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SECURITIESAND EXCHANGE COMMISSION

WASHINGTON, D.C.20549

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FORM10-K/A(Amendment No.1)

    Annual ReportPursuant to Section 13 or 15(d)        Of the SecuritiesExchange Act of 1934For the 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) |
|                         |

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.

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REGISTER.COM,INC.2003 FORM 10-K/A (Amendment No. 1) ANNUAL REPORT

TABLEOF CONTENTS

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|             |  |                                                                                                        |  | Page   |
| EXPLANATORY NOTE |
| PART I           |  |
| Item1.           |  | Business                                                                                                    |  |   | 2  |   |
| PARTII           |  |
| Item 6.          |  | Selected FinancialData                                                                                      |  |   | 29 |   |
| Item 7.          |  | Management'sDiscussion and Analysis of Financial Condition and Results of    Operations |  |   | 30 |   |
| Item8.           |  | Financial Statements and SupplementaryData                                                                  |  |   | 43 |   |
| Item 9A.         |  | Controls andProcedures                                                                                      |  |   | 67 |   |
| PARTIV           |  |
| Item 15.         |  | Exhibits, Financial StatementSchedules, and Reports on Form8-K                                              |  |   | 69 |   |
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EXPLANATORYNOTE

Register.com, Inc. (the"Company") is filing this amendment to itsAnnual Report on Form 10-K for the year ended December 31, 2003 (this"Amendment") to reflect the restatement ofits financial statements for the year ended December 31 2003 and thecorresponding changes described below.

The restatement reflectsthe recognition of a deferred income tax asset as a result of a taxelection made in the first quarter of 2003 which allowed the Company torecord a tax benefit relating to an otherwise non-deductible goodwillimpairment charge of $8.3 million recorded by RCOM Europe plc (formerlyknown as Virtual Internet plc) in the third quarter of 2002. At thetime of the goodwill impairment charge, no income tax benefit wasrecorded as the goodwill impairment was not deductible for tax purposesin the country of domicile of RCOM Europe and therefore the tax benefitwas not realizable. In March 2003, the Company filed an election withthe Internal Revenue Service ("IRS") toinclude the consolidated income or loss of RCOM Europe in theCompany's consolidated U.S. federal tax return starting in theyear 2003. Accordingly, the goodwill that had been impaired forfinancial reporting purposes in the third quarter of 2002 becamedeductible in the U.S. over a period of approximately 14 yearsbeginning on January 1, 2003. Based on the Company's expectationof generating future taxable income in the U.S., realization of anincome tax benefit related to the tax deductibility of the goodwill isconsidered more likely than not and therefore a deferred income taxasset of $3.2 million should have been recorded in the first quarter of2003 upon the change in tax status.

This restatement favorablyimpacted the provision for income taxes and increased net income forthe year 2003 by $3.2 million, and increased deferred tax assets andincreased total stockholders' equity at December 31, 2003 by $3.2million. The restatement did not affect the Company's cash flowor loss from operations in 2003.

A discussion of the restatementis set forth in Note 15 to the Consolidated Financial Statementsincluded in this Amendment. Changes also have been made to thefollowing items in this Amendment as a result of the restatement:

Part I

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|  | •  | Item 1, Business —Risk Factors |

Part II

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|  | •  | Item 6,Selected Financial Data |

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|  | •  | Item 7,Management's Discussion and Analysis of Financial Condition andResults of Operations |

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|  | •  | Item 8,Financial Statements and Supplementary Data |

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|  | •  | Item 9A, Controls and Procedures |

This Amendment does not reflect events that have occurred afterMarch 12, 2004, the date the Annual Report on Form 10-K was originallyfiled. Information with respect to those events has been or will be setforth, as appropriate, in the Company's subsequent periodicfilings, including its Quarterly Reports on Form 10-Q and CurrentReports on Form 8-K. Any reference to facts and circumstances at a"current" date refer to such facts andcircumstances as of such original filing date.

The Company isconcurrently filing with the Securities and Exchange Commissionamendments on Form 10-Q/A (the "Form10-Q/A's") to its Quarterly Reports on Form 10-Q forthe three months ended March 31, 2004 and the six months ended June 30,2004 to reflect changes required as a result of the restatement. Noamendments have been made to the Company's Quarterly Reports onForm 10-Q for the quarters ended March 31, 2003, June 30, 2003 orSeptember 30, 2003 as all relevant changes have been reflected in thisAmendment and in the Form 10-Q/A's.

