vested in 2002, and the forgiveness of a portion of the    loan made to Mr. Meffert in connection with his relocation.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(5) | Consists    solely of special bonus payments    paid under Mr. Levys employment agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(6) | Michael    Pollack started with us in June
      2001.     Mr. Pollack was issued a restricted stock award for 5,587
      shares on June 11, 2001, at a purchase price of $0.0001 per share (par
      value) under our 2000 Plan.  The closing price    per share was $7.55
      on the grant date.     These shares are subject to our repurchase
      right which expires on June 11, 2004.  At December 31, 2002,    the
      aggregate market value of these shares was $25,141.50.  Mr.    Pollack
      is entitled to receive regular cash dividends paid on these shares.                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(7) | Consists    of a reimbursement of taxes due on the portion of Mr. Pollacks restricted    stock that vested in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(8) | Rajiv    Samant started with us in June 2001
      and his employment was terminated on October 29, 2002.  His rate of
      annual salary in 2001 was $250,000.  Mr. Samant received two restricted
      stock awards under our 2000 Plan, both at a purchase price of $0.0001 per
      share (par value). The first was for 15,420 shares of our Common Stock
      on June 28, 2001, at which
      date
      the
      closing
      price per
      share
      was $12.97,
      and
      the
      second was
      for 34,247 shares on May 2, 2002, at which date the closing price per share
      as $8.76.     At December 31, 2002, the aggregate market value of
      these shares was $69,390.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(9) | In    connection with our termination of Mr. Samants employment, we forgave the loan of $102,236 made in    connection with his first restricted stock grant and we paid him $30,000 in    severance.  Subsequent to Mr. Samants    termination, we repurchased all of his restricted stock.                                                                                                                                                                                                                                                                                                                                                                                                                    







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Stock Option Grants





The following table contains information concerning the stock  options granted to the Named Executive Officers during the year ended December  31, 2002.  All the grants were made  under the Companys 2000 Plan.  The Company has not granted any stock appreciation  rights.





OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 2002





|                        |  | Individual Grants                               |         |                                                               |  |                          |    |                 |     
|----------------------- |  | ----------------------------------------------- | ------- | ------------------------------------------------------------- |  | ------------------------ | -- | --------------- | ----
|                        |  |                                                 |         |                                                               |  |                          |    |                 |     
|                        |  | Number of Shares Underlying Options Granted (1) |         | % of Total Options Granted to Employees in Fiscal Year    (2) |  | Exercise Price Per Share |    | Expiration Date |     
|                        |  |                                                 |         |                                                               |  |                          |   
|Name                    |  |                                                 |         |                                                               |  |                          | 5% |                 |     
|                        |  |                                                 |         |                                                               |  |                          |    |                 |     
|Richard    D. Forman    |  |                                                 | 150,000 |                                                               |  | 4.9                      |    | $               | 8.76
|Jonathan    Stern       |  |                                                 | 150,000 |                                                               |  | 5.0                      |    |                 | 7.48
|                        |  |                                                 | 100,000 |                                                               |  | 3.3                      |    |                 | 7.24
|                        |  |                                                 | 100,000 |                                                               |  | 3.3                      |    |                 | 4.72
|Walt
      Meffert, Jr. |  |                                                 | 35,000  |                                                               |  | 1.2                      |    |                 | 8.76
|Jack    S. Levy         |  |                                                 | 35,000  |                                                               |  | 1.2                      |    |                 | 8.76
|Michael    Pollack      |  |                                                 | 14,000  |                                                               |  | 0.5                      |    |                 | 8.76
|Rajiv    Samant (4)     |  |                                                 | 100,000 |                                                               |  | 3.3                      |    |                 | 8.76




---




|(1) | The    options shown in this table become exercisable in 42 equal monthly    installments upon the    optionees completion of each month of service commencing on the date six    months after the date of grant.  In    the event of certain change of control transactions of the Company, the    options will become immediately exercisable if not assumed or replaced with comparable rights.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                    
|(2) | During    2002, the Company granted employees options to purchase an aggregate of    3,038,827 shares of Common Stock.                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                    
|(3) | The    potential realizable value is calculated based upon the term of the option at    its time of grant.  It is calculated assuming that the stock    price on the date of grant appreciates at the indicated annual rate,    compounded annually for the entire term of the option, and that the option is    exercised and sold on the last day of its term for the appreciated stock price.   
|    |                                                                                                                                                                                                                                                                                                                                                                                                    
|(4) | Mr.    Samants employment with us was terminated on October 29, 2002.  All of his options expired unexercised on    January 29, 2003.                                                                                                                                                                                                                                                             







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Option Exercise and Year-End Values





The following table provides  information, with respect to the Named  Executive Officers, concerning the exercise of options during the 2002 Fiscal  Year and unexercised options held by them at of the end of that fiscal year.





AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION  VALUES





|                        |  |                               |           |                   |   |             |  | Number of Shares UnderlyingUnexercised Options at    FiscalYear End |         | Value of Unexercised In-the-Money Options atDecember 31, 2002 (2) | 
|----------------------- |  | ----------------------------- | --------- | ----------------- | - | ----------- |  | ------------------------------------------------------------------- | ------- | ----------------------------------------------------------------- | 
|                        |  |                               |           |                   |   |             |  |                                                                     |         |                                                                   | 
|Name                    |  | SharesAcquired onExercise (#) |           | ValueRealized (1) |   | Exercisable |  | Unexercisable                                                       |         | Exercisable                                                       | 
|                        |  |                               |           |                   |   |             |  |                                                                     |         |                                                                   | 
|Richard    D. Forman    |  |                               | 1,228,000 |                   | $ | 4,939,601   |  |                                                                     | 451,189 |                                                                   | 
|Jonathan    Stern       |  |                               |          |                   |   |            |  |                                                                     | 8,333   |                                                                   | 
|Walt
      Meffert, Jr. |  |                               |          |                   |   |            |  |                                                                     | 24,523  |                                                                   | 
|Jack    S. Levy         |  |                               | 7,500     |                   |   | 53,774      |  |                                                                     | 167,210 |                                                                   | 
|Michael    Pollack      |  |                               |          |                   |   |            |  |                                                                     | 37,809  |                                                                   | 
|Rajiv    Samant (3)     |  |                               |          |                   |   |            |  |                                                                     | 91,666  |                                                                   | 




---




|(1) | Based    upon the market price of the purchased shares on the exercise date less the option    exercise price paid for those shares.                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                 
|(2) | Based    upon the market price of $4.50 per share, determined on the basis of the    closing selling price per share of Common Stock on the Nasdaq National Market    on December 31, 2002, less    the option exercise price payable per share.
|    |                                                                                                                                                                                                                                                 
|(3) | Mr.    Samants employment with us was terminated on October 29, 2002.  All of his options expired unexercised on    January 29, 2003.                                                                                                          




Director Compensation





The Board of Directors has a  standing Audit Committee,  Compensation Committee and Executive Committee. The following lists the primary  responsibilities of each of these committees and their members.





Audit Committee





The Audit Committee assists the  Board of Directors in fulfilling its oversight responsibilities by reviewing the Companys financial  information, systems of internal controls and financial reporting process.  With the implementation of new rules by the  SEC in accordance with the Sarbanes-Oxley Act of 2002, the Audit Committees  responsibilities have  increased significantly to include, among other things, the appointment,  compensation and oversight of the Companys auditors.





Committee Members:  Stanley Morten, Dewain K. Cross and Taher  Elgamal





Compensation Committee





The Compensation Committee
    advises the Chief Executive Officer and the Board of Directors on matters
    of the Companys compensation  philosophy and the compensation of executive
    officers and other individuals compensated by the Company, including among
    other things, annual salaries and bonuses and incentive
  compensation arrangements. The Compensation Committee is also responsible for
    the administration of the Companys Employee Stock Purchase Plan (ESPP)
    and the 2000 Plan.





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Committee Members:  Jim Rosenthal and Reginald Van Lee





Executive Committee





The Executive Committee (i)  reviews and makes recommendations to the Board of Directors regarding the  Companys strategy, (ii) monitors, supervises and assists the Chief Executive  Officer in the management  of the Companys business operations and execution of its restructuring plan  and (iii) makes recommendations to the Chief Executive Officer and the Board of  Directors regarding organizational and other changes.





