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SECURITIESAND EXCHANGE COMMISSION

WASHINGTON, D.C.20549

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FORM10-K

    Annual Report Pursuant to Section 13 or15(d)        Of the Securities Exchange Act of 1934Forthe Fiscal Year Ended December  31,2003

Commission File Number000-29739

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REGISTER.COM,INC.

(Exact name of registrant asspecified in itscharter)

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| Delaware                |  | 11-3239091                            |
| (Stateof incorporation) |  | (I.R.S. Employeridentificationnumber) |
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575 Eighth Avenue, 8th FloorNewYork, New York 10018(212)798-9100

(Address, including zip code,and telephone number,including area code, of registrant'sprincipal executive offices)

Securities registered pursuant toSection  12(b) of theAct:

None.

Securities registered pursuantto Section  12(g) of the Act:

Common Stock$0.0001 par valuePreferred Stock Purchase Rights

Indicate bycheck mark whether the registrant (1) has filed all reports required tobe filed by Section  13 or 15(d) of the Securities Exchange Actof 1934 during the preceding 12 months (or for such shorter period thatthe registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.

 Yes     No

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, tothe best of registrant's knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of thisForm 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 votingstock held by non-affiliates of the registrant as of June  30,2003 was approximately $196,617,337 (based on the last reported saleprice on the NASDAQ National Market on that date). The number of sharesoutstanding of the registrant's common stock as of March8, 2004 was 23,541,322. The registrant does not have any non-votingstock outstanding.

DOCUMENTS INCORPORATED BYREFERENCE

Portions of the Registrant's ProxyStatement for the 2004 Annual Meeting of Stockholders, which is to befiled subsequent to the date hereof, are incorporated by reference intoPart III of this Annual Report on Form10-K.

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REGISTER.COM,INC.2003 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

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|     |  |                                                                                                                 |  | Page   |
| PART I   |  |
| Item1.   |  | Business                                                                                                             |  |   | 1  |   |
| Item2.   |  | Properties                                                                                                           |  |   | 27 |   |
| Item3.   |  | Legal Proceedings                                                                                                    |  |   | 27 |   |
| Item4.   |  | Submission of Matters to a Vote of SecurityHolders                                                                   |  |   | 29 |   |
| PART II  |  |
| Item 5.  |  | Market for Registrant's Common Equityand Related Stockholder Matters                                                 |  |   | 30 |   |
| Item6.   |  | Selected Financial Data                                                                                              |  |   | 31 |   |
| Item7.   |  | Management's Discussion and Analysis of FinancialCondition and Results of    Operations          |  |   | 32 |   |
| Item7A.  |  | Quantitative and Qualitative Disclosures About MarketRisk                                                            |  |   | 43 |   |
| Item 8.  |  | Financial Statementsand Supplementary Data                                                                           |  |   | 44 |   |
| Item9.   |  | Changes in and Disagreements With Accountants on Accountingand Financial     Disclosure          |  |   | 67 |   |
| Item9A.  |  | Controls and Procedures                                                                                              |  |   | 67 |   |
| PART III |  |
| Item 10. |  | Directorsand Executive Officers of theRegistrant                                                                     |  |   | 68 |   |
| Item 11. |  | ExecutiveCompensation                                                                                                |  |   | 68 |   |
| Item 12. |  | SecurityOwnership of Certain Beneficial Owners and Management and Related    Stockholder Matters |  |   | 68 |   |
| Item13.  |  | Certain Relationships and RelatedTransactions                                                                        |  |   | 68 |   |
| Item 14. |  | PrincipalAccounting Fees and Services                                                                                |  |   | 68 |   |
| PARTIV   |  |
| Item 15. |  | Exhibits, Financial StatementSchedules, and Reports on Form8-K                                                       |  |   | 68 |   |
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This reportcontains forward-looking statements relating to future events and ourfuture performance within the meaning of Section   27A of theSecurities Act of 1933, as amended, and Section 21E of the SecuritiesExchange Act of 1934, as amended, including, without limitation,statements regarding our expectations, assumptions, estimates,projections, beliefs, intentions or future strategies about ourbusiness and our industry that are signified by the words"expects","anticipates","intends","believes" or similar language. Actualresults could differ materially from those anticipated in suchforward-looking statements. All forward-looking statements included inthis document are based on information available to us on the datehereof. It is routine for our internal projections and expectations tochange as the year or each quarter in the year progresses, andtherefore it should be clearly understood that the internal projectionsand beliefs upon which we base our expectations may change prior to theend of each quarter or the year. Although these expectations maychange, our company policy is generally to provide our expectationsonly once per quarter, so we may not inform you of any changes untilthe next quarter. We caution that our business and financialperformance are subject to substantial risks and uncertainties. Inevaluating our business, investors and prospective investors shouldcarefully consider the information set forth below under the caption"Risk Factors" in addition to the otherinformation set forth herein and elsewhere in our other public filingswith the Securities and Exchange Commission.

PARTI

Item 1.    Business.

Overview

We are aprovider of global domain name registration, website, email and otherInternet services for businesses and consumers that wish to have aunique address and branded identity on the Internet. Domain names serveas addresses and identities on the World Wide Web. They enable abusiness or person to establish an Internet presence and are integralto the use of websites (e.g., www.register.com), email (e.g.,johndoe@register.com) and other types of Internet-basedservices

We began processing domain name registrations in thegeneric top level domains (gTLDs) .com, .net and .org in June 1999 and,as such, were the first registrar accredited by the InternetCorporation for Assigned Names and Numbers (ICANN) to compete in thedomain name registration market after ICANN introduced competition inthe industry. We had approximately 3.1 million active domain nameregistrations under management as of December  31, 2003,representing approximately 1  million customers. Currently, weregister, renew and transfer domain names in gTLDs such as .com, .net,..org, .biz, .info and .name and in over 400 country code top leveldomains (ccTLDs), including .de for Germany and .jp for Japan and subdomains, such as .co.uk and .org.uk for the United Kingdom.

Webelieve that we offer a quick and user-friendly domain nameregistration process as well as responsive and reliable customersupport. We also assist our customers in further developing andmaintaining their Internet presence by offering them a range ofwebsite, email and other value-added products and services.

Domain name registration activity is driven by the use of theInternet by businesses and consumers for electronic commerce andcommunication, the promotion, marketing and protection of brands andidentities across the world and other online activities. Our mission isto become the preferred provider of domain names, website, email andother Internet services for customers seeking to build, manage andpromote their online presence.

Our Retail division focuses onsmall to medium-sized businesses and individuals. Generally, thesecustomers purchase domain name registration services and othervalue-added services directly from our website located atwww.register.com. In addition to our Retail division, we maintain aCorporate Services division. Our Corporate Services division providesdomain name registration and related products and services, includingglobal registration and management services and online brand andtrademark protection, to large corporate enterprises with specializedregistration needs. In order to extend the distribution reach of ourproducts and services, we also maintain a Global Partner Network

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(GPN) wholesale division which works withcompanies that resell our domain name registration and web services totheir customers using software solutions that we provide. Our GPNpartners are typically Internet Service Providers (ISPs), web-hostingcompanies, telecom carriers and web portals, but also include onlineand offline retailers and business aggregators. Using softwaresolutions that we provide, these companies resell our domain nameregistration services and related products and services to theircustomers.

Corporate History

We are the successor bymerger to Forman Interactive Corp. Forman Interactive commencedoperations in 1994 as a developer of electronic commerce software, andbegan reoffering web hosting and related products and services in 1997.In February 1998, we began to distribute domain names in connectionwith our other products at no additional cost. In April 1999, wecommenced offering registration services for ccTLDs. In June 1999,Forman Interactive merged with and into the then newly formedRegister.com, Inc. and we began operating as a paid registrar in the..com, .net and .org domains. In March 2002, we acquired VirtualInternet plc, a U.K. based company, which had operations in the UnitedStates and Europe through two divisions: the Corporate Servicesdivision and the Hosting division. In May 2002, we sold the Hostingdivision. The Corporate Services division, which provides global domainname registration and online intellectual property protection business,became our European Corporate Services group. Virtual Internet hadpreviously been our joint venture partner in RegistryPro, the coreassets of which we sold in February 2004. In 2003, we changed the nameof Virtual Internet to Register.com Europe plc (RCOM Europe).

Domain Name Registration System

The Internet domain nameregistration system consists of two principal functions: registry andregistrar. A registry maintains a master database of domain names, andtheir corresponding Internet Protocol (IP) addresses, registered in aparticular top level domain, such as .com, .us or .uk. A registrar,such as Register.com, acts as an intermediary between the registry andthe businesses and consumers, referred to as registrants, seeking toregister domain names. Registrars typically handle billing, customerservice and the technical management of a domain name registration. Asof March 1, 2004, there were 191 registrars accredited by ICANN toaccept registration in one or more of the gTLDs, although not all ofthese accredited registrars are operational. In addition, there aremany resellers that are not ICANN accredited registrars, but compete inthe marketplace as a reseller of domain name registrations.

Thedomain name system is organized according to industry nomenclature bylevels, so that, for example, in the domain name mybrand.com, .com isthe top level domain and mybrand is the second level domain. Top leveldomains are classified as either gTLDs or ccTLDs. Each ccTLD isaffiliated with a specific country, whereas gTLDs are not. Although theoriginal and most common gTLDs continue to be .com, .net and .org, inNovember 2000, ICANN approved seven additional gTLD registries: .biz,..info, .name, .pro, .museum, .coop and .aero.

There arecurrently more than 400 different ccTLDs, such as .de for Germany and..jp for Japan or sub domains, such as .co.uk and .org.uk for the UnitedKingdom, representing more than 200 countries and territories. Eachregistry for a ccTLD is responsible for maintaining and operating itsown database of registered domain names. Some ccTLDs are unrestrictedand allow anyone, from anywhere, to register their domain names on afirst-come, first-served basis. Others require that registrants have alocal presence in the country and may have other requirements andrestrictions as well. Several high profile ccTLDs that have recentlyrelaxed previous restrictions include .us (United States) and .cn(China). While there have been movements by ICANN directed at creatinguniform domain name registration rules and registrar administrationguidelines, to date there has been no international consensus.

From January 1993 until April 1999, Network Solutions, Inc. was thesole entity authorized by the U.S. government to act as both registrarand registry for domain names in the .com, .net and .org top leveldomains. In November 1998, ICANN was selected by the U.S. Department ofCommerce to 

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oversee the management of the .com, .net and..org domains. In April 1999, as a preliminary step to introducingcompetition into the domain name registration system for .com, .net and..org domains, ICANN selected Register.com as one of five registrars toparticipate in a testbed to evaluate whether the registration systemcould accommodate multiple registrars. In June 1999, we were the firstof these five competitive registrars to launch our registrationservices. In November 1999, the testbed was completed, and allregistrars meeting ICANN's standards for accreditation werepermitted to register domain names in the .com, .net and .orgdomains.

For a more detailed discussion of the regulatorybackground of the domain name registration system, see"Administration of the Internet; Government Regulation andLegal Uncertainties." For risks associated with the domainname system, see "Risk Factors."

TheRegister.com Strategy

Our objective is to develop long-termrelationships with our customers by helping them establish, manage andexpand their Internet presence in order to communicate and conductcommerce simply and effectively on line. We believe that domain namesserve as the cornerstone for establishing an Internet presence andthat, increasingly, it is our value-added products and services whichenable our customers to further develop and broaden their Internetpresence. We believe customers will increasingly purchase additionalproducts and services from us to help put their domain names to use inorder to achieve their online goals. In each of 2002 and 2003, thepercentage of our new Retail customers who, when registering a domainname took advantage of our value-added services including email andwebsite building tools nearly doubled from the previous year. Webelieve that by delivering a superior level of customer service andenhancing our current product and service offerings, we can strengthencustomer loyalty and increase the lifetime value of our customers. Inaddition, we provide domain name registration services in hundreds ofccTLDs, offering our Corporate Services customers "onestop shopping" for their domain name registration processand for managing their domain names across the globe.

We arefocusing our marketing efforts on attracting and retaining customerswho actively use their domain names and are more likely both to takeadvantage of the additional products and services we offer and to renewtheir domain names. By focusing on the quality of our customer base,rather than the volume of domain names registered, we believe we willsucceed in increasing both our revenue per customer and our overallrevenue.

We are in the midst of a restructuring program toaddress the challenges facing our business. The primary goal of ourrestructuring program is to introduce new systems that will enable usto operate our business more efficiently. For our Retail division, weare building a new and more flexible systems architecture which webelieve will enable us to introduce new products and services morerapidly and cost effectively and to improve our operating efficienciesand reduce costs. We believe that by making our technology architecturemore flexible and efficient we will achieve these goals. For ourCorporate Services division, we are developing a system to automate asmuch of the order processing and fulfillment for ccTLD registrations aspossible. We anticipate that our new Corporate Services system willenable us take sales orders and fulfill them on a more highly automatedbasis, thereby reducing our costs and increasing our efficiency andaccuracy.

As part of our cost reduction efforts, we have alsorelocated some of our groups and operations to our Canadian facility,where the overhead and labor costs are lower than in our otherlocations. In addition, in February 2004, we sold our RegistryProbusiness, which had been given ICANN approval to operate the .proregistry. We sold this business because we believe that operating aregistry would have distracted us and taken time, energy and resourcesfrom our core business of operating a registrar and selling relatedvalue-added products and services.

Distribution Channels

We have established multiple distribution channels which we believeenable us to reach a broader range of potential customers and increaseour exposure across the market. We strive to provide our customers withquick, easy-to-use, value-added and flexible solutions across all ofour distribution channels.

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www.register.com.    Through ourwww.register.com website, our Retail customers can register a domainname and purchase the value-added products and services we offer toquickly and easily establish, maintain and enhance their Internetpresence. Our marketing efforts focus on enhancing our return oninvestment by improving customer retention, upselling additionalproducts and services to our domain name registrants and optimizingtheir lifetime value. We have used a combination of direct response andtargeted mass marketing vehicles to reach our target customers,including: television, radio, outbound and inbound telemarketing,email, direct mail and online marketing, and an affiliate programthrough which we pay a commission for customer referrals that result indomain name registrations.

Corporate Services.    OurCorporate Services division is dedicated to meeting the needs oflarger, global and brand-intensive companies with respect to theirdomain name registration and management, and online brand and trademarkprotection. We expanded the international reach of this division in2002 through our acquisition of Virtual Internet (now RCOM Europe). OurCorporate Services customers are typically large multi-nationalentities that have extensive domain name portfolios. Many companiescurrently rely on their own personnel to monitor and protect their namebrands and trademarks on the Internet by registering and renewing thesedomain names on a worldwide basis, across hundreds of ccTLDs. Webelieve that we can provide these services more efficiently through ourdedicated account team and our relationships with hundreds ofregistries. We reach our Corporate Services customers principallythrough our direct sales forces in the U.S. and Europe, supported byour marketing efforts. Our clients include over 60 of the world'stop 100 most valuable brands, as ranked by Interbrand in 2003.

Global Partner Network.    We also offer our products andservices indirectly through our Global Partner Network (GPN) wholesaledivision which works with companies that resell our domain nameregistration and Internet products and services. Our GPN partners aretypically ISPs, web-hosting companies, telecom carriers and webportals, but also include online and offline retailers and businessaggregators. These companies seek to generate revenue and increasetheir own customer retention by offering our domain name registrationand related web services to their customers. In addition to providingour GPN partners with software solutions to enable them to resell ourservices, we provide them with tools that allow them to control aspectsof domain name registrations for their customers directly and tomonitor their customers' domain name registration activity. Weoffer our GPN partners a choice between software solutions that aredistinguishable primarily based upon the complexity of implementationand the degree of integration they provide.

NameBargain.    Through our www.namebargain.com website, weoffer low price domain name registrations targeted at customers who buynames in bulk. However, domain names registered through this servicecome with limited services and limited customer support. We did notactively market or promote this site in 2003.

Products andServices

We are committed to offering new "best ofbreed" products and services in order to empower ourcustomers to establish their Internet presence and to drive theirsuccess. We offer the following key products and services:

Domain Name Registration Services.    Our core expertise isin providing domain name registration and management services. Weregister, renew and transfer domain names in the .com, .net and .orggTLDs, register and renew domain names in the .biz, .info and .namegTLDs and register and renew domain names in hundreds of ccTLDs, ofwhich more than 30 may currently be registered through ourwww.register.com website. We generally offer one year through ten yearregistration periods for the initial domain name registration and oneto nine year terms for renewals. In connection with domain nameregistrations, we provide the following basic products and services,for no additionalfee:

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|  | •  | FirstStepSite®.    Weprovide our customers who have registered domain names throughwww.register.com the ability to create a basic website and post it onthe Internet. Customers can select from a limited number of layouts,themes and colors and also upload images to |

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|  |        |                                                                                                                                                                                                     |
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|  |   | customize their FirstStepSites. Thisno-additional-fee service adds a small navigation bar, on which wedisplay Register.com or third-party advertising, in a frame at the topof the website'sscreen. |

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|  | •  | Website Forwarding —Basic.    We allow customers to forward any domain name registered tothem to any website page they choose. This no-additional-fee serviceadds a small navigation bar, on which we display Register.com orthird-party advertising, in a frame at the bottom of thewebsite's screen. |

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|  | •  | DomainManagerTM.    This online application enables our customers toview and modify important account information online, on a real-timebasis, including their email address, the location of the server thathosts their website and all billing information. It also enablescustomers to renew their domain name registrations quickly andefficiently on line. On a more technical level, Domain Manager allowsour customers to modify certain information about their domain namessuch as zone file addresses through password-protected online accountaccess. |

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|  | •  | DNS Services.    We areone of the largest authoritative Domain Name Server (DNS) providers inthe world. DNS provides the Internet and Internet users withauthoritative routing information for domain names. |

RenewalServices.    Encouraging our customers to renew their domain nameregistrations with us is of great importance, as their renewals willallow us to increase our profitability by lowering our overallmarketing costs. We are committed to making our renewal services moreefficient and easier to use. In order to strengthen our renewalefforts, and to help our customers protect their domain nameregistrations from inadvertent lapse and deletion, we have developedretention-based initiatives and provide services suchas:

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|  | •  | QuickRenewTM — aneasy-to-use, one-step online renewalprocess; |

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|  | •  | SafeRenewTM —our automatic renewal service whereby customers who provide a creditcard authorization at the time of registration or at any timethereafter, will automatically have their domain names and value-addedservices renewed as theyexpire; |

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|  | •  | Renewal ManagerTM— an easy way for our customers to renew multiple domain nameregistrations at one time;and |

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|  | •  | Outbound email andtelemarketing efforts to current customers reminding them to protectand renew their names that are about to lapse. |

Domain NameRegistrant and Registrar Transfers.    We facilitate theprocessing of domain name registration transfers between registrants.Also, we enable customers to transfer to us, as registrar, domain namesin certain gTLDs that they originally registered with a differentregistrar.

Website and Email Value-AddedServices.    Promoting usage of domain names is important toincreasing our renewal rate and our revenue per customer. To achievethis, we offer value-added products and services, some of which weprovide directly and some of which are provided by third partiescontracted by us. We also provide renewal services for our products andservices. These products and servicesinclude:

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|  | •  | Personalized BrandedEmail.    We offer email services that enable our customers to usetheir unique domain names to create branded email addresses, such asmyname@mybrand.com. Our basic email offering allows ourcustomers to access their email via a web-based interface or to havedirect and automatic emaildelivery. |

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|  | •  | HostedMicrosoft® Exchange.    We offer this service whichenables our small business customers to benefit from most of thefunctions of Microsoft Outlook Exchange (including shared address booksand calendars) without the cost of maintaining an Exchangeserver. |

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|  | •  | WebSiteNOW!TM.    Ourtemplate-based do-it-yourself website building tool allows users withno HTML programming skills to create websites that contain images, textand hyperlinks. |

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|  |   | Our WebSiteNOW! product has more storagespace, higher-quality templates, and is more flexible in designcapabilities than our basic FirstStepSiteproduct. |

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|  | •  | Web Hosting.    All ofour web hosting products allow users to put websites online usingeither  the included  do-it-yourself website building toolor by uploading existing files to the web hosting account directlyusing an FTP client software, which allows for the transfer of filesbetween a user and a remote server, or through a third partysite-building tool like Microsoft Frontpage®.  Ouradvanced web hosting accounts also include ecommerce software that canbe used to create an online store. |

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|  | •  | Website design services.    Weoffer professional design services through an advertiser that can helpour customers build customizedwebsites. |

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|  | •  | Website Forwarding— Premium.    Our premium domain name forwarding service allowscustomers to point their domain names to existing sites on the Internetwithout advertising appearing on the screen and masking the navigationbar of the target landingwebsite. |

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|  | •  | Website promotion.    Weoffer services facilitating the submission of our customers'domain names and keywords to various search engines. This helps ourcustomers promote theirwebsites. |

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|  | •  | DigitalCertificates.    We offer digital certificates to our customers toprovide a security key for their services which facilitates conductinge-commerce with confidence. |

Additional Products and ServiceOfferings through our Advertisers.    In addition, we pursueadvertisers who we believe can offer additional products and servicesthat will appeal to our customers and in most cases enable them tofurther develop their businesses. Examples of these advertisers andservices include: incorporation services; search engine advertising;and virtual intranet applications for the small office and home officemarket.

Corporate Services.    Through our CorporateServices division, we offer an array of products and services to assistour global and brand-intensive customers with high volume domain nameregistration and management and online brand protection needsincluding:

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|  | •  | Multiple DomainRegistrations and Transfers.    We enable our Corporate Servicescustomers to register and transfer large numbers of domain names inboth the gTLD and ccTLD name spaces. For those customers whoconsolidate their domain names under our management, we can administerthe renewal process with greaterease. |

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|  | •  | NameConsoleTM.    Weprovide a web-based application which allows Corporate Servicecustomers to provide their employees with managed registrationcapability, including bulk registration of gTLDs and ccTLDs, onlineresponding capabilities and user permission levels through a customizedpassword-protectedinterface. |

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|  | •  | Internet Audit.    Weassist our Corporate Services customers in identifying how theirintellectual property is represented on the Internet, helping them toidentify domain names and web pages that contain references to theirmarks andbrands. |

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|  | •  | NameWatchTM.    Usingthis service, our Corporate Services customers can monitor for newlyregistered domain names that they believe are confusingly similar orotherwise potentially infringing of their trademarkrights. |

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|  | •  | BrandPatrolTM.    This service helps our Corporate Services customersto monitor non-domain name related potential online intellectualproperty infringement, including unauthorized retailing and metataginfringement. |

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|  | •  | AccountMasking.    We enable Corporate Services customers to register domainnames with anonymity (by registering them in Register.com's name)so that they can confidentially secure a name for a product, service oridea before it comes tomarket. |

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|  | •  | DomainLockDown®.    We offer domain name security servicesthat "lock" names at the registry level,which significantly reduces the risk of unauthorized alterations to keyregistrar information. |

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|  | •  | PremiumDNS.    We offer different levels of DNS services, but all domainnames of Corporate Services customers subscribing to our Premium DNSservice are hosted on Register.com's Premium DNS infrastructure,providing geographic and network redundancies. |

CustomerService

We believe that our ability to establish and maintainlong-term relationships with our customers and to differentiateourselves from our competition depends significantly on the strength ofour customer support operations and staff. We value frequentcommunication with and feedback from our customers in order tocontinually improve the quality of care provided by our customerservice representatives. Our customer support group seeks to providedependable and timely resolution of customer inquiries, 24 hours perday, seven days per week. Our customer service representatives handlegeneral inquiries about the domain name registration process and ourproduct and service offerings, investigate the status of orders andpayments and answer technical questions about the Internet and domainname management.

We maintain a customer care facility located inCanada. Our customer care center provides enhanced customer service andtechnical support, including a complementary online and telephoneticketing system, a toll-free call-in number, and a highly trainedstaff, to provide faster and specialized attention to customerinquiries. As a result of our ongoing training, we have teams ofcustomer service representatives who specialize in key aspects of ourbusiness, and who are skilled in assisting our customers with ourproducts, services and technology. We also handle a significant portionof customer inquiries made online through an outsourced facility.

We operate with a "continuous improvement"philosophy that consistently ensures our customers receive"best of breed" service and technicalsupport, fueled by a focus on continuously raising the bar in deliveryof industry-class service level response times, first call resolution,superior technical knowledge, and total customer satisfaction.

Advertising Sales

Our goal is to partner with advertisersin order to offer various business products and services to ourcustomers, either on a co-branded or private label basis, or through alink to our advertisers' sites. We believe that our user baseprovides advertisers and merchants with an attractive platform fromwhich to reach their respective target audiences. In addition to ourRegister.com and NameBargain.com websites, we sell advertising space onFirstStepSite® pages and on web pages to which we pointour customers' domain names following their registration untilthey launch their own website or otherwise change their DNS records.However, as our own product and service offerings expand, some of ouradvertisers have become our competitors. As a result, we may need todiscontinue our relationships with certain advertisers if we beginoffering products and services that are competitive to those that theyoffer. For instance, our largest advertising customer from the fourthquarter of 2002 through the third quarter of 2003 was a provider of webhosting services. However, because we recently began to offer webhosting services to our customers, this advertiser became a competitorand so we decided to discontinue our advertising relationship withthem. Accordingly, we did not sell advertising to this advertisingcustomer during the fourth quarter of 2003 and we do not anticipate anyadditional revenue from this advertising customer in the future.Although we do not know whether we will be able to attract newadvertisers to make up for the loss of this advertiser, we expect tocontinue to provide new products and services to our customers throughadvertising relationships and to generate additional advertisingrevenues in the future.

Technology

The primary focus ofour restructuring program is to complete the development of andsuccessfully launch new technology infrastructures for both our Retailand our Corporate Services divisions. We believe that by improving oursystems, network and platform and creating a more highly automatedsystem, we will be able to reduce our operating expenses. We believethat these improvements will also enable us to introduce new productsand services more rapidly and 

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cost-effectively. Although we believe that ourcurrent systems are reliable and secure, we hope that this newinfrastructure will allow us to achieve greater reliability andsecurity as well as greater scalability and flexibility, which willenable us to remain competitive. Our research and development costswere $18.6 million, $13.4 million and $7.7 million in 2003, 2002 and2001, respectively.

Facilities.    Our principal onlinesystems supporting our www.register.com website are located at ahosting facility in New York. We continually monitor this system toimprove various aspects of its reliability. We believe this facilityhas ample power redundancy, fire suppression, peering to other ISPs,bandwidth and backbone redundancy to support the current andanticipated growth of our business. We also have additional systems forour premium DNS services at four other co-located hosting facilities,however our systems for our other products and services are notgeographically redundant.

Reliability.    Ourtechnology platform is designed for reliability. Hardware componentsare redundant to provide high availability. We provide software anddata reliability through a variety of processes and quality-assuranceprocedures. Depending on the specific system, our standard proceduresinclude daily database backups, storage of critical information andincremental backups of ongoing database modifications.

Scalability and Flexibility.    Although we believe thatour current platform is scaleable and flexible, our new architecturewill be designed to have even greater scalability and flexibility thanour current platform. We have designed our current systems to handle alarge volume of domain name registrations, general website traffic anddomain name server queries in an efficient, scalable and fault-tolerantmanner. Our application servers are clustered and use a highlyavailable, redundant shared file system that allows us to addadditional capacity in a more flexible manner.

Security.    Our technology incorporates a variety ofsecurity techniques to protect domain name registration data, includinglimiting access to users through a strict rule base implemented on thenetwork's router and encrypting user passwords at the time ofaccount creation. We encrypt communications via secure socket layer (orSSL) and have initiated processes to maintain internal server passwordsand to ensure limited accessibility to critical components on thenetwork. Our team of engineers currently monitors our systems 24 hoursper day, seven days per week.

Administration of the Internet;Government Regulation and Legal Uncertainties

Under a 1993cooperative agreement with the U.S. Department of Commerce, NetworkSolutions was authorized to act as the sole registry and sole registrarfor domain names in the .com, .net and .org top level domains. InOctober 1998, the Department of Commerce amended the Network Solutionscooperative agreement to call for the formation of a not-for-profitcorporation to oversee the management of, and create policiesregarding, domain names in the .com, .net and .org top level domains.The Department of Commerce also proposed that additional registrars beauthorized to register domain names based upon the idea thatcompetitive registrars would benefit consumers and businesses. ICANNwas recognized as this not-for-profit corporation by the Department ofCommerce in November 1998.

ICANN's authority is based uponcontracts with member entities such as registrars and registries andcompliance with its consensus policies. While these policies do notconstitute law in the United States or elsewhere, they have asignificant influence on the operation and future of the domain nameregistration system.

In April 1999, ICANN selected five testbedcompanies, including us, to act as registrars to register domain namesin the .com, .net and .org domains and compete with Network Solutions.On June  2, 1999, we became the first of the testbed companies tobegin directly registering domain names. As of March  1, 2004,191 companies were accredited by ICANN to act as registrars in one ormore gTLD, although not all of these accredited registrars areoperational. In November 2000, ICANN approved the following seven newgTLDs operated by new registries: .biz, .info, .name, .pro, .museum,..coop and .aero. The .museum, .coop and .aero gTLDs are authorized onlyfor use in specific industry segments.

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In March 2000, Network Solutions wasacquired by VeriSign and in May 2001, ICANN finalized agreements withVeriSign that superseded the original agreements between the Departmentof Commerce and Network Solutions. These agreements enabled VeriSign tocontinue to operate the .com registry until at least 2007 and the .netregistry until at least June  30, 2005, even as it retainedownership and control over its registrar business through NetworkSolutions. The agreements also provide that VeriSign could continue tooperate both registries beyond these dates if it ceased to operationthe .org registry and maintained a structural separation between itsregistry and its registrar businesses. Notwithstanding the above, inNovember 2003 VeriSign divested its Network Solutions business andceased to operate as a registrar, although VeriSign retained a smallownership interest in the registrar business. VeriSign continues tooperate the .com and .net registries.

ICANN may create consensuspolicies governing the domain name registration system if they passthrough a consensus of the Domain Name Supporting Organization and itsconstituencies, and the other Supporting Organizations, and are adoptedby the ICANN board of directors. We would be affected by such policies,but none have been adopted since the Uniform Dispute Resolution Policy(UDRP) was created to address the problem of cybersquatting. We play anactive role in the development of ICANN policies.

Recently theUnited Nations (UN) and the International Telecommunications Union(ITU) have expressed an increased interest in Internet governance. TheUN and ITU have established a group to review whether ICANN'sauthority to oversee the Internet should be transferred away fromICANN, in whole or in part, to these organizations. Although such aresult is unlikely in 2004, it is possible that there will be changesin the area of Internet governance in the future. If new U.S. orinternational laws or regulations or ICANN policies regarding domainnames and domain name registrars are adopted, we would be required tocomply, which could increase our costs, distract time and energy fromour operations and make it more difficult for us to deliver ourproducts and services. New and existing laws may cover issues suchas:

|  |              |                                                             |
|--|--------------|-------------------------------------------------------------|
|  | •  | pricing controls or increasesat the ICANN or registrylevel; |

|  |              |                |
|--|--------------|----------------|
|  | •  | Internettaxes; |

|  |              |                                                     |
|--|--------------|-----------------------------------------------------|
|  | •  | the creation of additionalgTLDs and sponsored TLDs; |

|  |              |                     |
|--|--------------|---------------------|
|  | •  | consumerprotection; |

|  |              |                             |
|--|--------------|-----------------------------|
|  | •  | privacy and dataprotection; |

|  |              |                                       |
|--|--------------|---------------------------------------|
|  | •  | cross-border domainname registration; |

|  |              |                                             |
|--|--------------|---------------------------------------------|
|  | •  | trademark,copyright and patentinfringement; |

|  |              |                                    |
|--|--------------|------------------------------------|
|  | •  | domain name disputeresolution; and |

|  |              |                                                                                         |
|--|--------------|-----------------------------------------------------------------------------------------|
|  | •  | other claims basedon the nature or content of domain names and domain nameregistration. |

In addition, there have been ongoing legislativedevelopments and judicial decisions with respect to trademarkinfringement claims, unfair competition claims, and dispute resolutionpolicies relating to the registration of domain names. To help protectourselves from liability in the face of these ongoing legaldevelopments, we have taken the followingprecautions:

|  |              |                                                                                                                                                                                                                        |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | in our standardregistration agreement, we require that each registrant indemnify,defend and hold us harmless for any dispute arising from theregistration or use of a domain name registered in that person'sname; and |

|  |              |                                                                   |
|--|--------------|-------------------------------------------------------------------|
|  | •  | on December 1, 1999, weimplemented the UDRP as approved by ICANN. |

Despite theseprecautions, we cannot assure you that our indemnity and disputeresolution policies will be sufficient to protect us against claimsasserted by various third parties, including claims of trademarkinfringement and unfair competition in our capacity as registrar.

In November 1999, the Anticybersquatting Consumer Protection Act wasenacted by the United States government. This law seeks to curtail apractice commonly known in the domain name 

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registration industry as"cybersquatting." A cybersquatter isgenerally defined in the Act as one who registers a domain name that isidentical or similar to another party's trademark, or the name ofanother living person, in each case with the bad faith intent to profitfrom use of the domain name. The law states that registrars may not beheld liable for registration or maintenance of a domain name foranother person absent a showing of the registrar's bad faithintent to profit from the use of the domain name. Registrars may beheld liable, however, if they do not comply promptly with proceduralprovisions of the law. For example, if there is a litigation involvinga domain name, the registrar is required to deposit a certificaterepresenting the domain name registration with the court. To date,there is no precedent to specify under what circumstances we may sufferliability as a registrar under this law. If we are held liable underthis law, any liability could have a material adverse effect on ourbusiness, financial condition and results of operations.