This report containsforward-looking statements relating to future events and our futureperformance within the meaning of Section 27A of the Securities Act of1933, as amended, and Section 21E of the Securities Exchange Act of1934, as amended, including, without limitation, statements

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regarding our expectations, assumptions,estimates, projections, beliefs, intentions or future strategies aboutour business 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 (GPN)wholesale division which works with companies that resell our domainname registration and web services to their customers using softwaresolutions that we provide. Our GPN partners are typically InternetService Providers (ISPs), web-hosting companies, telecom carriers andweb portals, 

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but also include online and offline retailersand business aggregators. Using software solutions that we provide,these companies resell our domain name registration services andrelated products and services to their customers.

CorporateHistory

We are the successor by merger to Forman InteractiveCorp. Forman Interactive commenced operations in 1994 as a developer ofelectronic commerce software, and began reoffering web hosting andrelated products and services in 1997. In February 1998, we began todistribute domain names in connection with our other products at noadditional cost. In April 1999, we commenced offering registrationservices for ccTLDs. In June 1999, Forman Interactive merged with andinto the then newly formed Register.com, Inc. and we began operating asa paid registrar in the .com, .net and .org domains. In March 2002, weacquired Virtual Internet plc, a U.K. based company, which hadoperations in the United States and Europe through two divisions: theCorporate Services division and the Hosting division. In May 2002, wesold the Hosting division. The Corporate Services division, whichprovides global domain name registration and online intellectualproperty protection business, became our European Corporate Servicesgroup. Virtual Internet had previously been our joint venture partnerin RegistryPro, the core assets of which we sold in February 2004. In2003, we changed the name of Virtual Internet to Register.com Europeplc (RCOM Europe).

Domain Name Registration System

TheInternet domain name registration system consists of two principalfunctions: registry and registrar. A registry maintains a masterdatabase of domain names, and their corresponding Internet Protocol(IP) addresses, registered in a particular top level domain, such as..com, .us or .uk. A registrar, such as Register.com, acts as anintermediary between the registry and the businesses and consumers,referred to as registrants, seeking to register domain names.Registrars typically handle billing, customer service and the technicalmanagement of a domain name registration. As of March 1, 2004, therewere 191 registrars accredited by ICANN to accept registration in oneor more of the gTLDs, although not all of these accredited registrarsare operational. In addition, there are many resellers that are notICANN accredited registrars, but compete in the marketplace as areseller of domain name registrations.

The domain name system isorganized according to industry nomenclature by levels, so that, forexample, in the domain name mybrand.com, .com is the top level domainand mybrand is the second level domain. Top level domains areclassified as either gTLDs or ccTLDs. Each ccTLD is affiliated with aspecific country, whereas gTLDs are not. Although the original and mostcommon gTLDs continue to be .com, .net and .org, in November 2000,ICANN approved seven additional gTLD registries: .biz, .info, .name,..pro, .museum, .coop and .aero.

There are currently more than400 different ccTLDs, such as .de for Germany and .jp for Japan or subdomains, such as .co.uk and .org.uk for the United Kingdom,representing more than 200 countries and territories. Each registry fora ccTLD is responsible for maintaining and operating its own databaseof registered domain names. Some ccTLDs are unrestricted and allowanyone, from anywhere, to register their domain names on a first-come,first-served basis. Others require that registrants have a localpresence 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 oversee the management of the .com, .net and .org domains.In April 1999, as a preliminary step to introducing competition intothe domain name registration system for .com, .net and .org domains,ICANN selected Register.com as one of five registrars to participate ina testbed to evaluate whether 

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the registration system could accommodatemultiple registrars. In June 1999, we were the first of these fivecompetitive registrars to launch our registration services. In November1999, the testbed was completed, and all registrars meetingICANN's standards for accreditation were permitted to registerdomain names in the .com, .net and .org domains.

For a moredetailed discussion of the regulatory background of the domain nameregistration system, see "Administration of the Internet;Government Regulation and Legal Uncertainties." For risksassociated with the domain name system, see "RiskFactors."