Committee Members:  Peter A.  Forman, Richard D. Forman and Mitchell I. Quain





Prior to July 23, 2002, we paid  our non-employee board members an annual fee of $4,000.  From July 23, 2002 until November 15, 2002,  we also paid our non-employee directors an additional fee of $500 for each duly constituted regular or  special meeting of the Board, Compensation Committee or Audit Committee that  such director attended either in person or by teleconference, with such  payments to a non-employee director not to exceed $14,000 per year.





Since November 15, 2002,
we now pay our non-employee directors an annual fee of $30,000.  In addition,
our non-employee Board members receive a $1,000 payment for each duly constituted
regular or special meeting of the Board that they attend in person or by teleconference
and a $500 payment for each duly constituted committee meeting that they attend
in person or by teleconference (other than Executive Committee meetings).  The
Chairman
of

the
Audit
Committee
receives
an additional annual payment of $10,000.  These payments were prorated for
the remainder of 2002.  We currently do not provide additional  compensation
for special assignments of the Board of Directors.





Messrs. Richard Forman and Quain  receive no additional compensation for serving as members of the Executive  Committee.  Mr. Peter Forman, as the sole non-employee director on  the Executive Committee, is compensated at a per diem rate of $800 for each day  that he works as a member of the Executive Committee.





Under the Automatic Option
    Grant Program of the 2000 Plan, eligible non-employee Board members receive
    a series of option grants over their period of Board service.  Eligible
    non-employee Board members are non-employee Board members other than those
    who (i) as of March 3, 2000, directly or indirectly (including through
    an affiliate), owned three percent of our voting stock and (ii) are independently
    compensated for his or her Board membership.  Each eligible  non-employee
    Board member will, at the time of his or her initial election or appointment
    to the Board, receive an option grant for 25,000 shares of Common Stock,
    provided such individual has not previously been in our employ, at an exercise
    price equal to the fair market value of our Common Stock on the close of
    business on the date of grant.  In addition, each  eligible non-employee
    Board member who continues to serve will automatically be granted an  option
    to purchase 2,500 shares of Common Stock on the date of each regularly scheduled
    quarterly Board meeting that occurs in a calendar quarter following the quarter
    of his or her initial election or appointment  to the Board at an exercise
    price equal to the fair market value of our Common Stock on the close of
    business on the date of grant.  Each grant under the Automatic Option
    Grant Program will have a minimum term of ten years, subject to earlier termination
    upon the directors cessation of service as a Board member.  Subject
    to the directors continuing service on the Board, 50% of the initial
    25,000-share option grant will vest upon the first anniversary of the individuals
    becoming a director and 50% will vest upon the second anniversary; and each
    2,500-share option grant will vest upon the directors completion of
    one year of Board service measured from the grant date.  Each option
    will be immediately exercisable for any or all of the option shares.  However,
    any unvested shares purchased under the option shall be subject to repurchase
    by us, at the exercise price paid per
share, upon the optionees cessation of Board service prior to vesting in
those shares.





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In the event of a change
    of control or a hostile take-over, the options to purchase shares of Common
    Stock held by our directors at such time will automatically vest in full
    and any repurchase rights shall automatically terminate so that each such
    option may, immediately prior to the effective date of such change of control
    or hostile take-over, become fully exercisable.  Each option that is
    accelerated in connection with a change of control shall terminate upon the
    change of control, except to the extent assumed by our successor corporation
    or otherwise continued in full force and effect pursuant to the terms of
    the change of control.  Any such options that are assumed by our  successor
    corporation shall be subject to adjustment, both as to the number of shares
    and as to the exercise price.  Each option  that is accelerated in connection
    with a hostile take-over shall remain exercisable until its expiration  date
    or sooner termination of the option term.  Upon the occurrence of a
    hostile take-over, our directors will have a thirty-day period in which to
    surrender their options in return for a cash distribution.





Stock Option Grants in 2002





On July 24, 2001, the
  Board of Directors approved five option grants under the Discretionary Option
  Grant Program of our 2000 Plan, each to purchase 2,500 shares of Common Stock,
  to each of Messrs. Jim Rosenthal, Mitchell I. Quain and Reginald Van Lee. 
  The first three of the five grants were made in 2001 and the remaining two grants
  were made on February 5 and April 16, 2002 at exercise prices per share of $8.09,
  and $8.60 respectively.  On October 23, 2001, the Board of Directors approved
  four option grants under the Discretionary Option Grant Program to Peter Forman,
  each to purchase 2,500 shares of Common Stock.  The dates and exercise
  prices of the grants made to Mr. P. Forman in 2002 are the same as those for
  the other non-employee directors.  All the options granted under the Discretionary
  Option Grant Program vest upon one year of Board service measured from the grant
  date.  The Board approved these grants to non-employee directors to be
  made in lieu of a single annual grant of options and to provide that such grants
  would be made to all non-employee Board members other than individuals who,
  as of March 3, 2000, directly or indirectly (including through an affiliate),
  owned three percent of the Companys voting stock and who are independently
  compensated for their Board membership.





In addition, on April
    16, 2002, the Board approved a discretionary option grant to Reginald Van
    Lee to purchase 35,000 shares of our Common Stock and a discretionary option
    grant to Jim Rosenthal to purchase 25,000 shares of our Common Stock, each
    with an exercise price of $8.65.  Subject to Messrs. Van Lees
    and Rosenthals continuing service as directors, fifty percent of these
    options will vest on April 16, 2003 and the remaining fifty percent will
    vest on April 16, 2004.  These options have a ten-year term, subject
    to earlier termination upon the optionees cessation of services as
    a Board member, and other terms consistent with the terms of options granted
    under the Automatic Option Grant Program of the 2000 Plan.





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In 2002, pursuant to the  Automatic Option Grant Program of the  2000 Plan, we granted each of the directors listed below options to purchase  25,000 shares of our Common Stock upon his joining the Board of Directors.  Fifty percent of such options vest on the  first anniversary of the director joining our Board of Directors and the remaining fifty  percent vests on the second anniversary.





| |  | Taher Elgamal: 
        granted on April 4, 2002 with an exercise price per share of $8.52.     
| | - | ------------------------------------------------------------------------------------------------
| |   |                                                                                                 
| |  | Stanley Morten: 
        granted on November 19, 2002 with an exercise price per share of $4.51.
| |   |                                                                                                 
| |  | Dewain K. Cross:
        granted on March 5, 2003 with an exercise price per share of $5.40.    




We also granted each of our  non-employee directors options to purchase 2,500 shares of our Common Stock in  accordance with the Automatic Option Grant Program of the 2000 Plan on the following dates:





| |  | July 23, 2002 at an exercise    price per share of $7.08; and
| | - | -------------------------------------------------------------
| |   |                                                              
| |  | October 22, 2002 at an exercise    price per share of $3.45  




On September 29, 2002, in  connection with Mr. Quains appointment as Chairman of the Board of Directors, we granted him  options to purchase 50,000 shares of our Common Stock at an exercise price of  $2.91 per share.  These options shall  vest in full on September 29, 2003.





In connection with Mr.
    Quains  letter agreement of employment, we granted  him options to
    purchase 600,000 shares of our Common Stock at an exercise price of $4.50
    per share on November 25, 2002.  These  options shall vest and become
    exercisable in 48 equal monthly installments of 12,500 shares for as long
    as Mr. Quain
    remains a director on the Board, provided that (A) the option will accelerate
    and vest in full upon Mr. Quains death or permanent disability, or
     a change in control, which occurs at any time while Mr. Quain is serving
    as a director on the Board, and (B) in the event Mr. Quain is not reelected
    to the Board by our stockholders, the option will accelerate and vest as
    if Mr. Quain had continued to remain Executive Chairman or non-executive
    Chairman of the Board for the twelve-month period subsequent to his last
    date of service as a director, and provided further that the option will
    immediately terminate and
cease vesting in the event that Mr. Quains employment is terminated for
cause.  In connection with this letter  agreement, Mr. Quain waived any
rights or entitlement to any stock option grants or other benefits under the
Automatic Option Grant Program of the 2000 Plan.