In2003, the Federal Trade Commission (FTC) implemented several amendmentsto the Telemarketing Sales Rule (TSR) including the establishment of anational Do Not Call registry prohibiting telemarketers from callingnumbers listed with the registry. The amendments also created newrequirements for upselling, negative option, free-to-pay continuityplans and for billing, authorization and the use of account informationand pre-recorded calls. As a result of these amendments, we wererequired to modify some of our inbound and outbound telemarketingprocedures, but we are currently in compliance with these newrequirements.

In December 2003, the CAN-SPAM Act of 2003, a newfederal anti-spam law, was enacted. This new law pre-empts variousstate anti-spam laws and establishes a single standard for emailmarketing and customer communications. Among other things, this Actrequires labeling commercial email as an advertisement and prohibitsharvesting email addresses and falsifying header information usingdeceptive or misleading subject lines. We believe that this new lawwill benefit our business and marketing efforts as we do not use spamtechniques or practices and will benefit now that others are prohibitedfrom doing so.

In addition, on January 1, 2004, Canada'snew privacy law, the Personal Information Protection and ElectronicDocuments Act, came fully into effect. This law imposes rules regardinghow companies can collect, use and distribute customer data in thecourse of commercial activities. The location of our customer servicecenter in Canada, in particular, gives rise to the potential reach ofthe Canadian law over the company. We have examined the potentialimpact of this law on our policies and terms and conditions and,although we may need to modify certain of our processes, we believethat our systems for the protection of our customers' personalinformation already substantially comply with these requirements.

Competition

We believe that our industry experience,product and service offerings, brand name, customer service focus anddistribution channels enable us to compete favorably in providingdomain name registration services and related products and services andin attracting advertisers. However, many of our competitors may havecompetitive advantages over us. Although we have one of the longestoperating histories of all the registrars and we are focused onstrengthening our customer relationship, we face competition both fromresellers that have greater name recognition and longer operatinghistories and registrars that offer more aggressive pricing and newersystems and that have a greater ability to automate their serviceofferings and launch new products and services more efficiently.

Competition in the Domain Name Registration Industry.    Wecompete with numerous other ICANN accredited registrars. In particular,Network Solutions presently has a significant market share advantageover us and the other registrars. The barriers for competitors seekingto enter the marketplace as domain name registrars include developingthe requisite technological infrastructure and meeting ICANN'saccreditation requirements and, depending on the level of service andproduct offerings, can range from insignificant to significant. As ofMarch 1, 2004, 191 companies were accredited by ICANN to act asregistrars in one or more gTLD, although not all of these accreditedregistrars are operational.

The continued growth in the numberof registrars entering the domain name industry and increased pricingpressure primarily from new entrants have made it difficult for us tomaintain our 

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industry market share position and, togetherwith a reduction in the growth rate for domain names, have contributedto a decline in the number of our paid domain name registrations from2003 to 2002. In addition to other registrars, we also face competitionfrom resellers including, among others, ISPs, web-hosting companies,Internet portals and search engines, telecommunication and cablecompanies and Internet professional service firms, who align themselveswith accredited registrars to resell domain name registration services.Many of these competitors may have strengths similar to ours but mayalso have stronger brand recognition and Internet industryexperience.

Competition with Respect to Our Value-AddedServices.    An important component of our business strategy isto offer value-added products and services for the development of ourcustomers' Internet presence, however, the marketplace for ourproducts and services is highly competitive. Other registrars havedeveloped or entered into strategic relationships to offer products andservices similar to those that we now provide, including our email,domain name forwarding and website hosting, or products and servicesthat we anticipate offering in the future. In addition to competingwith other registrars, we also compete with many other providers ofthese products and services, including application service providers,Internet professional services firms and domain name resellers.

Competition for Advertisers.    We compete for Internetadvertising and sponsorship revenues with other domain name registrars,content-based websites, ISPs, Internet content providers, largeweb-based publishers, Internet search engines and portal companies andvarious other companies that facilitate Internet advertising. We alsocompete with traditional offline media for a share ofadvertisers' total advertising budgets.

IntellectualProperty and Proprietary Rights

We believe that we are wellpositioned in the market for domain name registration and relatedproducts and services in part due to our highly recognized brand,Register.com. We regard our trademarks, copyrights, trade secrets andother intellectual property as critical to our success. We rely ontrademark and copyright law, trade secret protection andconfidentiality and/or license agreements with our employees,customers, GPN partners and others to protect our intellectual propertyrights. However, despite our precautions, third parties could obtainand use our intellectual property without authorization. Furthermore,the validity, enforceability and scope of protection of intellectualproperty in Internet-related industries are uncertain and stillevolving. The laws of some foreign countries do not protectintellectual property to the same extent as do the laws of the UnitedStates. We have several registered trademarks includingRegister.com®, Register®,FirstStepSite®, FirstStepPortal®, DomainLock Down®, and other trademark registrationapplications pending. Other trademarks and service marks used in thisannual report are the property of their respective owners.

Employees

As of December 31, 2003, we had approximately 468full-time employees and 65 independent contractors. None of ouremployees are represented by a labor union or are subject tocollective-bargaining agreements. We believe that we maintain goodrelationships with our employees.

Additional Information andWhere to Find It

Our Internet address iswww.register.com. We make the following filings available, assoon as reasonably practicable after they are electronically filed withor furnished to the Securities and Exchange Commission, on our InvestorRelations website, located athttp://investor.register.com:

|  |              |                                |
|--|--------------|--------------------------------|
|  | •  | ourannual report on Form 10-K; |

|  |              |                                    |
|--|--------------|------------------------------------|
|  | •  | ourquarterly reports on Form 10-Q; |

|  |              |                                     |
|--|--------------|-------------------------------------|
|  | •  | ourcurrent reports on Form 8-K; and |

any amendments to thosereports filed or furnished pursuant to Section  13(a) or 15(d) ofthe Securities Exchange Act of 1934. All such filings are madeavailable free of charge on our Investor Relations website as soon asreasonably practicable after we file them with, or furnish them to, theSEC.

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RISK FACTORS

Any investment in our common stock involves a high degree ofrisk. You should consider carefully the risks described below, togetherwith the other information contained in this report. If any of thefollowing events actually occurs, our business, financial condition andresults of operations may suffer materially. As a result, the marketprice of our common stock could decline, and you could lose all or partof your investment in our common stock.

Risks Related toOur Industry and Our Business

We have a recent history oflosses and we cannot assure you that we will be able to operateprofitably or sustain or attain positive cash flow in futureperiods.

Although we were profitable for the year 2003, we werenot profitable for the first six months of 2003, or for the years 2002and 2001. Our net loss for 2002 included a goodwill impairmentwritedown of $17.0 million and our net loss for 2001 included a $32.5million writedown of intangibles. We incurred losses from operations ofapproximately $17.2 million for the year 2002 and $19.9 million for theyear 2001. As of December 31, 2003 our accumulated deficit totaled$41.6 million. We expect our research and development costs to continueat high levels throughout much of 2004 as we continue our efforts toupgrade and improve our systems and we cannot assure you when ourresearch and development costs will decrease. In addition, losses atour RCOM Europe and RegistryPro subsidiaries have contributed to adecline in our profitability. Although we are expecting losses at RCOMEurope to impact our profitability negatively through the early part ofthe year 2004 and perhaps beyond, we are projecting that RCOM Europewill operate profitably for the full year 2004. However, we cannotassure you that it will achieve such profitability. We sold ourRegistryPro business in February 2004 and, accordingly, we believe thatRegistryPro will not have a significant negative impact on ourprofitability in 2004 or beyond. We have also budgeted for asignificant increase in our marketing expense in 2004 compared with2003, and we cannot assure you that those additional marketing expenseswill result in additional revenues. In addition, unless we lower thenumber of credit card refunds and reduce our level of credit cardchargebacks, we may continue to be subject to significant penaltiesthat would impact our profitability. Further, we anticipate that ourrevenues from advertising will be materially lower in future periods.For all these reasons, we cannot assure you that we will be able tooperate profitably or sustain or attain positive cash flow in thefuture.

If our restructuring program is not successful,we may not achieve the operational and financial objectives we have setfor the Company, and our business, financial condition and results ofoperations could be materially adversely affected.

We are inthe midst of a restructuring program to address the core issues thatwere contributing to our inefficient cost structure and hindering ourefforts to improve our results of operations and earnings. The primaryfocus of this program is our effort to build a new and more flexibleRetail systems architecture, which we believe will enable us tointroduce new products and services more rapidly and cost-effectively,and a new Corporate Services systems architecture, which we believewill enable us to reduce our costs of taking and fulfilling salesorders. Other goals of our restructuring program include reducing costsand reducing credit card chargeback and refund rates.

If we failto complete our restructuring program successfully, and in particularfail to upgrade and improve our internal systems in a timely andcost-effective manner, our business, financial condition and results ofoperation could be materially adversely affected. In connection withour restructuring efforts, we have incurred, and expect to continue toincur through most of 2004, significant research and developmentexpenditures as we continue to invest in systems architectureimprovements, and seek to improve our business processes. We havededicated technology consultants and personnel to effect theseimprovements even as we maintain our current systems with otherpersonnel. As long as we are focused on improving our systems andbusiness processes, we are limited in the time and resources we candedicate to launching new products and services to meet the needs ofour customers and to better compete in the marketplace. We have alreadyexperienced significant delays in the 

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launch of our new systems which have in turncaused delays in the launch of new products or services and in upgradesof current ones. Our inability to meet the needs of our customers willaffect our ability to effectively compete, to attract and retaincustomers and to market new products and services.

We cannotassure you that our restructuring program will achieve the goals wehave set for it. The implementation of new systems is a complex processthat requires communication and coordination throughout ourorganization and has significant execution risks. We have experienceddelays in various stages of these projects and cannot assure you whenor if these projects will be successfully completed. Even if our newsystems architecture is launched successfully, we cannot assure youthat it will enable us to reduce our expenses to the significant extentand in the time frames we currently contemplate. We cannot assure youthat our business will ultimately realize the additional benefits wehope to achieve from improved systems or that our new systems will nothave unintended adverse impacts on our ability to service our customersand operate our business as planned.

If the marketplacefor new domain names does not grow, and/or if we are unable to maintainour historical market share, our domain name registration businesswould be adversely affected and our net revenues may decline.

Although there was a slowdown in the growth and expansion rate inthe marketplace for new domain names in 2002 and 2003 compared to 2000and 2001, there are currently indications that the rate may bebeginning to increase. However, we cannot assure you that this trendwill continue and that the growth rate will continue to increase. Inaddition, even if the marketplace does begin to experience an increasein the growth rate, we cannot assure you that we will experience acommensurate increase in our domain name registrations. During 2003,our total number of names under management declined by approximately0.2 million names to approximately 3.1 million names as of December 31,2003, and we experienced a decline in the total number of domain nameregistrations, renewals and transfers to us for the year ended December31, 2003 (2.1 million) as compared with the year ended December 31,2002 (2.4 million). If there is a slowdown in the growth rate or ifthere is an expansion but competition continues to intensify and we areunable to maintain our historical market share, our business, financialcondition and results of operations could be materially adverselyaffected.

We face strong competition in the domain nameregistration services industry which we expect will continue tointensify and we may not be able to maintain or improve our competitiveposition.

Competition in the domain name registrationservices industry continues to intensify among the marketparticipants.

When we began providing online domain nameregistrations in the .com, .net and .org domains in June 1999, we wereone of only five testbed competitive registrars accredited by ICANN tointerface directly with Network Solutions' registry for .com,..net and .org domain names. Since the end of the testbed period onNovember 30, 1999, ICANN has continued to accredit new registrars. Asof March 1, 2004, ICANN had accredited 191 registrars, including us, toregister domain names in one or more of the gTLDs, although not all ofthese accredited registrars are currently operational. The continuedintroduction of registrars and resellers into the domain nameregistration industry and the rapid growth of some who have entered theindustry could make it difficult for us to maintain our industrycompetitive position. If we continue to experience a decline in thetotal number of paid domain name registrations, renewals and transfersto us, our business, financial condition and results of operationscould be materially adversely affected.

We facecompetition from registrars and resellers that may have greater namerecognition, particularly internationally, better systems or greaterresources.

In addition to competition from other registrars,we also face competition from resellers including, among others, ISPs,web-hosting companies, Internet portals and search engines,

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telecommunication and cable companies,systems integrators, consulting firms and Internet professional servicefirms, who align themselves with accredited registrars to resell domainname registration services. Many of these competitors have strong brandrecognition, possess core capabilities to deliver ancillary services,such as customer service, billing services and network management andhave a broad array of value-added products and services that they canbundle with domain name registrations. In addition, some of ourcompetitors have designed their systems and built their businesses in amanner that, we believe, enables them to be lower-cost providers thanwe currently are. Our position could be harmed by any of these existingor future competitors, some of which may have 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 registrationindustry could force us to reduce our prices for our core products andservices, which would negatively impact our results of operations.

We recognized lower revenues from domain name registrations for theyear ended December 31, 2003 compared to the year ended December 31,2002, which was due primarily to fewer domain names registered and, toa lesser extent, to lower average sale prices per year of subscriptionterm for those names. Some of our competitors offer domain nameregistrations at a wholesale price level minimally above the registryfees or even below the registry fees when bundling registrations withother products or services. Other competitors have lower pricing orhave reduced and may continue to reduce their pricing for domain nameregistrations, renewals and transfers both for short-term promotionsand on a permanent basis. Some of these competitors have experienced asignificant increase in their registrations, suggesting that customersare becoming more price sensitive. Further, some of our competitorshave, in the past, offered domain name registrations for free, derivingtheir revenues from other sources. In response to increasingcompetition in the domain name registration industry, we may berequired, by marketplace factors or otherwise, to reduce, perhapssignificantly, the prices we charge for our core domain nameregistration and related products and services, especially if ourcompetitors who charge these reduced fees are able to maintain customerservice comparable to ours. Reducing the prices we charge for domainname registration services in order to remain competitive couldmaterially adversely affect our business, financial position andresults of operations.

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

Our business depends in great part on our customers' renewalof their domain name registrations through us and we cannot assure youthat those customers who will renew their domain name registrationswill do so through us. Our renewal rate for paid domain nameregistrations for the year ended December  31, 2003 wasapproximately 53% compared with 50% for 2002. Our totaldomain name registrations under management decreased by 8%during the year ended December 31, 2003 and have declined from a peakof approximately 3.8 million as of September  30, 2001 toapproximately 3.1 million as of December 31, 2003. Also, as discussedbelow, our renewal rates could be adversely affected by any futuremodifications we may make to our SafeRenew program. If we are unable tocontinue to increase our overall renewal rate or number of new domainname registrations, the combination of fewer new customers, fewercustomers renewing their registrations through us and the transfers ofregistrations to other registrars will have the cumulative effect ofdecreasing the number of domain name registrations under ourmanagement. Not only could this cause our revenues from domain nameregistrations to decrease, but we would be left with fewer domain namecustomers to whom we could market our other products and services. Adecline in our domain name registrations or renewals could materiallyadversely affect our business, financial condition and results ofoperations.

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If our customers do not find ourexpanded product and service offerings appealing, or if we fail toestablish ourselves as a reliable source for these products andservices, we may remain dependent on domain name registrations as aprimary source of revenue and our net revenues may fall belowanticipated levels.

A key part of our strategy is to diversifyour revenue base by offering value-added products and services inaddition to domain name registrations. Although we have recentlyexperienced increased sales for other products and services such asemail, web hosting and website creation tools, our efforts to date havestill not resulted in substantial diversification. Further, it will bedifficult to achieve substantial diversification in the near future aswe focus significant resources on our restructuring efforts. Ourprimary business, domain name registrations, renewals and transfers,generated 87% of our net revenues during the year ended December31, 2003. We cannot assure you that we will be able to attain themarket's confidence in us as a reliable provider of products andservices outside of our core business. If, over time, we fail to offerproducts and services that meet our customers' needs and that arecompetitive with those offered in the marketplace, or our customerselect not to purchase our products and services, our anticipated netrevenues may fall below expectations, we may not generate sufficientrevenue to offset the related costs and we will remain dependent ondomain name registrations as our primary source of revenue. Ourinability to successfully diversify our revenue base from domain nameregistrations could, together with a decline in that market, materiallyadversely affect our business, financial condition and results ofoperations.

Our advertising revenues have decreasedsignificantly due to the discontinuation of our most significantadvertising customer and we may not be able to find suitablereplacement advertising to replace this revenue in the future.

From the fourth quarter of 2002 through the third quarter of 2003,our largest advertising customer, a provider of web hosting services,accounted for a significant portion of our advertising revenue. In thethird quarter of 2003, revenues from this advertiser representedapproximately 80% of our overall advertising revenue. However,because we recently began to offer web hosting services to ourcustomers, this advertiser became a competitor and so we decided todiscontinue our advertising relationship with them. Accordingly, we didnot sell advertising to this advertising customer during the fourthquarter of 2003 and we do not anticipate any additional revenue fromthis advertising customer in the future. We cannot assure you that wewill be able to replace these lost revenues with other advertisingrevenue or with revenues from sales of web hosting services to our owncustomers, and even if we can, it may take a long period of time to doso. We expect any decrease in our advertising revenue to have anadverse impact on our overall gross margin because the gross profitmargin on advertising revenue is 100% and, accordingly, anydecrease in advertising revenue not otherwise offset with newadvertising revenue would represent a reduction of our gross profit inthe same amount.

If we do not maintain a low rate ofcredit card chargebacks and reduce our rate of credit card refunds, wewill continue to face the prospect of financial penalties and couldlose our ability to accept credit card payments from customers, whichwould have a material adverse effect on our business, financialcondition and results of operations.

A substantial majority ofour revenues originate from online credit card transactions. Undercurrent credit card industry practices, we are liable for fraudulentand disputed credit card transactions because we do not obtain thecardholder's signature at the time of the transaction, eventhough the financial institution issuing the credit card may haveauthorized the transaction. We have experienced high rates of refundsto customers and chargebacks from customers that have resulted in theassessment of financial penalties by two credit card associations. Wehad not incurred penalties from one of those associations until August2002, at which time we were assessed a penalty of $0.3 millionapplicable to the year 2001. Under that association's rules,additional penalties may be imposed at the discretion of theassociation. Any such potential penalties would be imposed on ourcredit card processor by the association, and under our contract withour processor, we are required to reimburse it for such penalties.Because the imposition of any potential penalties is at the discretionof the credit card association, we accrued a $3.7 million charge togeneral and administrative expense in 

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the year 2002 and an additional $2.4 millionfor the year 2003 to cover what we estimate to be the maximum potentialpenalties that could be imposed under that credit cardassociation's rules for transactions in these periods. We havehad preliminary discussions with our credit card processor to obtainresolution to the 2002 penalties and believe that upon finalresolution, it is not likely that we will be required to pay the fullamount accrued for 2002. If the ultimate amount we pay is less than themaximum potential penalties previously accrued, we would reverse anyexcess accrual as a reduction of general and administrative expense atthat time. If we cannot reduce our refund and chargeback rates tolevels that are acceptable to the credit card associations, andmaintain acceptable levels, we will continue to face the risk that oneor more credit card associations may, at any time, assess penaltiesagainst us or terminate our ability to accept credit card payments fromcustomers, which would have a material adverse effect on our business,financial condition, results of operations and cash flows.

Some of the measures we are implementing to reduce our rateof chargebacks and credit card refunds may reduce our netrevenues.

In an effort to reduce our rate of chargebacks andcredit card refunds, we have implemented a number of differentmeasures. However, by implementing aggressive online fraud screens andpost-transaction verifications designed to prevent fraudulent creditcard transactions on our website, we may block legitimate customersfrom purchasing our services, thereby reducing our net revenues. Also,in an effort to protect our customers' online identities, ourSafeRenew program was implemented in January 2001 on an"opt out" basis to .com, .net and .org domainname registrations registered through the www.register.com website, andwas subsequently expanded to cover certain ccTLDs registered throughthis website. Under the terms of our services agreement, at the time acovered registration comes up for renewal, we attempt to charge aregistrant's on-file credit card a one-year renewal fee and, ifthe charge is successful, to renew the registration for that additionalone-year period. Our modification of a portion of this program to an"opt in" basis with respect to internationaltransactions beginning October 2002 and any further modifications wemay undertake may result in the lapse of a significant number of domainname registrations that would have been renewed through the SafeRenewprogram, which could damage our relationship with customers that hadrelied upon the SafeRenew program to renew their domain nameregistrations. In addition, implementing changes to the program mayhave an adverse effect on our renewal rates in future periods and, as aresult, may materially adversely affect our net revenues.

We face certain risks as a result of the numerous recent keychanges to our management team and challenges in retaining our keyemployees through our restructuring process.

Our successdepends in large part on the contributions of our management team andkey sales and technology personnel. Over each of the past severalyears, we have experienced high turnover among our employees and duringthe past year we have experienced a significant number changes to themembers of our management team including (i) the appointment in June2003 of a new President and CEO, Peter Forman, to replace his brotherRichard Forman, who resigned from these positions which he had heldsince March 1998 and March 1996, respectively, but who continues to actas a director; (ii) the hiring of a new General Manager of our Retaildivision; (iii) the hiring of a new director of our Canadianoperations; (iv) the hiring of a new director of human resources; (v)the promotion of our Deputy General Counsel to General Counsel; and(vi) the promotion of our Vice President of Operations to Senior VicePresident. Many of our key employees have not worked with one anotherfor long periods of time and may not be able to develop an effectiveworking relationship. Moreover, many of our managers are still learningabout our company and our industry. If we cannot work togethereffectively to solve the operational challenges that exist in ourbusiness, or master the details of our business and our market, thenour business will be harmed, and we will incur additional costs inseeking and retaining new management personnel.

We compete withother technology and Internet companies, as well as companies in otherindustries, in hiring and retaining qualified personnel. Ourrestructuring process has resulted in significant organizationalchanges. These changes, together with the unsolicited acquisitionproposals 

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we received in January 2003 and the potentialfor a proxy contest and general uncertainty that resulted createdmorale challenges. In response to these challenges and in order toretain employees and keep them focused on our goals, we implementedretention bonus and change in control severance programs.Notwithstanding the resolution of the potential proxy contest and theimplementation of these programs, morale challenges may persist, and wecontinue to face the challenge of keeping our employees motivated andfocused on our strategies and goals. The loss or demotivation of suchemployees, particularly from our sales, operations or technology team,could harm our business. In particular, recently several individualshave left our RCOM Europe office and if we continue to experiencedepartures, it could siginificantly impact our ability to operate ourRCOM Europe office. Furthermore, the success of our currentrestructuring goals and the development of our systems architecture ishighly dependent upon the work of our technology team, and thecompetition for such highly trained individuals has increased in thepast year. Although we do not believe that the departure of any oneindividual would significantly impact the timing or success of theimplementation of our new system, the loss of a group of individualsfrom our technology team could significantly impact the development ofour new systems and could have a material adverse effect on ourbusiness.

Our past acquisitions, including VirtualInternet, subject us to significant risks, and any potential futureacquisitions may subject us to significant risks, any of which couldharm our business.

Our long-term growth strategy may includeidentifying and acquiring or investing in suitable candidates onacceptable terms. In particular, over time, we may acquire or makeinvestments in providers of product offerings that complement ourbusiness and other companies in the domain name registrationindustry.

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

|              |                                                                     |
|--------------|---------------------------------------------------------------------|
| •  | diversion of managementattention from running our existingbusiness; |

|              |                                                                                                                           |
|--------------|---------------------------------------------------------------------------------------------------------------------------|
| •  | increased expenses, includingtravel, legal, administrative and compensation expenses resulting fromnewly hired employees; |

|              |                                                                                                                                 |
|--------------|---------------------------------------------------------------------------------------------------------------------------------|
| •  | increased coststo integrate the technology, personnel, customer base and businesspractices of the acquired company with ourown; |

|              |                                              |
|--------------|----------------------------------------------|
| •  | potential exposure to additionalliabilities; |

|              |                                                                                                                               |
|--------------|-------------------------------------------------------------------------------------------------------------------------------|
| •  | potential adverse effectson our reported operating results due to possible write-down ofgoodwill associated withacquisitions; |

|              |                                                                                                   |
|--------------|---------------------------------------------------------------------------------------------------|
| •  | potential disputes withthe sellers of acquired businesses, technologies, services or products;and |

|              |                                                                                               |
|--------------|-----------------------------------------------------------------------------------------------|
| •  | inability to utilize tax benefitsrelated to operating losses incurred by acquired businesses. |

Moreover, performance problems with an acquired business,technology, service or product could also have a material adverseimpact on our reputation as a whole. In addition, any acquiredbusiness, technology, service or product could significantlyunder-perform relative to our expectations, and we may not achieve thebenefits we expect from our acquisitions.

We acquired VirtualInternet, now known as RCOM Europe, in March 2002, sold its hostingdivision in May 2002 and are in the process of integrating itsbusiness, technology, operations and personnel with those of our U.S.and Canadian operations. Our efforts to transition the back andfront-end systems that we previously used in our U.S. CorporateServices division to those we acquired through Virtual Internetresulted in fulfillment delays and invoice issuance delays andinhibited the effectiveness of our U.S. Corporate Services support andsales teams. We may face similar issues as we make efforts to improveour Corporate Services systems and processes and further integrate thebusiness. In 2002, RCOM Europe incurred a pre-tax loss of $10.5million, including a charge of $8.3 million for goodwill impairment andin 2003, RCOM Europe incurred a pre-tax loss of $1.9 million. We maynot be able to increase revenues or cut expenses sufficiently to makeit 

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profitable in the near future. We were notable to consolidate RCOM Europe's 2002 losses in our U.S. incometax returns for 2002, although we filed an election with the IRS toconsolidate RCOM Europe's results for 2003 and beyond.

Forall these reasons, our pursuit of an acquisition and investmentstrategy or any individual acquisition or investment, including ouracquisition of RCOM Europe, could have a material adverse effect on ourbusiness, financial condition and results of operations.

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

Although we have historicallyhad customers in international markets, in 2002 we expanded ourbusiness and operations in international markets through ouracquisition of RCOM Europe, and we now have a significant workforce inthe United Kingdom and employees in France and Germany as well. Inaddition, as part of our cost reducing efforts, we have relocated someof our groups and operations to our Canadian facility where theoverhead and labor costs are lower than in our other locations.Introducing and marketing our products and services internationally,developing direct and indirect international sales and support channelsand managing foreign personnel and operations will continue to requiresignificant management attention and financial resources. We face anumber of risks associated with our conducting business internationallythat could negatively impact our results of operation,including:

|              |                                                                                                                 |
|--------------|-----------------------------------------------------------------------------------------------------------------|
| •  | management, communicationand integration problems resulting from cultural differences andgeographic dispersion; |

|              |                                                             |
|--------------|-------------------------------------------------------------|
| •  | sufficiency ofqualified labor pool in internationalmarkets; |

|              |                                                                 |
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| •  | political and economicinstability in some internationalmarkets; |

|              |                                    |
|--------------|------------------------------------|
| •  | competition with foreigncompanies; |

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| •  | legal uncertainty regardingliability and compliance with foreignlaws; |

|              |                                          |
|--------------|------------------------------------------|
| •  | currency fluctuations andexchange rates; |

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| •  | potentially adverse taxconsequences or inability to realize taxbenefits; |

|              |                                                                                           |
|--------------|-------------------------------------------------------------------------------------------|
| •  | difficulties in protectingintellectual property rights in international jurisdictions;and |

|              |                                                                |
|--------------|----------------------------------------------------------------|
| •  | the level of adoption of theInternet in international markets. |

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

We cannot predictwith any certainty the effect that new governmental and regulatorypolicies, or industry reactions to those policies, will have on ourbusiness.

Before April 1999, Network Solutions managed thedomain name registration system for the .com, .net and .org domainspursuant to a cooperative agreement with the U.S. government. InNovember 1998, the Department of Commerce recognized ICANN to overseekey aspects of the Internet domain name registration system. Since thattime and particularly because the domain name industry is in its earlystages of development, ICANN has been subject to strict scrutiny by thepublic and the government. Although it recently underwent arestructuring, ICANN continues to face significant questions regardingits financial viability and efficacy as a private sector entity. Whilethese issues will take time to sort out, the long-term structure andmission of ICANN may evolve, even in the coming year, to addressperceived shortcomings. Accordingly, we continue to face the risksthat:

|              |                                                                                                                                                                |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | the U.S. government may, for anyreason, reassess its decision to introduce competition into, orICANN's role in overseeing, the domain name registrationmarket; |

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|              |                                                                                                                                                                                                                                            |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | the Internetcommunity or the Department of Commerce or U.S. Congress may becomedissatisfied with ICANN and refuse to recognize its authority orsupport its policies, which could create instability in the domain nameregistration system; |

|              |                                                                                                             |
|--------------|-------------------------------------------------------------------------------------------------------------|
| •  | pending litigationagainst ICANN could affect ICANN's role in overseeing the domainname registration system; |

|              |                                                                                                                        |
|--------------|------------------------------------------------------------------------------------------------------------------------|
| •  | ICANN mayattempt to impose additional fees on registrars if it fails to obtainfunding sufficient to run itsoperations; |

|              |                                                                           |
|--------------|---------------------------------------------------------------------------|
| •  | accreditation criteriacould change in ways that are disadvantageous tous; |

|              |                                                                                        |
|--------------|----------------------------------------------------------------------------------------|
| •  | ICANN's limited resources mayseriously affect its ability to carry out its mandate;and |

|              |                                                                                                                                                                                                                                                                                                 |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | international regulatory bodies,such as the International Telecommunications Union, the U.N. or theEuropean Union, may gain increased influence over the management andregulation of the domain name registration system, leading to increasedregulation in areas such as taxation and privacy. |

Ourbusiness could be materially harmed if in the future the administrationand operation of the Internet no longer relies upon the existing domainname system.

The domain name registration industry continues todevelop and adapt to changing technology. This development may includechanges in the administration or operation of the Internet, includingthe creation and institution of alternate systems for directingInternet traffic without the use of the existing domain name system.Some of our competitors have begun registering domain names withextensions that rely on such alternate systems. These competitors arenot subject to ICANN accreditation requirements and restrictions. Othercompetitors have attempted to introduce naming systems that usekeywords rather than traditional domain names. The widespreadacceptance of any alternative systems could eliminate the need toregister a domain name to establish an online presence and couldmaterially adversely affect our business, financial condition andresults of operations.

Working with the differentcountry code registries exposes us to a number of operational, legaland business challenges, which if not properly addressed, could have amaterial adverse effect on our business, financial condition andresults of operations.

We currently work with hundreds ofcountry code registries operating hundreds of country code top leveldomains (ccTLDs) throughout the world. Country code registries may beadministered by the host country, entrepreneurs or other third parties.Different country code registries require registrars to comply withspecific regulations. Many of these regulations vary from ccTLD toccTLD. If we fail to comply with the regulations imposed by countrycode registries, these registries will likely prohibit us fromregistering or continuing to register domain names in their ccTLDs.Further, in most cases, our rights to provide ccTLD domain nameregistration services are not governed by written contract. In the caseof our existing written contracts, there is uncertainty as to whichcountry's law may govern. As a result, we cannot be certain thatwe will continue to be able to register domain names in the ccTLDs wecurrently offer. If these registry businesses cease operations orotherwise fail to process domain name registrations or the relatedinformation in ccTLDs, we would be unable to honor the subscriptions ofregistrants who have registered, or are in the process of registering,domain names in the applicable ccTLD. In addition, the process forregistering domain names with many of the ccTLD registries necessitatessignificant manual efforts to process numerous paper documents,resulting in high labor costs and an increased potential for clericalerrors. The rules, requirements and processes of the registries arealso subject to change, and each time a registry makes a change, wemust make corresponding changes to our systems or processes. If we areunable to keep up with these administrative burdens or to honor asubstantial number of subscriptions for our customers or if the ccTLDregistries fail to process our customers' domain nameregistrations in a timely and accurate fashion, we could face claims ofloss from our registrants and our business, financial condition andresults of operations could be materially adverselyaffected.

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We cannot assure you that ourstandard agreements will be enforceable.

We rely on severalagreements that govern the terms of the services we provide to ourusers. These agreements contain a number of provisions intended tolimit our potential liability arising from our providing services forour customers including liability resulting from our failure toregister or maintain domain names. As most of our customers use ourservices online, execution of our agreements by customers occurselectronically or, in the case of our terms of use, is deemed to occurbecause of a user's continued use of the website following noticeof those terms. We believe that our reliance on these agreements isconsistent with the practices in our industry, but if a court were tofind that either one of these methods of execution is invalid or thatkey provisions of our services agreements are unenforceable, we couldbe subject to liability that could have a materially adverse effect onour business, financial condition and results of operations.

Our failure to register, maintain, transfer or renew thedomain names that we process on behalf of our customers may subject usto additional expenses, claims of loss or negative publicity, whichcould have a material adverse effect on our business.

Clericalerrors and system and process failures have resulted in inaccurate andincomplete information in our database of domain names and in ourfailure to properly register or to maintain or renew the registrationof certain domain names that we process on behalf of our customers. Ourfailure to properly register or to maintain or renew the registrationof our customers' domain names, even if we are not at fault, mayresult in our incurring significant expenses and may subject us toclaims of loss or negative publicity, which could have a materialadverse effect on our business, financial condition and results ofoperations.

In addition, ICANN recently implemented new policiesregarding how we transfer out domain names and the acknowledgementprocess, which will require us to revise our transfer processes.Pursuant to these new policies, we will no longer be able to usecertain safeguards that we had in place to acknowledge transferrequests, which could increase the risk of unauthorized or fraudulenttransfers. Such transfers could increase claims of loss or subject usto negative publicity, which could have a material adverse effect onour business, financial condition and results of operations.

We may be held liable if third parties misappropriate ourusers' personal information.

If third parties succeed inpenetrating our network security or otherwise misappropriate ourcustomers' personal or credit card information, we could besubject to liability. Our liability could include claims forunauthorized purchases with credit card information, impersonation orother similar fraud claims as well as for other misuses of personalinformation, including for unauthorized marketing purposes. Theseclaims could result in penalties from credit card associations,potential termination by credit card associations of our ability toaccept credit card payments, litigation and adverse publicity, any ofwhich could have a material adverse effect on our business, financialcondition and results of operations, as well as our reputation, as anywell-publicized compromise of security could deter people from usingonline services such as the ones we offer.

In addition, theFederal Trade Commission and state agencies have investigated variousInternet companies regarding their use of their customers'personal information. The federal government has enacted legislationprotecting the privacy of consumers' nonpublic personalinformation. We cannot guarantee that our currentinformation-collection procedures and disclosure policies will be foundto be in compliance with existing or future laws or regulations. Ourfailure to comply with existing laws, including those of foreigncountries, the adoption of new laws or regulations regarding the use ofpersonal information that require us to change the way we conduct ourbusiness or an investigation of our privacy practices could increasethe costs of operating our business.

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We may not be able to protect andenforce our intellectual property rights or protect ourselves from theclaims of third parties.

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

We rely upon copyright, trade secret and trademark law, inventionassignment agreements and confidentiality agreements to protect ourproprietary technology and other assets, including software,applications and trademarks, and other intellectual property to theextent that protection is sought or secured at all. We do not currentlyhave patents on any of our technologies or processes. While wetypically enter into confidentiality agreements with our employees,consultants and GPN partners, and generally control access to anddistribution and use of our proprietary information, we cannot ensurethat our efforts to protect our proprietary information will beadequate against infringement or misappropriation of our intellectualproperty by employees, affiliates or third parties, particularly inforeign countries where laws or law enforcement practices may notprotect our proprietary rights as fully as in the United States.

Furthermore, because the validity, enforceability and scope ofprotection of proprietary rights in Internet-related industries isuncertain and still evolving, we cannot assure you that we will be ableto defend our proprietary rights. In addition to being difficult topolice, once any infringement is detected, disputes concerning theownership or rights to use intellectual property could be costly andtime-consuming to litigate, may distract management from operating thebusiness and may result in our losing significant rights and ourability to operate our business.

We cannot assure youthat third parties will not develop technologies or processes similaror superior to ours.

We cannot ensure that third partieswill not be able to independently develop technology, processes orother intellectual property that is similar to or superior to ours. Theunauthorized reproduction or other misappropriation of our intellectualproperty rights, including copying the content, look, feel orfunctionality of our website, could enable third parties to benefitfrom our technology without our receiving any compensation and couldmaterially adversely affect our business, financial condition andresults of operations.

We may be subject to claims ofalleged infringement of intellectual property rights of thirdparties.

We do not conduct comprehensive patent searches todetermine whether our technology infringes patents held by others.These matters are inherently uncertain in Internet-related industriesdue to the rapidly evolving technological environment. There may benumerous patent applications pending, many of which are confidentialwhen filed, with regard to technologies similar to our own. Thirdparties may assert infringement claims against us with respect to past,current or future technologies, and these claims and any resultantlitigation, should it occur, could subject us to significant liabilityfor damages. Even if we prevail, litigation could be time-consuming andexpensive to defend, and could result in the diversion ofmanagement's time and attention. Any claims from third partiesmay also result in limitations on our ability to use the intellectualproperty subject to these claims unless we are able to enter intoagreements with the third parties making these claims. Such royalty orlicensing agreements, if required, may be unavailable on termsacceptable to us, if at all. If a successful claim of infringement isbrought against us and we fail to develop non-infringing technology orto license the infringed or similar technology on a timely basis, itcould materially adversely affect our business, financial condition andresults of operations.

We rely on certain technologies that welicense from other parties. We cannot assure you that these third-partytechnology licenses will not infringe on the proprietary rights ofothers or will continue to be available to us on commerciallyreasonable terms, if at all. The loss of such technology could requireus to obtain substitute technology of lower quality or performancestandards or at greater cost, which could materially harm ourbusiness.

The nature of our services may subject us toalleged infringement and other claims relating specifically to domainnames.

As a registrar of domain names and a provider ofadditional web services, we may be subject to various claims, includingclaims from third parties asserting trademark infringement or dilution,unfair 

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competition and violations of publicity andprivacy rights, to the extent that such parties consider their rightsto be violated by the registration of particular domain names by ourusers or our hosting of our users' websites or secondary marketactivities.

For example, we provide an automated serviceenabling users to register domain names and do not monitor or reviewthe content of such domain names. Users might register domain nameswhich, based on the nature and content of such domain names, could beconsidered obscene, hateful or defamatory, or which could infringe ordilute a third party's intellectual property. The law relating tothe liability of registrars stemming from the activities of registrantsin this regard is currently unsettled in certain jurisdictions, and theactions 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 couldresult in the diversion of management's time and attention.

In addition, the Anticybersquatting Consumer Protection Act wasenacted in November 1999 to curtail a practice commonly known in theindustry as "cybersquatting." A cybersquatteris generally defined in this Act as one who registers a domain namethat is identical or similar to another party's trademark or thename of a living person, in each case with the bad faith intent toprofit from use of the domain name. Cybersquatting is a problem thatcould be exacerbated with any additional top level domain names thatmay be established by ICANN. Although this Act states that registrarsmay not be held liable for registering or maintaining a domain name foranother person absent a showing of the registrar's bad faithintent to profit from the use of the domain name, registrars may beheld liable if they fail to comply promptly with procedural provisionsunder the Act. If we are held liable under this law, any liabilitycould have a material adverse effect on our business, financialcondition and results of operations.

Although established caselaw and statutory law have, to date, shielded us from liabilityrelating to cybersquatting registrations on our site in the primaryregistration market, this law remains new and unsettled in manyjurisdictions and the application of these laws and precedent to otherdomain name registration related services is still developing. Anydetermination that our other domain name registration related servicesfacilitate cybersquatting could have a material adverse effect on ourbusiness, financial condition and results of operations.

RisksRelated to Our Technology and the Internet

Systemsdisruptions and failures could cause our customers, resellers andadvertisers to become dissatisfied with us and may impair ourbusiness.

Our customers, advertisers and resellersmay become dissatisfied with our products and services due tointerruptions in access to our website or our failure to adopt andadapt to changing technology.

Our ability to maintain ourcomputer and telecommunications equipment in working order and toreasonably protect them from interruption is critical to our success.Our website must accommodate a high volume of traffic and deliverfrequently updated information. In addition, the technology underlyingthe Internet and the applications available to simplify electroniccommerce are continuously being enhanced or upgraded and to remaincompetitive, we must incorporate these emerging technologies into ourinfrastructure on a cost-effective and timely basis. We occasionallyexperience system application failures, as well as slower responsetimes. We also conduct planned site outages and experience unplannedsite outages. To date, these disruptions of service and slower responsetimes have had minimal impact on our business. However, our customers,advertisers and resellers may become dissatisfied by any systemsfailure that interrupts our ability to provide our products andservices to them or increases response times. Substantial or repeatedsystem failures would significantly reduce the attractiveness of ourwebsite and could cause our customers, advertisers and resellers toswitch to another domain name registration service provider.

Aspart of our restructuring process, we have been incurring substantialexpenses to update our technology, improve our systems'performance and develop new applications to meet the evolving needs ofour customers and ensure the compatibility of our current systems withemerging 

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technologies. We cannot assure you that wewill be able to achieve these goals on a timely basis as changes intechnologies occur. Also as part of our restructuring efforts toincrease efficiencies, we have outsourced certain operations and maycontinue to explore opportunities to outsource others. Outsourcingoperations may raise concerns with our resellers or customers regardingour ability to control the services we offer them if certain elementsare managed by another company. In addition, we cannot assure you thatwe will be able to effectively transition those functions that we maychoose to outsource, as any such process involves complexity andrisk.

Although we carry general liability and professionalliability insurance, our insurance may not cover any claims bydissatisfied customers, advertisers, affiliates, or resellers, or maybe inadequate to indemnify us for any liability that may be imposed inthe event that a claim were brought against us. Our business could bematerially harmed by any system failure, security breach or otherdamage that interrupts or delays our operations.

Ourcustomers, advertisers and resellers may become dissatisfied with ourproducts and services due to interruptions in our access to theregistration systems of generic top level domain or country coderegistries.

We depend on the registration systems of generictop level domain and country code registries to register domain nameson behalf of our customers. We have in the past experienced problemswith the registration systems of these top level domain registries,including outages, particularly during their implementation phase. Anysignificant outages in the registration systems of these registrieswould prevent us from delivering or delay our delivery of our servicesto our customers. Prolonged or repeated interruptions in our access tothe registries could cause our customers, advertisers and resellers toswitch to another domain name registration service provider.

Our business would be materially harmed if our computersystems become damaged.

We currently do not have acomprehensive disaster recovery plan in effect and our systemsredundancies are not geographically distributed. We have no currentplans to add additional facilities to make our systems geographicallyredundant. Fires, floods, earthquakes, power losses, telecommunicationsfailures, break-ins and similar events could damage these systems andseverely harm our business because our services could be interruptedfor an indeterminate length of time. Computer viruses, electronicbreak-ins, human error or other similar disruptive problems could alsoadversely affect our systems.

Despite any precautions we maytake, the occurrence of a natural disaster, a decision to close afacility we are using without adequate notice for financial reasons orother unanticipated problems at any of our facilities including ourhosting facilities, could result in lengthy interruptions in ourservices. In addition, the failure by our hosting facilities to provideour required data communications or any damage to or failure of oursystems could result in interruptions in our service. Suchinterruptions would reduce our revenues and profits, and our futurerevenues and profits would be harmed if our users were to believe thatour systems are unreliable. In addition, our business interruptioninsurance may not be adequate to compensate us for losses that mayoccur. Accordingly, any significant damage to our systems or disruptionin our ability to provide our services would have a material adverseeffect on our business, financial condition and results ofoperations.

Our ability to deliver our products andservices and our financial condition depend on our ability to licensethird-party software, systems and related services on reasonable termsfrom reliable parties.

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

Failure by our third-party serviceproviders to deliver their services will have a negative effect on ourbusiness.

We do not develop and maintain all of the productsand services that we offer, so we are dependent, in part, on theservices of other third-party service providers. We offer certain ofour 

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services to our customers through variousthird-party service providers engaged to perform these services on ourbehalf. In the event that these service providers fail to maintainadequate levels of support or if they discontinue their lines ofbusiness, our customer relations may be impacted negatively and we maybe required to pursue replacement third-party relationships. If we areunable to find adequate replacements on a timely basis, or at all, wemay be forced to either temporarily or permanently discontinue certainservices. For instance, we are currently aware of at least one serviceprovider that is experiencing operational difficulties and a weakeningfinancial condition. Although we continually evaluate our relationshipswith our third-party service providers and plan for contingencies if aproblem should arise with a provider, transitioning services and datafrom one provider to another can often be a complicated and timeconsuming process and we cannot assure that if we need to switch aprovider we would be able to do so on a completely seamless basis, orat all.

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

Inaddition, some of the domain names registered by our RCOM Europecorporate customers resolve to name servers that are owned andcontrolled by a third party. If these domain name servers are shut downfor financial reasons or other unanticipated problems, our services maybe interrupted, which could damage our relationship with our customers,our reputation and our business.

Our failure to respondto the rapid technological changes in our industry may harm ourbusiness.

If we are unable, for technological, legal, financialor other reasons, to adapt in a timely manner to changing marketconditions or customer requirements, we could lose customers, strategicalliances and market share. The Internet and electronic commerce arecharacterized by rapid technological change. Sudden changes in user andcustomer requirements and preferences, the frequent introduction of newproducts and services embodying new technologies and the emergence ofnew industry standards and practices could render our existingproducts, services and systems obsolete. The emerging nature ofproducts and services in the domain name registration industry andtheir rapid evolution will require that we continually improve theperformance, features and reliability of our products and services. Oursuccess will depend, in part, on ourability:

|              |                                               |
|--------------|-----------------------------------------------|
| •  | to enhance our existingproducts and services; |

|              |                                                                                                                                                                                          |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | to design,develop, launch and/or license new products, services and technologiesthat address the increasingly sophisticated and varied needs of ourcurrent and prospective customers;and |

|              |                                                                                                                        |
|--------------|------------------------------------------------------------------------------------------------------------------------|
| •  | to respond to technologicaladvances and emerging industry standards and practices on acost-effective and timely basis. |

The development of additionalproducts and services and other proprietary technology involvessignificant technological and business risks and requires substantialexpenditures and lead time. We may be unable to use new technologieseffectively or adapt our websites, internally developed technology ortransaction-processing systems to customer requirements or emergingindustry standards. Updating our technology internally and licensingnew technology from third parties may require us to incur significantadditional capital expenditures.

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

Our success depends uponthe continued development and acceptance of the Internet as a widelyused medium for commerce and communication. We cannot assure you thatuse of the Internet will continue to grow at the pace it has in recentyears. A number of factors could prevent continued growth, developmentand acceptance, including:

|              |                                                                                                                  |
|--------------|------------------------------------------------------------------------------------------------------------------|
| •  | theunwillingness of companies and consumers to shift their purchasing fromtraditional vendors to online vendors; |

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|              |                                                                                                                                               |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
| •  | the Internetinfrastructure may not be able to support the demands placed on it, andits performance and reliability may decline as usagegrows; |

|              |                                                                                                                                                                                                                                                                          |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | security and authenticationissues may create concerns with respect to the transmission over theInternet of confidential information, such as credit card numbers, andattempts by unauthorized computer users, so-called hackers, topenetrate online security systems;and |

|              |                                                                                                                                                                                             |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | privacy concerns, including thoserelated to the ability of websites to gather user information withoutthe user's knowledge or consent, may impact consumers'willingness to interact online. |

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

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

To date,government regulations have not materially restricted the use of theInternet. The legal and regulatory environment pertaining to theInternet, however, is uncertain and may change. Both new and existinglaws may be applied to the Internet by state, federal or foreigngovernments, covering items suchas:

|              |                                                           |
|--------------|-----------------------------------------------------------|
| •  | sales and other taxes, includingEuropean Value-Added Tax; |

|              |                                  |
|--------------|----------------------------------|
| •  | user privacyand security issues; |

|              |                                               |
|--------------|-----------------------------------------------|
| •  | the expansion ofintellectual property rights; |

|              |                  |
|--------------|------------------|
| •  | pricingcontrols; |

|              |                                                      |
|--------------|------------------------------------------------------|
| •  | characteristics and qualityof products and services; |

|              |                     |
|--------------|---------------------|
| •  | consumerprotection; |

|              |                       |
|--------------|-----------------------|
| •  | cross-bordercommerce; |

|              |                      |
|--------------|----------------------|
| •  | libel anddefamation; |

|              |                                              |
|--------------|----------------------------------------------|
| •  | copyright, trademark andpatent infringement; |

|              |                 |
|--------------|-----------------|
| •  | pornography;and |

|              |                                                                    |
|--------------|--------------------------------------------------------------------|
| •  | other claims based on the natureand content of Internet materials. |

The adoption of any new lawsor regulations or the new application or interpretation of existinglaws or regulations to the Internet could hinder the growth in use ofthe Internet and other online services generally and decrease theacceptance of the Internet and other online services as media ofcommunications, commerce and advertising. Our business may be harmed ifany slowing of the growth of the Internet reduces the demand for ourservices. In addition, new legislation could increase our costs ofdoing business and prevent us from delivering our products and servicesover the Internet, thereby harming our business, financial conditionand results of operations.

The introduction of tax lawstargeting companies engaged in electronic commerce could materiallyadversely affect our business, financial condition and results ofoperations.

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

On November 1,2003, a moratorium on certain state and local taxation of onlineservices and electronic commerce expired. The U.S. Congress iscurrently debating the Internet Tax 

25

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Non-Discrimination Act, which wouldpermanently extend the moratorium, and a compromise bill, the InternetTax Ban Extension and Improvement Act, which would renew the moratoriumthrough November 1, 2005. If these bills are not passed and themoratorium is not extended, the imposition of such taxes, which may beheavily lobbied for by states, could materially adversely affect ourbusiness, financial condition and results of operations.

Inaddition, a directive has been introduced in the European Union (EU)requiring non-EU providers of electronically supplied services toprivate individuals and non-business organizations in the EU to imposevalue-added taxes on such services. Although not all of the EU memberstates have yet implemented the directive nor have the tax authoritiesof all of the member states published official guidance on the rules,we believe that we will be required to implement system changes inorder to comply with this directive. These systems changes may besignificant and it is not yet clear which of our products and serviceswould be subject to this directive. We are not currently in compliancewith this directive and, as a result, may be subject to fines orpenalties. In addition, imposition of these additional taxes may alsolead to some of our services and products that we offer in EU countriesbecoming more expensive relative to services rendered in thosecountries by EU businesses, which could put us at a competitivedisadvantage if we pass along those increased costs to our customers,or could reduce our profit margin if we decide to absorb thesecosts.

Investment Risks

Our stock price ishighly volatile.

The market price of our common stock has beenand may continue to be highly volatile and significantly affected by anumber of factors, including:

|              |                                                                                                      |
|--------------|------------------------------------------------------------------------------------------------------|
| •  | generalmarket and economic conditions and market conditions affectingtechnology companies generally; |

|              |                                                      |
|--------------|------------------------------------------------------|
| •  | limitedavailability of our shares on the openmarket; |

|              |                                                                                |
|--------------|--------------------------------------------------------------------------------|
| •  | actual or anticipatedfluctuations in our quarterly or annual operatingresults; |

|              |                                                                                                       |
|--------------|-------------------------------------------------------------------------------------------------------|
| •  | announcements of acquisitionsor investments, developments in Internet governance or corporateactions; |

|              |                                    |
|--------------|------------------------------------|
| •  | industry conditions andtrends; and |

|              |                                                |
|--------------|------------------------------------------------|
| •  | interest in the Company bypotential acquirors. |

The stock market has experienced extremeprice and volume fluctuations that have particularly affected themarket prices of the securities of technology related companies. Thesefluctuations may adversely affect the market price of our commonstock.

The market price for our shares could benegatively affected if we utilize a significant portion of ourremaining cash and marketable securities.

If we utilize asignificant portion of our cash and marketable securities, the marketprice for our shares could be negatively affected. We may in the futuredistribute additional cash to stockholders including by way of one ormore dividends, distributions or repurchases of additional sharesand/or warrants on the open market, in private transactions or by othermethods, subject to the approval of our Board of Directors andcompliance with applicable securities laws. If the market price of ourstock declined significantly, it could, among other things, also resultin:

|              |                                                                                                                           |
|--------------|---------------------------------------------------------------------------------------------------------------------------|
| •  | our possible noncompliance with theNasdaq National Market's listing requirements and the possibledelisting of our shares; |

|              |                                                                                                                                                            |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | reducedtrading volumes, an illiquid market for the trading of our shares, andmore difficulties involved with the selling of our shares by ourstockholders; |

26

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|              |                                                                            |
|--------------|----------------------------------------------------------------------------|
| •  | our shareslosing their appeal as a currency for future acquisitions;and/or |

|              |                                                                                                                |
|--------------|----------------------------------------------------------------------------------------------------------------|
| •  | an impairment in our ability toaccess the capital markets should we desire or need to raise additionalcapital. |

Our executive officers and directors own asignificant percentage of our shares, which will limit your ability toinfluence corporate matters.

As of March 8, 2004, our executiveofficers and directors beneficially owned approximately 23% ofour common stock. Accordingly, these stockholders could havesignificant influence over the outcome of any corporate transaction orother matter submitted to our stockholders for approval, includingmergers, consolidations and the sale of all or substantially all of ourassets. The interests of these stockholders may differ from theinterests of our other stockholders. In addition, third parties may bediscouraged from making a tender offer or bid to acquire us because ofthis concentration of ownership.

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

Provisions in ouramended and restated certificate of incorporation, our amended andrestated bylaws, our Stockholder Rights Plan and Delaware law coulddelay or prevent a change of control or change in management that wouldprovide stockholders with a premium to the market price of their commonstock. Our Stockholder Rights Plan has significant anti-takeovereffects by causing substantial dilution to a person or group thatattempts to acquire us on terms not approved by our Board of Directors.The authorization of undesignated preferred stock, for example, givesour board the ability to issue preferred stock with voting or otherrights or preferences that could impede the success of any attempt tochange control of the company. If a change of control or change inmanagement is delayed or prevented, this premium may not be realized orthe market price of our common stock could decline.

Item2.    Properties.

We currently lease approximately 30,000square feet of space in New York, New York under a contract whichexpires in September 2009. We also lease 6,500 square feet of space inMaryland under a contract that expires in January 2005. In addition, wehave entered into a five-year lease expiring in August 2006, renewableat our option for up to two additional five-year terms, for 20,000square feet of space in Canada. Our subsidiary RCOM Europe owns abuilding containing approximately 2,000 square feet of space in London,England, although this building is currently for sale. In addition,RCOM Europe leases approximately 6,100 square feet of space in Londonunder three leases, the earliest of which expires in November 2004. Webelieve that our leased facilities in London will provide us withadequate space even after we sell the building. We also maintain leasesfor smaller facilities in Cardiff and Paris and maintain a lease inPrinceton, New Jersey, which we have subleased. We believe that theforegoing space will meet our needs for at least the next twelvemonths.

Item 3.    Legal Proceedings.

In November2001, the Company, its former Chairman, President and Chief ExecutiveOfficer Richard D. Forman and its former Vice President of Finance andAccounting, Alan G. Breitman (the "IndividualDefendants"), and Goldman Sachs & Co. and LehmanBrothers, Inc., two of the underwriters in the syndicate for our March3, 2000 initial public offering, were named as defendants in a classaction complaint alleging violations of the federal securities laws inthe United States District Court, Southern District of New York.Goldman Sachs & Co. and Lehman Brothers, Inc. distributed 172,500of the 5,750,000 shares in the initial public offering. On April 19,2002, the Company and the Individual Defendants were named asdefendants in a Consolidated Amended Complaint (now the operativecomplaint) filed in the Southern District of New York and captionedIn re: Register.com, Inc. Initial Public Offering SecuritiesLitigation. The Consolidated Amended 

27

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Complaint seeks unspecified damages as aresult of various alleged securities law violations arising fromactivities purportedly engaged in by the underwriters in connectionwith our initial public offering. Plaintiffs allege that theunderwriter defendants agreed to allocate stock in the Company'sinitial public offering to certain investors in exchange for excessiveand undisclosed commissions and agreements by those investors to makeadditional purchases of stock in the aftermarket at pre-determinedprices. Plaintiffs allege that the prospectus for the Company'sinitial public offering was false and misleading in violation of thesecurities laws because it did not disclose these arrangements. Theaction is being coordinated with approximately three hundred othernearly identical actions filed against other companies before one judgein the U.S. District Court for the Southern District of New York. OnOctober  9, 2002, the Court dismissed the Individual Defendantsfrom the case without prejudice based on Stipulations of Dismissalfiled by the plaintiffs and the Individual Defendants. OnFebruary  19, 2003, the Court denied the motion to dismiss thecomplaint against the Company. The Company has approved a Memorandum ofUnderstanding ("MOU") and related agreementswhich set forth the terms of a settlement between the Company and theplaintiff class. It is anticipated that any potential financialobligation of the Company to plaintiffs due pursuant to the terms ofthe MOU and related agreements will be covered by existing insurance.Therefore, the Company does not expect that the settlement will involveany payment by the Company. The MOU and related agreements are subjectto a number of contingencies including the negotiation of a settlementagreement and approval by the Court. We cannot predict whether or whena settlement will occur or be finalized.

Register.com has beennamed as a defendant in a purported class action lawsuit filed on May2, 2002, which alleges that our SafeRenew program violates New Yorklaw. This lawsuit was filed by Brian Wornow, on behalf of himself andall others similarly situated, in the Supreme Court of the State of NewYork. Our SafeRenew program was implemented in January 2001 on an"opt-out basis" to .com, .net and .orgregistrations registered through the www.register.com website, and wassubsequently expanded to cover certain ccTLDs registered through thiswebsite. Under the terms of our services agreement, at the time acovered registration comes up for renewal, we attempt to charge aregistrant's on-file credit card a one year renewal fee and, ifthe charge is successful, to renew the registration for that additionalone-year period. Register.com believes that the SafeRenew program wasproperly adopted as an effort to protect our customers' onlineidentities. Plaintiff sought a declaratory judgment that the SafeRenewprogram violates New York General Obligations Law Section 5-903, andalso claimed breach of contract, money had and received, and unjustenrichment. Plaintiff further sought to enjoin Register.com fromautomatically renewing domain name registrations, an award ofcompensatory damages, restitution, disgorgement of profits (plusinterest), cost and expenses, attorneys' fees, and punitivedamages. On September 6, 2002, Register.com filed a motion to dismissthe complaint in its entirety. On April 17, 2003, Register.com'smotion was granted as to two counts (declaratory judgment and breach ofcontract), but denied as to two other counts (unjust enrichment andmoney had and received). On April 28, 2003, Register.com filed ananswer denying the material allegations of the complaint. On May 2,2003, Plaintiff filed a notice of appeal to the Appellate Division,First Department of the two counts that were dismissed. On May 15,2003, Plaintiff filed an amended complaint asserting new causes ofaction against Register.com for (i) deceptive trade practices inviolation of New York General Business Law Section 349; (ii)conversion; and (iii) breach of the implied covenant of good faith andfair dealing. On June 9, 2003, Register.com moved to dismissPlaintiff's newly asserted causes of action. On July 23, 2003 theCourt heard oral arguments on Register.com's motion. On February2, 2004, Plaintiff filed an appeal of the dismissal of the Section5-903 claims. On February 19, 2004, Register.com's motion todismiss the first, fourth and a fifth causes of action ofPlaintiff's amended complaint was granted. While we intend tocontinue to defend ourselves vigorously in this lawsuit, in an effortto mitigate a potential worst-case scenario, we entered into aninsurance agreement pursuant to which, in accordance with its terms andconditions, to the extent that we have a final judgment in excess of$15 million our insurance carrier would cover up to an additional $30million.

On or about January  17, 2003, individualstockholders of the Company filed complaints in the Delaware Court ofChancery purporting to commence class action lawsuits against theCompany and 

28

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each of the individual members of theCompany'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 alleged, among other things,breaches of fiduciary duty by the directors in connection with certainpublicly disclosed indications of interest in the acquisition ofCompany and further alleged that the directors were not fulfillingtheir fiduciary duties in connection with their review and response tosuch indications of interest. On January 9, 2004 the complaints werewithdrawn by the plaintiff and on January 12, 2004 the court approvedthe dismissal of the complaints without prejudice.

In February2001, Register.com was named as a defendant in a purported class actionlawsuit pending in the Supreme Court of the State of New York. Thecomplaint alleges that by linking new domain names registered throughRegister.com to a "Coming Soon" web page thatinforms visitors the name was recently registered through Register.com,and provides links to services provided by Register.com and itsbusiness partners, as well as a banner advertisement for such services,Register.com has (i) breached an implied covenant of good faith andfair dealing; (ii) engaged in deceptive trade practices in violation ofNew York General Business Law Section 349; and (iii) been unjustlyenriched. Prior to the filing of the lawsuit, in addition to disclosingthe Coming Soon page by means of such domain names, Register.com alsodisclosed the existence of the Coming Soon page in the"Help" and "Frequently AskedQuestions" portions of its website. In March 2001,Register.com added an additional disclosure concerning the Coming Soonpage to Register.com's Services Agreement. In April 2001,Register.com filed a motion to dismiss Plaintiff's claims forfailure to state a claim upon which relief may be granted and in August2001, Register.com's motion was granted. Plaintiff appealed thedismissal to the Appellate Division, First Department, and in April2003 the Appellate Division affirmed the dismissal of the unjustenrichment cause of action, but reinstated the causes of action forbreach of an implied covenant of good faith and fair dealing anddeceptive trade practices. Thereafter, Register.com and Plaintiffagreed upon a settlement which, following notice to the proposedsettlement class, was approved by the Court on November 3, 2003. Inaccordance with the settlement, Register.com has provided each memberof the putative class with a five dollar discount off of futurepurchases of Register.com's fees for domain name registrationsand renewals and has paid attorney's fees in the amount awardedby the Court to class counsel.

On or about August 7, 2003 andAugust 8, 2003, purported stockholders of the Company filed twoseparate complaints in the Court of Chancery of Delaware against theCompany and certain current and past individual members of theCompany's Board of Directors. The first complaint was styled asMcBride v. Register.com, Inc., et al (C.A. No. 20470) andthe second complaint was styled as DeMatte v. Register.com,Inc., et al (C.A. No. 20474). On November 3, 2003, the two caseswere consolidated (C.A. No. 20470) and on November 5, 2003, an amendedcomplaint was filed. The complaint alleges, among other things, thatthe named defendants breached their fiduciary duties in connection withthe self tender that the Company commenced in August 2003 and completedin September 2003, and that the self tender is an attempt by theindividual defendants to entrench their positions in theCompany.   The complaint seeks, among other things, thecourt's certification as a class action lawsuit, unspecifieddamages and rescission of the self tender. On December 5, 2003Register.com filed a motion to dismiss for failure to state a claimupon which relief can be granted and failure to comply with therequirements of Rule 23.1 and on February 26, 2004 Register.com filed abrief in support of such motion.

There are various other claims,lawsuits and pending actions against the Company incidental to theoperations of its business. It is the opinion of management, afterconsultation with counsel, that the ultimate resolution of such claims,lawsuits and pending actions will not have a material adverse effect onthe Company's financial position, results of operations orliquidity.

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

No matter was submitted to a vote of securityholders during the fourth quarter of 2003.

29

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PART II

Item 5.    Market forRegistrant's Common Equity and Related Stockholder Matters.

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

|                                   |  |        |        |        |  |        |        |        |  |  |
|-----------------------------------|--|--------|--------|--------|--|--------|--------|--------|--|--|
|                              |  | High   |        | Low    |
| **YearEnding December  31,2003:** |  |
| FourthQuarter                     |  | $      | 5.85   |   |  | $      | 4.49   |   |
| ThirdQuarter                      |  |   | 6.50   |   |  |   | 4.50   |   |
| SecondQuarter                     |  |   | 6.45   |   |  |   | 5.20   |   |
| FirstQuarter                      |  |   | 5.82   |   |  |   | 4.44   |   |
|                              |  |   |   |   |  |   |   |   |
| **YearEnding December  31,2002:** |  |
| FourthQuarter                     |  | $      | 5.25   |   |  | $      | 2.93   |   |
| ThirdQuarter                      |  |   | 7.66   |   |  |   | 2.52   |   |
| SecondQuarter                     |  |   | 9.07   |   |  |   | 6.95   |   |
| FirstQuarter                      |  |   | 11.60  |   |  |   | 7.35   |   |
|                                   |

On March8, 2004, the last sale price of our common stock reported by the NasdaqNational Market was $5.30 per share. As of March 8, 2004, we hadapproximately 73 holders of record of our common stock.

Dividend Policy

We have never declared nor paid any cashdividends on our common stock; however, we may consider the payment ofa dividend in the future. In addition, in September 2003 we used $120million of our cash, short-term investments and marketable securitiesto complete a self-tender offer in which we purchased 17,910,347 sharesof our common stock and warrants to purchase 987,283 shares of ourcommon stock (based on the conversion of warrants on a cashless basisat the $6.35 per share offer price).

Equity Compensation PlanInformation

The following table provides information as ofDecember  31, 2003 with respect to shares of our common stockthat may be issued under our existing equity compensationplans:

|                                                             |  |                                                                                   |           |                                                                       |  |                                                                                                                                |      |        |  |        |           |           |  |  |
|-------------------------------------------------------------|--|-----------------------------------------------------------------------------------|-----------|-----------------------------------------------------------------------|--|--------------------------------------------------------------------------------------------------------------------------------|------|--------|--|--------|-----------|-----------|--|--|
| PlanCategory                                                |  | Number ofSecuritiestobe IssuedUpon ExerciseofOutstandingOptions,WarrantsandRights |           | WeightedAverageExercise Price ofOutstandingOptions,Warrantsand Rights |  | NumberofSecuritiesRemainingAvailable forFutureIssuanceUnder EquityCompensationPlans(ExcludingSecurities Reflectedin Column(a)) |
|                                                        |  | (a)                                                                               |           | (b)                                                                   |  | (c)                                                                                                                            |
| EquityCompensation Plans Approved by SecurityHolders(1)     |  |                                                                              | 5,619,539 | (2)                                                              |  | $                                                                                                                              | 9.41 |   |  |   | 3,021,854 | (3)  |
| EquityCompensation Plans Not Approved by SecurityHolders(4) |  |                                                                              | 11,343    |                                                                  |  | $                                                                                                                              | 1.02 |   |  |   | —   |      |
| Total                                                       |  |                                                                              | 5,630,882 |                                                                  |  | $                                                                                                                              | 9.39 |   |  |   | 3,021,854 |      |
|                                                             |

|  |
|--|
|  |  |
|  |

| (1) | Includesoptions to purchase shares under our Amended and Restated 2000 StockIncentive Plan and our Employee Stock Purchase Plan (ESPP). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Excludes purchase rightsaccruing under the ESPP, which has a shareholder approved reserve of698,070 shares of |
|-----|---------------------------------------------------------------------------------------------------------------|

30

----

|  | Common Stock (698,070 shares of Common Stockas of January  1, 2004). Under the ESPP, each eligible employeemay purchase shares of Common Stock through payroll deductions of up to10% of their eligible compensation. The price paid by theemployee is 85% of the fair market value on the offering date orthe last day of the purchase period. There are two 6-month purchaseperiods per year commencing May 1 and November 1. |
|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Consists of shares availablefor future issuance under the 2000 Plan and the ESPP. |
|-----|-----------------------------------------------------------------------------------|

| (4) | Consists of the followingwarrants to purchase shares of Common Stock issued prior to theCompany's initial public offering, pursuant to compensationarrangements with advisors: 843 shares at an exercise price of $0.43per share, which expires September  21, 2008; 5,250 shares at anexercise 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 expiresJune  10, 2009. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

31

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Item6.    Selected Financial Data.