Each director and several  executive officers are parties to an indemnification agreement that provides  for indemnification and advancement of expenses to the fullest extent permitted by Delaware law, our Amended  and Restated Certificate of Incorporation, and our Amended and Restated Bylaws.





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Employment Agreements with Named Executive Officers





We have entered into
    employment agreements with each of Richard D. Forman, our President and Chief
    Executive Officer; Jonathan Stern, our Chief Financial Officer; Walt Meffert, Jr.,
    our Chief Technology Officer; Jack S. Levy, our Vice President, General Counsel
    and Secretary; and with Michael Pollack, our General Manager of Corporate
    ServicesU.S.   In connection with Mr. Samants resignation, we
    entered into a Separation Agreement and General Release with him.





Richard D. Forman





Mr. Formans employment agreement  with us became effective as  of February 27, 2000 and had an initial term of 42 months, with automatic  renewal for successive one-year terms unless we or Mr. Forman give notice of  cancellation at least 90 days prior to the expiration of the agreement.  The agreement entitles Mr. Forman to receive a base salary  of $200,000 per year, discretionary annual bonuses and fringe benefits such as  medical and dental coverage, short and long term disability and life insurance.





In addition, we granted Mr.  Forman stock options under our 2000  Plan to purchase up to 525,000 shares of Common Stock, of which:





| |  | options to purchase 175,000    shares have an exercise price of $26.40;    
| | - | ---------------------------------------------------------------------------
| |   |                                                                            
| |  | options to purchase 175,000    shares have an exercise price of $33.60; and
| |   |                                                                            
| |  | options to purchase 175,000 shares have an exercise price    of $38.40.    




These stock options are to vest  in equal monthly amounts over a 42-month period, as long as Mr. Forman is  employed by us.  The options with an  exercise price of $26.40 vested in full on April 27, 2001; the options with an exercise price of  $33.60 vested in full on June 27, 2002; and the options with an exercise price  of $38.40 began vesting in equal monthly installments on June 27, 2002 and will  vest in full on August 27, 2003.





The vesting of Mr. Formans stock  options will accelerate in  full upon the termination of Mr. Formans employment by us without cause or by  him for good reason.  In addition, if  his employment is terminated without cause or for good reason, Mr. Forman will  be entitled to a lump-sum severance  payment in an amount equal to one months base salary multiplied by the number  of months remaining in the contract term or 12 months, whichever number is  greater.  He would also be entitled to  medical and dental benefits for himself and his eligible dependents under COBRA for a period  of 18 months following the date of termination to be paid by the Company.  Mr. Forman is also entitled to an additional  payment in order to compensate him for any golden parachute excise tax that  he incurs as a result of receiving  the severance payments and benefits provided for in the employment
agreement.





In addition, if Mr. Formans  employment is terminated without cause or for good reason, or due to his death  or disability, he will be entitled to any earned but unpaid salary, as well as accrued but  unused vacation, any unpaid bonus accrued prior to the date of termination, a  pro rata bonus for the year in which the termination occurs, reimbursement for  business expenses





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and any payments or benefits due  under our policies or benefit plans.   Mr. Forman may terminate his employment upon one months written notice  to us.





Mr. Forman is prohibited under  his employment agreement from using or disclosing any of our confidential information at any time in  the future and has assigned to us all rights to any inventions he develops  during his employment that pertain to our business or that are developed during  work time or using our material or facilities.   Mr. Forman is also prohibited  from competing with us or soliciting any of our customers or employees during  his employment and for a period of one year thereafter.





Jonathan Stern





We  have a letter agreement with Mr. Stern which confirms the terms of his  employment.  The letter agreement provides that his  employment will be at will and may be terminated at any time by either  party.  Mr. Stern is entitled to an  annual salary of $250,000, which will be reviewed on an annual basis and an annual  bonus of up to $150,000, which may be  paid 50% in cash and 50% in fully-vested shares of Common Stock.  In connection with Mr. Sterns employment  with us, we granted him options to purchase an aggregate of 350,000 shares of  Common Stock, of which:





| |  | options    to purchase 150,000 shares have    an exercise price of $7.48; 
| | - | --------------------------------------------------------------------------
| |   |                                                                           
| |  | options    to purchase 100,000 shares have an exercise price of $7.24; and
| |   |                                                                           
| |  | options    to purchase 100,000 shares have an exercise price of $4.72.    




These  stock options began vesting on December 11, 2002 and vest in equal monthly amounts over a  42-month period, for as long as Mr. Stern is employed by us.  In the event that he is terminated without  cause or resigns with good reason following a change in control, each option  shall accelerate, vest and become exercisable in full on the effective date of his termination.





The letter agreement provides  that if Mr. Sterns employment with us is terminated without cause or for good  reason at any time, he will receive his base salary in effect at the time of  such termination or resignation  for a period of six months from the date of such termination or  resignation.  In addition, Mr. Sterns  medical coverage will be continued for such six month period at the Companys  expense.  Mr. Stern must give the  Company thirty days written notice  and opportunity to cure prior to resigning for good reason.





On March 8, 2003, we
    granted Mr. Stern options to purchase 50,000 shares of our Common Stock at
    an exercise price of $5.27 per share.  The
    options vest and become exercisable in 42 equal monthly installments commencing
on September 8, 2003. In the event that he is terminated without cause or resigns
    with good reason following a change in control, this option shall accelerate,
    vest and become exercisable in full on the effective date of his termination.








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Walt Meffert, Jr.





We  have a letter agreement
    dated October 8, 2001, as amended on November 26, 2002, with Mr. Meffert
    which confirms the terms of his employment.   The letter agreement provides
    that his employment will be at will and  may be terminated at
    any time by either party.   Mr. Meffert is entitled to an annual salary
    of $225,000, which will be reviewed on an annual basis and an annual bonus
    of not less than $50,000.   Pursuant to this agreement, we granted Mr.
    Meffert options to purchase 120,000 shares of our Common Stock at an exercise
    price per share of $11.45.  These
    options began vesting on May 14, 2002 and vest ratably on a monthly
    basis for
a period of 42 months.





On  November 12, 2001, we issued Mr. Meffert 8,734 restricted shares of our Common  Stock at a purchase price of $0.0001 per share.  These shares are subject to our repurchase right which expires on November 12, 2004.  In the event of our change in control, if  our repurchase right is not assigned to our successor corporation, then  immediately prior to such change in control, our repurchase right shall automatically  lapse in its entirety and Mr.  Mefferts restricted shares shall vest in full.





The  letter agreement also provides that we will loan Mr. Meffert up to $50,000, net  of applicable taxes, in order to cover the costs of his relocation to New  York.  The Company loaned $35,975 under  this arrangement and will  forgive the loan in three equal annual installments, which commenced on the  first anniversary of Mr. Mefferts start date, provided he remains employed by  the Company.





On  November 26, 2002, we amended Mr. Mefferts letter agreement to provide that if Mr. Mefferts  employment with us is terminated without cause at any time, he will be entitled  to receive his base salary for a period of twelve months from the date of his  termination and medical and dental benefits under COBRA for a period of three months.





On March 8, 2003, we
    granted  Mr. Meffert options to purchase 120,000 shares of our Common Stock
    at an exercise
  price of $5.27 per share.  The options vest and become exercisable in
  42  equal monthly installments commencing on September 8, 2003. In the event
  that
  Mr. Meffert is terminated without cause before March 8, 2005 this option will
  accelerate, vest and become exercisable in full on the effective date of his
  termination.





Jack S. Levy





Mr. Levys employment agreement  with us became effective as of October 11, 1999.  The agreement provides for a one-year term, followed by  extensions of 45-day periods, unless terminated by either party.  Mr. Levy is entitled to an annual salary of at least $116,327  and received a signing bonus of $25,000.   Mr. Levy also received a $50,000 cash bonus in connection with the  closing of our initial public offering and a $25,000 cash bonus at the one-year  anniversary of the closing of our initial  public offering.





We also granted Mr. Levy options  to purchase up to 122,500 shares of our Common Stock at an exercise price of  $1.43 per share.  These options began to  vest in January 2000 in 41 monthly installments of 2,916 shares and a final monthly installment of 2,944  shares.  We also granted Mr. Levy  options to purchase 52,500 shares of our Common Stock at an exercise price per  share of $24.00.  These options began to  vest on a monthly basis over a period of 42 months following the closing of our initial public offering.  The vesting of these options will accelerate  upon the earlier of:





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| |  | our change in control, in which    case vesting will accelerate to the six-month anniversary of the closing of the transaction; or                                                                    
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                       
| |  | the termination of Mr. Levys    employment by us without cause or by him for good reason following our change    in control, in which case vesting will accelerate to the date of his    termination.




If Mr. Levys employment is terminated by us without cause or by  him for good reason following our change in control, the vesting of any of  these options that would have vested through the expiration of the employment  term had the termination not occurred will be accelerated to the date of the termination.  In addition, we would be required to pay Mr.  Levy his salary until the scheduled expiration of his employment  agreement.  If Mr. Levys employment is  terminated due to death or for good cause, or a voluntary resignation, he will  not be entitled to any  compensation from us other than the payment of any accrued base salary, bonuses  and benefits.





On March 8, 2003, we
    granted  Mr. Levy 37,951 shares of restricted stock at a purchase price of
    $0.0001 per
  share.  These shares are subject to our repurchase right, which right
  lapses  with respect to one quarter of the total shares granted on each of
  November
  1, 2003, February 1, May 1, and August 1, 2004.  In the event of our change
   in control, and immediately prior to such change in control, our repurchase right shall
   automatically lapse in its entirety and Mr. Levys restricted shares
   shall  vest in full.  Mr. Levy is entitled to receive regular cash
   dividends paid on these shares.





Michael Pollack





We  have a letter agreement  dated June 8, 2001 with Mr. Pollack which confirms the terms of his  employment.  The letter agreement  provides that his employment will be at will and may be terminated at any  time by either party.  Mr. Pollack is  entitled to an annual  salary of $200,000, which will be reviewed on an annual basis and an annual  bonus of up to $150,000.  If Mr.  Pollacks employment with us is terminated without cause at any time, he will  be entitled to receive his base salary for a period of two months from the effective date of his  termination.  Pursuant to this  agreement, we granted Mr. Pollack options to purchase 120,000 shares of our  Common Stock at an exercise price per share of $12.96.  These options began vesting on January 17,  2002 and vest ratably on a  monthly basis for a period of 42 months.





On  June 11, 2001, we issued Mr. Pollack 5,587 restricted shares of our Common  Stock at a purchase price of $0.0001 per share.  These shares are subject to our repurchase right which expires on  June 11, 2004.  In the event of our change in control, if  our repurchase right is not assigned to our successor corporation, then  immediately prior to such change in control, our repurchase right shall  automatically lapse in its entirety and Mr. Pollacks restricted shares shall vest in full.





Also  on June 11, 2001
    we loaned Mr. Pollack $17,277.82 for the payment of withholding taxes in
    connection with the grant of restricted shares.  The loan accrues interest
    at a rate of 3.93% per annum, compounded annually and becomes due and payable
    in full on June 11, 2004.   The Company will forgive the principal and
    interest due under the loan in three equal annual installments, which commenced
    on the first anniversary of Mr. Pollacks start date, provided he remains
    employed by the Company.  Should Mr. Pollacks employment be terminated
    by the Company without cause or by either the Company or Mr. Pollack with
    good reason, the unpaid principal and interest due under the loan shall be
    forgiven in full.





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Rajiv Samant





On November 18, 2002,
  we entered into a Separation Agreement and General Release with Mr. Samant. 
  Pursuant to the terms of this agreement, the Company paid Mr. Samant $30,000
  in severance and forgave in full the principal and interest, $102,236, due under
  the loan the Company granted him for the payment of withholding taxes in connection
  with the grant of restricted shares when he joined the Company.





Executive Change in Control Severance Program





Effective March 8, 2003,
    the Company adopted the Executive Change in Control Severance Program pursuant
    to which the executive officers, other than Messrs. Richard Forman and Mitchell
    I. Quain, including each of the other Named Executive Officers, participate.   Under
    the terms of the program, if within one year following a change in control
    that occurs on or prior to May 31, 2004, a participants employment
    with the Company is terminated (1) by the Company other than for cause, by
    reason of the participants death or by reason  of the participants
    disability or (2) by the participant within 90 days following an event constituting
    good reason, the participant will be entitled to separation benefits of 12
    months base salary, subject to a participants execution and
    non-revocation of a release.





The program cannot be amended in  any manner that is adverse to the interests of a participant or terminated  within one year following the date of its adoption or following a change in  control.  Any successor of the Company  or its businesses will be bound  by the terms of the severance program in the same manner and to the same extent  that the Company would be obligated to perform its duties if no succession had  taken place.  The cash severance  benefits payable under the terms of the program will be reduced by other severance benefits  payable under any plan, program, policy, practice, agreement or arrangement  between the participant and the Company, but will not be reduced by the payment  of any retention bonuses described below.





Change in Control Termination Letters





Effective March 8, 2003,
    the Company entered into agreements with, among others, Messrs. Levy, Meffert
and Stern.  Under the terms of these  agreements, each officer that is a
party
to
this agreement will receive a payment equal to five months base  salary
within ten days after a voluntary termination during the 90-day period commencing
75 days after a change in control that occurs on or prior to May 31, 2004.  If
such officer receives a payment under the Executive Change in Control Severance
Program for voluntarily resigning for good reason under that program,
the Executive Change in Control Severance Program, and not the Change in Control
Termination Letters, will control.





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Any successor of the Company or its businesses will  be bound by the terms of the severance program in the same manner and to the  same extent that the Company would be obligated to perform its duties if no  succession had taken place.





Retention Bonus Letters





Effective March 8, 2003,
    the Company entered into agreements with, among others, Messrs. Levy, Meffert
and Stern.  Under the terms of  the agreements, each officer that is a party
to this agreement will receive a cash lump sum payment by August 15, 2003 if
such
officer
remains employed with the Company through July 31, 2003, or, within ten days
following the termination of employment, in the event that a change in control   occurs
on or prior to July 31, 2003 and on or after the date of such change in control,
such officers employment  with the Company is terminated by the Company
other than for cause, death or disability or, for certain officers, the officer
voluntarily resigns for good reason or for any other reason giving rise to severance
payments.





In order to be eligible to receive the retention bonus, each  officer that is a party to this agreement has agreed not to disclose or use any  confidential information.  Any successor  of the Company or its businesses will be bound by the terms of the Retention  Bonus Letter in the same manner  and to the same extent that the Company would be obligated to perform its  duties if no succession had taken place.





The retention bonuses for each of  Messrs. Levy, Meffert and Stern will be, respectively, $42,500, $33,750 and  $37,500.  Retention bonuses will not be set off by any  payments under any of the other arrangements described above.





Compensation Committee Interlocks and Insider  Participation





During the 2002 Fiscal Year, the  Compensation Committee consisted of two directors, Jim Rosenthal  and  Reginald Van Lee.  No interlocking  relationship has existed between the members of the Companys Compensation  Committee and the board of directors or compensation committee of any other  company.








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Item 12.  Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder Matters.