The following table sets forthcertain selected consolidated financial data of the Company for theyears ended December  31, 2003, 2002, 2001, 2000 and 1999. Theselected consolidated data is derived from our consolidated financialstatements. You should read the following selected consolidatedfinancial data together with our consolidated financial statements andtheir notes as well as "Management's Discussion andAnalysis of Financial Condition and Results ofOperations."

|                                                                                                                       |  |                                        |         |         |  |        |         |         |  |        |         |         |  |        |        |         |  |        |         |         |  |  |
|-----------------------------------------------------------------------------------------------------------------------|--|----------------------------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|--------|---------|--|--------|---------|---------|--|--|
|                                                                                                                  |  | YearEnded December31,                  |
|                                                                                                                  |  | 2003                                   |         | 2002    |  | 2001   |         | 2000    |  | 1999   |
|                                                                                                                  |  | (inthousands, except per shareamounts) |
| Statement of OperationsData:                                                                                          |  |                                   |    |    |  |   |    |    |  |   |    |    |  |   |   |    |  |   |    |    |
| Netrevenues                                                                                                           |  | $                                      | 104,319 |    |  | $      | 106,288 |    |  | $      | 116,281 |    |  | $      | 86,110 |    |  | $      | 9,645   |    |
| Costofrevenues                                                                                                        |  |                                   | 32,694  |    |  |   | 35,299  |    |  |   | 34,790  |    |  |   | 23,869 |    |  |   | 3,083   |    |
| Grossprofit                                                                                                           |  |                                   | 71,625  |    |  |   | 70,989  |    |  |   | 81,491  |    |  |   | 62,241 |    |  |   | 6,562   |    |
| Operatingexpenses:                                                                                                    |  |                                   |    |    |  |   |    |    |  |   |    |    |  |   |   |    |  |   |    |    |
| Salesandmarketing                                                                                                     |  |                                   | 26,169  |    |  |   | 31,222  |    |  |   | 33,532  |    |  |   | 47,311 |    |  |   | 7,150   |    |
| Researchanddevelopment                                                                                                |  |                                   | 18,615  |    |  |   | 13,357  |    |  |   | 7,741   |    |  |   | 5,580  |    |  |   | 1,767   |    |
| Generaland administrative (including non-cash compensation of $1,048, $1,937,$1,771, $2,173, and $4,929,respectively) |  |                                   | 26,865  |    |  |   | 26,312  |    |  |   | 14,769  |    |  |   | 13,434 |    |  |   | 7,309   |    |
| Amortizationand writedown of goodwill and otherintangibles                                                            |  |                                   | 551     |    |  |   | 17,290  |    |  |   | 45,299  |    |  |   | 5,582  |    |  |   | — |    |
| Totaloperatingexpenses                                                                                                |  |                                   | 72,200  |    |  |   | 88,181  |    |  |   | 101,341 |    |  |   | 71,907 |    |  |   | 16,226  |    |
| (Loss)fromoperations                                                                                                  |  |                                   | (575    | )  |  |   | (17,192 | )  |  |   | (19,850 | )  |  |   | (9,666 | )  |  |   | (9,664  | )  |
| Otherincome,net                                                                                                       |  |                                   | 2,989   |    |  |   | 5,588   |    |  |   | 8,664   |    |  |   | 9,520  |    |  |   | 887     |    |
| Gainon sale ofinvestment                                                                                              |  |                                   | — |    |  |   | — |    |  |   | — |    |  |   | 4,603  |    |  |   | — |    |
| Income(loss) before provision (benefit) for incometaxes                                                               |  |                                   | 2,414   |    |  |   | (11,604 | )  |  |   | (11,186 | )  |  |   | 4,457  |    |  |   | (8,777  | )  |
| Provision(benefit) for incometaxes                                                                                    |  |                                   | 90      |    |  |   | (1,195  | )  |  |   | 10,401  |    |  |   | 4,187  |    |  |   | — |    |
| Netincome(loss)                                                                                                       |  | $                                      | 2,324   |    |  | $      | (10,409 | )  |  | $      | (21,587 | )  |  | $      | 270    |    |  | $      | (8,777  | )  |
|                                                                                                                  |  |                                   |    |    |  |   |    |    |  |   |    |    |  |   |   |    |  |   |    |    |
| Basicincome (loss) pershare                                                                                           |  | $                                      | 0.07    |    |  | $      | (0.26   | )  |  | $      | (0.58   | )  |  | $      | 0.01   |    |  | $      | (0.46   | )  |
| Dilutedincome (loss) pershare                                                                                         |  | $                                      | 0.06    |    |  | $      | (0.26   | )  |  | $      | (0.58   | )  |  | $      | 0.01   |    |  | $      | (0.46   | )  |
| Weightedaverage number of sharesoutstanding:                                                                          |  |                                   |    |    |  |   |    |    |  |   |    |    |  |   |   |    |  |   |    |    |
| Basic                                                                                                                 |  |                                   | 35,701  |    |  |   | 40,046  |    |  |   | 37,424  |    |  |   | 31,394 |    |  |   | 19,117  |    |
| Diluted                                                                                                               |  |                                   | 37,662  |    |  |   | 40,046  |    |  |   | 37,424  |    |  |   | 39,184 |    |  |   | 19,117  |    |
|                                                                                                                       |

|                              |  |               |         |        |  |        |         |        |  |        |         |        |  |        |         |        |  |        |         |        |  |  |
|------------------------------|--|---------------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                         |  | December31,   |
|                         |  | 2003          |         | 2002   |  | 2001   |         | 2000   |  | 1999   |
|                         |  | (inthousands) |
| Balance SheetData:           |  |          |    |   |  |   |    |   |  |   |    |   |  |   |    |   |  |   |    |   |
| Cashand cashequivalents      |  | $             | 52,991  |   |  | $      | 50,557  |   |  | $      | 61,932  |   |  | $      | 60,156  |   |  | $      | 40,944  |   |
| Short-terminvestments        |  |          | 39,043  |   |  |   | 105,283 |   |  |   | 78,186  |   |  |   | 65,283  |   |  |   | 4,723   |   |
| Workingcapital               |  |          | 70,389  |   |  |   | 125,636 |   |  |   | 120,592 |   |  |   | 92,160  |   |  |   | 29,813  |   |
| Available-for-salesecurities |  |          | 2,527   |   |  |   | 61,205  |   |  |   | 57,651  |   |  |   | 47,980  |   |  |   | — |   |
| Totalassets                  |  |          | 163,425 |   |  |   | 285,604 |   |  |   | 268,789 |   |  |   | 292,617 |   |  |   | 68,336  |   |
| Totaldeferredrevenues        |  |          | 86,919  |   |  |   | 87,110  |   |  |   | 77,379  |   |  |   | 88,516  |   |  |   | 32,101  |   |
| Totalliabilities             |  |          | 103,133 |   |  |   | 111,962 |   |  |   | 93,196  |   |  |   | 103,722 |   |  |   | 46,423  |   |
| Stockholders'equity          |  |          | 60,292  |   |  |   | 173,642 |   |  |   | 175,593 |   |  |   | 188,895 |   |  |   | 21,913  |   |
|                              |

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Item 7.    Management'sDiscussion and Analysis of Financial Condition and Results ofOperations.

This report contains forward-looking statementsrelating to future events and our future performance within the meaningof Section  27A of the Securities Act of 1933, as amended, andSection  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 thewords "expects","anticipates","intends","believes" or similar language. Actualresults could differ materially from those anticipated in suchforward-looking statements. All forward-looking statements included inthis document are based on information available to us on the datehereof. It is routine for our internal projections and expectations tochange as the year or each quarter in the year progress, and thereforeit should be clearly understood that the internal projections andbeliefs upon which we base our expectations may change prior to the endof each quarter or the year. Although these expectations may change,our company policy is generally to provide our expectations only onceper quarter, so we may not inform you of any changes until the nextquarter. We caution investors that our business and financialperformance are subject to substantial risks and uncertainties. Inevaluating our business, prospective investors should carefullyconsider the information set forth under the caption "RiskFactors" in addition to the other information set forthherein and elsewhere in our other public filings with the Securitiesand Exchange Commission.

Overview

We are a providerof global domain name registration, website, email and other Internetservices for businesses and consumers that wish to have a uniqueaddress and branded identity on the Internet. Domain names serve asaddresses and identities on the World Wide Web. They enable a businessor person to establish an Internet presence and are integral to the useof websites (e.g., www.register.com), email (e.g.,johndoe@register.com) and other types of Internet-basedservices

We began processing domain name registrations in thegeneric top level domains (gTLDs) .com, .net and .org in June 1999 and,as such, were the first registrar accredited by the InternetCorporation for Assigned Names and Numbers (ICANN) to compete in thedomain name registration market after ICANN introduced competition inthe industry. We had approximately 3.1 million active domain nameregistrations under management as of December  31, 2003,representing approximately 1  million customers. Currently, weregister, renew and transfer domain names in TLDs such as .com, .net,..org, .biz, .info and .name and in over 400 country code top leveldomains (ccTLDs), including .de for Germany and .jp for Japan and subdomains, such as .co.uk and .org.uk for the United Kingdom.

Webelieve that we offer a quick and user-friendly domain nameregistration process as well as responsive and reliable customersupport. We also assist our customers in further developing andmaintaining their Internet presence by offering them a range ofwebsite, email and other value-added products and services.

Domain name registration activity is driven by the use of theInternet by businesses and consumers for electronic commerce andcommunication, the promotion, marketing and protection of brands andidentities across the world and other online activities. Our mission isto become the preferred provider of domain names, website, email andother Internet services for customers seeking to build, manage andpromote their online presence.

Our Retail division focuses onsmall to medium-sized businesses and individuals. Generally, thesecustomers purchase domain name registration services and othervalue-added services directly from our website located atwww.register.com. In addition to our Retail division, we maintain aCorporate Services division. Our Corporate Services division providesdomain name registration and related products and services, includingglobal registration and management services and online brand andtrademark protection, to large corporate enterprises with specializedregistration needs. In order to extend the distribution reach of ourproducts and services, we also maintain a Global Partner Network (GPN)wholesale division which works with companies that resell our domainname registration and web services to their customers using oursoftware solutions. Our GPN partners are typically Internet ServiceProviders (ISPs), web-hosting companies, telecom carriers and webportals, but also include online and offline retailers and businessaggregators. Using our software solutions, these companies resell ourdomain name registration services and related products and services totheir customers.

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In June 2000, we acquired Inabox, Inc. for$1.0 million cash and 280,019 shares of our common stock, and we usedInabox's software to develop our FirstStepSite®and WebSiteNOW!TM products and My.register.com, one of thereseller solutions offered to our Global Partner Network. In September2000, we acquired Afternic.com, Inc., a secondary market exchange fordomain names, for $10.0  million cash and 4,378,289 shares of ourcommon stock. Each of these transactions was accounted for using thepurchase method of accounting. As a result, the financial results ofInabox and Afternic.com are consolidated with our financial resultsfrom the dates of their respective acquisitions. We made a decision toabandon the Afternic business in September 2002.

In March 2002,we acquired Virtual Internet plc, a U.K. based company, for£11.99 million (US $16.9 million at the date of acquisition),which had operations in the United States and Europe and operatedthrough two divisions: the Corporate Services division and the Hostingdivision. The Corporate Services division provides domain nameregistration and online intellectual property management and protectionservices, and the Hosting division provided web-hosting services. InMay 2002, we sold the Hosting division for $0.5 million. Our results ofoperations include Virtual Internet's Corporate Services divisionsubsequent to March 8, 2002. In 2003, we changed the name of VirtualInternet to Register.com Europe plc ("RCOMEurope").

In late 2002, we began a restructuringprogram to address the challenges facing our business. The primary goalof our restructuring program is to introduce new systems that willenable us to operate our business more efficiently. For our Retaildivision, we are building a new and more flexible systems architecturewhich we believe will enable us to introduce new products and servicesmore rapidly and cost effectively and to improve our operatingefficiencies and reduce costs. We believe that by making our technologyarchitecture more flexible and efficient we will achieve these goals.For our Corporate Services division, we are developing a system toautomate as much of the order processing and fulfillment for ccTLDregistrations as possible. We anticipate that our new CorporateServices system will enable us take sales orders and fulfill them on amore highly automated basis, thereby reducing our costs and increasingour efficiency and accuracy.

As part of our cost reductionefforts, we have also relocated some of our groups and operations toour Canadian facility, where the overhead and labor costs are lowerthan in our other locations. In addition, in February 2004, we sold ourRegistryPro business, which had been given ICANN approval to operatethe .pro registry. We sold this business because we believe thatoperating a registry would have distracted us and taken time, energyand resources from our core business of operating a registrar andselling related value-added products and services.

SignificantAccounting Policies

Use of Estimates

Thepreparation of our financial statements in conformity with generallyaccepted accounting principles requires management to make estimatesand assumptions that affect the amounts reported in the financialstatements and accompanying notes. Our most significant estimatesrelate to potential refunds to customers and chargebacks fromcustomers; the realizability of accounts receivable, fixed assets,intangible assets, and deferred tax assets; the potential liability tocredit card associations for penalties for credit card chargebacks andrefunds in excess of certain thresholds; potential liability forvarious matters in litigation; and the estimated useful lives of fixedassets and intangible assets. Actual results could differ frommanagement's estimates. The markets for our products and servicesare characterized by intense competition, continual technology advancesand new product/service introductions, all of which could impact thefuture realizability of our assets.

Net Revenues

We derive our net revenues from domain name registrations, otherproducts and services and advertising. We earn registration fees inconnection with new, renewed, and transferred-in registrations.Registration periods generally range from one to ten years.

Domain name registration revenues are deferred at the time of theregistration and are recognized ratably over the term of theregistration period. Under this subscription-based model, we

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recognize revenue over the period duringwhich we provide the registration services, including customer serviceand maintenance of the individual domain name records. We requireprepayment at the time of sale via credit card for most online domainname registration sales, which provides us with the full cash fee atthe beginning of the registration period whereas we recognize therevenues over the registration period. For many of our customers whoregister domain names through our Corporate Services division, and manyof the participants in our Global Partner Network, we establish linesof credit based on credit worthiness.

Under current credit cardindustry practices, we are liable for fraudulent and disputed creditcard transactions because we do not obtain the cardholder'ssignature at the time of the transaction, even though the financialinstitution issuing the credit card may have approved the transaction.As a result, we must estimate the amount of credit card chargebacks wewill receive in the future related to credit card sales in the currentperiod. In determining our estimate, on a monthly basis we reviewhistorical rates of credit card chargebacks, current economic trendsand changes in acceptance of our products and services. Deferredrevenues and revenues recognized are presented net of provisions forestimated refunds to customers and chargebacks from customers.

The credit card associations may impose financial penalties if ourchargebacks and/or refunds exceed certain thresholds. Such penaltiesare not charged to revenues, but are classified as general andadministrative expenses. Because the imposition of any potentialpenalties is at the discretion of the association, subject tocontractual limitations, we have accrued amounts to cover what weestimate to be the maximum potential penalties that could be imposedunder that association's rules. If the penalty ultimately imposedis less than the maximum contractual amount, we would reverse anyexcess accounts previously accrued as a reduction of general andadministrative expense at that time. If a significant percentage ofcustomers continue to request refunds from us or contact their bank torequest that the amount we charged to their credit card be charged backto us based on claims that their credit card was used fraudulently orwithout their consent, our business could be materially adverselyaffected. See "Risk Factors" and Note 14 toConsolidated Financial Statements "Commitments andContingencies — Credit Card Penalties" foradditional information in connection with penalties that may be imposedby credit card associations and other risks associated with theCompany's credit card chargebacks and refunds.

In additionto our standard registration fees, many of which are published on ourwww.register.com website, we have a number of different fee structuresfor our domain name registration services. Our Corporate Servicesdivision delivers a diversified range of generally higher-pricedservices for our corporate customers and also extends volume-baseddiscounts for domain name registrations and transfers. We pay referralcommissions to certain participants in our Global Partner Network andto participants in our affiliate network. Other participants in ourGlobal Partner Network pay us a wholesale price per registration,discounted off of our standard registration fee.

We experienceda decrease in our total names under management to approximately 3.1million as of December 31, 2003 from approximately 3.3 million as ofDecember 31, 2002.

Other products and services, which primarilyconsist of email, domain name forwarding, web hosting, site submissionto search engines, application processing fees for new gTLDs,intellectual property protection services related to the introductionof new gTLDs and software, and fees for modifying existingregistrations, are sold either as one time offerings or through annualor monthly subscriptions, depending on the product or service. Revenuesfrom our other products and services are recognized ratably over theperiod in which we provide such services. Revenues from processing feesfor domain name applications, which may or may not result in domainname registrations, and other intellectual property protection servicesrelated to the introduction of new gTLDs, are recognized immediatelyupon the sale of the services.

Advertising revenues are derivedfrom the sale of sponsorships and banner advertisements, typicallyunder short-term contracts that range from one month to one year induration. We recognize 

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these revenues in the periods in which theadvertisements are displayed or the required number of impressions areachieved, provided that no significant company obligation remains andcollection of the resulting receivable is probable.

Cost ofRevenues

Our cost of revenues consists of the costsassociated with providing domain name registrations and other productsand services. Cost of revenues for domain name registrations representsamortization of registry fees on a straight-line basis over theregistration term, depreciation of the equipment used to process thedomain name registrations, fees paid for co-location facilities housingour equipment, and fees paid to the financial institutions to processcredit card payments on our behalf. Cost of revenues does not includepenalties for excessive credit card chargebacks and refunds; suchpenalties are classified as general and administrative expense. We payregistry 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$5,020 per year for one to ten-year country code domain nameregistrations. The largest component of our cost of revenues isregistry fees which, while paid in full at the time the domain name isregistered, are recorded as a prepaid expense and amortized to cost ofrevenues ratably over the terms of the registrations.

Cost ofrevenues for our other products and services consists of fees paid tothird-party service providers, depreciation of equipment used todeliver the services, fees paid for co-location facilities housing ourequipment, and fees paid to financial institutions to process creditcard payments on our behalf. Cost of revenues for other products andservices is recognized ratably over the periods in which the servicesare provided.

We have no direct cost of revenues associated withour advertising revenues and we have no incremental cost of revenuesassociated with delivering advertisements since we use the sameequipment to deliver the advertisements as we use for our domain nameregistration services. Therefore, the gross profit margin onadvertising revenue is 100%, and accordingly, any decrease inadvertising revenue would represent a reduction of our gross profit ofthe same amount. We incur costs including salaries and commissions forour advertising sales staff, which are classified as operatingexpenses.

Operating Expenses

Our operatingexpenses consist of sales and marketing, research and development,general and administrative (including non-cash compensation), andamortization of intangibles. Prior to January 1, 2002 our operatingexpenses also included amortization of goodwill; effective January 1,2002 we adopted SFAS 142 and ceased amortization of goodwill. Our salesand marketing expenses consist primarily of employee salaries,marketing programs such as advertising, and commissions paid to oursales representatives. Research and development expenses consistprimarily of employee salaries, fees for outside consultants, softwarelicensing fees and related costs associated with the development andintegration of new products and services, enhancement of existingproducts and services, and quality assurance. General andadministrative expenses, excluding non-cash compensation, includesalaries and other personnel-related expenses for executive, financialand administrative personnel, as well as professional fees, insurancepremiums, penalties for excessive credit card chargebacks and refunds,and provisions for uncollectible receivables. Facilities costs areallocated across the various operating expense categories. We accountfor non-cash compensation expense in accordance with AccountingPrinciples Board Opinion No. 25 and related interpretations. Non-cashcompensation expense relates to grants of restricted stock, stockoptions and warrants to employees, directors, consultants and vendorswith exercise prices below fair market value of the underlying stock onthe date of grant. Based on such grants through December 31, 2003, weexpect to record approximately $0.5 million in additional non-cashcompensation expense through 2008 as follows: $0.4 million in 2004 and$0.1 million through 2008. Non-cash compensation expense will reduceour earnings or increase our losses, as applicable, in futureperiods.

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We review our goodwill and intangibles forimpairment annually or whenever events or changes in circumstancesindicate that the carrying amount of these assets may not berecoverable. We assess the recoverability of goodwill and intangiblesusing estimated undiscounted cash flows. These cash flows include anestimated terminal value based on a hypothetical sale of an acquisitionat the end of the related amortization period. We also compare thetotal market value of our common stock with the book value of ourstockholders' equity. Based on the foregoing factors, if weconclude that an other-than-temporary impairment of goodwill orintangibles has occurred, we record an impairment writedown.

Income Taxes

In preparing our financialstatements, we make estimates of our current tax obligations andtemporary differences resulting from timing differences for reportingitems for financial statement and tax purposes, the most significant ofwhich is deferred revenue. We recognize deferred taxes by the asset andliability method of accounting for income taxes. Under the asset andliability method, deferred income taxes are recognized for differencesbetween the financial statement and tax bases of assets and liabilitiesat enacted statutory tax rates in effect for the years in which thedifferences are expected to reverse. The effect on deferred taxes of achange in tax rates is recognized as income or expense in the periodthat includes the enactment date. Valuation allowances are establishedwhen appropriate, based on management's judgment, to reduce thecarrying value of deferred tax assets to the amounts expected to berealized.

Net Income (Loss)

Although we wereprofitable for the year 2003, we were not profitable for the years 2002or 2001. Our net loss for 2002 included a goodwill impairment writedownand amortization of intangibles of $17.0 million. Our net loss for 2001included a goodwill impairment writedown of $32.5 million. Although wehave recently taken several initiatives intended to reduce ouroperating expenses in 2004, we cannot assure you as to when or if thesereductions will be realized. Losses at RCOM Europe and RegistryPro havecontributed to a decline in our profitability. We expect losses at RCOMEurope to impact our profitability negatively through the early part ofthe year 2004 and perhaps beyond. We sold our RegistryPro business inFebruary 2004 and, accordingly, we believe that RegistryPro will nothave a significant negative impact on our profitability in 2004 orbeyond. In addition, unless we lower our credit card refunds and reduceour level of credit card chargebacks, we may continue to be potentiallyliable for significant penalties from credit card associations, whichwould impact our profitability (see "RiskFactors" for additional information). Further, weanticipate that our revenues from advertising will be materially lowerin future periods.

For all the above reasons, we cannot assureyou that we will be able to operate profitably or continue to generatepositive cash flow in the future.

Year 2003 compared withYear 2002

Net Revenues

Total net revenuesdecreased 2% to $104.3 million in 2003 from $106.3 million in2002.

Domain name registrations.    Recognition ofrevenues from domain name registrations decreased 6% to $91.4million in 2003 from $97.3 million in 2002. This decrease was dueprimarily to a lower number of domain names registered, and in part tolower average sale prices per year of subscription term. Thesereductions were offset in part by the inclusion of RCOM Europe in ourresults of operations for the full year in 2003 as compared to 2002,for which it was included from the date of acquisition (March  8,2002); revenues from RCOM Europe of $10.4 million and $7.2million were recognized in 2003 and 2002, respectively. We may facecontinued pricing pressure in the future, which would adversely impactour revenues and profitability.

Other Products andServices.    Revenues from other products and services increased85% to $8.9  million in 2003 from $4.8  million in2002. The largest component of the increased revenues in this categorywas email services.

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At December  31, 2003, our deferredrevenue balance was $86.9 million, compared with $87.1 million atDecember  31, 2002, representing a decrease of $0.2million for the year 2002. Our deferred revenue balance is an indicatorof revenue to be recognized in future periods.

Advertising.    Revenues from advertising decreased4% to $4.0 million in 2003 from $4.2 million in 2002. From thefourth quarter of 2002 through the third quarter of 2003, our largestadvertising customer, a provider of web-hosting services, had accountedfor approximately $1.0 million of advertising revenues per quarter.However in the fourth quarter of 2003 we began to offer web-hostingservices to our own customers, and decided to discontinue thisadvertising relationship. Accordingly, we did not sell advertising tothis customer in the fourth quarter of 2003 and we do not expect tosell advertising to this customer in future periods. Accordingly, weanticipate that our annualized advertising revenue will decline byapproximately $4.0 million unless we can increase our advertising salesto other customers. Our sales of web-hosting services directly to ourown customers are classified as revenues from other products andservices.

Cost of Revenues

Total cost of revenuesdecreased 7% to $32.7 million in 2003 from $35.3 million in2002.

Cost of Domain Name Registrations.    Costsrecognized for domain name registrations decreased 11% to $30.7million in 2003 from $34.3 million in 2002. The decrease resultedprimarily from a lower number of domain names registered in 2003 and areduction of data center operations expenses.

Cost of OtherProducts and Services.    Cost of other products and servicesincreased 44% to $2.0  million in 2003 from $1.0 millionin 2002 in part as a result of increased revenues from other productsand services in 2003 (primarily email services), and in part because in2002 we had received a $0.4 million refund from the .biz registry as aresult of that registry's decision to cancel certain .bizapplications.

Gross Profit Margin

Our gross profitmargin increased to 68.7% in 2003 from 66.8% in 2002,primarily as a result of lower costs of our data center operations, andin part due to increases in revenues from other products and services,which have a higher gross profit margin than domain name registrationservices.

Operating Expenses

Total operating expensesdecreased 18% to $72.2  million in 2003 from $88.2million in 2002.

Sales and Marketing.    Sales andmarketing expenses decreased 16% to $26.2  million in 2003from $31.2  million in 2002. The decrease was primarily due toreductions in online and off-line media spending. We anticipate thatour marketing expense will increase significantly in 2004.

Research and Development.    Research and developmentexpenses increased 39% to $18.6  million in 2003 from$13.4  million in 2002. The increase resulted primarily fromhigher salaries and consulting fees for personnel working to improveour systems and operations. We anticipate that research and developmentexpenses will continue to remain high during the first half of 2004,and perhaps beyond, as we continue our efforts to upgrade and improveour systems.

General and Administrative.    General andadministrative expenses increased 2% to $26.9  million in2003 from $26.3 million in 2002. The increase was primarily due to $6.8million of advisory fees and expenses incurred in 2003 in connectionwith our consideration of various strategic alternatives following theunsolicited acquisition proposals we received in early 2003 and inconnection with the self-tender offer for $120 million of our commonstock and warrants completed in September 2003. This was partiallyoffset by lower accruals for potential credit card penalties ($2.4million in 2003 versus $4.5 million in 2002), a decline ofapproximately $2 million in bad debt expense as a result of improvedcollection efforts which reduced the level of past-due receivables andthe required reserves for potentially uncollectible receivables, and adecline of $0.9 million in amortization of noncash compensation.

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As of December 31, 2003 our balance sheetreflected an accrued liability of $6.1 million for potential creditcard penalties, which represents our estimate of the maximum potentialpenalties that could be imposed under one credit cardassociation's rules for chargebacks and/or refunds in excess ofcertain thresholds. For additional information in connection withpotential credit card penalties, see "RiskFactors" and Note 14 to Consolidated Financial Statements,"Commitments and Contingencies — Credit CardPenalties."

Amortization and Writedown ofGoodwill and Other Intangibles.    Amortization of intangibleswas $0.6 million in 2003 compared with amortization and writedown ofgoodwill and other intangibles of $17.3  million in 2002. InSeptember 2002, we made a decision to abandon the Afternic business. Asa consequence of that decision, as well as negative industry andeconomic trends affecting us and the general decline in technologycompany valuations, including the valuation of our common stock, weperformed an impairment analysis of the goodwill and intangible assetsrecorded in connection with our various acquisitions. Because the totalmarket value of our common stock at September  30, 2002 was lowerthan the book value of our stockholders' equity, we recorded agoodwill impairment loss of $17.0 million in September 2002. Also, inaccordance with SFAS 142, we ceased amortization of goodwill effectiveJanuary  1, 2002.

Other Income, Net

Other income,net, which consisted primarily of interest income, net of interestexpense, decreased to $3.0 million in 2003 from $5.6 million in 2002.The decrease was primarily due to lower prevailing interest rates andin part to a reduction of $120 million in our investment portfolio inconnection with our self-tender offer for $120 million of our commonstock and warrants completed in September 2003.

Provision forIncome Taxes

The provision for income taxes in 2003 was $0.1million, representing an effective rate of 4% of pre-tax income.This lower-than-statutory effective tax rate (43%) resultedprimarily from our receipt of tax-free interest income on ourinvestment portfolio. The provision for income taxes in 2002 was abenefit of $1.2  million, representing an effective tax rate of11% of the pre-tax loss. This lower-than-statutory effective taxbenefit resulted primarily from the fact that only a portion of thegoodwill impairment writedown was tax deductible, and in part becauseno tax benefits were recorded in connection with losses generated byRCOM Europe, as realization was not assured.

Earnings Per Share— Weighted average number of shares

The weighted averagenumber of shares outstanding for the year 2003 was 35,701,000 shares(basic) and 37,662,000 shares (diluted). As a result of our completionin September 2003 of our $120 million self-tender offer, in which wepurchased 17,910,347 shares of our common stock and warrants topurchase 987,283 shares of our common stock (based on the conversion ofwarrants on a cashless basis at the $6.35 per share offer price), theweighted average number of shares declined in the fourth quarter of2003. The lower number of shares outstanding will have the effect ofincreasing net income (loss) per share in future periods; however,interest income on our available cash and investment balances will belower.

Year 2002 compared with Year 2001

NetRevenues

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

Domain name registrations.    Recognition of revenues fromdomain name registrations decreased 4% to $97.3  millionin 2002 from $101.4  million in 2001. This decrease was due inpart to lower average prices and a longer dollar-weighted-averagesubscription term for domain names registered in 2002 compared with2001, and in part to a writeoff related to credit card receivables in2002. These reductions were offset in part by the inclusion of RCOMEurope in our results of operations after March  8, 2002, forwhich revenues of $7.2  million were recognized in 2002. We mayface continued pricing pressure.

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At December  31, 2002, we had $87.1million of deferred revenue compared with $77.4  million atDecember  31, 2001, representing an increase of $9.7million for the year 2002. The increase was due primarily to theacquisition of RCOM Europe on March  8, 2002, whose balance sheetincluded deferred revenue of $6.9  million at the date ofacquisition. Our deferred revenue balance is an indicator of revenue tobe recognized in future periods.

Other Products andServices.    Revenues from other products and services decreased13% to $4.8 million in 2002 from $5.5  million in 2001.The decrease was due primarily to the non-recurrence in 2002 of $2.9million of revenues received during 2001 from sales of intellectualproperty services in connection with the launch of new gTLDs, offset inpart by increased sales in 2002 of email and WebSiteNOW! services.

Advertising.    Revenues from advertising decreased54% to $4.2  million in 2002 from $9.4  million in2001, primarily as a result of softness in the Internet advertisingmarket.

Cost of Revenues

Total cost of revenuesincreased 1% to $35.3  million in 2002 from $34.8 millionin 2001.

Cost of Domain Name Registrations.    Costsrecognized for domain name registrations increased 3% to$34.3  million in 2002 from $33.3  million in 2001. Theincrease was due to the inclusion of RCOM Europe in our results ofoperations after March 8, 2002, for which costs of $2.4  millionwere recognized in 2002, more than offsetting the decreased cost ofdomain name registrations that resulted from lower registrationrevenues recognized in 2002.

Cost of Other Products andServices.     Cost of other products and services declined to$1.0 million in 2002 from $1.5 million, primarily because 2001 included$1.2 million of costs related to sales of intellectual propertyservices in connection with the launch of new gTLDs, which did notrecur in 2002.

Gross Profit Margin

Our gross profitmargin declined to 66.8% in 2002 from 70.1% in 2001, inpart due to lower advertising revenues, in part to lower average pricesand in part to fixed costs for depreciation and data center operationswhich comprised a higher percentage of the lower level of revenues.

Operating Expenses

Total operating expenses decreased13% to $88.2  million in 2002 from $101.3  millionin 2001.

Sales and Marketing.    Sales and marketingexpenses decreased 7% to $31.2 million in 2002 from $33.5million in 2001. The decrease was primarily due to lower expensesrelated to media advertising, direct mail and other promotionalactivities, offset in part by the inclusion of RCOM Europe in ourresults of operations after March  8, 2002.

Researchand Development.    Research and development expenses increased74% to $13.4  million in 2002 from $7.7  million in2001. The increase resulted primarily from higher salaries andconsulting fees for personnel working to improve our systems andoperations, and in part from increased costs for software licenses.

General and Administrative.    General and administrativeexpenses 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 resultof excessive chargebacks and refunds, of which $0.8 million was paidand $3.7 million was accrued to cover our estimate of potentialpenalties which could be imposed for 2002 under one cardassociation's rules, (ii) the inclusion of $3.4  million ofexpenses for RCOM Europe which was acquired March  8, 2002, (iii)an increase of $1.3  million in bad debt expense, (iv) the costsof operating our customer service center in Canada which commencedoperations in the third quarter of 2001, and (v) startup costs of$1.0   million for RegistryPro. For additional information inconnection with credit card penalties, see "RiskFactors" and Note 14 to Consolidated Financial Statements"Contingencies and Commitments — Credit CardPenalties".

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Amortization and Writedown of Goodwilland Other Intangibles.    Amortization and writedown of goodwilland other intangibles was $17.3 million in 2002 compared with$45.3  million in 2001. During 2001 we recorded a goodwillimpairment writedown of $32.5 million related to Afternic, which wasacquired in September 2000. In September 2002, we made a decision toabandon the Afternic business. As a consequence of that decision, aswell as negative industry and economic trends affecting us and thegeneral decline in technology company valuations, including thevaluation of our common stock, we performed an impairment analysis ofthe goodwill and intangible assets recorded in connection with itsvarious acquisitions. Because the total market value of our commonstock at September  30, 2002 was lower than the book value of itsstockholders' equity, we recorded a goodwill impairment loss of$17  million in September 2002. Also in accordance with SFAS 142,we ceased amortization of goodwill effective January  1,2002.

Other Income, Net

Other income, net, whichconsisted primarily of interest income, net of interest expense,decreased to $5.6 million in 2002 from $8.7 million in 2001. Thedecrease was primarily due to lower prevailing interest rates in2002.

Provision for Income Taxes

The provision forincome taxes in 2002 was a benefit of $1.2  million, representingan effective tax rate of 11% of the pre-tax loss. That effectivetax rate was lower than the statutory rate of 43% in partbecause only a portion of the goodwill impairment writedown istax-deductible, in part because no tax benefits were recorded inconnection with losses generated by RCOM Europe in the United Kingdomas realization is not assured, and in part because a substantialportion of our interest income is exempt from taxes. In 2001, theprovision for income taxes was an expense of $10.4  million,rather than a benefit, because goodwill amortization and the impairmentwritedown recorded in 2001 were not tax-deductible.

QuarterlyResults of Operations

The following table sets forth selectedunaudited quarterly statement of operations data, in dollar amounts andas percentages of net revenue, for the eight quarters ended December31, 2003. In our opinion this information has been prepared onsubstantially the same basis as the audited financial statementsappearing elsewhere in this annual report, and all necessaryadjustments, consisting only of normal recurring adjustments, have beenincluded in order to present fairly the unaudited quarterly results ofoperations data. The quarterly data should be read in conjunction withour annual financial statements and related notes appearing elsewherein this annual report. The operating results for any quarter are notnecessarily indicative of results for any futureperiod.

40

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|                                                                                                                               |  |                                         |        |                    |  |              |        |                |  |                  |        |                    |  |              |        |                |  |        |        |         |  |        |         |         |  |        |        |        |  |        |        |        |  |  |
|-------------------------------------------------------------------------------------------------------------------------------|--|-----------------------------------------|--------|--------------------|--|--------------|--------|----------------|--|------------------|--------|--------------------|--|--------------|--------|----------------|--|--------|--------|---------|--|--------|---------|---------|--|--------|--------|--------|--|--------|--------|--------|--|--|
|                                                                                                                          |  | QuarterEnded                            |
|                                                                                                                          |  | December31, 2003                        |        | September 30, 2003 |  | June 30,2003 |        | March 31, 2003 |  | December 31,2002 |        | September 30, 2002 |  | June 30,2002 |        | March 31, 2002 |
|                                                                                                                          |  | (inthousands, except per share amounts) |
| Netrevenues                                                                                                                   |  | $                                       | 25,313 |               |  | $            | 25,749 |           |  | $                | 26,167 |               |  | $            | 27,090 |           |  | $      | 26,531 |    |  | $      | 25,490  |    |  | $      | 26,967 |   |  | $      | 27,300 |   |
| Costofrevenues                                                                                                                |  |                                    | 8,085  |               |  |         | 7,748  |           |  |             | 8,570  |               |  |         | 8,291  |           |  |   | 9,207  |    |  |   | 8,182   |    |  |   | 9,157  |   |  |   | 8,753  |   |
| Grossprofit                                                                                                                   |  |                                    | 17,228 |               |  |         | 18,001 |           |  |             | 17,597 |               |  |         | 18,799 |           |  |   | 17,324 |    |  |   | 17,308  |    |  |   | 17,810 |   |  |   | 18,547 |   |
| Operatingexpenses:                                                                                                            |  |                                    |   |               |  |         |   |           |  |             |   |               |  |         |   |           |  |   |   |    |  |   |    |    |  |   |   |   |  |   |   |   |
| Salesandmarketing                                                                                                             |  |                                    | 6,825  |               |  |         | 6,098  |           |  |             | 6,599  |               |  |         | 6,647  |           |  |   | 7,424  |    |  |   | 7,270   |    |  |   | 8,294  |   |  |   | 8,234  |   |
| Researchanddevelopment                                                                                                        |  |                                    | 5,466  |               |  |         | 5,079  |           |  |             | 4,169  |               |  |         | 3,901  |           |  |   | 3,985  |    |  |   | 3,897   |    |  |   | 3,157  |   |  |   | 2,318  |   |
| Generaland administrative (including non-cash compensation of $288, $285,$287, $188, $521, $492, $469, and $455,respectively) |  |                                    | 4,542  |               |  |         | 4,877  |           |  |             | 11,354 |               |  |         | 6,092  |           |  |   | 7,619  |    |  |   | 10,030  |    |  |   | 4,799  |   |  |   | 3,864  |   |
| Amortizationand writedown of goodwill and otherintangibles                                                                    |  |                                    | 145    |               |  |         | 137    |           |  |             | 135    |               |  |         | 134    |           |  |   | 134    |    |  |   | 17,003  |    |  |   | 123    |   |  |   | 30     |   |
| Totaloperatingexpenses                                                                                                        |  |                                    | 16,978 |               |  |         | 16,191 |           |  |             | 22,257 |               |  |         | 16,774 |           |  |   | 19,162 |    |  |   | 38,200  |    |  |   | 16,373 |   |  |   | 14,446 |   |
| Income(loss) fromoperations                                                                                                   |  |                                    | 250    |               |  |         | 1,810  |           |  |             | (4,660 | )             |  |         | 2,025  |           |  |   | (1,838 | )  |  |   | (20,892 | )  |  |   | 1,437  |   |  |   | 4,101  |   |
| Otherincome (expense),net                                                                                                     |  |                                    | 440    |               |  |         | 771    |           |  |             | 899    |               |  |         | 879    |           |  |   | 1,351  |    |  |   | 1,174   |    |  |   | 1,473  |   |  |   | 1,590  |   |
| Income(loss) before provision (benefit) for incometaxes                                                                       |  |                                    | 690    |               |  |         | 2,581  |           |  |             | (3,761 | )             |  |         | 2,904  |           |  |   | (487   | )  |  |   | (19,718 | )  |  |   | 2,910  |   |  |   | 5,691  |   |
| Provision(benefit) for incometaxes                                                                                            |  |                                    | (197   | )             |  |         | 158    |           |  |             | (765   | )             |  |         | 894    |           |  |   | (140   | )  |  |   | (5,155  | )  |  |   | 2,063  |   |  |   | 2,037  |   |
| Netincome(loss)                                                                                                               |  | $                                       | 887    |               |  | $            | 2,423  |           |  | $                | (2,996 | )             |  | $            | 2,010  |           |  | $      | (347   | )  |  | $      | (14,563 | )  |  | $      | 847    |   |  | $      | 3,654  |   |
| Basic(loss) income pershare                                                                                                   |  | $                                       | 0.04   |               |  | $            | 0.06   |           |  | $                | (0.07  | )             |  | $            | 0.05   |           |  | $      | (0.01  | )  |  | $      | (0.36   | )  |  | $      | 0.02   |   |  | $      | 0.09   |   |
| Diluted(loss) income pershare                                                                                                 |  | $                                       | 0.04   |               |  | $            | 0.06   |           |  | $                | (0.07  | )             |  | $            | 0.05   |           |  | $      | (0.01  | )  |  | $      | (0.36   | )  |  | $      | 0.02   |   |  | $      | 0.08   |   |
| Weightedaverage number of sharesoutstanding:                                                                                  |  |
| Basic                                                                                                                         |  |                                    | 23,519 |               |  |         | 37,426 |           |  |             | 40,991 |               |  |         | 40,685 |           |  |   | 40,057 |    |  |   | 40,049  |    |  |   | 39,530 |   |  |   | 38,572 |   |
| Diluted                                                                                                                       |  |                                    | 25,311 |               |  |         | 38,927 |           |  |             | 40,991 |               |  |         | 43,286 |           |  |   | 40,057 |    |  |   | 40,049  |    |  |   | 43,544 |   |  |   | 44,175 |   |
|                                                                                                                               |

|                                                            |  |                  |         |                    |  |              |         |                |  |                  |        |                    |  |              |         |                |  |        |         |          |  |        |        |          |  |        |         |         |  |        |         |         |  |  |
|------------------------------------------------------------|--|------------------|---------|--------------------|--|--------------|---------|----------------|--|------------------|--------|--------------------|--|--------------|---------|----------------|--|--------|---------|----------|--|--------|--------|----------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                       |  | QuarterEnded     |
|                                                       |  | December31, 2003 |         | September 30, 2003 |  | June 30,2003 |         | March 31, 2003 |  | December 31,2002 |        | September 30, 2002 |  | June 30,2002 |         | March 31, 2002 |
| Netrevenues                                                |  |             | 100     | %             |  |         | 100     | %         |  |             | 100    | %             |  |         | 100     | %         |  |   | 100     | %   |  |   | 100    | %   |  |   | 100     | %  |  |   | 100     | %  |
| Costofrevenues                                             |  |             | 32      |               |  |         | 30      |           |  |             | 33     |               |  |         | 31      |           |  |   | 35      |     |  |   | 32     |     |  |   | 34      |    |  |   | 32      |    |
| Grossprofit                                                |  |             | 68      |               |  |         | 70      |           |  |             | 67     |               |  |         | 69      |           |  |   | 65      |     |  |   | 68     |     |  |   | 66      |    |  |   | 68      |    |
| Operatingcosts andexpenses                                 |  |             |    |               |  |         |    |           |  |             |   |               |  |         |    |           |  |   |    |     |  |   |   |     |  |   |    |    |  |   |    |    |
| Salesandmarketing                                          |  |             | 27      |               |  |         | 24      |           |  |             | 25     |               |  |         | 25      |           |  |   | 28      |     |  |   | 29     |     |  |   | 31      |    |  |   | 30      |    |
| Researchanddevelopment                                     |  |             | 22      |               |  |         | 20      |           |  |             | 16     |               |  |         | 14      |           |  |   | 15      |     |  |   | 15     |     |  |   | 12      |    |  |   | 9       |    |
| Generaland administrative (including non-cashcompensation) |  |             | 18      |               |  |         | 19      |           |  |             | 43     |               |  |         | 22      |           |  |   | 29      |     |  |   | 39     |     |  |   | 18      |    |  |   | 14      |    |
| Amortizationand writedown of goodwill and otherintangibles |  |             | — |               |  |         | — |           |  |             | 1      |               |  |         | — |           |  |   | — |     |  |   | 67     |     |  |   | — |    |  |   | — |    |
| Totaloperating costs andexpenses                           |  |             | 67      |               |  |         | 63      |           |  |             | 85     |               |  |         | 61      |           |  |   | 72      |     |  |   | 150    |     |  |   | 61      |    |  |   | 53      |    |
| Income(loss) fromoperations                                |  |             | 1       |               |  |         | 7       |           |  |             | (18    | )             |  |         | 8       |           |  |   | (7      | )   |  |   | (82    | )   |  |   | 5       |    |  |   | 15      |    |
| Otherincome (expenses),net                                 |  |             | 2       |               |  |         | 3       |           |  |             | 3      |               |  |         | 3       |           |  |   | 5       |     |  |   | 5      |     |  |   | 6       |    |  |   | 6       |    |
| Income(loss) before provision (benefit) for incometaxes    |  |             | 3       |               |  |         | 10      |           |  |             | (15    | )             |  |         | 11      |           |  |   | (2      | )   |  |   | (77    | )   |  |   | 11      |    |  |   | 21      |    |
| Provision(benefit) for incomeTaxes                         |  |             | 1       |               |  |         | 1       |           |  |             | (3     | )             |  |         | 3       |           |  |   | (1      | )   |  |   | (20    | )   |  |   | 8       |    |  |   | 8       |    |
| Netincome(loss)                                            |  |             | 4       | %             |  |         | 9       | %         |  |             | (12    | )%            |  |         | 8       | %         |  |   | (1      | )%  |  |   | (57    | )%  |  |   | 3       | %  |  |   | 13      | %  |
|                                                            |

Recentaccounting pronouncements

SFAS 146"Accounting for Costs Associated with Exit or DisposalActivities" was issued in June 2002, and requires thatcosts associated with exit or disposal activities be recognized whenthe liability is incurred, rather than at the date of commitment to anexit or disposal plan. Examples of covered costs are lease terminationand certain employee severance. SFAS 146 is applicable to exit ordisposal activities initiated after December  31, 2002.

SFAS 148 "Accounting for Stock-Based Compensation— Transition and Disclosure — an amendment of FAS123" was issued in December 2002, providing foralternative methods of transition for a voluntary change to the fairmarket value based method of accounting for stock-based employeecompensation.

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Liquidity and Capital Resources

Historically, we have funded our operations and met our capitalexpenditure requirements primarily through cash generated fromoperations, sales of equity securities and borrowings. We issued5,222,279 shares of our common stock to the public on March 3, 2000,which enabled us to raise approximately $115.3 million in cash afterdeducting underwriting discount and other offering expenses. InSeptember 2003, we used $120 million of our cash, short-terminvestments and marketable securities to complete a self-tender offerin which we purchased 17,910,347 shares of our common stock andwarrants to purchase 987,283 shares of our common stock (based on theconversion of warrants on a cashless basis at the $6.35 per share offerprice).

During 2003, our cash and cash equivalents, short-terminvestments and marketable securities declined by $122.4 million,primarily as a result of our generation of $10.9 million of cash fromoperations in 2003, offset by $120 million which we used for theself-tender offer, $10.6 million to retire notes payable issued inconnection with our acquisition of RCOM Europe, and $4 million forcapital expenditures. In 2002 we generated $16.1 million of cash fromoperations, and we used $3.2 million for capital expenditures.

We currently anticipate that our operating expenses will continue torepresent a material use of our cash resources and we expect ourexpenses for research and development to increase during the first halfof 2004 and perhaps beyond, and we expect our sales and marketingexpense to increase for the full year 2004 and perhaps beyond. Webelieve that our current balance of cash, short-term investments andmarketable securities together with anticipated cash to be providedfrom operations will be sufficient to meet our anticipated cash needsfor working capital and capital expenditures for at least the next 12months. However, as a result of the consummation of our $120 millionself-tender offer in September 2003, when compared to our financialposition prior to the self-tender, we have significantly reduced ourcash position and our future interest income, reduced our ability toengage in significant transactions without additional debt or equityfinancing, reduced our ability to cover existing contingent or otherfuture liabilities, and potentially negatively impacted our liquidityduring future periods of increased capital requirements or operatingexpenses.

Under a prior registry agreement with ICANN, we hadcommitted to provide up to $8.5 million in funding and other non-cashcontributions to our subsidiary, RegistryPro, for its activities inestablishing, operating and marketing the .pro top level domain.Effective February 26, 2004, we sold the core assets of the RegistryProbusiness and ICANN agreed to the assignment of the registry agreementto the purchaser. Through December 31, 2003 we had contributedapproximately $4.1 million in cash, of which $2.6 million was fundedduring 2003, and we had also made non-cash contributions which we havevalued at approximately $2.4 million. In addition, the purchaser hasagreed to assume $2.0 million of this $8.5 million commitment.Accordingly, we believe that we have satisfied our funding commitmentin full, as well as our other obligations under the registry agreement,although we have not obtained a release of these obligations fromICANN.

A summary of our contractual obligations for operatingleases and other commitments as of December  31, 2003 is asfollows:

|                            |  |                      |       |                 |  |           |       |           |  |                  |       |        |  |        |       |        |  |        |     |        |  |  |
|----------------------------|--|----------------------|-------|-----------------|--|-----------|-------|-----------|--|------------------|-------|--------|--|--------|-------|--------|--|--------|-----|--------|--|--|
|                       |  | PaymentsDue byPeriod |
|                       |  | Total                |       | Lessthan 1 Year |  | 2-3 Years |       | 4-5 Years |  | Morethan 5 Years |
|                       |  | (inthousands)        |
| Operating leaseobligations |  | $                    | 6,276 |            |  | $         | 1,353 |      |  | $                | 2,361 |   |  | $      | 1,767 |   |  | $      | 795 |   |
| Purchaseobligations(1)     |  |                 | 3,646 |            |  |      | 1,654 |      |  |             | 1,705 |   |  |   | 284   |   |  |   | 3   |   |
| Total                      |  | $                    | 9,922 |            |  | $         | 3,007 |      |  | $                | 4,066 |   |  | $      | 2,051 |   |  | $      | 798 |   |
|                            |

|  |
|--|
|  |  |
|  |

| (1) | Purchase obligations include agreements to purchase goods orservices that are enforceable and legally binding on the Company andthat specify all significant terms, including: fixed minimum quantitiesto be purchased: fixed, minimum or variable pricing provisions; and theapproximate timing of the transaction. Purchase obligations excludeagreements that are cancelable withoutpenalty. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

42

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The Board of Directors had previouslyauthorized a repurchase program for up to $10.0 million of our CommonStock through October 2004, and we had purchased 370,100 shares for atotal of $1.6  million through December  31, 2002 underthis program. In September 2003, we completed a $120 millionself-tender offer of our outstanding common stock and warrants. We willnot repurchase additional shares or our common stock unless the Boardof Directors authorizes a new repurchase program.

Item7A.    Quantitative and Qualitative Disclosures About MarketRisk.

Our exposure to market risk is primarily related tointerest rate sensitivity, which is affected by changes in the generallevel of U.S. interest rates. We believe that we are not subject to amaterial interest rate risk because substantially all of ourinvestments are in fixed-rate, short-term securities having a maturityof not more than two years, with a majority having a maturity of lessthan one year. Accordingly, the fair value of our investment portfoliowould not be significantly impacted by a 100 basis point increase ordecrease in interest rates. From time to time we also invest inpublicly traded stocks, and we are subject to market price risk withrespect to such investments. At December  31, 2003 the fair valueof our investments in publicly traded stocks was $0.5 million. We didnot have any foreign currency hedging or derivative instruments atDecember  31, 2003.

We generally do not enter intofinancial instruments for trading or speculative purposes and do notcurrently utilize derivative financial instruments. While we have nopresent intention of utilizing derivative financial instruments in thefuture, it is possible that we may enter into such transactions orsimilar transactions. At December  31, 2003 we had no long-termdebt.

Our consolidated financial statements are denominated inU.S. dollars. We derived 10% of our net revenues in 2003 fromoperations outside of the United States. We face foreign currency risksin part because our European subsidiaries receive revenues in localcurrencies, and in part because the expenses of our customer servicecenter are paid in Canadian dollars. Our European subsidiaries incurmost of their expenses in their local currencies, which in part offsetsour foreign currency risk related to European revenues received inlocal currencies. Our European subsidiaries use the local currency astheir functional currency. Because the financial results of our foreignsubsidiaries are translated into U.S. dollars for consolidation, asexchange rates vary, such financial results may vary from expectationsand may adversely impact our operating results and our net income(loss).

43

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Item8.    Financial Statements and Supplementary Data.

INDEX TOCONSOLIDATED FINANCIALSTATEMENTS

|                                                                                                                |  |        |    |        |  |  |
|----------------------------------------------------------------------------------------------------------------|--|--------|----|--------|--|--|
|                                                                                                           |  | Page   |
| Reportof PricewaterhouseCoopers LLP, IndependentAuditors                                                       |  |   | 45 |   |
| Consolidated Balance Sheets asof December 31, 2003 and2002                                                     |  |   | 46 |   |
| Consolidated Statements ofOperations for the years ended December 31, 2003, 2002 and2001                       |  |   | 47 |   |
| Consolidated Statements of Changesin Stockholders' Equity for the years ended December  31,2003, 2002 and 2001 |  |   | 48 |   |
| ConsolidatedStatements of Cash Flows for the years ended December  31,2003, 2002 and 2001                      |  |   | 49 |   |
| Notes to ConsolidatedFinancial Statements                                                                      |  |   | 50 |   |
|                                                                                                                |

44

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REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of Register.com,Inc.:

In our opinion, the accompanying consolidatedbalance sheets and the related consolidated statements of operations,of stockholders' equity and of cash flows present fairly, in allmaterial respects, the financial position of Register.com, Inc. atDecember   31, 2003 and 2002, and the results of its operationsand its cash flows for each of the three years in the period endedDecember   31, 2003 in conformity with accounting principlesgenerally accepted in the United States of America. These financialstatements are the responsibility of the Company's management;our responsibility is to express an opinion on these financialstatements based on our audits. We conducted our audits of thesestatements in accordance with auditing standards generally accepted inthe United States of America, which require that we plan and performthe audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believethat our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the Consolidated FinancialStatements, effective January   1, 2002, the Company adoptedStatement of Financial Accounting Standards No. 142,"Goodwill and Other Intangible Assets".

/s/ PricewaterhouseCoopersLLPPricewaterhouseCoopers LLPNew York, NewYorkFebruary  6, 2004

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REGISTER.COM, INC.

CONSOLIDATEDBALANCE SHEETS(in thousands, except sharedata)

|                                                                                                                                                                                    |  |             |         |         |  |        |         |         |  |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|-------------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                                                                                                               |  | December31, |
|                                                                                                                                                                               |  | 2003        |         | 2002    |
| **Assets:**                                                                                                                                                                        |  |
| CurrentAssets:                                                                                                                                                                     |  |
| Cash and cashequivalents                                                                                                                                                           |  | $           | 52,991  |    |  | $      | 50,557  |    |
| Short-terminvestments                                                                                                                                                              |  |        | 39,043  |    |  |   | 105,283 |    |
| Accountsreceivable, less allowance of $1,850 and $2,695,respectively                                                                                                               |  |        | 6,505   |    |  |   | 8,453   |    |
| Prepaiddomain name registryfees                                                                                                                                                    |  |        | 14,477  |    |  |   | 15,457  |    |
| Deferred taxasset, net                                                                                                                                                             |  |        | 24,927  |    |  |   | 23,052  |    |
| Othercurrentassets                                                                                                                                                                 |  |        | 2,388   |    |  |   | 3,303   |    |
| Totalcurrentassets                                                                                                                                                                 |  |        | 140,331 |    |  |   | 206,105 |    |
| Fixedassets, net                                                                                                                                                                   |  |        | 8,363   |    |  |   | 8,450   |    |
| Prepaiddomain name registry fees, net of currentportion                                                                                                                            |  |        | 9,856   |    |  |   | 7,131   |    |
| Otherinvestments                                                                                                                                                                   |  |        | 396     |    |  |   | 396     |    |
| Marketablesecurities                                                                                                                                                               |  |        | 2,527   |    |  |   | 61,205  |    |
| Goodwill andother intangible assets,net                                                                                                                                            |  |        | 1,952   |    |  |   | 2,317   |    |
| Totalassets                                                                                                                                                                        |  | $           | 163,425 |    |  | $      | 285,604 |    |
| **Liabilitiesand Stockholders'Equity:**                                                                                                                                            |  |
| CurrentLiabilities:                                                                                                                                                                |  |
| Accounts payable and accruedexpenses                                                                                                                                               |  | $           | 16,214  |    |  | $      | 15,227  |    |
| Deferredrevenue,net                                                                                                                                                                |  |        | 53,728  |    |  |   | 55,617  |    |
| Acquisitionnotepayable                                                                                                                                                             |  |        | — |    |  |   | 9,625   |    |
| Totalcurrentliabilities                                                                                                                                                            |  |        | 69,942  |    |  |   | 80,469  |    |
| Deferredrevenue, net of currentportion                                                                                                                                             |  |        | 33,191  |    |  |   | 31,493  |    |
| Totalliabilities                                                                                                                                                                   |  |        | 103,133 |    |  |   | 111,962 |    |
| Commitmentsandcontingencies                                                                                                                                                        |  |
| Stockholders'equity:                                                                                                                                                               |  |
| Preferred stock—$.0001 parvalue, 5,000,000 shares authorized; none issued and outstanding atDecember  31, 2003 and2002                                                       |  |        | — |    |  |   | — |    |
| Commonstock—$.0001 par value, 200,000,000 shares authorized; 23,536,801and 40,624,502 shares issued and outstanding at December  31,2003 and December  31, 2002,respectively |  |        | 2       |    |  |   | 4       |    |
| Additionalpaid-incapital                                                                                                                                                           |  |        | 100,228 |    |  |   | 216,713 |    |
| Unearnedcompensation                                                                                                                                                               |  |        | (528    | )  |  |   | (1,376  | )  |
| Accumulatedother comprehensiveincome                                                                                                                                               |  |        | 2,144   |    |  |   | 2,179   |    |
| Accumulateddeficit                                                                                                                                                                 |  |        | (41,554 | )  |  |   | (43,878 | )  |
| Totalstockholders'equity                                                                                                                                                           |  |        | 60,292  |    |  |   | 173,642 |    |
| Totalliabilities and stockholders'equity                                                                                                                                           |  | $           | 163,425 |    |  | $      | 285,604 |    |
|                                                                                                                                                                                    |

Theaccompanying notes are an integral part of these consolidated financialstatements.

46

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REGISTER.COM,INC.

CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands,except per shareamounts)

|                                                                                                       |  |                       |         |         |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------------------------------------------------------------------------|--|-----------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                                  |  | Yearended December31, |
|                                                                                                  |  | 2003                  |         | 2002    |  | 2001   |
| Netrevenues                                                                                           |  | $                     | 104,319 |    |  | $      | 106,288 |    |  | $      | 116,281 |    |
| Costofrevenues                                                                                        |  |                  | 32,694  |    |  |   | 35,299  |    |  |   | 34,790  |    |
| Grossprofit                                                                                           |  |                  | 71,625  |    |  |   | 70,989  |    |  |   | 81,491  |    |
| Operatingexpenses:                                                                                    |  |                  |    |    |  |   |    |    |  |   |    |    |
| Salesandmarketing                                                                                     |  |                  | 26,169  |    |  |   | 31,222  |    |  |   | 33,532  |    |
| Researchanddevelopment                                                                                |  |                  | 18,615  |    |  |   | 13,357  |    |  |   | 7,741   |    |
| Generaland administrative (including non-cash compensation of $1,048, $1,937,and $1,771,respectively) |  |                  | 26,865  |    |  |   | 26,312  |    |  |   | 14,769  |    |
| Amortizationand writedown of goodwill and otherintangibles                                            |  |                  | 551     |    |  |   | 17,290  |    |  |   | 45,299  |    |
| Totaloperatingexpenses                                                                                |  |                  | 72,200  |    |  |   | 88,181  |    |  |   | 101,341 |    |
| (Loss)fromoperations                                                                                  |  |                  | (575    | )  |  |   | (17,192 | )  |  |   | (19,850 | )  |
| Otherincome (expense),net                                                                             |  |                  | 2,989   |    |  |   | 5,588   |    |  |   | 8,664   |    |
| Income(loss) before provision for incometaxes                                                         |  |                  | 2,414   |    |  |   | (11,604 | )  |  |   | (11,186 | )  |
| Provision(benefit) for incometaxes                                                                    |  |                  | 90      |    |  |   | (1,195  | )  |  |   | 10,401  |    |
| Netincome(loss)                                                                                       |  |                  | 2,324   |    |  |   | (10,409 | )  |  |   | (21,587 | )  |
| Othercomprehensive income(loss):                                                                      |  |                  |    |    |  |   |    |    |  |   |    |    |
| Unrealized(loss) gain on marketablesecurities                                                         |  |                  | (693    | )  |  |   | (595    | )  |  |   | 1,002   |    |
| Gainon foreign currencytranslation                                                                    |  |                  | 658     |    |  |   | 1,388   |    |  |   | — |    |
| Comprehensiveincome(loss)                                                                             |  | $                     | 2,289   |    |  | $      | (9,616  | )  |  | $      | (20,585 | )  |
| Basicincome (loss) earnings pershare                                                                  |  | $                     | 0.07    |    |  | $      | (0.26   | )  |  | $      | (0.58   | )  |
| Dilutedincome (loss) earnings pershare                                                                |  | $                     | 0.06    |    |  | $      | (0.26   | )  |  | $      | (0.58   | )  |
| Weightedaverage number of sharesoutstanding:                                                          |  |                  |    |    |  |   |    |    |  |   |    |    |
| Basic                                                                                                 |  |                  | 35,701  |    |  |   | 40,046  |    |  |   | 37,424  |    |
| Diluted                                                                                               |  |                  | 37,662  |    |  |   | 40,046  |    |  |   | 37,424  |    |
|                                                                                                       |

Theaccompanying notes are an integral part of these consolidated financialstatements.

47

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REGISTER.COM, INC.

CONSOLIDATEDSTATEMENT OF STOCKHOLDERS' EQUITY(in thousands, except sharedata)

|                                                           |  |                                    |         |             |  |        |         |        |  |                          |             |                       |  |                                     |         |                     |  |        |          |         |  |        |         |         |  |        |         |         |  |        |         |         |  |        |          |         |  |  |
|-----------------------------------------------------------|--|------------------------------------|---------|-------------|--|--------|---------|--------|--|--------------------------|-------------|-----------------------|--|-------------------------------------|---------|---------------------|--|--------|----------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|----------|---------|--|--|
|                                                      |  | SeriesA ConvertiblePreferred Stock |         | CommonStock |  |
|                                                      |  | Shares                             |         | Amount      |  | Shares |         | Amount |  | AdditionalPaid-inCapital |             | UnearnedCompen-sation |  | Accumulatedothercomprehensiveincome |         | Accumu-latedDeficit |  | Total  |
| Balanceat January 1,2001                                  |  |                               | — |        |  |   | — |   |  |                     | 36,823,281  |                  |  | $                                   | 4       |                |  | $      | 204,677  |    |  | $      | (4,288  | )  |  | $      | 384     |    |  | $      | (11,882 | )  |  | $      | 188,895  |    |
| Issuanceof shares for the Employee Stock PurchasePlan     |  |                               | — |        |  |   | — |   |  |                     | 66,774      |                  |  |                                | — |                |  |   | 399      |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 399      |    |
| Amortizationofunearnedcompensation                        |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | (10      | )  |  |   | 1,771   |    |  |   | — |    |  |   | — |    |  |   | 1,761    |    |
| Exerciseof stock options, inclusive of related taxbenefit |  |                               | — |        |  |   | — |   |  |                     | 794,011     |                  |  |                                | — |                |  |   | 4,905    |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 4,905    |    |
| Exerciseofwarrants                                        |  |                               | — |        |  |   | — |   |  |                     | 570,428     |                  |  |                                | — |                |  |   | 208      |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 208      |    |
| Issuanceof restrictedstock                                |  |                               | — |        |  |   | — |   |  |                     | 42,087      |                  |  |                                | — |                |  |   | 500      |    |  |   | (490    | )  |  |   | — |    |  |   | — |    |  |   | 10       |    |
| Netunrealized holding gain in marketablesecurities        |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | 1,002   |    |  |   | — |    |  |   | 1,002    |    |
| Netincome(loss)                                           |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | — |    |  |   | (21,587 | )  |  |   | (21,587  | )  |
| Balanceat December 31,2001                                |  |                               | — |        |  |   | — |   |  |                     | 38,296,581  |                  |  |                                | 4       |                |  |   | 210,679  |    |  |   | (3,007  | )  |  |   | 1,386   |    |  |   | (33,469 | )  |  |   | 175,593  |    |
| Issuanceof shares for the Employee Stock PurchasePlan     |  |                               | — |        |  |   | — |   |  |                     | 62,470      |                  |  |                                | — |                |  |   | 349      |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 349      |    |
| Amortizationof unearnedcompensation                       |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | 1,937   |    |  |   | — |    |  |   | — |    |  |   | 1,937    |    |
| Exerciseof stock options, inclusive of related taxbenefit |  |                               | — |        |  |   | — |   |  |                     | 1,537,899   |                  |  |                                | — |                |  |   | 6,969    |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 6,969    |    |
| Exerciseofwarrants                                        |  |                               | — |        |  |   | — |   |  |                     | 1,063,406   |                  |  |                                | — |                |  |   | 42       |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 42       |    |
| Issuanceof restrictedstock                                |  |                               | — |        |  |   | — |   |  |                     | 34,246      |                  |  |                                | — |                |  |   | 306      |    |  |   | (306    | )  |  |   | — |    |  |   | — |    |  |   | —  |    |
| Repurchaseand retirement of treasurystock                 |  |                               | — |        |  |   | — |   |  |                     | (370,100    | )                |  |                                | — |                |  |   | (1,632   | )  |  |   | — |    |  |   | — |    |  |   | — |    |  |   | (1,632   | )  |
| Othercomprehensiveincome:                                 |  |                               |    |        |  |   |    |   |  |                     |        |                  |  |                                |    |                |  |   |     |    |  |   |    |    |  |   |    |    |  |   |    |    |  |   |     |    |
| Netunrealized holding loss on marketablesecurities        |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | (595    | )  |  |   | — |    |  |   | (595     | )  |
| Foreigncurrencytranslation                                |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | 1,388   |    |  |   | — |    |  |   | 1,388    |    |
| Netincome(loss)                                           |  |                               | — |        |  |   | — |   |  |                     |        |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | — |    |  |   | (10,409 | )  |  |   | (10,409  | )  |
| Balanceat December  31,2002                               |  |                               | — |        |  |   | — |   |  |                     | 40,624,502  |                  |  |                                | 4       |                |  |   | 216,713  |    |  |   | (1,376  | )  |  |   | 2,179   |    |  |   | (43,878 | )  |  |   | 173,642  |    |
| Issuanceof shares for the Employee Stock PurchasePlan     |  |                               | — |        |  |   | — |   |  |                     | 62,900      |                  |  |                                | — |                |  |   | 207      |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 207      |    |
| Amortizationof unearnedcompensation                       |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | 1,048   |    |  |   | — |    |  |   | — |    |  |   | 1,048    |    |
| Exerciseof stock options, inclusive of related taxbenefit |  |                               | — |        |  |   | — |   |  |                     | 338,731     |                  |  |                                | — |                |  |   | 3,132    |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 3,132    |    |
| Exerciseofwarrants                                        |  |                               | — |        |  |   | — |   |  |                     | 388,622     |                  |  |                                | — |                |  |   | 1        |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 1        |    |
| Issuanceof restrictedstock                                |  |                               | — |        |  |   | — |   |  |                     | 37,951      |                  |  |                                | — |                |  |   | 200      |    |  |   | (200    | )  |  |   | — |    |  |   | — |    |  |   | —  |    |
| Repurchaseand Retirement of commonstock                   |  |                               | — |        |  |   | — |   |  |                     | (17,915,905 | )                |  |                                | (2      | )              |  |   | (120,025 | )  |  |   | — |    |  |   | — |    |  |   | — |    |  |   | (120,027 | )  |
| Othercomprehensiveincome:                                 |  |                               |    |        |  |   |    |   |  |                     |        |                  |  |                                |    |                |  |   |     |    |  |   |    |    |  |   |    |    |  |   |    |    |  |   |     |    |
| Netunrealized holding loss on marketablesecurities        |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | (693    | )  |  |   | — |    |  |   | (693     | )  |
| Foreigncurrencytranslation                                |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | 658     |    |  |   | — |    |  |   | 658      |    |
| Netincome(loss)                                           |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | — |    |  |   | 2,324   |    |  |   | 2,324    |    |
| Balanceat December 31,2003                                |  |                               | — |        |  |   | — |   |  |                     | 23,536,801  |                  |  | $                                   | 2       |                |  | $      | 100,228  |    |  | $      | (528    | )  |  | $      | 2,144   |    |  | $      | (41,554 | )  |  | $      | 60,292   |    |
|                                                           |

Theaccompanying notes are an integral part of these consolidated financialstatements.