The following table sets
    forth information known to the Company with respect to the beneficial ownership
    of the Companys Common Stock as of March 20, 2003, by (i) each
    director, (ii) the
    Named
Executive Officers, (iii) all directors and executive officers as a group,
and (iv) each entity that beneficially owns more than 5% of our Common Stock.  Unless
otherwise indicated, each of the stockholders can be reached at our principal
executive offices located at 575 Eighth Avenue, 8th Floor, New York, NY 10018.





|                                                                          |  | Shares Beneficially Owned** |          
|------------------------------------------------------------------------- |  | --------------------------- | ---------
|                                                                          |  |                             |          
|                                                                          |  | Number                      |          
|                                                                          |  |                             |          
|Named Executive Officers                                                  |  |                             |          
|Richard D. Forman (1)                                                     |  |                             | 4,780,921
|Jonathan
        Stern (2)                                                |  |                             | 49,999   
|Walt
        Meffert, Jr. (3)                                             |  |                             | 51,830   
|Jack
        S. Levy (4)                                                  |  |                             | 239,154  
|Michael
        Pollack (5)                                               |  |                             | 60,468   
|Directors                                                                 |  |                             |          
|Dewain
        K. Cross                                                   |  |                             |         
|Taher
        Elgamal (6)                                                 |  |                             | 15,000   
|Peter
        A. Forman (7)                                               |  |                             | 3,290,765
|Stanley
        Morten                                                    |  |                             |         
|Mitchell
        I. Quain (8)                                             |  |                             | 127,400  
|Jim
        Rosenthal (9)                                                 |  |                             | 70,000   
|Reginald
        Van Lee (10)                                             |  |                             | 74,450   
|All
        directors and executive officers as a group (15 persons) (11) |  |                             | 9,006,264
|                                                                          |  |                             |          
|Principal
        Stockholders                                            |  |                             |          
|Royce
        & Associates, LLC (12)                                      |  |                             | 3,745,700
|Farallon
        Capital Management Partners (13)                         |  |                             | 2,040,000




---




|*   | Represents
        less than 1%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|**  | Gives effect
        to the shares of Common Stock issuable upon the exercise of all options
        exercisable within 60 days of March 20, 2003 and other rights beneficially
        owned by the indicated stockholders on that date. Beneficial ownership
        is determined in accordance with the rules of the Securities and Exchange
        Commission and includes voting and investment power with respect to shares. 
        Unless otherwise indicated, the persons named in the table have sole voting
        and sole investment control with respect to all shares beneficially owned. 
        Percentage ownership is calculated based on shares of our Common Stock
        outstanding as of March 20, 2003.  To the Companys knowledge,
        except as disclosed in this table, no other stockholder beneficially owned
        more than 5% of the outstanding shares of Common Stock as of March 20,
        2003.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(1) | Includes 2,986,113
        shares of Common Stock held by RDF Ventures LLC, 37,800 shares of Common
        Stock held by the RDF 1999 Family Trust, warrants to purchase 699,717
        shares of Common Stock at an exercise price of $0.97 per share, warrants
        to purchase 291 shares of Common Stock at an exercise price of $3.43 per
        share and currently exercisable options to purchase 525,000 shares of
        Common Stock at a weighted average price of $29.86 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(2) | Includes currently
        exercisable options to purchase 49,999 shares of Common Stock at a weighted
        average price of $6.62.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             




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|(3)  | Includes currently
        exercisable options to purchase 42,976 shares of Common Stock at a weighted
        average price of $11.08 and a restricted stock grant of 8,734 shares,
        which shares are subject to our repurchase right that expires on November
        12, 2004.                                                                                                                                        
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(4)  | Includes currently
        exercisable options to purchase 201,103 shares of Common Stock at a weighted
        average price of $9.46 and a restricted stock grant of 37,951 shares,
        which shares are subject to our repurchase right, which right lapses with
        respect to one quarter of the total shares granted on each of November
        1, 2003, February 1, May 1, and August 1, 2004.                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(5)  | Includes currently
        exercisable options to purchase 53,762 shares of Common Stock at a weighted
        average price of $12.78 and a restricted stock grant of 5,587 shares,
        which shares are subject to our repurchase right that expires on June
        11, 2004.                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(6)  | Includes currently
        exercisable options to purchase 15,000 shares of Common Stock at a weighted
        average price of $8.53.                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(7)  | Includes 2,699,438
        shares of Common Stock held by Forman Capital Management, LLC, warrants
        to purchase 548,247 shares of Common Stock at an exercise price of $0.97
        per share, warrants to purchase 980 shares of Common Stock at an exercise
        price of $3.43 per share and currently exercisable options to purchase
        10,000 shares of Common Stock at a weighted average price of $9.23.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(8)  | Includes 7,400
        shares held in trust for Mr. Quains children and currently exercisable
        options to purchase 110,000 shares of Common Stock at a weighted average
        price of $5.76.                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(9)  | Includes currently
        exercisable options to purchase 60,000 shares of Common Stock at a weighted
        average price of $12.68.                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(10) | Includes currently
        exercisable options to purchase 74,450 shares of Common Stock at a weighted
        average price of $18.04.                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(11) | Includes: Dewain
        K. Cross, Taher Elgamal, Richard D. Forman, Peter A. Forman, Stanley Morten,
        Mitchell I. Quain, Jim Rosenthal, Reginald Van Lee, Lori Faye Fischler,
        David W. Hirschler, Alan Kipust, Jack S. Levy, Michael Pollack, Walt Meffert,
        Jr. and Jonathan Stern.                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(12) | Based on a
        Schedule 13G filed with the Securities and Exchange Commission on
        February 5, 2003.  Royce & Associates, LLC (Royce)
        is a registered Investment Advisor and has sole voting and dispositive
        power over these shares.  Royces principal business address
        is 1414 Avenue of the Americas, New York, NY 10019.                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(13) | Based upon
        information provided to us by Farallon Capital Management Partners (Farallon)
        in February 2003, such shares were acquired after December 31, 2002. Farallons
        principal business address is One Maritime Plaza, San Francisco, CA 94111.                                                                                                                                                   




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Equity  Compensation Plan Information





The following table provides information as of  December 31, 2002 with respect to the shares of the Companys Common Stock that  may be issued under the Companys existing equity compensation plans.





|Plan
        Category                                                  |  | Number
        of Securities
        to be Issued Upon Exercise
        of Outstanding Options,
        Warrants and Rights |           | Weighted
        Average
        Exercise Price of
        Outstanding Options, Warrants
        and Rights |   | Number
        of Securities
        Remaining Available for
        Future Issuance Under
        Equity Compensation
        Plans (Excluding
        Securities Reflected in
        Column (a)) | 
|---------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------- | --------- | ----------------------------------------------------------------------------------------------------------- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                                       |  |                                                                                                                             |           |                                                                                                             |   |                                                                                                                                                                                                     | 
|                                                                       |  |                                                                                                                             | (a)       |                                                                                                             |   | (b)                                                                                                                                                                                                 | 
|                                                                       |  |                                                                                                                             |           |                                                                                                             |   |                                                                                                                                                                                                     | 
|Equity
        Compensation Plans Approved by Security Holders (1)     |  |                                                                                                                             | 5,872,161 | (2)                                                                                                         | $ | 12.18                                                                                                                                                                                               | 
|Equity
        Compensation Plans Not Approved by Security Holders (4) |  |                                                                                                                             | 12,000    |                                                                                                             | $ | 1.13                                                                                                                                                                                                | 
|Total                                                                  |  |                                                                                                                             | 5,804,161 |                                                                                                             | $ | 12.16                                                                                                                                                                                               | 




---

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes options
        to purchase shares under the following plans: the 2000 Plan and the ESPP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(2) | Excludes purchase
        rights accruing under the ESPP, which has a shareholder approved reserve
        of 547,302 shares of Common Stock (639,228 shares of Common Stock as of
        January 1, 2003).  Under the ESPP, each eligible employee may purchase
        shares of Common Stock through payroll deductions of up to 10% of their
        eligible compensation.  The price paid by the employee is 85% of
        the fair market value on the offering date or the last day of the purchase
        period.  There are two 6-month purchase periods per year commencing
        May 1 and November 1.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(3) | Consists of
        shares available for future issuance under the 2000 Plan and the ESPP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(4) | Consists of
        the following warrants to purchase shares of Common Stock issued prior
        to the Companys initial public offering, pursuant to compensation
        arrangements with advisors: 1,500 shares at an exercise price of $0.43
        per share, which expires September 21, 2008; 5,250 shares at an exercise
        price of $0.57 per share, which expires March 17, 2009; and 5,250 shares
        at an exercise price of $1.57 per share, which expires June 10, 2009.                                                                                                                   




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Item 13.  Certain  Relationships and Related Transactions.





In August 2002, we purchased
    U.S. Open tickets from Industrial Manufacturing Institute LLC (IMI),
    a company which is controlled by Mr. Quain. We paid  $61,875 for these tickets,
    which is the same amount as IMIs purchase price. These tickets were
    used for entertaining and conducting
    business with key customers, vendors and partners.