48

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REGISTER.COM, INC.CONSOLIDATEDSTATEMENTS OF CASH FLOWS

(inthousands)

|                                                                                                 |  |                       |          |         |  |        |          |         |  |        |          |         |  |  |
|-------------------------------------------------------------------------------------------------|--|-----------------------|----------|---------|--|--------|----------|---------|--|--------|----------|---------|--|--|
|                                                                                            |  | Yearended December31, |
|                                                                                            |  | 2003                  |          | 2002    |  | 2001   |
| **Cashflows from operatingactivities**                                                          |  |                  |     |    |  |   |     |    |  |   |     |    |
| Net income(loss)                                                                                |  | $                     | 2,324    |    |  | $      | (10,409  | )  |  | $      | (21,587  | )  |
| Adjustmentsto reconcile net income (loss) to net cash provided by (used in)operatingactivities: |  |                  |     |    |  |   |     |    |  |   |     |    |
| Deferredrevenues                                                                                |  |                  | (1,029   | )  |  |   | 1,864    |    |  |   | (11,138  | )  |
| Depreciation,amortization and writedown of goodwill and other intangibleassets                  |  |                  | 4,844    |    |  |   | 21,802   |    |  |   | 48,829   |    |
| Compensatorystock options and warrantsexpense                                                   |  |                  | 1,048    |    |  |   | 1,631    |    |  |   | 1,771    |    |
| Deferredincometaxes                                                                             |  |                  | (1,875   | )  |  |   | (4,637   | )  |  |   | 2,339    |    |
| Taxbenefit from exercise of employee stockoptions                                               |  |                  | 2,723    |    |  |   | 1,061    |    |  |   | 4,424    |    |
| Changesin assets and liabilities affecting operating cash flows, net ofacquisitions:            |  |                  |     |    |  |   |     |    |  |   |     |    |
| Accountsreceivable                                                                              |  |                  | 2,222    |    |  |   | 6,190    |    |  |   | (5,280   | )  |
| Prepaiddomain name registryfees                                                                 |  |                  | (1,498   | )  |  |   | (638     | )  |  |   | 2,715    |    |
| Prepaidincometaxes                                                                              |  |                  | —  |    |  |   | —  |    |  |   | 3,774    |    |
| Othercurrentassets                                                                              |  |                  | 1,090    |    |  |   | 2,730    |    |  |   | (2,209   | )  |
| Accountspayable and accruedexpenses                                                             |  |                  | 1,004    |    |  |   | (3,447   | )  |  |   | 612      |    |
| Netcash provided by operatingactivities                                                         |  |                  | 10,853   |    |  |   | 16,147   |    |  |   | 24,250   |    |
| **Cashflows from investingactivities**                                                          |  |                  |     |    |  |   |     |    |  |   |     |    |
| Capitalexpenditures                                                                             |  |                  | (4,026   | )  |  |   | (3,247   | )  |  |   | (2,195   | )  |
| Purchasesofinvestments                                                                          |  |                  | (410,414 | )  |  |   | (300,185 | )  |  |   | (139,830 | )  |
| Maturitiesofinvestments                                                                         |  |                  | 535,236  |    |  |   | 270,416  |    |  |   | 118,463  |    |
| Acquisitions,net                                                                                |  |                  | —  |    |  |   | (9,359   | )  |  |   | —  |    |
| Netcash provided (used) by investingactivities                                                  |  |                  | 120,796  |    |  |   | (42,375  | )  |  |   | (23,562  | )  |
| **Cashflows from financingactivities**                                                          |  |                  |     |    |  |   |     |    |  |   |     |    |
| Issuanceof notespayable                                                                         |  |                  | —  |    |  |   | 8,552    |    |  |   | —  |    |
| Repaymentof notespayable                                                                        |  |                  | (10,585  | )  |  |   | (219     | )  |  |   | —  |    |
| Netproceeds from issuance of common stock andwarrants                                           |  |                  | 592      |    |  |   | 6,605    |    |  |   | 1,088    |    |
| Retirementof commonstock                                                                        |  |                  | (120,000 | )  |  |   | (1,632   | )  |  |   | —  |    |
| Netcash (used) provided by financingactivities                                                  |  |                  | (129,993 | )  |  |   | 13,306   |    |  |   | 1,088    |    |
| Effectof exchange rate changes oncash                                                           |  |                  | 778      |    |  |   | 1,547    |    |  |   | —  |    |
| **Netincrease (decrease) in cash and cashequivalents**                                          |  |                  | 2,434    |    |  |   | (11,375  | )  |  |   | 1,776    |    |
| Cashand cash equivalents at beginning ofperiod                                                  |  |                  | 50,557   |    |  |   | 61,932   |    |  |   | 60,156   |    |
| **Cashand cash equivalents at end ofperiod**                                                    |  | $                     | 52,991   |    |  | $      | 50,557   |    |  | $      | 61,932   |    |
| Supplementaldisclosure of cash flowinformation:                                                 |  |                  |     |    |  |   |     |    |  |   |     |    |
| Cash paidfor interest                                                                           |  | $                     | 77       |    |  | $      | 123      |    |  | $      | —  |    |
| Cash paid for incometaxes                                                                       |  | $                     | 130      |    |  | $      | 1,731    |    |  | $      | —  |    |
|                                                                                                 |

The accompanying notes are anintegral part of these consolidated financialstatements.

49

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REGISTER.COM,INC.

NOTES TO CONSOLIDATED FINANCIALSTATEMENTS

1.    Nature of Business and Organization

Nature of Business

Register.com, Inc., togetherwith its wholly owned subsidiaries (the"Company" or"Register.com"), provides Internet domainname registration and other online products and services such asweb-site creation tools, email, domain name forwarding andadvertising.

The Company is an ICANN-accredited registrar ofdomain names. ICANN is an independent non-profit organization selectedby the U.S. Department of Commerce to manage and oversee the domainname system.

In March 2000, the Company completed an initialpublic offering of 5,222,279 shares of its common stock and receivednet proceeds of $115.3  million (see Note 6).

In June2000, the Company acquired Inabox, Inc., a developer of websitecreation software. In September 2000, the Company acquiredAfternic.com, Inc., a secondary market exchange for domain names. InMarch 2002, the Company acquired Virtual Internet plc, which providesdomain name registrations and online intellectual property managementand protection services. See Note 13 for additional information.

2.    Summary of Significant Accounting Policies

Principles of Consolidation

The consolidatedfinancial statements include the accounts of Register.com, Inc. (the"Company") and its wholly owned subsidiaries.Intercompany balances and transactions have been eliminated.

Cash equivalents

The Company considers all highlyliquid investments purchased with an initial maturity of 90 days orless to be cash equivalents. The Company maintains its cash balances inhighly rated financial institutions. At times, such cash balancesexceed the Federal Deposit Insurance Corporation limit. The Company haspledged $3.1 million and $7.7 million of its cash as of December 31,2003 and 2002, respectively, as security deposits, primarily to supportoutstanding letters of credit.

Investments

TheCompany classifies its investments in debt securities as marketablesecurities in accordance with the provisions of Statement of FinancialAccounting Standards ("SFAS") No. 115,"Accounting for Certain Investments in Debt and EquitySecurities." These securities are carried at fair marketvalue, with unrealized gains and losses reported in stockholders'equity as a component of other comprehensive income (loss). Gains orlosses on securities sold are based on the specific identificationmethod.

Securities with maturities of less than one year areclassified as current, and securities with maturities of greater thanone year are classified as non-current.

Fixedassets

Depreciation and amortization is calculated usingthe straight-line method. Estimated useful lives are as follows:capitalized computer software — three years; equipment, furnitureand fixtures — three to five years; buildings — fiftyyears; leasehold improvements — shorter of the estimated usefullife of each improvement or the lease term. The costs of additions andimprovements are capitalized, and repairs and maintenance costs arecharged to operations as incurred.

Revenuerecognition

The Company's revenues are primarilyderived from domain name registration fees, other products andservices, and advertising.

50

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Domain name registrationfees

Registration fees charged to end-users forregistration services are recognized on a straight-line basis over theregistration term. A majority of end-user subscribers pay for serviceswith credit cards for which the Company receives remittances from thecredit card associations, generally within two business days after thesale transaction. A provision for estimated refunds to customers andchargebacks from customers is recorded as a reduction of deferredrevenue and accounts receivable. For many of our corporate customerswho register domain names through our Corporate Services division andparticipants in our Global Partner Network, we establish lines ofcredit based on credit worthiness. Referral commissions earned byparticipants in our Global Partner Network are deducted from grossregistration revenue for presentation in our financial statements.

Other products and services

Revenue from otherproducts and services is recognized on a straight-line basis over theperiod in which services are provided. Payments received in advance ofservices rendered are included in deferred revenue.

Advertising

Advertising revenues are derivedprincipally from short-term advertising contracts. Advertising revenuesare recognized in the periods in which the advertisements are displayedor the required number of impressions are achieved, provided that nosignificant Company obligation remains and collection of the resultingreceivable is probable.

Deferred revenue

Deferred revenue represents the unearned portion of paymentsreceived and invoices rendered, net of provisions for estimated refundsto customers and chargebacks from customers, and referral commissionsfor certain Global Partner Network partners.

Prepaid domainname registry fees

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

Research and developmentand software development costs

Research and developmentcosts are charged to expense as incurred. Software development costsincurred subsequent to the establishment of technological feasibilityand prior to the general release of the product or service to thepublic, are capitalized and amortized to cost of revenues over theestimated useful life of the related product or service. Softwaredevelopment costs capitalized during the years 2003 and 2002 totaled$2.4 million and $1.6 million, respectively.

Advertisingcosts

Advertising costs include media advertising, directmail and other promotional activities, and are charged to expense asincurred. Advertising expense was $7.4 million, $11.9  million,and $15.5 million for the years 2003, 2002 and 2001, respectively.

Income taxes

The Company recognizes deferredincome taxes by the asset and liability method, based on differencesbetween the financial statement and tax bases of assets and liabilitiesat enacted statutory tax rates in effect for the years in which thedifferences are expected to reverse. The effect of a change in taxrates on deferred taxes is recognized in income in the period of theenactment date. In addition, valuation allowances are established whenappropriate to reduce deferred tax assets to the amounts expected to berealized.

Fair value of financial instruments

The carrying values of cash and cash equivalents, accountsreceivable, accounts payable and accrued expenses, approximate fairvalue because of the relatively short-term nature of theseinstruments.

51

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Concentration of creditrisk

Concentration of credit risk associated with accountsreceivable is limited due to the large number of customers, as well astheir dispersion across various industries and geographic areas. Nosingle customer comprised more than 5% of our gross accountsreceivable balance as of December 31, 2003. The Company has noderivative financial instruments.

Use ofestimates

The preparation of financial statements inconformity with generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the amountsreported in the financial statements and accompanying notes. TheCompany's most significant estimates relate to potential refundsto customers and chargebacks from customers; the realizability ofaccounts receivable, fixed assets, intangible assets, and deferred taxassets; the potential liability to credit card associations forpenalties for credit card chargebacks and refunds in excess of certainthresholds; potential liability for various matters in litigation; andthe estimated useful lives of fixed assets and intangible assets.Actual results could differ from management's estimates. Themarkets for the Company's products and services are characterizedby intense competition, continual technology advances and newproduct/service introductions, all of which could impact the futurerealizability of the Company's assets.

Stock basedcompensation

The Company accounts for stock-basedcompensation in accordance with Accounting Principles Board Opinion No.25, "Accounting for Stock Issued toEmployees," ("APB 25") andrelated interpretations. The Company provides the disclosures requiredby SFAS 123, "Accounting for Stock-BasedCompensation."

The Company's stock-basedincentive plans are more fully described in Note 8. The following tableillustrates the effect on the Company's net income (loss) and netincome (loss) per share had compensation cost for stock-based incentiveplans been determined in accordance with the fair value based method ofaccounting for stock-based compensation as prescribed by SFAS 123.Since option grants awarded during 2003, 2002 and 2001 vest overseveral years and additional awards are expected to be issued in thefuture, the pro forma results shown below are not likely to berepresentative of the effects on future years of the application of thefair value basedmethod.

|                                                                                                   |  |                                     |        |         |  |        |         |         |  |        |         |         |  |  |
|---------------------------------------------------------------------------------------------------|--|-------------------------------------|--------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                              |  | Yearended December31,               |
|                                                                                              |  | 2003                                |        | 2002    |  | 2001   |
|                                                                                              |  | (inthousands, except per sharedata) |        |    |  |   |
| Net income(loss):                                                                                 |  |                                |   |    |  |   |    |    |  |   |    |    |
| Asreported                                                                                        |  | $                                   | 2,324  |    |  | $      | (10,409 | )  |  | $      | (21,587 | )  |
| Add:Stock-based employee compensation included in reported netincome                              |  |                                | 1,048  |    |  |   | 1,937   |    |  |   | 1,771   |    |
| Deduct:Total stock-based employee compensation expense determined under thefair value basedmethod |  |                                | (4,193 | )  |  |   | (3,650  | )  |  |   | (5,157  | )  |
| Proforma                                                                                          |  | $                                   | (821   | )  |  | $      | (12,122 | )  |  | $      | (24,973 | )  |
| Netincome (loss) pershare:                                                                        |  |                                |   |    |  |   |    |    |  |   |    |    |
| As reported—diluted                                                                         |  | $                                   | 0.06   |    |  | $      | (0.26   | )  |  | $      | (0.58   | )  |
| Proforma —diluted                                                                           |  | $                                   | (0.02  | )  |  | $      | (0.30   | )  |  | $      | (0.67   | )  |
|                                                                                                   |

Otherdisclosures required by SFAS 123 have been included in Note 8.

Net income (loss) per share

The Company calculatesearnings per share in accordance with SFAS 128, "EarningsPer Share."

Basic earnings per share("Basic EPS") is computed by dividing netincome available to common stockholders by the weighted average numberof common shares outstanding during the period. 

52

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Diluted earnings per share("Diluted EPS") gives effect to all dilutivepotential common shares outstanding during a period. In computingDiluted EPS, the treasury stock method is used in determining thenumber of shares assumed to be purchased from the proceeds of exercisesof options and warrants. Details of the calculations of net income(loss) per share are asfollows:

|                                                  |  |                                        |        |        |  |        |         |         |  |        |         |         |  |  |
|--------------------------------------------------|--|----------------------------------------|--------|--------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                             |  | YearEnded December31,                  |
|                                             |  | 2003                                   |        | 2002   |  | 2001   |
|                                             |  | (inthousands, except per shareamounts) |
| **Net income (loss) per share— basic:**    |  |                                   |   |   |  |   |    |    |  |   |    |    |
| Netincome (loss) available to commonshareholders |  | $                                      | 2,324  |   |  | $      | (10,409 | )  |  | $      | (21,587 | )  |
| Weightedaverage shares —basic              |  |                                   | 35,701 |   |  |   | 40,046  |    |  |   | 37,424  |    |
| Netincome (loss) per share —basic          |  | $                                      | 0.07   |   |  | $      | (0.26   | )  |  | $      | (0.58   | )  |
|                                             |  |                                   |   |   |  |   |    |    |  |   |    |    |
| **Netincome (loss) per share —diluted:**   |  |                                   |   |   |  |   |    |    |  |   |    |    |
| Net income(loss)                                 |  | $                                      | 2,324  |   |  | $      | (10,409 | )  |  | $      | (21,587 | )  |
| Weightedaverage shares outstanding —basic  |  |                                   | 35,701 |   |  |   | 40,046  |    |  |   | 37,424  |    |
| Dilutedeffect of stockoptions                    |  |                                   | 264    |   |  |   | 606     |    |  |   | 2,292   |    |
| Dilutedeffect ofwarrants                         |  |                                   | 1,697  |   |  |   | 2,193   |    |  |   | 4,791   |    |
| Weightedaverage shares —diluted            |  |                                   | 37,662 |   |  |   | 42,845  |    |  |   | 44,507  |    |
| Netincome (loss) per share —diluted        |  | $                                      | 0.06   |   |  |   |         | *  |  |   |         | *  |
|                                                  |

|  |
|--|
|  |  |
|  |

| * | Inclusionof common stock equivalent shares would result in an anti-dilutive netloss per share. As a result, diluted net loss per share is the same asbasic net loss per share. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Weighted average number ofshares

The weighted average number of shares outstandingfor the year 2003 was 35,701,000 shares (basic) and 37,662,000 shares(diluted). As a result of the completion in September 2003 of theCompany's $120 million self-tender offer, in which the Companypurchased 17,910,347 shares of its common stock and warrants topurchase 987,283 shares of its common stock (based on the conversion ofsuch warrants on a cashless basis at the $6.35 per share offer price),the weighted average number of shares has declined. The lower weightedaverage number of shares will have the effect of increasing net income(loss) per share in future periods.

Comprehensive income(loss)

The Company follows SFAS 130,"Reporting Comprehensive Income." Items ofcomprehensive income must be classified by their nature in thefinancial statements, with accumulated balances shown separately.

Comprehensive income was $41,000 less than net income for the year2003, representing a net unrealized loss on marketable securities of$693,000 offset in part by an unrealized gain on foreign currencytranslation of $652,000.

Segment and geographicreporting

The Company follows SFAS 131,"Disclosures about Segments of an Enterprise and RelatedInformation", which established standards for reportingoperating segments in annual financial statements, and relateddisclosures about products and services, geographic areas and majorcustomers. The Company operates in one business segment. Revenues andlong-lived assets outside of the United States are not deemed material,therefore no separate disclosure by geographic region is provided.

53

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Goodwill and otherintangibles

SFAS 141 "BusinessCombinations" and SFAS 142 "Goodwill andOther Intangible Assets" became effective for the Companyon January  1, 2002 with respect to business combinationscompleted on or after June 30, 2001.

Under SFAS 142, effectiveJanuary  1, 2002 goodwill is no longer subject to amortization.Management estimates the recoverability of the carrying amount ofintangible assets annually, or whenever events or changes incircumstances 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 comparedwith the carrying value of stockholders' equity, are the primaryindicators used to assess the recoverability of intangible assets. (SeeNote 13).

Following is a reconciliation of net income (loss)between the historical amounts reported for year 2001, and the adjustedamounts reflecting this new accountingstandard:

|                                                      |  |          |         |         |  |  |
|------------------------------------------------------|--|----------|---------|---------|--|--|
|                                                 |  | Year2001 |
| (in thousands, except per shareamounts)              |  |
| Net income(loss):                                    |  |     |    |    |
| Reportednet income(loss)                             |  | $        | (21,587 | )  |
| Excludeamortization of goodwill and otherintangibles |  |     | 12,799  |    |
| Adjustednet income(loss)                             |  | $        | (8,788  | )  |
| Basicnet income (loss) pershare:                     |  |     |    |    |
| Reportedbasic net income (loss) pershare             |  | $        | (0.58   | )  |
| Adjustedbasic net income (loss) pershare             |  | $        | (0.23   | )  |
| Dilutednet income (loss) pershare:                   |  |     |    |    |
| Reporteddiluted net income (loss) pershare           |  | $        | (0.58   | )  |
| Adjusteddiluted net income (loss) pershare           |  | $        | (0.23   | )  |
|                                                      |

Long-livedassets (excluding Goodwill)

The Company evaluatespotential impairment of long-lived assets (excluding goodwill) wheneverevents or circumstances indicate that the carrying amount of an assetmay not be recoverable. An impairment loss would be recognized when theestimated future cash flow expected to result from the use of the assetand its eventual disposition is less than its carrying amount. If anasset is considered impaired, the impairment loss is measured as theamount by which the carrying value of the asset exceeds its estimatedfair value. Fair value is determined based upon estimated discountedcash 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 DisposalActivities" was issued in June 2002, requiring that costsassociated with exit or disposal activities be recognized when theliability is incurred, rather than at the date of commitment to an exitor disposal plan. Examples of covered costs are lease termination andcertain employee severance. SFAS 146 is applicable to exit or disposalactivities 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, providing for alternative methods oftransition for a voluntary change to the fair market value based methodof accounting for stock-based employee compensation.

Reclassification

For comparative purposes, certainamounts in the financial statements of prior periods have beenreclassified to conform to the current year's presentation.

54

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3.    Fixed Assets

Fixed assetsconsist of thefollowing:

|                                               |  |               |         |         |  |        |         |         |  |  |
|-----------------------------------------------|--|---------------|---------|---------|--|--------|---------|---------|--|--|
|                                          |  | December31,   |
|                                          |  | 2003          |         | 2002    |
|                                          |  | (inthousands) |
| Computer equipment and capitalizedsoftware    |  | $             | 18,538  |    |  | $      | 14,606  |    |
| Furnitureand fixtures                         |  |          | 430     |    |  |   | 426     |    |
| Officeequipment                               |  |          | 626     |    |  |   | 631     |    |
| Building                                      |  |          | 512     |    |  |   | 512     |    |
| Leaseholdimprovements                         |  |          | 2,994   |    |  |   | 2,904   |    |
|                                          |  |          | 23,100  |    |  |   | 19,079  |    |
| Less:accumulated depreciation andamortization |  |          | (14,737 | )  |  |   | (10,629 | )  |
| Fixedassets,net                               |  | $             | 8,363   |    |  | $      | 8,450   |    |
|                                               |

4.    AccountsPayable and Accrued Expenses

Accounts payable and accruedexpenses consist of thefollowing:

|                                                                                           |  |               |        |        |  |        |         |        |  |  |
|-------------------------------------------------------------------------------------------|--|---------------|--------|--------|--|--------|---------|--------|--|--|
|                                                                                      |  | December31,   |
|                                                                                      |  | 2003          |        | 2002   |
|                                                                                      |  | (inthousands) |
| Trade accountspayable                                                                     |  | $             | 597    |   |  | $      | 1,095   |   |
| Accruedcompensation andbenefits                                                           |  |          | 3,179  |   |  |   | 2,519   |   |
| Accruedregistry fees and relatedcosts                                                     |  |          | 515    |   |  |   | 3,264   |   |
| Penalties for creditcard chargebacks and refunds in excess of certain thresholds (Note14) |  |          | 6,138  |   |  |   | 3,739   |   |
| Accrued advertisingexpense                                                                |  |          | 680    |   |  |   | 1,627   |   |
| Accruedprofessional fees                                                                  |  |          | 718    |   |  |   | 878     |   |
| Incometaxespayable                                                                        |  |          | 1,614  |   |  |   | — |   |
| Other                                                                                     |  |          | 2,773  |   |  |   | 2,105   |   |
|                                                                                      |  | $             | 16,214 |   |  | $      | 15,227  |   |
|                                                                                           |

5.    Investments

As of December  31, 2003 and 2002, short-term investments andmarketable securities consisted of thefollowing:

|                                     |  |           |        |                |  |                              |        |                              |  |        |         |        |  |        |         |         |  |  |
|-------------------------------------|--|-----------|--------|----------------|--|------------------------------|--------|------------------------------|--|--------|---------|--------|--|--------|---------|---------|--|--|
|                                |  | FairValue |        | Amortized Cost |  | GrossUnrealizedHolding Gains |        | GrossUnrealizedHoldingLosses |
| **December 31, 2003 (inthousands)** |  |
| Short-terminvestments:              |  |
| Municipaldebtobligations            |  | $         | 39,043 |           |  | $                            | 39,005 |                         |  | $      | 50      |   |  | $      | (12     | )  |
| Totalshort-terminvestments          |  | $         | 39,043 |           |  | $                            | 39,005 |                         |  | $      | 50      |   |  | $      | (12     | )  |
| Marketablesecurities                |  |      |   |           |  |                         |   |                         |  |   |    |   |  |   |    |    |
| Municipaldebtobligations            |  | $         | 2,000  |           |  | $                            | 2,000  |                         |  |   | — |   |  |   | — |    |
| Equitysecurities                    |  |      | 527    |           |  |                         | 471    |                         |  |   | 57      |   |  |   | — |    |
| Totalmarketablesecurities           |  | $         | 2,527  |           |  | $                            | 2,471  |                         |  | $      | 57      |   |  | $      | — |    |
|                                     |

55

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|                                     |  |           |         |                |  |                              |         |                              |  |        |         |        |  |        |         |         |  |  |
|-------------------------------------|--|-----------|---------|----------------|--|------------------------------|---------|------------------------------|--|--------|---------|--------|--|--------|---------|---------|--|--|
|                                |  | FairValue |         | Amortized Cost |  | GrossUnrealizedHolding Gains |         | GrossUnrealizedHoldingLosses |
| **December 31, 2002 (inthousands)** |  |
| Short-terminvestments:              |  |
| Municipaldebtobligations            |  | $         | 95,327  |           |  | $                            | 94,872  |                         |  | $      | 457     |   |  | $      | (2      | )  |
| Certificatesofdeposit               |  |      | 9,956   |           |  |                         | 9,956   |                         |  |   | — |   |  |   | — |    |
| Totalshort-terminvestments          |  | $         | 105,283 |           |  | $                            | 104,828 |                         |  | $      | 457     |   |  | $      | (2      | )  |
| Marketablesecurities                |  |      |    |           |  |                         |    |                         |  |   |    |   |  |   |    |    |
| Municipaldebtobligations            |  | $         | 60,887  |           |  | $                            | 60,404  |                         |  | $      | 486     |   |  | $      | (3      | )  |
| Equitysecurities                    |  |      | 318     |           |  |                         | 470     |                         |  |   | — |   |  |   | (152    | )  |
| Totalmarketablesecurities           |  | $         | 61,205  |           |  | $                            | 60,874  |                         |  | $      | 486     |   |  | $      | (155    | )  |
|                                     |

TheCompany classifies its investments in debt and equity securities asmarketable securities in accordance with the provisions of SFAS 115,"Accounting for Certain Investments in Debt and EquitySecurities." These securities are carried at fair marketvalue, with unrealized gains and losses reported in stockholders'equity as a component of other comprehensive income (loss). Gains orlosses on securities sold are calculated based on the specificidentification method. Net unrealized holding gains of $0.1million and $0.8  million on these securities are included inaccumulated comprehensive income at December  31, 2003 and 2002,respectively. Other investments at December  31, 2003 represent a$0.4  million investment in Afilias USA, Inc., the registry forthe .info generic top level domain.

6.    Stockholders'Equity

Common Stock

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

During2001, the Company issued 56,377 shares of restricted stock to employeesat exercise prices ranging from $0.00 to $11.49 per share. The Companyrecorded $0.5  million as deferred compensation, representing thefair value of the restricted stock at the date of issuance, which isbeing amortized to expense over the three-year vesting period of thegrants.

During 2003, the Company issued 37,951 shares ofrestricted stock to an employee at a price of $5.27 per share, andrecorded $0.2 million as deferred compensation, representing theestimated fair value of the restricted stock at the date of issuance.That amount is being amortized to expense over the vesting period ofthe shares. In December 2003, the Company accelerated the vesting of13,388 of those shares, and also purchased 5,558 of those shares fromthe employee, with the proceeds used by the employee as payment forwithholding taxes incurred in connection with the acceleratedvesting.

Self-Tender Offer

In September 2003,the Company used $120 million of its cash, short-term investments andmarketable securities to complete a self-tender offer in which theCompany purchased 17,910,347 shares of its common stock and warrants topurchase 987,283 shares of its common stock (based on the conversion ofwarrants on a cashless basis at the $6.35 per share offer price).

Retirement of Common Stock

During 2002, theCompany repurchased and retired 370,100 shares of its common stock at acost of $1.6 million.

Preferred Stock PurchaseRights

In October 2002, the Company declared a dividenddistribution of one preferred share purchase right (the"Right") for each outstanding share of theCompany's Common Stock, to stockholders of 

56

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record at the close of business on November12, 2002. Each Right entitles the registered holder to purchase fromthe Company a unit consisting of one one-thousandth of a share (a"Unit") of Series A Junior ParticipatingPreferred Stock ("Series A Preferred") at aprice of $32.00 per Unit. The Rights, which expire on November 12,2012, will only become exercisable upon distribution. Distribution ofthe Rights will not occur until ten days after the earlier of (i) thepublic announcement that a person or group has acquired beneficialownership of 15% or more of the outstanding shares of CommonStock (an "Acquiring Person"), or (ii) thecommencement of, or announcement of an intention to make, a tenderoffer or exchange offer that would result in a person or groupacquiring the beneficial ownership of 15% or more of theoutstanding shares of the Company's Common Stock. Under specifiedcircumstances, the holders of the Rights, other than the AcquiringPerson, would be entitled to receive, upon exercise of the Rights,Series A Preferred having a value equal to two times the exercise priceof the Rights.

Voting

Each share of commonstock entitles the holder to one vote on all matters submitted to avote of the Company's stockholders.

7.    Warrants

Common shares issuable upon exercise of warrants outstanding atDecember  31, 2003 are asfollows:

|               |  |                 |  |                             |           |                                |  |   |      |        |  |  |  |  |
|---------------|--|-----------------|--|-----------------------------|-----------|--------------------------------|--|---|------|--------|--|--|--|--|
| IssuanceDate  |  | Expiration Date |  | Shares IssuableUponExercise |           | Average Exercise PricePerShare |
| January1998   |  | June2005        |  |                        | 1,295,224 |                           |  | $ | 0.97 |   |
| September1998 |  | September2008   |  |                        | 843       |                           |  | $ | 0.43 |   |
| March1999     |  | March2009       |  |                        | 5,250     |                           |  | $ | 0.57 |   |
| May1999       |  | May2004         |  |                        | 277,747   |                           |  | $ | 4.08 |   |
| June1999      |  | June2009        |  |                        | 5,250     |                           |  | $ | 1.57 |   |
| June1999      |  | June2004        |  |                        | 164,895   |                           |  | $ | 3.43 |   |
| Totals        |  |            |  |                        | 1,749,209 |                           |  | $ | 1.70 |   |
|               |

8.    StockOption Plans

Amended and Restated 2000 Stock IncentivePlan

The Company's Amended and Restated 2000 StockIncentive Plan (the "2000 Plan") supersedesthe 1997 and 1999 Stock Option Plans. The 2000 Plan permits grants ofincentive stock options, non-qualified stock options, and otherequity-based awards. Incentive stock options and certain other awardsmay be granted only to employees, whereas non-qualified stock optionsand certain other awards may be granted to employees, non-employeedirectors, and consultants. The number of shares reserved for issuanceunder the 2000 Plan is automatically increased on the first trading dayof each calendar year by 2% of the total number of shares ofcommon stock outstanding on the last trading day of the prior calendaryear, up to a maximum annual increase of 1,750,000 shares. OnJanuary  2, 2004, 2003 and 2002 the number of shares reserved forissuance increased by 470,736, 812,490, and 765,932, respectively.Accordingly, the maximum aggregate number of shares reserved forissuance under the 2000 Plan as of January  2, 2004 was2,982,463.

The Compensation Committee determines the exerciseprice and other terms of options and other awards (except automaticoption grants to non-employee directors) under the 2000 Plan. Allnon-employee Board members, other than 3% Stockholders, areautomatically granted an option to acquire 25,000 shares of commonstock on the date of initial election or appointment to the Board, atan exercise price equal to the fair market value of the Company'scommon stock on the date of grant, with vesting in annual installmentsover two years. In addition, each non-employee Board member, other than3% Stockholders, who continues to serve as a director on thedate of each regularly 

57

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scheduled quarterly meeting of the Board willreceive an option grant to purchase 2,500 shares of common stock oneach such meeting date at an exercise price equal to the fair marketvalue of the Company's common stock on the date of grant. Each2,500 share option grant will vest upon the optionee's completionof 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% ofthe total combined voting power of the outstanding securities of theCompany (or any Parent or Subsidiary), or was affiliated with or was arepresentative of such a 3% or greater stockholder and iscompensated for his/her membership on the Board of Directors by anysuch 3% or greater stockholder.

Stock option activityunder the 2000 Plan is summarized asfollows:

|                                                           |  |                |            |                              |  |        |        |        |  |  |
|-----------------------------------------------------------|--|----------------|------------|------------------------------|--|--------|--------|--------|--|--|
|                                                      |  | NumberofShares |            | WeightedAverageExercisePrice |
| Outstanding at January  1,2001                            |  |           | 3,574,432  |                         |  | $      | 19.00  |   |
| Granted                                                   |  |           | 2,674,088  |                         |  |   | 8.92   |   |
| Exercised                                                 |  |           | (356,550   | )                       |  |   | 1.07   |   |
| Forfeited                                                 |  |           | (1,079,895 | )                       |  |   | 18.57  |   |
| Outstandingat 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  |   |
| Outstandingat December  31,2002                           |  |           | 5,872,161  |                         |  |   | 12.18  |   |
|                                                      |  |           |       |                         |  |   |   |   |
| Granted                                                   |  |           | 1,953,425  |                         |  |   | 5.54   |   |
| Exercised                                                 |  |           | (293,477   | )                       |  |   | 2.53   |   |
| Forfeited                                                 |  |           | (1,912,570 | )                       |  |   | 15.36  |   |
| Outstandingat December  31,2003                           |  |           | 5,619,539  |                         |  | $      | 9.41   |   |
|                                                      |  |           |       |                         |  |   |   |   |
| Optionsavailable for future grant as of December  31,2003 |  |           | 2,511,727  |                         |  |   |   |   |
|                                                           |

Detailsof options outstanding under the 2000 Plan at December  31, 2003are asfollows:

|               |  |                                     |           |                                                 |  |                              |      |                                    |  |                              |       |        |  |        |           |        |  |   |       |        |  |  |
|---------------|--|-------------------------------------|-----------|-------------------------------------------------|--|------------------------------|------|------------------------------------|--|------------------------------|-------|--------|--|--------|-----------|--------|--|---|-------|--------|--|--|
|          |  | OptionsOutstanding                  |           | OptionsExercisable                              |
| ExercisePrice |  | NumberOutstanding atDecember31,2003 |           | Weighted-AverageRemainingContractualLife(Years) |  | WeightedAverageExercisePrice |      | NumberExercisableatDecember31,2003 |  | WeightedAverageExercisePrice |
| $0.86-$4.43   |  |                                | 474,839   |                                            |  |                         | 8.23 |                               |  | $                            | 4.14  |   |  |   | 128,062   |   |  | $ | 3.63  |   |
| $4.50-$4.50   |  |                                | 611,400   |                                            |  |                         | 8.92 |                               |  | $                            | 4.50  |   |  |   | 162,500   |   |  | $ | 4.50  |   |
| $4.51-$5.27   |  |                                | 774,709   |                                            |  |                         | 9.24 |                               |  | $                            | 5.10  |   |  |   | 90,110    |   |  | $ | 4.95  |   |
| $5.32-$5.46   |  |                                | 578,896   |                                            |  |                         | 8.99 |                               |  | $                            | 5.45  |   |  |   | 39,155    |   |  | $ | 5.46  |   |
| $5.52-$6.30   |  |                                | 739,556   |                                            |  |                         | 8.74 |                               |  | $                            | 6.21  |   |  |   | 201,912   |   |  | $ | 6.25  |   |
| $6.38-$8.60   |  |                                | 564,163   |                                            |  |                         | 7.37 |                               |  | $                            | 7.55  |   |  |   | 288,103   |   |  | $ | 7.53  |   |
| $8.65-$8.81   |  |                                | 584,786   |                                            |  |                         | 7.68 |                               |  | $                            | 8.75  |   |  |   | 224,517   |   |  | $ | 8.75  |   |
| $9.00-$12.86  |  |                                | 561,924   |                                            |  |                         | 7.18 |                               |  | $                            | 10.99 |   |  |   | 373,203   |   |  | $ | 11.23 |   |
| $12.96-$40.88 |  |                                | 690,416   |                                            |  |                         | 6.66 |                               |  | $                            | 27.70 |   |  |   | 584,587   |   |  | $ | 28.67 |   |
| $45.00-$58.06 |  |                                | 38,850    |                                            |  |                         | 6.43 |                               |  | $                            | 45.62 |   |  |   | 35,286    |   |  | $ | 45.65 |   |
| $0.86-$58.06  |  |                                | 5,619,539 |                                            |  |                         | 8.14 |                               |  | $                            | 9.41  |   |  |   | 2,127,435 |   |  | $ | 14.01 |   |
|               |

58

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Prior to completion of the initial publicoffering in March 2000, the fair value of option grants to employeeswas estimated using the minimum value method of the Black-Scholesoption-pricing model, which assumes no volatility of the stock price.The estimated fair values were based on assumptions derived frominformation provided by the Company's management. Changes in theinformation would affect the assumptions and the estimated fair valuesderived from the assumptions. Subsequent to the initial publicoffering, volatility assumptions have been utilized. The assumptionsused to determine the estimated fair value of option grants toemployees in 2003, 2002 and 2001 were as follows:

|                       |  |                       |    |         |  |        |     |         |  |        |     |         |  |  |
|-----------------------|--|-----------------------|----|---------|--|--------|-----|---------|--|--------|-----|---------|--|--|
|                  |  | YearEnded December31, |
|                  |  | 2003                  |    | 2002    |  | 2001   |
| Riskfree interestrate |  |                  | 3  | %  |  |   | 3.8 | %  |  |   | 4.5 | %  |
| Expectedlives (years) |  |                  | 5  |    |  |   | 5   |    |  |   | 5   |    |
| Expecteddividends     |  |                  | 0  | %  |  |   | 0   | %  |  |   | 0   | %  |
| Volatility            |  |                  | 72 | %  |  |   | 68  | %  |  |   | 80  | %  |
|                       |

Thefair value of options and warrants (see Note 7) granted tonon-employees is estimated using the Black-Scholes option-pricingmodel. The estimated fair values were based on assumptions derived frominformation provided by the Company's management as shown in theabove table. Changes in the information would affect the assumptionsand the estimated fair values derived from the assumptions.

Theweighted average exercise prices and the estimated fair values at grantdates of options granted during 2003, 2002, and 2001 were asfollows:

|                                                          |  |                       |         |                     |  |                |         |                     |  |                |         |                    |  |        |         |        |  |   |      |        |  |   |      |        |  |  |
|----------------------------------------------------------|--|-----------------------|---------|---------------------|--|----------------|---------|---------------------|--|----------------|---------|--------------------|--|--------|---------|--------|--|---|------|--------|--|---|------|--------|--|--|
|                                                     |  | YearEnded December31, |
|                                                     |  | 2003                  |         | 2002                |  | 2001           |
|                                                     |  | ExercisePrice         |         | EstimatedFair Value |  | Exercise Price |         | Estimated FairValue |  | Exercise Price |         | EstimatedFairValue |
| Exercise price less than fair valueof stock on grantdate |  |                  | — |                |  |           | — |                |  |           | — |               |  |   | — |   |  | $ | .01  |   |  | $ | 9.19 |   |
| Exerciseprice equal to fair value of stock on grantdate  |  | $                     | 5.54    |                |  | $              | 5.54    |                |  | $              | 6.47    |               |  | $      | 6.47    |   |  | $ | 8.92 |   |  | $ | 8.92 |   |
|                                                          |

9.    EmployeeStock Purchase Plan

An Employee Stock Purchase Plan (the"Plan") became effective on March  3,2000, through which employees may purchase shares of common stockthrough payroll deductions up to 10% of eligible compensation.The price paid by the employee is 85% of the fair market valueon the offering date or the last day of the purchase period. There aretwo 6-month purchase periods per year commencing May 1 and November 1.A total of 350,000 shares was initially reserved for issuance under thePlan. The number of shares reserved for issuance is automaticallyincreased on the first trading day of January of each year by0.25% of the total shares of common stock outstanding on thelast trading day of the prior calendar year. Accordingly, in January2004, 2003 and 2002, the number of shares reserved for issuance wasincreased by 58,842, 101,561, and 95,741 shares, respectively. Sharesissued under the Plan were 62,900 and 62,470 during 2003 and 2002,respectively.

10.    Related Party Transactions

Peter Forman

Over the four-month period fromFebruary 2003 through June 2003, Peter Forman provided consultingservices to the Company for a fee of $0.1 million. Mr. Forman was amember of the Company's board of directors during that period. InJune 2003, Mr. Forman was elected CEO and President of the Company andentered into an employment agreement with the Company that includes aprofit-sharing bonus arrangement whereby Mr. Forman is eligible toreceive annual bonuses equal to 3% of the Company'searnings before interest, taxes, certain non-cash expenses and othercosts or gains ("EBIT"), as defined in theagreement, between $7 million and $25 million, and 5% of theexcess over $25 million for each calendar year.

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11.    Income Taxes

Temporarydifferences between the carrying amounts of assets and liabilities forfinancial reporting and income tax purposes resulted in a net deferredtax asset of $24.9  million and $23.1  million atDecember  31, 2003 and 2002, respectively.

The provisionfor income taxes for the years 2003, 2002 and 2001 consists of thefollowing:

|                                 |  |               |        |         |  |        |         |         |  |        |         |        |  |  |
|---------------------------------|--|---------------|--------|---------|--|--------|---------|---------|--|--------|---------|--------|--|--|
|                            |  | December31,   |
|                            |  | 2003          |        | 2002    |  | 2001   |
|                            |  | (inthousands) |
| **Currentprovision:**           |  |          |   |    |  |   |    |    |  |   |    |   |
| Federal                         |  | $             | 1,202  |    |  | $      | 2,395   |    |  | $      | 5,634   |   |
| State                           |  |          | 500    |    |  |   | 1,046   |    |  |   | 2,252   |   |
| Foreign                         |  |          | 263    |    |  |   | — |    |  |   | — |   |
| Totalcurrent                    |  |          | 1,965  |    |  |   | 3,441   |    |  |   | 7,886   |   |
| **Deferredprovision(benefit):** |  |          |   |    |  |   |    |    |  |   |    |   |
| Federal                         |  |          | (1,298 | )  |  |   | (3,620  | )  |  |   | 1,513   |   |
| State                           |  |          | (577   | )  |  |   | (1,016  | )  |  |   | 1,002   |   |
| Totaldeferred                   |  |          | (1,875 | )  |  |   | (4,636  | )  |  |   | 2,515   |   |
| Totalprovision(benefit)         |  | $             | 90     |    |  | $      | (1,195  | )  |  | $      | 10,401  |   |
|                                 |

Thecurrent provision in the above schedule excludes the effect of taxdeductions related to exercises of non-qualified stock options anddisqualifying dispositions of incentive stock options. Under SFAS 109,tax benefits resulting from the foregoing are treated as an increase instockholders' equity. On a tax-return basis, after giving effectto such tax deductions, for the year 2002 the Company had a taxableloss, and accordingly, the Company had recorded a tax receivable ofapproximately $1.2 million which was included within accounts payableand accrued expenses as of December 31, 2002. As of December 31, 2003,the Company had a tax payable of $1.6 million, which was included inaccounts payable and accrued expenses.

The components of the netdeferred tax asset were asfollows:

|                                 |  |               |        |         |  |        |         |         |  |  |
|---------------------------------|--|---------------|--------|---------|--|--------|---------|---------|--|--|
|                            |  | December31,   |
|                            |  | 2003          |        | 2002    |
|                            |  | (inthousands) |        |    |
| Deferred taxassets:             |  |          |   |    |  |   |    |    |
| Allowance for doubtfulaccounts  |  | $             | 803    |    |  | $      | 1,142   |    |
| Accruedexpenses                 |  |          | 192    |    |  |   | 184     |    |
| Allowance forreturns            |  |          | 359    |    |  |   | 357     |    |
| Depreciation andamortization    |  |          | 439    |    |  |   | 323     |    |
| Stock-basedcompensation         |  |          | 180    |    |  |   | (55     | )  |
| Deferredrevenue                 |  |          | 25,340 |    |  |   | 25,874  |    |
| Credit cardpenalties            |  |          | 2,663  |    |  |   | 1,584   |    |
| Foreign TaxCredit               |  |          | 112    |    |  |   | — |    |
| Totaldeferred taxasset          |  |          | 30,088 |    |  |   | 29,409  |    |
| Deferredtax liabilities:        |  |          |   |    |  |   |    |    |
| Prepaid domainname registryfees |  |          | 5,172  |    |  |   | 6,101   |    |
| Deferredcommissions             |  |          | (145   | )  |  |   | 40      |    |
| Restrictedstock                 |  |          | 134    |    |  |   | 216     |    |
| Totaldeferred taxliabilities    |  |          | 5,161  |    |  |   | 6,357   |    |
| Netdeferred taxasset            |  | $             | 24,927 |    |  | $      | 23,052  |    |
|                                 |

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

|                                                                                 |  |                       |         |         |  |        |         |          |  |        |         |          |  |  |
|---------------------------------------------------------------------------------|--|-----------------------|---------|---------|--|--------|---------|----------|--|--------|---------|----------|--|--|
|                                                                            |  | Yearended December31, |
|                                                                            |  | 2003                  |         | 2002    |  | 2001   |
| Taxprovision (benefit) at Federal statutoryrate                                 |  |                  | 34.0    | %  |  |   | (35.0   | )%  |  |   | (35.0   | )%  |
| Stateincome tax provision (benefit), net of Federal taxcharge                   |  |                  | 1.0     |    |  |   | 0.6     |     |  |   | (4.7    | )   |
| Foreigntaxrate                                                                  |  |                  | 10.9    |    |  |   | 34.9    |     |  |   | — |     |
| Taxexemptinterest                                                               |  |                  | (39.5   | )  |  |   | (12.7   | )   |  |   | — |     |
| Non-deductibleamortization and writedown of goodwill and other intangibleassets |  |                  | — |    |  |   | 26.1    |     |  |   | 152.4   |     |
| Abandonmentof Afternic business (Note13)                                        |  |                  | — |    |  |   | (23.7   | )   |  |   | — |     |
| Taxcredits                                                                      |  |                  | (15.2   | )  |  |   | (5.5    | )   |  |   | — |     |
| Otherpermanentitems                                                             |  |                  | (16.4   | )  |  |   | 5.0     |     |  |   | — |     |
| Non-deductibleadvisorycosts                                                     |  |                  | 28.9    |    |  |   | — |     |  |   | — |     |
| Valuationallowance                                                              |  |                  | — |    |  |   | — |     |  |   | (19.8   | )   |
| Taxprovision (benefit) per statement ofoperations                               |  |                  | 3.7     | %  |  |   | (10.3   | )%  |  |   | 92.9    | %   |
|                                                                                 |

12.    Commitments

Operating leases

The Company leases officefacilities under non-cancelable operating leases expiring through 2011.Future minimum lease payments are asfollows:

|                            |  |               |       |        |  |  |
|----------------------------|--|---------------|-------|--------|--|--|
| Yearsending December  31,  |  | (inthousands) |
| 2004                       |  | $             | 1,353 |   |
| 2005                       |  |          | 1,234 |   |
| 2006                       |  |          | 1,127 |   |
| 2007                       |  |          | 885   |   |
| 2008                       |  |          | 882   |   |
| Thereafter                 |  |          | 795   |   |
| Totalminimum leasepayments |  | $             | 6,276 |   |
|                            |

Rentexpense for the years 2003, 2002 and 2001 was $1.8  million,$1.5  million and $0.7  million, respectively.

Employment agreements

In the normal course ofbusiness, the Company enters into employment agreements with certain ofits executives.

13.    Acquisitions

In September2000, the Company acquired Afternic.com, Inc. for $10.0  millioncash and 4,378,289 shares of common stock. A portion of the cash andstock was used to satisfy existing obligations of Afternic.com. Thetotal value of the transaction at the time of the acquisition wasapproximately $47.9 million. The acquisition was accounted for usingthe purchase method of accounting, and accordingly, the purchase pricewas allocated to assets acquired and liabilities assumed based on theirrespective fair values. Intangible assets of $47.9  million,representing the excess of the purchase price plus transaction expensesover the fair value of assets acquired, was allocated to goodwill andother intangibles, to be amortized on a straight-line basis over aperiod of 48 months.

During 2001, due to significantly lowerthan expected demand for Afternic's services experienced in thefirst year following the acquisition, as well as the fact that marketconditions and attendant 

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multiples used to estimate terminal valuesbecame and remained significantly depressed since the acquisition ofAfternic, the Company concluded that an other than temporary impairmentof goodwill has occurred. As a result, the Company recorded animpairment charge in the quarter ended September 30, 2001, in theapproximate amount of $32.5  million. At December 31, 2001, therewas a remaining balance of $8.6  million of goodwill and otherintangible assets related to the acquisitions of Inabox andAfternic.

On March  8, 2002 the Company acquired VirtualInternet plc, a U.K. based company ("VI"),for £11.99  million ($16.9  million at date ofacquisition). VI had operations in the United States and Europe and, atthe time of acquisition, operated through two divisions: the CorporateServices division and the Hosting division. The Corporate Servicesdivision provides domain name registration and online intellectualproperty management and protection services, and the Hosting divisionprovided web-hosting services. In May 2002, the Company sold VI'sHosting division for $0.5  million. Certain of VI'sshareholders, other than shareholders in certain jurisdictions outsideof the U.K., elected to receive loan notes issued by the Company inexchange for their VI shares; $9.6  million of these loan noteswere outstanding at December  31, 2002. These loan notes boreinterest at a floating rate equal to LIBOR minus 1%(3.93% at December  31, 2002) and were fully redeemed byJune 2003. The cash portion of the VI acquisition was funded with theCompany's available cash resources. The Company's resultsof operations include Virtual Internet's Corporate Servicesbusiness subsequent to March 8, 2002. In 2003, Virtual Internet changedits name to Register.com Europe plc ("RCOMEurope").

For the year 2002, RCOM Europe recordedrevenue of $7.2  million, and incurred a loss of $10.5 million,which included a charge of $8.3  million related to an impairmentof goodwill. The Company did not record a tax benefit in connectionwith that loss.

A breakdown of the Company's intangibleassets, all of which were recorded in connection with the acquisitionof RCOM Europe, and the related amortizationis:

|                               |  |                        |        |                                      |  |               |        |        |  |        |        |        |  |  |
|-------------------------------|--|------------------------|--------|--------------------------------------|--|---------------|--------|--------|--|--------|--------|--------|--|--|
|                          |  | Asof December  31,2003 |
|                          |  | GrossBookValue         |        | AccumulatedAmortization(inthousands) |  | Net BookValue |
| Intangibleassets:             |  |                   |   |                                 |  |          |   |   |  |   |   |   |
| Software                      |  | $                      | 497    |                                 |  | $             | 283    |   |  | $      | 214    |   |
| Tradename                     |  |                   | 113    |                                 |  |          | 25     |   |  |   | 88     |   |
| Customerlist                  |  |                   | 2,150  |                                 |  |          | 500    |   |  |   | 1,650  |   |
| Total                         |  | $                      | 2,760  |                                 |  | $             | 808    |   |  | $      | 1,952  |   |
| Projectedamortizationexpense: |  |                   |   |                                 |  |          |   |   |  |   |   |   |
| Year2004                      |  | $                      | 543    |                                 |  |          |   |   |  |   |   |   |
| Year2005                      |  | $                      | 407    |                                 |  |          |   |   |  |   |   |   |
| Year2006                      |  | $                      | 377    |                                 |  |          |   |   |  |   |   |   |
| Year2007                      |  | $                      | 377    |                                 |  |          |   |   |  |   |   |   |
| Year2008                      |  | $                      | 70     |                                 |  |          |   |   |  |   |   |   |
| Year 2009 andthereafter       |  | $                      | 178    |                                 |  |          |   |   |  |   |   |   |
|                               |

InSeptember 2002, the Company made a decision to abandon its Afternicbusiness. As a consequence of that decision, as well as negativeindustry and economic trends then affecting the Company and the generaldecline in technology company valuations, including the valuation ofthe Company's common stock, the Company performed an impairmentanalysis of the goodwill and intangible assets recorded in connectionwith its various acquisitions. Because the total market value of theCompany's common stock as of September  30, 2002 was lowerthan the book value of its stockholders' equity, the Companyrecorded a goodwill impairment writedown of approximately $17.0million in September 2002.

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14.    Contingencies andCommitments

Litigation

In November 2001, theCompany, its former Chairman, President and Chief Executive OfficerRichard D. Forman and its former Vice President of Finance andAccounting, Alan G. Breitman (the "IndividualDefendants"), and Goldman Sachs & Co. and LehmanBrothers, Inc., two of the underwriters in the syndicate for our March3, 2000 initial public offering, were named as defendants in a classaction complaint alleging violations of the federal securities laws inthe United States District Court, Southern District of New York.Goldman Sachs & Co. and Lehman Brothers, Inc. distributed 172,500of the 5,750,000 shares in the initial public offering. On April 19,2002, the Company and the Individual Defendants were named asdefendants in a Consolidated Amended Complaint (now the operativecomplaint) filed in the Southern District of New York and captionedIn re: Register.com, Inc. Initial Public Offering SecuritiesLitigation. The Consolidated Amended Complaint seeks unspecifieddamages as a result of various alleged securities law violationsarising from activities purportedly engaged in by the underwriters inconnection with our initial public offering. Plaintiffs allege that theunderwriter defendants agreed to allocate stock in the Company'sinitial public offering to certain investors in exchange for excessiveand undisclosed commissions and agreements by those investors to makeadditional purchases of stock in the aftermarket at pre-determinedprices. Plaintiffs allege that the prospectus for the Company'sinitial public offering was false and misleading in violation of thesecurities laws because it did not disclose these arrangements. Theaction is being coordinated with approximately three hundred othernearly identical actions filed against other companies before one judgein the U.S. District Court for the Southern District of New York. OnOctober  9, 2002, the Court dismissed the Individual Defendantsfrom the case without prejudice based on Stipulations of Dismissalfiled by the plaintiffs and the Individual Defendants. OnFebruary  19, 2003, the Court denied the motion to dismiss thecomplaint against the Company. The Company has approved a Memorandum ofUnderstanding ("MOU") and related agreementswhich set forth the terms of a settlement between the Company and theplaintiff class. It is anticipated that any potential financialobligation of the Company to plaintiffs due pursuant to the terms ofthe MOU and related agreements will be covered by existing insurance.Therefore, the Company does not expect that the settlement will involveany payment by the Company. The MOU and related agreements are subjectto a number of contingencies including the negotiation of a settlementagreement and approval by the Court. We cannot predict whether or whena settlement will occur or be finalized.

Register.com has beennamed as a defendant in a purported class action lawsuit filed on May2, 2002, which alleges that our SafeRenew program violates New Yorklaw. This lawsuit was filed by Brian Wornow, on behalf of himself andall others similarly situated, in the Supreme Court of the State of NewYork. Our SafeRenew program was implemented in January 2001 on an"opt-out basis" to .com, .net and .orgregistrations registered through the www.register.com website, and wassubsequently expanded to cover certain ccTLDs registered through thiswebsite. Under the terms of our services agreement, at the time acovered registration comes up for renewal, we attempt to charge aregistrant's on-file credit card a one year renewal fee and, ifthe charge is successful, to renew the registration for that additionalone-year period. Register.com believes that the SafeRenew program wasproperly adopted as an effort to protect our customers' onlineidentities. Plaintiff sought a declaratory judgment that the SafeRenewprogram violates New York General Obligations Law Section 5-903, andalso claimed breach of contract, money had and received, and unjustenrichment. Plaintiff further sought to enjoin Register.com fromautomatically renewing domain name registrations, an award ofcompensatory damages, restitution, disgorgement of profits (plusinterest), cost and expenses, attorneys' fees, and punitivedamages. On September 6, 2002, Register.com filed a motion to dismissthe complaint in its entirety. On April 17, 2003, Register.com'smotion was granted as to two counts (declaratory judgment and breach ofcontract), but denied as to two other counts (unjust enrichment andmoney had and received). On April 28, 2003, Register.com filed ananswer denying the material allegations of the complaint. On May 2,2003, Plaintiff filed a notice of appeal to the Appellate Division,First Department of the two counts that were dismissed. On May 15,2003, Plaintiff filed an amended complaint asserting new causes ofaction against Register.com for (i) 

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deceptive trade practices in violation ofNew York General Business Law Section 349; (ii) conversion; and (iii)breach of the implied covenant of good faith and fair dealing. On June9, 2003, Register.com moved to dismiss Plaintiff's newly assertedcauses of action. On July 23, 2003 the Court heard oral arguments onRegister.com's motion. On February 2, 2004, Plaintiff filed anappeal of the dismissal of the Section 5-903 claims. On February 19,2004, Register.com's motion to dismiss the first, fourth and afifth causes of action of Plaintiff's amended complaint wasgranted. While we intend to continue to defend ourselves vigorously inthis lawsuit, in an effort to mitigate a potential worst-case scenario,we entered into an insurance agreement pursuant to which, in accordancewith its terms and conditions, to the extent that we have a finaljudgment in excess of $15 million our insurance carrier would cover upto an additional $30 million.

On or about January  17,2003, individual stockholders of the Company filed complaints in theDelaware Court of Chancery purporting to commence class action lawsuitsagainst the Company and each of the individual members of theCompany'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 alleged, among other things,breaches of fiduciary duty by the directors in connection with certainpublicly disclosed indications of interest in the acquisition ofCompany and further alleged that the directors were not fulfillingtheir fiduciary duties in connection with their review and response tosuch indications of interest. On January 9, 2004 the complaints werewithdrawn by the plaintiff and on January 12, 2004 the court approvedthe dismissal of the complaints without prejudice.

In February2001, Register.com was named as a defendant in a purported class actionlawsuit pending in the Supreme Court of the State of New York. Thecomplaint alleges that by linking new domain names registered throughRegister.com to a "Coming Soon" web page thatinforms visitors the name was recently registered through Register.com,and provides links to services provided by Register.com and itsbusiness partners, as well as a banner advertisement for such services,Register.com has (i) breached an implied covenant of good faith andfair dealing; (ii) engaged in deceptive trade practices in violation ofNew York General Business Law Section 349; and (iii) been unjustlyenriched. Prior to the filing of the lawsuit, in addition to disclosingthe Coming Soon page by means of such domain names, Register.com alsodisclosed the existence of the Coming Soon page in the"Help" and "Frequently AskedQuestions" portions of its website. In March 2001,Register.com added an additional disclosure concerning the Coming Soonpage to Register.com's Services Agreement. In April 2001,Register.com filed a motion to dismiss Plaintiff's claims forfailure to state a claim upon which relief may be granted and in August2001, Register.com's motion was granted. Plaintiff appealed thedismissal to the Appellate Division, First Department, and in April2003 the Appellate Division affirmed the dismissal of the unjustenrichment cause of action, but reinstated the causes of action forbreach of an implied covenant of good faith and fair dealing anddeceptive trade practices. Thereafter, Register.com and Plaintiffagreed upon a settlement which, following notice to the proposedsettlement class, was approved by the Court on November 3, 2003. Inaccordance with the settlement, Register.com has provided each memberof the putative class with a five dollar discount off of futurepurchases of Register.com's fees for domain name registrationsand renewals and has paid attorney's fees in the amount awardedby the Court to class counsel.

On or about August 7, 2003 andAugust 8, 2003, purported stockholders of the Company filed twoseparate complaints in the Court of Chancery of Delaware against theCompany and certain current and past individual members of theCompany's Board of Directors. The first complaint was styled asMcBride v. Register.com, Inc., et al (C.A. No. 20470) andthe second complaint was styled as DeMatte v. Register.com,Inc., et al (C.A. No. 20474). On November 3, 2003, the two caseswere consolidated (C.A. No. 20470) and on November 5, 2003, an amendedcomplaint was filed. The complaint alleges, among other things, thatthe named defendants breached their fiduciary duties in connection withthe self tender that the Company commenced in August 2003 and completedin September 2003, and that the self tender is an attempt by theindividual defendants to entrench their positions in theCompany.   The complaint seeks, among other things, thecourt's certification as a class action lawsuit, unspecifieddamages and rescission of the self tender. On December 5, 2003

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Register.com filed a motion to dismiss forfailure to state a claim upon which relief can be granted and failureto comply with the requirements of Rule 23.1 and on February 26, 2004Register.com filed a brief in support of such motion.

There arevarious other claims, lawsuits and pending actions against the Companyincidental to the operations of its business. It is the opinion ofmanagement, after consultation with counsel, that the ultimateresolution of such claims, lawsuits and pending actions will not have amaterial adverse effect on the Company's financial position,results of operations or liquidity.

Credit CardPenalties

The Company has experienced high rates ofrefunds to customers and chargebacks from customers, which haveresulted in the assessment of financial penalties by two credit cardassociations. If the Company is unable to lower its refund andchargeback rates to levels deemed acceptable by the credit cardassociations, the Company could continue to face such penalties and maylose its rights to accept credit card payments from customers throughone or more credit card associations. The Company had not previouslyincurred penalties from one of those associations until August 2002, atwhich time it was assessed a penalty of $0.3  million applicableto the year 2001. Under that association's rules, additionalpotential penalties may be imposed at the discretion of theassociation. Because the imposition of any potential penalties is atthe discretion of the association, subject to contractual limitations,the Company accrued a $2.4 million and $3.7  million charge togeneral and administrative expense in the year 2003 and 2002,respectively, to cover what the Company estimates to be the maximumpotential penalties that could be imposed under thatassociation's rules for transactions through December 31, 2003.Any such potential penalties would be imposed on the Company'scredit card processor by the association, and under the Company'scontract with its processor, the Company is required to reimburse suchpenalties. If the penalty ultimately imposed is less than the maximumcontractual amount, the Company would reverse any excess accountspreviously accrued as a reduction of general and administrative expenseat that time.

Commitments

Under a priorregistry agreement with ICANN, we had committed to provide up to $8.5million in funding and other non-cash contributions to our subsidiary,RegistryPro, for its activities in establishing, operating andmarketing the .pro top level domain.   Effective February 26,2004, we sold the core assets of the RegistryPro business and ICANNagreed to the assignment of the agreement to the purchaser, although wehave not obtained a release of these obligations from ICANN.Through December 31, 2003 we had contributed approximately $4.1 millionin cash, of which $2.6 million was funded during 2003, and we had alsomade non-cash contributions.  In addition, the purchaser hasagreed to assume up to $2.0 million of thiscommitment.

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REPORT OFINDEPENDENT AUDITORS

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

In connection withour audits of the financial statements of Register.com, Inc. as ofDecember  31, 2003 and 2002 and for each of the three years inthe period ended December  31, 2003, which financial statementsare included in the Form 10-K, we have also audited the financialstatement schedule listed in Part II herein.

In ouropinion, this financial statement schedule, when considered in relationto the basic financial statements taken as a whole, presents fairly, inall material respects, the information required to be includedtherein.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLPNew York, NewYorkFebruary  6, 2004

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Schedule II—Valuation andQualifyingAccount

|                                          |  |                             |        |                           |  |            |        |                       |  |        |         |        |  |        |        |        |  |  |
|------------------------------------------|--|-----------------------------|--------|---------------------------|--|------------|--------|-----------------------|--|--------|---------|--------|--|--------|--------|--------|--|--|
|                                     |  | BalanceatBeginning ofPeriod |        | Charged toCostsandExpense |  | Deductions |        | Balanceat EndofPeriod |
| **For the year endedDecember  31,2003:** |  |                        |   |                      |  |       |   |                  |  |   |    |   |  |   |   |   |
| Provisionfor doubtfulaccounts            |  | $                           | 2,695  |                      |  | $          | 739    |                  |  | $      | 1,584   |   |  | $      | 1,850  |   |
| **Forthe year ended December 31,2002:**  |  |                        |   |                      |  |       |   |                  |  |   |    |   |  |   |   |   |
| Provisionfor doubtfulaccounts            |  | $                           | 2,179  |                      |  | $          | 2,608  |                  |  | $      | 2,092   |   |  | $      | 2,695  |   |
| **Forthe year ended December 31,2001:**  |  |                        |   |                      |  |       |   |                  |  |   |    |   |  |   |   |   |
| Provisionfor doubtfulaccounts            |  | $                           | 1,749  |                      |  | $          | 430    |                  |  | $      | — |   |  | $      | 2,179  |   |
|                                          |

Item9.     Changes in and Disagreements With Accountants onAccounting and Financial Disclosure.

Not applicable.

Item 9A. Controls and Procedures

Our Chief ExecutiveOfficer and Chief Financial Officer have concluded, based on theirevaluation as of December 31, 2003, that our disclosure controls andprocedures are effective to ensure that information required to bedisclosed by us in the reports we file or submit under the SecuritiesExchange Act of 1934, as amended, is recorded, processed, summarizedand reported within the time periods specified in the SEC's rulesand forms.