On December 20, 2001
    we  loaned Walt Meffert, Jr., our Chief Technology Officer $39,394.26 for
    the payment
  of withholding taxes in connection with restricted shares we granted him on
     November 12, 2001.  The loan accrues interest at a rate of 3.93% per
     annum,  compounded annually and becomes due and payable in full on November
     12, 2004. 
  The Company will forgive the principal and interest due under the loan in three
   equal annual installments, which commenced the first anniversary of Mr. Mefferts
    start date, provided he remains employed by the Company.  Should Mr.
    Mefferts
  employment be terminated by the Company without cause or by either the Company
     or Mr. Meffert with good reason, the unpaid principal and interest due under

  the loan shall be forgiven in full.  In addition, we gave Mr. Meffert
  a  $35,975 loan to cover his relocation costs when he joined the Company. 
  The Company will forgive the principal and interest due under the relocation
   loan in three equal annual installments, which commenced on the first anniversary

  of Mr. Mefferts start date, provided he remains employed by the Company.








Item 14.  Controls and  Procedures.





Our Chief Executive Officer and Chief Financial  Officer have concluded, based on their evaluation as of a date within 90 days  prior to the date of the filing of this Report, that our disclosure controls  and procedures are effective to ensure that information required to be  disclosed by us in the reports we file or submit under the Securities Exchange  Act of 1934, as amended, is recorded, processed, summarized and reported within  the time periods specified in the SECs rules and forms.





There were no significant changes in our internal  controls or in other factors that could significantly affect these controls  subsequent to their evaluation, including any corrective actions with regard to  significant deficiencies and material weaknesses.





As previously disclosed,
    we have material weaknesses in our internal accounting controls.   These
    weaknesses may impair our ability to accurately record, track, and amortize
    deferred revenues and prepaid registry fees through our systems; to reconcile
    on a detailed transaction basis accounts receivable from credit card processors
    to our database of domain names; to reconcile completely on a detailed
    transaction basis invoices from registries to our database of domain names;
    and to generate accurate invoices to corporate customers.  To mitigate
    risks that might result from such material weaknesses, we have implemented
    a number of processes designed to ensure the accuracy, in all material respects,
    of our reported financial position and results of operation.  We are
    in the process of implementing new accounting system modules, including modules
    to perform certain reconciliations and to record, track, and amortize deferred
    revenues  and prepaid registry fees, and new control processes in our Corporate
    Services group.  When fully implemented, these new financial system modules and control processes  are expected to correct these weaknesses.





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Item 15.  Exhibits,  Financial Statement Schedules, and Reports on Form 8-K.





| | (a) | 1.  Consolidated    Financial Statements.                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                         
| |     | The financial    statements
      as set forth under Item 8 of this report are incorporated herein by reference.                        
| |     |                                                                                                                                         
| |     | 2.  Financial Statement    Schedules.                                                                                                   
| |     |                                                                                                                                         
| |     | The Valuation and
       Qualifying Account Schedule as set forth under Item 8 of this report is
      incorporated herein by reference.
| |     |                                                                                                                                         
| |     | 3.Exhibits.                                                                                                                             
| |     |                                                                                                                                         
| |     | The following Exhibits    are incorporated herein by reference or are filed with this report as    indicated below.                     




|Exhibit    Number | Description                                                                                                                                                                                                                                                                       
|----------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1++             | Agreement and Plan of Merger    and Reorganization, dated as of September 15, 2000, by and among    Register.com, Inc., RCOM Acquisition Corp. II, Afternic.com, Inc.,    eXtraActive Incorporated and the Stockholders of Afternic.com, Inc.    identified on Schedule 1 thereto.
|3.1y              | Amended and Restated Certificate of Incorporation.                                                                                                                                                                                                                                
|3.2##             | Certificate of Correction of Amended and Restated    Certificate of Incorporation                                                                                                                                                                                                 
|3.3              | Amended and Restated Bylaws                                                                                                                                                                                                                                                       
|3.4x              | Certificate of Designation of Rights, Preferences    and Privileges of the Series A Junior Participating Preferred Stock                                                                                                                                                          
|4.1*              | Specimen common stock certificate.                                                                                                                                                                                                                                                
|4.2*              | See Exhibits 3.1, 3.2, and 3.3 for provisions of the    certificate of incorporation and bylaws defining the rights of holders of    Common Stock.                                                                                                                                
|4.3.1**           | Registration Rights Agreement dated June 30, 1999.                                                                                                                                                                                                                                
|4.3.2+            | Registration Rights Agreement dated June 4, 2000.                                                                                                                                                                                                                                 
|4.3.3++           | Registration Rights Agreement    dated September 15, 2000.                                                                                                                                                                                                                        
|4.5*              | Certificate of designations, preferences and    relative, participating, optional and other special rights of preferred stock    and qualifications, limitations and restrictions of Series A Convertible    Preferred Stock.                                                     
|4.6.1*            | Form of warrant to purchase common stock issued to    Series A Convertible Preferred Stockholders.                                                                                                                                                                                
|4.6.4*            | Form of warrant to purchase common stock issued to    Niles H. Cohen and Zachary Prensky.                                                                                                                                                                                         
|4.6.5*           | Form of Amended and Restated Common Stock Purchase    Warrant -- Series A issued to Richard D. Forman, Peter A. Forman, Dan Levine    and Capital Express LLC.                                                                                                                    




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|Exhibit    Number | Description                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.6.6*            | Warrants to purchase common stock issued to Legg    Mason Wood Walker, Incorporated.                                                                                                                                                                                                                                                                                                                                                         
|4.6.7*            | Form of warrant to purchase common stock issued to    consultants.                                                                                                                                                                                                                                                                                                                                                                           
|4.7.1*           | Employee Stock Option Certificate issued to Richard    D. Forman.                                                                                                                                                                                                                                                                                                                                                                            
|4.8.1^^          | Stock Option Agreement, dated June 28, 2001, with    Rajiv Samant.                                                                                                                                                                                                                                                                                                                                                                           
|4.8.2^^          | Stock Issuance Agreement, dated June 28, 2001, with    Rajiv Samant.                                                                                                                                                                                                                                                                                                                                                                         
|4.9¤             | Stock Issuance Agreement, dated March 20,
      2002, with Walt Meffert, Jr.                                                                                                                                                                                                                                                                                                                                                                 
|4.10o            | Stock Option Agreement with Jonathan Stern.                                                                                                                                                                                                                                                                                                                                                                                                  
|4.11o            | Stock Issuance Agreement, dated August 13, 2002,    with Rajiv Samant.                                                                                                                                                                                                                                                                                                                                                                       
|4.12xx            | Rights Agreement, dated as of October 28,
      2002, between Register.com, Inc. and American Stock Transfer & Trust
      Company, which includes the form of Certificate of Designation of Rights,
      Preferences and Privileges of the Series A Junior Participating Preferred
      Stock as Exhibit A, the form of Rights Certificate as Exhibit B and
      the Summary of Rights to Purchase Series A Preferred Stock as Exhibit C.
|10.1*             | 1997 Stock Option Plan.                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.2*             | 1999 Stock Option Plan.                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.3.1+++         | Registrar Accreditation Agreement, dated November    30, 1999, by and between ICANN and Register.com, Inc.                                                                                                                                                                                                                                                                                                                                   
|10.3.2+           | Registrar Accreditation Agreement, dated April 27,    2000, by and between ICANN and Register.com, Inc.                                                                                                                                                                                                                                                                                                                                      
|10.4*             | Registrar License and Agreement, dated December 13,    1999, by and between Network Solutions, Inc. and Register.com, Inc.                                                                                                                                                                                                                                                                                                                   
|10.5*             | Lease between Pennbus Realties, Inc. and Forman    Interactive Corp.                                                                                                                                                                                                                                                                                                                                                                         
|10.6*             | 2000 Stock Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.6.2¤           | Amended and Restated 2000 Stock Incentive Plan    (effective as of March 22, 2002).                                                                                                                                                                                                                                                                                                                                                          
|10.7*             | Employee Stock Purchase Plan.                                                                                                                                                                                                                                                                                                                                                                                                                
|10.8*            | Employment Agreement, dated November 15, 1995, with    Richard D. Forman.                                                                                                                                                                                                                                                                                                                                                                    
|10.8.2*          | Employment Agreement, dated February 27, 2000, with    Richard D. Forman.                                                                                                                                                                                                                                                                                                                                                                    
|10.9*            | Employment Agreement with Jack S. Levy.                                                                                                                                                                                                                                                                                                                                                                                                      
|10.10*            | Marketing Agreement, dated as of May 21, 1999, with    Staples, Inc.                                                                                                                                                                                                                                                                                                                                                                         
|10.11*            | Joint Marketing and Distribution Agreement, dated as    of June 25, 1999, with Concentric Network Corporation.                                                                                                                                                                                                                                                                                                                               
|10.11.2+          | Amendment No. 1, dated as of June 30, 2000, with    Concentric Network Corporation.                                                                                                                                                                                                                                                                                                                                                          
|10.15^^^         | Letter Agreement of Employment, dated June 11, 2001,    with Rajiv Samant.                                                                                                                                                                                                                                                                                                                                                                   
|10.16^^^         | Promissory Note, dated July 24, 2001, with Rajiv    Samant.                                                                                                                                                                                                                                                                                                                                                                                  
|10.18¤           | Offer Letter, dated October 8, 2001, with
      Walt Meffert, Jr.                                                                                                                                                                                                                                                                                                                                                                            
|10.19¤           | Promissory Note, dated December 20, 2001,
      with Walt Meffert, Jr.                                                                                                                                                                                                                                                                                                                                                                       
|10.20            | Lease between Yarmouth Area Industrial Commission    and RCOM Canada, Corp.                                                                                                                                                                                                                                                                                                                                                                  
|10.21o           | Separation Agreement and General Release, dated June    7, 2002, with René M. Mathis.                                                                                                                                                                                                                                                                                                                                                        
|10.22o           | Consulting Agreement, dated as of June 7, 2002, with    René M. Mathis.                                                                                                                                                                                                                                                                                                                                                                      




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|Exhibit
        Number | Description                                                                                                                                    
|---------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------
|10.23o                | Letter Agreement
        of Employment, dated as of June 11, 2002, with Jonathan Stern.                                                        
|10.24                | Employment
        Agreement by and between Register.com and Mitchell Quain, dated November
        25, 2002.                                  
|10.25                 | Separation
        Agreement and General Release dated November 18, 2002, with Rajiv Samant.                                                   
|10.26                  | Form of Indemnification
        Agreement between the Company and certain executive officers and directors.                                    
|10.27                 | Amendment to
        Offer Letter with Walt Meffert, Jr. dated November 26, 2002.                                                              
|10.28                 | Offer Letter,
        dated June 8, 2001 with Michael Pollack.                                                                                 
|10.29 Ë               | Promissory
        Note, dated June 11, 2001 with Michael Pollack.                                                                             
|10.30 ¥               | Stock Issuance
        Agreement with Michael Pollack.                                                                                         
|10.31Þ                | Stock Option
        Agreement with Mitchell I. Quain.                                                                                         
|21.1                   | Subsidiaries
        of Registrant.                                                                                                            
|23.1                   | Consent of
        PricewaterhouseCoopers LLP.                                                                                                 
|99.1                   | Certification
        of Richard D. Forman, Chief Executive Officer of the Company, pursuant
        to 18 U.S.C. § 1350, dated March 31, 2003.
|99.2                   | Certification
        of Jonathan Stern, Chief Financial Officer of the Company, pursuant to
        18 U.S.C. § 1350, dated March 31, 2003.   




---

|    |                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Incorporated by reference
        to the identically numbered exhibit of Registration Statement No. 333-93533.                                                         
|y   | Incorporated by reference
        to Exhibit 3.2 of Registration Statement No. 333-93533.                                                                              
|   | Incorporated by reference
        to Exhibit 3.4 of Registration Statement No. 333-93533.                                                                              
|**  | Incorporated by reference
        to Exhibit 4.3 of Registration Statement No. 333-93533.                                                                              
|##  | Incorporated by reference
        to the identically numbered exhibit of Registrants Quarterly Report
        on Form 10-Q filed for the quarter ended March 31, 2000.
|+   | Incorporated by reference
        to the identically numbered exhibit of Registrants Quarterly Report
        on Form 10-Q filed for the quarter ended June 30, 2000. 
|++  | Incorporated by reference
        to the identically numbered exhibit of Registrant Current Report on Form
        8-K dated September 29, 2000.                       
|+++ | Incorporated by reference
        to Exhibit 10.3 of Registration Statement No. 333-93533.                                                                             
|^   | Incorporated by reference
        to the identically numbered exhibit of Registrants Annual Report
        on Form 10-K for the year ended December 31, 2000.         
|^^  | Incorporated by reference
        to the identically numbered exhibit of Registrants Quarterly Report
        on Form 10-Q filed for the quarter ended March 31, 2001.
|^^^ | Incorporated by reference
        to the identically numbered exhibit of Registrants Quarterly Report
        on Form 10-Q filed for the quarter ended June 30, 2001. 
|   | Incorporated by reference
        to Exhibit 10.15 of the Registrants Quarterly Report on Form 10-Q
        filed for the quarter ended March 31, 2001.               
|o   | Incorporated by reference
        to the identically numbered exhibit of Registrants Quarterly Report
        on Form 10-Q for the quarter ended June 30, 2002.       
|x   | Incorporated by reference
        to Exhibit 3.1 of Registrants Current Report on Form 8-K dated October
        29, 2002.                                            
|xx  | Incorporated by reference
        to Exhibit 4.1 of Registrants Current Report on Form 8-K dated October
        29, 2002.                                            




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| | Incorporated
        by reference to the identically numbered exhibit of Registrants
        Current Report on Form 8-K dated November 25, 2002.         
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|Ë | Incorporated
        by reference to Exhibit d (9) of the Registrants Schedule T-O filed
        with the SEC on December 16, 2002.                      
|¥ | Incorporated
        by reference to Exhibit d (10) of the Registrants Schedule T-O filed
        with the SEC on December 16, 2002.                     
|Þ | Incorporated
        by reference to Exhibit d (12) of the Registrants Schedule T-O filed
        with the SEC on December 16, 2002.                     
|¤ | Incorporated by reference to
      the identically numbered exhibit of Registrants Annual Report on Form
      10-K for the year ended December 31, 2001.
| | Indicates management
        contract or compensatory plan or arrangement.                                                                                




| | (b)  Reports on Form 8-K
| | ------------------------




On September 29, 2002, we filed  a Current Report on Form 8-K, Item 5 announcing that Mitchell Quain was  appointed Chairman of the Board of Directors.





On October 29, 2002, we filed a  Current Report on Form 8-K, Item 5 announcing the adoption of a stockholder  rights plan.





On November 19, 2002, we filed a  Current Report on Form 8-K, Item 5 announcing the appointment of Stanley Morten  to the Board of Directors and Audit Committee.





On November 25, 2002, we filed a  Current Report on Form 8-K, Item 5 announcing Mitchell Quains appointment as  Executive Chairman and Jim Rosenthals appointment to the Audit Committee.