Our management, including our Chief Executive Officerand Chief Financial Officer, does not expect that our disclosurecontrol and procedures or internal control over financial reportingwill prevent all error and all fraud. A control system, no matter howwell conceived and operated, can provide only reasonable, not absolute,assurance that the objectives of the system are met and cannot detectall deviations.  Because of the inherent limitations in allcontrol systems, no evaluation of control can provide absoluteassurance that all control issues and instances of fraud or deviations,if any, within the Company have been detected. While we believe thatour disclosure controls and procedures and our internal control overfinancial reporting have been effective, in light of the foregoing, weintend to continue to examine and refine our disclosure controls andprocedures and our internal control over financial reporting to monitorongoing developments in this area.

In the past we have hadmaterial weaknesses in our internal control over financial reporting.During the fourth quarter of 2003, we completed the implementation of anumber of new processes and new accounting system modules which havesince corrected these weaknesses. Otherwise, there were no significantchanges in our internal control over financial reporting subsequent toour evaluation of the Company's internal control over financialreporting that could materially affect or are reasonably likely tomaterially affect our internal control over financialreporting.

67

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PARTIII

Item 10.    Directors and Executive Officers of theRegistrant.

The information required by this item other thanthe following information concerning the Company's code of ethicsis incorporated herein by reference to the sections entitled"Proposal  1  — Election ofDirectors" and "Executive Compensation— Section  16(a) Beneficial Ownership ReportingCompliance" in the Company's definitive ProxyStatement for the Annual Meeting of Shareholders to be held on May 7,2004 (the "Proxy Statement"). The Companyintends to file the Proxy Statement within 120  days after theend of its fiscal year.

The Company has adopted a"code of ethics" as defined by applicablerules of the Securities and Exchange Commission and the Nasdaq StockMarket, which is applicable to its chief executive officer, chieffinancial officer, controller and other senior financial and reportingpersons and its directors. This code is part of the Company'sbroader Code of Business Ethics and Conduct and is publicly availableon the Company's website at http://investor.register.com. If theCompany makes any amendments to the code of ethics for its seniorofficers, financial and reporting persons or directors (other thantechnical, administrative, or other non-substantive amendments), orgrants any waivers, including implicit waivers, from a provision ofthis code to such persons, the Company will disclose the nature of theamendment or waiver, its effective date and to whom it applies on itswebsite or in a report on Form  8-K filed with the Securities andExchange Commission.

Item 11.    Executive Compensation.

The information required by this item is incorporated herein byreference to the sections entitled "Executive Compensationand Related Information" in the Company's ProxyStatement.

|                                       |                                                                                                |
|---------------------------------------|------------------------------------------------------------------------------------------------|
| Item12.      | Security Ownership of CertainBeneficial Owners and Management and Related Stockholder Matters. |

The information required by this item is incorporated herein byreference to the sections entitled "Security Ownership ofCertain Beneficial Owners and Management" in theCompany's Proxy Statement.

Item 13.    CertainRelationships and Related Transactions.

The informationrequired by this item is incorporated herein by reference to thesection entitled "Certain Relationships and RelatedTransactions" in the Company's Proxy Statement.

Item 14.    Principal Accounting Fees and Services

Theinformation required by this item is incorporated herein by referenceto the section entitled "Principal Accounting Fees andServices" in the Company's ProxyStatement.

PART IV

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

|           |                                                             |
|-----------|-------------------------------------------------------------|
| (a)  | 1.    Consolidated FinancialStatements. |

The financial statements as set forth under Item 8of this report are incorporated herein by reference.

2.    Financial Statement Schedules.

The Valuation and Qualifying Account Schedule as set forth underItem 8 of this report is incorporated herein by reference.

68

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3.    Exhibits.

The following Exhibits are incorporated herein by reference or arefiled with this report as indicatedbelow.

|               |  |                                                                                                                                                                                                                                                                                                    |  |  |  |  |
|---------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                        |
| 3.1           |  | Amendedand Restated Certificate of Incorporation (incorporated by reference toExhibit 3.2 of Registration Statement No.333-93533).                                                                                                                                                                 |
| 3.2           |  | Certificateof Correction of Amended and Restated Certificate of Incorporation(incorporated by reference to the identically numbered exhibit ofRegistrant's Quarterly Report on Form 10-Q filed for the quarterended March 31,2000).                                                                |
| 3.3           |  | Amendedand Restated Bylaws (incorporated by reference to Exhibit 3.4 ofRegistration Statement No.333-93533).                                                                                                                                                                                       |
| 3.4           |  | Certificateof Designation of Rights, Preferences and Privileges of the Series AJunior Participating Preferred Stock (incorporated by reference toExhibit 3.1 of Registrant's Current Report on Form 8-K datedOctober 29,2002).                                                                     |
| 4.1           |  | Specimencommon stock certificate (incorporated by reference to the identicallynumbered exhibit of Registration Statement No.333-93533).                                                                                                                                                            |
| 4.2           |  | SeeExhibits 3.1, 3.2, and 3.3 for provisions of the certificate ofincorporation and bylaws defining the rights of holders of Common Stock(incorporated by reference to the identically numbered exhibit ofRegistration Statement No.333-93533).                                                    |
| 4.3           |  | RegistrationRights Agreement dated June 30, 1999 (incorporated by reference to theidentically numbered exhibit of Registration Statement No.333-93533).                                                                                                                                            |
| 4.4           |  | RegistrationRights Agreement dated June 4, 2000 (incorporated by reference toExhibit 4.3.2 of Registrant's Quarterly Report on Form 10-Q filedfor the quarter ended June 30,2000).                                                                                                                 |
| 4.5           |  | RegistrationRights Agreement dated September 15, 2000 (incorporated by reference toExhibit 4.3.3 of Registrant Current Report on Form 8-K dated September29,2000).                                                                                                                                 |
| 4.6           |  | Certificateof designations, preferences and relative, participating, optional andother special rights of preferred stock and qualifications, limitationsand restrictions of Series A Convertible Preferred Stock (incorporatedby reference to Exhibit 4.5 of Registration Statement No.333-93533). |
| 4.7           |  | Formof warrant to purchase common stock issued to Series A ConvertiblePreferred Stockholders (incorporated by reference to Exhibit 4.6.1 ofRegistration Statement No.333-93533).                                                                                                                   |
| 4.8           |  | Formof warrant to purchase common stock issued to Niles H. Cohen andZachary Prensky (incorporated by reference to Exhibit 4.6.4 ofRegistration Statement No.333-93533).                                                                                                                            |
| 4.9*          |  | Formof Amended and Restated Common Stock Purchase Warrant — Series Aissued to Richard D. Forman, Peter A. Forman, Dan Levine and CapitalExpress LLC (incorporated by reference to Exhibit 4.6.5 of RegistrationStatement No.333-93533).                                                      |
| 4.10          |  | Warrantsto purchase common stock issued to Legg Mason Wood Walker, Incorporated(incorporated by reference to Exhibit 4.6.6 of Registration StatementNo. 333-93533).                                                                                                                                |
|               |

69

----

|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |  |  |  |
|---------------|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.11          |  | Formof warrant to purchase common stock issued to consultants (incorporatedby reference to Exhibit 4.6.7 of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                        |
| 4.12*         |  | EmployeeStock Option Certificate issued to Richard D. Forman (incorporated byreference to Exhibit 4.7.1 of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                         |
| 4.13*         |  | StockIssuance Agreement, dated March 20, 2002, with Walt Meffert, Jr.(incorporated by reference to Exhibit 4.9 of Registrant's AnnualReport on Form 10-K for the year ended December 31,2001).                                                                                                                                                                                                                                                                                                                           |
| 4.14*         |  | StockOption Agreement with Jonathan Stern (incorporated by reference toExhibit 4.10 of Registrant's Quarterly Report on Form 10-Q forthe quarter ended June 30,2002).                                                                                                                                                                                                                                                                                                                                                    |
| 4.15          |  | RightsAgreement, dated as of October 28, 2002, between Register.com, Inc. andAmerican Stock Transfer & Trust Company, which includes the form ofCertificate of Designation of Rights, Preferences and Privileges of theSeries  A Junior Participating Preferred Stock as ExhibitA, the form of Rights Certificate as Exhibit B and the Summary ofRights to Purchase Series A Preferred Stock as Exhibit C (incorporatedby reference to Exhibit 4.1 of Registrant's Current Report onForm 8-K dated October 29,2002). |
| 10.1          |  | 1997Stock Option Plan (incorporated by reference to the identicallynumbered exhibit of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.2          |  | 1999Stock Option Plan (incorporated by reference to the identicallynumbered exhibit of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.3          |  | RegistrarAccreditation Agreement, dated November 30, 1999, by and between ICANNand Register.com, Inc (incorporated by reference to the identicallynumbered exhibit of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                              |
| 10.4          |  | RegistrarAccreditation Agreement, dated April 27, 2000, by and between ICANN andRegister.com, Inc (incorporated by reference to Exhibit 10.3.2 ofRegistrant's Quarterly Report on Form 10-Q filed for the quarterended June 30,2000).                                                                                                                                                                                                                                                                                    |
| 10.5          |  | RegistrarLicense and Agreement, dated December 13, 1999, by and between NetworkSolutions, Inc. and Register.com, Inc (incorporated by reference toExhibit 10.4 of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                  |
| 10.6          |  | Leasebetween Pennbus Realties, Inc. and Forman Interactive Corp(incorporated by reference to Exhibit 10.5 of Registration StatementNo.333-93533).                                                                                                                                                                                                                                                                                                                                                                        |
| 10.7          |  | 2000Stock Incentive Plan (incorporated by reference to the identicallynumbered exhibit of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.8          |  | Amendedand Restated 2000 Stock Incentive Plan (effective as of March 22, 2002)(incorporated by reference to Exhibit 10.6 of Registrant's AnnualReport on Form 10-K for the year ended December 31,2001).                                                                                                                                                                                                                                                                                                                 |
| 10.9*         |  | EmployeeStock Purchase Plan (incorporated by reference to Exhibit 10.6.2 ofRegistration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.10*        |  | EmploymentAgreement, dated November 15, 1995, with Richard D. Forman(incorporated by reference to Exhibit 10.7 of Registration StatementNo. 333-93533).                                                                                                                                                                                                                                                                                                                                                                  |
|               |

70

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|               |  |                                                                                                                                                                                                                |  |  |  |  |
|---------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                    |
| 10.11*        |  | EmploymentAgreement, dated February 27, 2000, with Richard D. Forman(incorporated by reference to Exhibit 10.8 of Registration StatementNo.333-93533).                                                         |
| 10.12*        |  | EmploymentAgreement with Jack S. Levy (incorporated by reference to Exhibit10.8.2 of Registration Statement No.333-93533).                                                                                     |
| 10.13*        |  | OfferLetter, dated October 8, 2001, with Walt Meffert, Jr (incorporated byreference to Exhibit 10.9 of Registrant's Annual Report on Form10-K for the year ended December 31,2001).                            |
| 10.14*        |  | PromissoryNote, dated December 20, 2001, with Walt Meffert, Jr (incorporated byreference to Exhibit 10.18 of Registrant's Annual Report on Form10-K for the year ended December 31,2001).                      |
| 10.15         |  | Leasebetween Yarmouth Area Industrial Commission and RCOM Canada, Corp(incorporated by reference to Exhibit 10.20 of the Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2001). |
| 10.16*        |  | LetterAgreement of Employment, dated as of June 11, 2002, with Jonathan Stern(incorporated by reference to Exhibit 10.23 of Registrant'sQuarterly Report on Form 10-Q for the quarter ended June 30,2002).     |
| 10.17*        |  | EmploymentAgreement by and between Register.com and Mitchell Quain, datedNovember 25, 2002 (incorporated by reference to Exhibit 10.24 ofRegistrant's Current Report on Form 8-K dated November 25,2002).      |
| 10.18*        |  | Form ofIndemnification Agreement between the Company and certain executiveofficers anddirectors.                                                                                                               |
| 10.19*        |  | Amendmentto Offer Letter with Walt Meffert, Jr., dated November 26,2002.                                                                                                                                       |
| 10.20*        |  | OfferLetter, dated June 8, 2001 with MichaelPollack.                                                                                                                                                           |
| 10.21*        |  | PromissoryNote, dated June 11, 2001 with Michael Pollack (incorporated byreference to Exhibit d (9) of the Registrant's Schedule T-O filedwith the SEC on December 16,2002).                                   |
| 10.22*        |  | StockIssuance Agreement with Michael Pollack (incorporated by reference toExhibit d (10) of the Registrant's Schedule T-O filed with theSEC on December 16,2002).                                              |
| 10.23*        |  | StockOption Agreement with Mitchell I. Quain (incorporated by reference toExhibit d (12) of the Registrant's Schedule T-O filed with theSEC on December 16,2002).                                              |
| 10.24*        |  | StockOption Agreement with Jonathan Stern (incorporated by reference toExhibit 10.32 of Registrant's Quarterly Report on Form 10-Q filedfor the quarter ended March 31,2003).                                  |
| 10.25*        |  | RestrictedStock Agreement with Jack S. Levy, effective as of March 8, 2003(incorporated by reference to Exhibit 10.33 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003). |
| 10.26*        |  | Form ofExecutive Change in Control Severance Program (incorporated byreference to Exhibit 10.34 of Registrant's Quarterly Report onForm 10-Q filed for the quarter ended March 31,2003).                       |
|               |

71

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|               |  |                                                                                                                                                                                                                                                                             |  |  |  |  |
|---------------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                 |
| 10.27*        |  | Formof U.S. Director-level Employee Change in Control Severance Program(incorporated by reference to Exhibit 10.35 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003).                                                                 |
| 10.28*        |  | Form ofU.S. Employee Change in Control Severance Program (incorporated byreference to Exhibit 10.36 of Registrant's Quarterly Report onForm 10-Q filed for the quarter ended March 31,2003).                                                                                |
| 10.29*        |  | Form ofChange in Control Voluntary Termination Benefits Letter with Executives(incorporated by reference to Exhibit 10.37 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003).                                                          |
| 10.30*        |  | Form ofRetention Bonus Letter Agreement with Executives who are party to theChange in Control Voluntary Termination Benefits Letter (incorporatedby reference to Exhibit 10.38 of Registrant's Quarterly Report onForm 10-Q filed for the quarter ended March 31,2003).     |
| 10.31*        |  | Form ofRetention Bonus Letter Agreement with Executives who are not party tothe Change in Control Voluntary Termination Benefits Letter(incorporated by reference to Exhibit 10.39 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003). |
| 10.32*        |  | Amendmentto Letter Agreement of Employment with Jonathan Stern, dated May 8,2003 (incorporated by reference to Exhibit 10.40 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003).                                                       |
| 10.33*        |  | RetentionBonus Letter Agreement with Jonathan Stern, dated May 13, 2003(incorporated by reference to Exhibit 10.41 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003).                                                                 |
| 10.34         |  | Agreement,dated June 9, 2003, among Register.com, Inc., Barington CompaniesEquity Partners, L.P. and the other parties listed on Schedule Athereto (incorporated by reference to Exhibit 10.42 ofRegistrant's Current Report on Form 8-K dated June 10,2003).               |
| 10.35*        |  | EmploymentAgreement, dated June 16, 2003, with Peter A. Forman (incorporated byreference to Exhibit 10.43 of Registrant's Current Report on Form8-K dated June 17,2003).                                                                                                    |
| 10.36*        |  | Amendmentto Letter Agreement of Employment with Michael D. Pollack, dated May23, 2003 (incorporated by reference to Exhibit (d)(1)(T) ofRegistrant's Schedule T-O filed with the SEC on August 5,2003).                                                                     |
| 10.37*        |  | LetterAgreement of Employment, dated as of November 15, 2002, with AlanKipust (incorporated by reference to Exhibit (d)(1)(CC) ofRegistrant's Schedule T-O filed with the SEC on August 5,2003).                                                                            |
| 10.38*        |  | Letterof Agreement of Employment, dated August 6, 2003, with Monica SchulzeHodges (incorporated by reference to Exhibit (d)(1)(EE) ofRegistrant's Schedule T-O filed with the SEC on August 5,2003).                                                                        |
| 10.39*        |  | Amendmentto Letter Agreement of Employment, dated as of November 19, 2003, withAlanKipust.                                                                                                                                                                                  |
| 21.1          |  | Subsidiariesof Registrant.                                                                                                                                                                                                                                                  |
|               |

72

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|               |  |                                                                                                                                                                       |  |  |  |  |
|---------------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                           |
| 23.1          |  | Consentof PricewaterhouseCoopersLLP.                                                                                                                                  |
| 31.1          |  | Certificationof Peter A. Forman, Chief Executive Officer of the Company, pursuant toRules 13a-14(a) and 15(d)-14(a) of the Securities Exchange Act of 1934,asamended. |
| 31.2          |  | Certificationof Jonathan Stern, Chief Financial Officer of the Company, pursuant toRules 13a-14(a) and 15(d)-14(a) of the Securities Exchange Act of1934.             |
| 32.1          |  | Certificationby Peter A. Forman, Chief Executive Officer of the Company, pursuant to18 U.S.C.§1350.                                                              |
| 32.2          |  | Certificationby Jonathan Stern, Chief Financial Officer of the Company, pursuant to18 U.S.C.§1350.                                                               |
|               |

|  |
|--|
|  |  |
|  |

| * | Indicatesmanagement contract or compensatory plan or arrangement. |
|---|-------------------------------------------------------------------|

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

OnNovember  10, 2003, we filed a Current Report on Form 8-K, Item12 announcing our financial results for the third quarter of2003.

73

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SIGNATURES

Pursuant to the requirements of Section  13 or 15(d) of theSecurities Exchange Act of 1934, Register.com, Inc. has duly causedthis report to be signed on its behalf by the undersigned, thereuntoduly authorized, in the City of New York, State of New York, on this11th day of March, 2004.

|  | REGISTER.COM,INC. |
|--|-------------------|

|  | By: /s/ Peter A.Forman |
|--|-----------------------------|

|  |
|--|
|  |  |  |
|  |

|  | PeterA. Forman President and Chief Executive Officer |
|--|------------------------------------------------------|

Pursuant tothe requirements of the Securities Exchange Act of 1934, this reporthas been signed below by the following persons on behalf of theregistrant and in the capacities and on the datesindicated.

|                         |  |                                                                              |  |               |
|-------------------------|--|------------------------------------------------------------------------------|--|---------------|
| Signature               |  | Title                                                                        |  | Date          |
|                         |
| /s/Peter A. Forman      |  | President, Chief Executive Officer and Director(Principal Executive Officer) |  | March 11,2004 |
|                         |
| Peter A.Forman          |
|                         |
| /s/ Jonathan Stern      |  | Chief Financial Officer (PrincipalAccounting and Financial Officer)          |  | March 11,2004 |
|                         |
| JonathanStern           |
|                         |
| /s/ Mitchell I.Quain    |  | Chairman of theBoard of Directors                                            |  | March 11,2004 |
|                         |
| Mitchell I. Quain       |
|                         |
| /s/ Niles H. Cohen      |  | Director                                                                     |  | March 11,2004 |
|                         |
| Niles H.Cohen           |
|                         |
| /s/ Dewain K. Cross     |  | Director                                                                     |  | March 11,2004 |
|                         |
| DewainK. Cross          |
|                         |
| /s/ Richard D.Forman    |  | Director                                                                     |  | March 11,2004 |
|                         |
| Richard D.Forman        |
|                         |
| /s/ James A.Mitarotonda |  | Director                                                                     |  | March 10,2004 |
|                         |
| James A.Mitarotonda     |
|                         |
| /s/ Stanley Morten      |  | Director                                                                     |  | March 11,2004 |
|                         |
| StanleyMorten           |
|                         |
| /s/ Jim Rosenthal       |  | Director                                                                     |  | March 11,2004 |
|                         |
| JimRosenthal            |
|                         |
| /s/ Reginald VanLee     |  | Director                                                                     |  | March 11,2004 |
|                         |
| Reginald VanLee         |
|                         |

74

----

EXHIBITINDEX

|               |  |                                                                                                                                                                                                                                                                                                    |  |  |  |  |
|---------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                        |
| 3.1           |  | Amendedand Restated Certificate of Incorporation (incorporated by reference toExhibit 3.2 of Registration Statement No.333-93533).                                                                                                                                                                 |
| 3.2           |  | Certificateof Correction of Amended and Restated Certificate of Incorporation(incorporated by reference to the identically numbered exhibit ofRegistrant's Quarterly Report on Form 10-Q filed for the quarterended March 31,2000).                                                                |
| 3.3           |  | Amendedand Restated Bylaws (incorporated by reference to Exhibit 3.4 ofRegistration Statement No.333-93533).                                                                                                                                                                                       |
| 3.4           |  | Certificateof Designation of Rights, Preferences and Privileges of the Series AJunior Participating Preferred Stock (incorporated by reference toExhibit 3.1 of Registrant's Current Report on Form 8-K datedOctober 29,2002).                                                                     |
| 4.1           |  | Specimencommon stock certificate (incorporated by reference to the identicallynumbered exhibit of Registration Statement No.333-93533).                                                                                                                                                            |
| 4.2           |  | SeeExhibits 3.1, 3.2, and 3.3 for provisions of the certificate ofincorporation and bylaws defining the rights of holders of Common Stock(incorporated by reference to the identically numbered exhibit ofRegistration Statement No.333-93533).                                                    |
| 4.3           |  | RegistrationRights Agreement dated June 30, 1999 (incorporated by reference to theidentically numbered exhibit of Registration Statement No.333-93533).                                                                                                                                            |
| 4.4           |  | RegistrationRights Agreement dated June 4, 2000 (incorporated by reference toExhibit 4.3.2 of Registrant's Quarterly Report on Form 10-Q filedfor the quarter ended June 30,2000).                                                                                                                 |
| 4.5           |  | RegistrationRights Agreement dated September 15, 2000 (incorporated by reference toExhibit 4.3.3 of Registrant Current Report on Form 8-K dated September29,2000).                                                                                                                                 |
| 4.6           |  | Certificateof designations, preferences and relative, participating, optional andother special rights of preferred stock and qualifications, limitationsand restrictions of Series A Convertible Preferred Stock (incorporatedby reference to Exhibit 4.5 of Registration Statement No.333-93533). |
| 4.7           |  | Formof warrant to purchase common stock issued to Series A ConvertiblePreferred Stockholders (incorporated by reference to Exhibit 4.6.1 ofRegistration Statement No.333-93533).                                                                                                                   |
| 4.8           |  | Formof warrant to purchase common stock issued to Niles H. Cohen andZachary Prensky (incorporated by reference to Exhibit 4.6.4 ofRegistration Statement No.333-93533).                                                                                                                            |
| 4.9*          |  | Formof Amended and Restated Common Stock Purchase Warrant — Series Aissued to Richard D. Forman, Peter A. Forman, Dan Levine and CapitalExpress LLC (incorporated by reference to Exhibit 4.6.5 of RegistrationStatement No.333-93533).                                                      |
| 4.10          |  | Warrantsto purchase common stock issued to Legg Mason Wood Walker, Incorporated(incorporated by reference to Exhibit 4.6.6 of Registration StatementNo.333-93533).                                                                                                                                 |
| 4.11          |  | Formof warrant to purchase common stock issued to consultants (incorporatedby reference to Exhibit 4.6.7 of Registration Statement No.333-93533).                                                                                                                                                  |
|               |

----

|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |  |  |  |
|---------------|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.12*         |  | EmployeeStock Option Certificate issued to Richard D. Forman (incorporated byreference to Exhibit 4.7.1 of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                         |
| 4.13*         |  | StockIssuance Agreement, dated March 20, 2002, with Walt Meffert, Jr.(incorporated by reference to Exhibit 4.9 of Registrant's AnnualReport on Form 10-K for the year ended December 31,2001).                                                                                                                                                                                                                                                                                                                           |
| 4.14*         |  | StockOption Agreement with Jonathan Stern (incorporated by reference toExhibit 4.10 of Registrant's Quarterly Report on Form 10-Q forthe quarter ended June 30,2002).                                                                                                                                                                                                                                                                                                                                                    |
| 4.15          |  | RightsAgreement, dated as of October 28, 2002, between Register.com, Inc. andAmerican Stock Transfer & Trust Company, which includes the form ofCertificate of Designation of Rights, Preferences and Privileges of theSeries  A Junior Participating Preferred Stock as ExhibitA, the form of Rights Certificate as Exhibit B and the Summary ofRights to Purchase Series A Preferred Stock as Exhibit C (incorporatedby reference to Exhibit 4.1 of Registrant's Current Report onForm 8-K dated October 29,2002). |
| 10.1          |  | 1997Stock Option Plan (incorporated by reference to the identicallynumbered exhibit of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.2          |  | 1999Stock Option Plan (incorporated by reference to the identicallynumbered exhibit of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.3          |  | RegistrarAccreditation Agreement, dated November 30, 1999, by and between ICANNand Register.com, Inc (incorporated by reference to the identicallynumbered exhibit of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                              |
| 10.4          |  | RegistrarAccreditation Agreement, dated April 27, 2000, by and between ICANN andRegister.com, Inc (incorporated by reference to Exhibit 10.3.2 ofRegistrant's Quarterly Report on Form 10-Q filed for the quarterended June 30,2000).                                                                                                                                                                                                                                                                                    |
| 10.5          |  | RegistrarLicense and Agreement, dated December 13, 1999, by and between NetworkSolutions, Inc. and Register.com, Inc (incorporated by reference toExhibit 10.4 of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                  |
| 10.6          |  | Leasebetween Pennbus Realties, Inc. and Forman Interactive Corp(incorporated by reference to Exhibit 10.5 of Registration StatementNo.333-93533).                                                                                                                                                                                                                                                                                                                                                                        |
| 10.7          |  | 2000Stock Incentive Plan (incorporated by reference to the identicallynumbered exhibit of Registration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.8          |  | Amendedand Restated 2000 Stock Incentive Plan (effective as of March 22, 2002)(incorporated by reference to Exhibit 10.6 of Registrant's AnnualReport on Form 10-K for the year ended December 31,2001).                                                                                                                                                                                                                                                                                                                 |
| 10.9*         |  | EmployeeStock Purchase Plan (incorporated by reference to Exhibit 10.6.2 ofRegistration Statement No.333-93533).                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.10*        |  | EmploymentAgreement, dated November 15, 1995, with Richard D. Forman(incorporated by reference to Exhibit 10.7 of Registration StatementNo.333-93533).                                                                                                                                                                                                                                                                                                                                                                   |
| 10.11*        |  | EmploymentAgreement, dated February 27, 2000, with Richard D. Forman(incorporated by reference to Exhibit 10.8 of Registration StatementNo. 333-93533).                                                                                                                                                                                                                                                                                                                                                                  |
|               |

----

|               |  |                                                                                                                                                                                                                |  |  |  |  |
|---------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                    |
| 10.12*        |  | EmploymentAgreement with Jack S. Levy (incorporated by reference to Exhibit10.8.2 of Registration Statement No.333-93533).                                                                                     |
| 10.13*        |  | OfferLetter, dated October 8, 2001, with Walt Meffert, Jr (incorporated byreference to Exhibit 10.9 of Registrant's Annual Report on Form10-K for the year ended December 31,2001).                            |
| 10.14*        |  | PromissoryNote, dated December 20, 2001, with Walt Meffert, Jr (incorporated byreference to Exhibit 10.18 of Registrant's Annual Report on Form10-K for the year ended December 31,2001).                      |
| 10.15         |  | Leasebetween Yarmouth Area Industrial Commission and RCOM Canada, Corp(incorporated by reference to Exhibit 10.20 of the Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2001). |
| 10.16*        |  | LetterAgreement of Employment, dated as of June 11, 2002, with Jonathan Stern(incorporated by reference to Exhibit 10.23 of Registrant'sQuarterly Report on Form 10-Q for the quarter ended June 30,2002).     |
| 10.17*        |  | EmploymentAgreement by and between Register.com and Mitchell Quain, datedNovember 25, 2002 (incorporated by reference to Exhibit 10.24 ofRegistrant's Current Report on Form 8-K dated November 25,2002).      |
| 10.18*        |  | Form ofIndemnification Agreement between the Company and certain executiveofficers anddirectors.                                                                                                               |
| 10.19*        |  | Amendmentto Offer Letter with Walt Meffert, Jr., dated November 26,2002.                                                                                                                                       |
| 10.20*        |  | OfferLetter, dated June 8, 2001 with MichaelPollack.                                                                                                                                                           |
| 10.21*        |  | PromissoryNote, dated June 11, 2001 with Michael Pollack (incorporated byreference to Exhibit d (9) of the Registrant's Schedule T-O filedwith the SEC on December 16,2002).                                   |
| 10.22*        |  | StockIssuance Agreement with Michael Pollack (incorporated by reference toExhibit d (10) of the Registrant's Schedule T-O filed with theSEC on December 16,2002).                                              |
| 10.23*        |  | StockOption Agreement with Mitchell I. Quain (incorporated by reference toExhibit d (12) of the Registrant's Schedule T-O filed with theSEC on December 16,2002).                                              |
| 10.24*        |  | StockOption Agreement with Jonathan Stern (incorporated by reference toExhibit 10.32 of Registrant's Quarterly Report on Form 10-Q filedfor the quarter ended March 31,2003).                                  |
| 10.25*        |  | RestrictedStock Agreement with Jack S. Levy, effective as of March 8, 2003(incorporated by reference to Exhibit 10.33 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003). |
| 10.26*        |  | Form ofExecutive Change in Control Severance Program (incorporated byreference to Exhibit 10.34 of Registrant's Quarterly Report onForm 10-Q filed for the quarter ended March 31,2003).                       |
| 10.27*        |  | Form ofU.S. Director-level Employee Change in Control Severance Program(incorporated by reference to Exhibit 10.35 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003).    |
|               |

----

|               |  |                                                                                                                                                                                                                                                                             |  |  |  |  |
|---------------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                 |
| 10.28*        |  | Formof U.S. Employee Change in Control Severance Program (incorporated byreference to Exhibit 10.36 of Registrant's Quarterly Report onForm 10-Q filed for the quarter ended March 31,2003).                                                                                |
| 10.29*        |  | Form ofChange in Control Voluntary Termination Benefits Letter with Executives(incorporated by reference to Exhibit 10.37 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003).                                                          |
| 10.30*        |  | Form ofRetention Bonus Letter Agreement with Executives who are party to theChange in Control Voluntary Termination Benefits Letter (incorporatedby reference to Exhibit 10.38 of Registrant's Quarterly Report onForm 10-Q filed for the quarter ended March 31,2003).     |
| 10.31*        |  | Form ofRetention Bonus Letter Agreement with Executives who are not party tothe Change in Control Voluntary Termination Benefits Letter(incorporated by reference to Exhibit 10.39 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003). |
| 10.32*        |  | Amendmentto Letter Agreement of Employment with Jonathan Stern, dated May 8,2003 (incorporated by reference to Exhibit 10.40 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003).                                                       |
| 10.33*        |  | RetentionBonus Letter Agreement with Jonathan Stern, dated May 13, 2003(incorporated by reference to Exhibit 10.41 of Registrant'sQuarterly Report on Form 10-Q filed for the quarter ended March 31,2003).                                                                 |
| 10.34         |  | Agreement,dated June 9, 2003, among Register.com, Inc., Barington CompaniesEquity Partners, L.P. and the other parties listed on Schedule Athereto (incorporated by reference to Exhibit 10.42 ofRegistrant's Current Report on Form 8-K dated June 10,2003).               |
| 10.35*        |  | EmploymentAgreement, dated June 16, 2003, with Peter A. Forman (incorporated byreference to Exhibit 10.43 of Registrant's Current Report on Form8-K dated June 17,2003).                                                                                                    |
| 10.36*        |  | Amendmentto Letter Agreement of Employment with Michael D. Pollack, dated May23, 2003 (incorporated by reference to Exhibit (d)(1)(T) ofRegistrant's Schedule T-O filed with the SEC on August 5,2003).                                                                     |
| 10.37*        |  | LetterAgreement of Employment, dated as of November 15, 2002, with AlanKipust (incorporated by reference to Exhibit (d)(1)(CC) ofRegistrant's Schedule T-O filed with the SEC on August 5,2003).                                                                            |
| 10.38*        |  | Letterof Agreement of Employment, dated August 6, 2003, with Monica SchulzeHodges (incorporated by reference to Exhibit (d)(1)(EE) ofRegistrant's Schedule T-O filed with the SEC on August 5,2003).                                                                        |
| 10.39*        |  | Amendmentto Letter Agreement of Employment, dated as of November 19, 2003, withAlanKipust.                                                                                                                                                                                  |
| 21.1          |  | SubsidiariesofRegistrant.                                                                                                                                                                                                                                                   |
| 23.1          |  | Consentof PricewaterhouseCoopers LLP.                                                                                                                                                                                                                                       |
|               |

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|               |  |                                                                                                                                                                       |  |  |  |  |
|---------------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                           |
| 31.1          |  | Certificationof Peter A. Forman, Chief Executive Officer of the Company, pursuant toRules 13a-14(a) and 15(d)-14(a) of the Securities Exchange Act of 1934,asamended. |
| 31.2          |  | Certificationof Jonathan Stern, Chief Financial Officer of the Company, pursuant toRules 13a-14(a) and 15(d)-14(a) of the Securities Exchange Act of1934.             |
| 32.1          |  | Certificationby Peter A. Forman, Chief Executive Officer of the Company, pursuant to18 U.S.C.§1350.                                                              |
| 32.2          |  | Certificationby Jonathan Stern, Chief Financial Officer of the Company, pursuant to18 U.S.C.§1350.                                                               |
|               |

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|  |  |
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| * | Indicatesmanagement contract or compensatory plan orarrangement. |
|---|------------------------------------------------------------------|

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