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SIGNATURES





Pursuant to the requirements of Section 13 or
    15(d) of the Securities Exchange Act of 1934, Register.com, Inc. has duly
    caused this report to be signed on its behalf by the undersigned, thereunto
    duly authorized, in the City of New York, State of New York, on this 4th
    day
of April, 2003.





| | REGISTER.COM,  INC.
| | -------------------
| |                    
| | By:                
| |                    
| |                    




Pursuant to the requirements of the Securities Exchange Act of 1934,  this report has been signed below by the following persons on behalf of the  registrant and in the capacities and on the dates indicated.





|Signature                               |  | Title                                                                                 |  | Date         
|--------------------------------------- |  | ------------------------------------------------------------------------------------- |  | -------------
|/s/
            Richard D. Forman       |  |                                                                                       |  |              
|Richard
        D. Forman               |  | President,
        Chief Executive Officer and Director (Principal Executive Officer) |  | April 4, 2003
|                                        |  |                                                                                       |  |              
|/s/
            Jonathan Stern          |  |                                                                                       |  |              
|Jonathan Stern                          |  | Chief
        Financial Officer (Principal Accounting and Financial Officer)          |  | April 4, 2003
|                                        |  |                                                                                       |  |              
|/s/
            Mitchell I. Quain       |  |                                                                                       |  |              
|Mitchell I. Quain                       |  | Chairman
        of the Board of Directors                                            |  | April 4, 2003
|                                        |  |                                                                                       |  |              
|/s/
            Dewain
        K. Cross |  |                                                                                       |  |              
|Dewain
        K. Cross                 |  | Director                                                                              |  | April 4, 2003
|                                        |  |                                                                                       |  |              
|/s/
            Taher Elgamal           |  |                                                                                       |  |              
|Taher
        Elgamal                   |  | Director                                                                              |  | April 4, 2003




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|/s/
      Peter A. Forman  |  |          |  |              
|-------------------------- |  | -------- |  | -------------
|Peter A. Forman            |  | Director |  | April 4, 2003
|                           |  |          |  |              
|/s/
      Stanley Morten   |  |          |  |              
|Stanley Morten             |  | Director |  | April 4, 2003
|                           |  |          |  |              
|/s/
      Jim Rosenthal    |  |          |  |              
|Jim
      Rosenthal        |  | Director |  | April 4, 2003
|                           |  |          |  |              
|/s/
      Reginald Van Lee |  |          |  |              
|Reginald Van Lee           |  | Director |  | April 4, 2003




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CERTIFICATIONS





I, Richard D. Forman, certify that:





1.     I have reviewed this  annual report on Form 10-K of Register.com, Inc.;





2.     Based on my knowledge,  this annual 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 annual report;





3.     Based on my knowledge,  the financial statements, and other financial information included in this  annual 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 annual 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 we 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  annual 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 annual report (the  Evaluation Date); and





c)     Presented in this  annual 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 function):





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





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6.     The registrants other  certifying officers and I have indicated in this annual 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:  April 4, 2003 | By: | /s/ Richard D. Forman                
|-------------------- | --- | -------------------------------------
|                     |     | Richard D. Forman                    
|                     |     | President and Chief Executive Officer




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I, Jonathan Stern, certify that:





1.     I have reviewed this  annual report on Form 10-K of Register.com, Inc.;





2.     Based on my knowledge,  this annual 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 annual report;





3.     Based on my knowledge,  the financial statements, and other financial information included in this  annual 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 annual 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 we 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  annual 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 annual report (the  Evaluation Date); and





c)     Presented in this  annual 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 function):





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





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6.     The registrants other  certifying officers and I have indicated in this annual 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:  April 4, 2003 | By: | /s/ Jonathan Stern     
|-------------------- | --- | -----------------------
|                     |     | Jonathan Stern         
|                     |     | Chief Financial Officer




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|                      
|----------------------
|Exhibit
      Index   
|Exhibit
        Number
|2.1++                 
|3.1y                  
|3.2##                 
|3.3                  
|3.4x                  
|4.1*                  
|4.2*                  
|4.3.1**               
|4.3.2+                
|4.3.3++               
|4.5*                  
|4.6.1*                
|4.6.4*                
|4.6.5*               
|4.6.6*                
|4.6.7*                
|4.7.1*               
|4.8.1^^              
|4.8.2^^              
|4.9¤                 
|4.10o                
|4.11o                
|4.12xx                
|10.1*                 
|10.2*                 
|10.3.1+++             
|10.3.2+               
|10.4*                 
|10.5*                 
|10.6*                 
|10.6.2¤               
|10.7*                 
|10.8*                
|10.8.2*              
|10.9*                
|10.10*                
|10.11*                
|10.11.2+              
|10.15^^^             
|10.16^^^             
|10.18¤               
|10.19¤               
|10.20                
|10.21o               
|10.22o               







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|Exhibit
        Number | Description                                                                                                                                    
|---------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------
|10.23o                | Letter Agreement
        of Employment, dated as of June 11, 2002, with Jonathan Stern.                                                        
|10.24                | Employment
        Agreement by and between Register.com and Mitchell Quain, dated November
        25, 2002.                                  
|10.25                 | Separation
        Agreement and General Release dated November 18, 2002, with Rajiv Samant.                                                   
|10.26                  | Form of Indemnification
        Agreement between the Company and certain executive officers and directors.                                    
|10.27                 | Amendment to
        Offer Letter with Walt Meffert, Jr. dated November 26, 2002.                                                              
|10.28                 | Offer Letter,
        dated June 8, 2001 with Michael Pollack.                                                                                 
|10.29 Ë               | Promissory
        Note, dated June 11, 2001 with Michael Pollack.                                                                             
|10.30 ¥               | Stock Issuance
        Agreement with Michael Pollack.                                                                                         
|10.31Þ                | Stock Option
        Agreement with Mitchell I. Quain.                                                                                         
|21.1                   | Subsidiaries
        of Registrant.                                                                                                            
|23.1                   | Consent of
        PricewaterhouseCoopers LLP.                                                                                                 
|99.1                   | Certification
        of Richard D. Forman, Chief Executive Officer of the Company, pursuant
        to 18 U.S.C. § 1350, dated March 31, 2003.
|99.2                   | Certification
        of Jonathan Stern, Chief Financial Officer of the Company, pursuant to
        18 U.S.C. § 1350, dated March 31, 2003.   
|                       |                                                                                                                                                

---

|*   | Incorporated by reference
        to the identically numbered exhibit of Registration Statement No. 333-93533.                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|y   | Incorporated by reference
        to Exhibit 3.2 of Registration Statement No. 333-93533.                                                                              
|   | Incorporated by reference
        to Exhibit 3.4 of Registration Statement No. 333-93533.                                                                              
|**  | Incorporated by reference
        to Exhibit 4.3 of Registration Statement No. 333-93533.                                                                              
|##  | Incorporated by reference
        to the identically numbered exhibit of Registrants Quarterly Report
        on Form 10-Q filed for the quarter ended March 31, 2000.
|+   | Incorporated by reference
        to the identically numbered exhibit of Registrants Quarterly Report
        on Form 10-Q filed for the quarter ended June 30, 2000. 
|++  | Incorporated by reference
        to the identically numbered exhibit of Registrant Current Report on Form
        8-K dated September 29, 2000.                       
|+++ | Incorporated by reference
        to Exhibit 10.3 of Registration Statement No. 333-93533.                                                                             
|^   | Incorporated by reference
        to the identically numbered exhibit of Registrants Annual Report
        on Form 10-K for the year ended December 31, 2000.         
|^^  | Incorporated by reference
        to the identically numbered exhibit of Registrants Quarterly Report
        on Form 10-Q filed for the quarter ended March 31, 2001.
|^^^ | Incorporated by reference
        to the identically numbered exhibit of Registrants Quarterly Report
        on Form 10-Q filed for the quarter ended June 30, 2001. 
|   | Incorporated by reference
        to Exhibit 10.15 of the Registrants Quarterly Report on Form 10-Q
        filed for the quarter ended March 31, 2001.               
|o   | Incorporated by reference
        to the identically numbered exhibit of Registrants Quarterly Report
        on Form 10-Q for the quarter ended June 30, 2002.       
|x   | Incorporated by reference
        to Exhibit 3.1 of Registrants Current Report on Form 8-K dated October
        29, 2002.                                            
|xx  | Incorporated by reference
        to Exhibit 4.1 of Registrants Current Report on Form 8-K dated October
        29, 2002.                                            
|   | Incorporated by reference
        to the identically numbered exhibit of Registrants Current Report
        on Form 8-K dated November 25, 2002.                      
|Ë   | Incorporated by reference
        to Exhibit d (9) of the Registrants Schedule T-O filed with the
        SEC on December 16, 2002.                                   
|¥   | Incorporated by reference
        to Exhibit d (10) of the Registrants Schedule T-O filed with the
        SEC on December 16, 2002.                                  
|Þ   | Incorporated by reference
        to Exhibit d (12) of the Registrants Schedule T-O filed with the
        SEC on December 16, 2002.                                  
|¤   | Incorporated by reference to
      the identically numbered exhibit of Registrants Annual Report on Form
      10-K for the year ended December 31, 2001.             
|   | Indicates management contract
        or compensatory plan or arrangement.                                                                                             




---