The Register.com Strategy

Ourobjective is to develop long-term relationships with our customers byhelping them establish, manage and expand their Internet presence inorder to communicate and conduct commerce simply and effectively online. We believe that domain names serve as the cornerstone forestablishing an Internet presence and that, increasingly, it is ourvalue-added products and services which enable our customers to furtherdevelop and broaden their Internet presence. We believe customers willincreasingly purchase additional products and services from us to helpput their domain names to use in order to achieve their online goals.In each of 2002 and 2003, the percentage of our new Retail customerswho, when registering a domain name took advantage of our value-addedservices including email and website building tools nearly doubled fromthe previous year. We believe that by delivering a superior level ofcustomer service and enhancing our current product and serviceofferings, we can strengthen customer loyalty and increase the lifetimevalue of our customers. In addition, we provide domain nameregistration services in hundreds of ccTLDs, offering our CorporateServices customers "one stop shopping" fortheir domain name registration process and for managing their domainnames across the globe.

We are focusing our marketing efforts onattracting and retaining customers who actively use their domain namesand are more likely both to take advantage of the additional productsand services we offer and to renew their domain names. By focusing onthe quality of our customer base, rather than the volume of domainnames registered, we believe we will succeed in increasing both ourrevenue per customer and our overall revenue.

We are in themidst of a restructuring program to address the challenges facing ourbusiness. The primary goal of our restructuring program is to introducenew systems that will enable us to operate our business moreefficiently. For our Retail division, we are building a new and moreflexible systems architecture which we believe will enable us tointroduce new products and services more rapidly and cost effectivelyand to improve our operating efficiencies and reduce costs. We believethat by making our technology architecture more flexible and efficientwe will achieve these goals. For our Corporate Services division, weare developing a system to automate as much of the order processing andfulfillment for ccTLD registrations as possible. We anticipate that ournew Corporate Services system will enable us take sales orders andfulfill them on a more highly automated basis, thereby reducing ourcosts and increasing our efficiency and accuracy.

As part of ourcost reduction efforts, we have also relocated some of our groups andoperations to our Canadian facility, where the overhead and labor costsare lower than in our other locations. In addition, in February 2004,we sold our RegistryPro business, which had been given ICANN approvalto operate the .pro registry. We sold this business because we believethat operating a registry would have distracted us and taken time,energy and resources from our core business of operating a registrarand selling related value-added products and services.

Distribution Channels

We have established multipledistribution channels which we believe enable us to reach a broaderrange of potential customers and increase our exposure across themarket. We strive to provide our customers with quick, easy-to-use,value-added and flexible solutions across all of our distributionchannels.

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 

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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 customize theirFirstStepSites. This no-additional-fee service adds a small navigationbar, on which we display Register.com or third-party advertising, in aframe at the top of the website's screen. |

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|  | •  | WebsiteForwarding — Basic.    We allow customers to forward any domainname registered to them to any website page they choose. Thisno-additional-fee service adds a small navigation bar, on which wedisplay Register.com or third-party advertising, in a frame at thebottom of the website'sscreen. |

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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.   Our WebSiteNOW! product has more storage space,higher-quality templates, and is more flexible in design capabilitiesthan our basic FirstStepSiteproduct. |

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|  | •  | Web Hosting.    All ofour web hosting products allow users to put websites online using |

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|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|  |   | either  the includeddo-it-yourself website building tool or by uploading existing files tothe web hosting account directly using an FTP client software, whichallows for the transfer of files between a user and a remote server, orthrough a third party site-building tool like MicrosoftFrontpage®.  Our advanced web hosting accountsalso include ecommerce software that can be used to create an onlinestore. |

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|  | •  | Website designservices.    We offer professional design services through anadvertiser that can help our 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. |

|  |              |                                                                                                                                                                                                                                                  |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | 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. |

|  |              |                                                                                                                                                                                                                                                                        |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | 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. |

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Customer Service

We believe thatour ability to establish and maintain long-term relationships with ourcustomers and to differentiate ourselves from our competition dependssignificantly on the strength of our customer support operations andstaff. We value frequent communication with and feedback from ourcustomers in order to continually improve the quality of care providedby our customer service representatives. Our customer support groupseeks to provide dependable and timely resolution of customerinquiries, 24 hours per day, seven days per week. Our customer servicerepresentatives handle general inquiries about the domain nameregistration process and our product and service offerings, investigatethe status of orders and payments and answer technical questions aboutthe Internet and domain name management.

We maintain a customercare facility located in Canada. Our customer care center providesenhanced customer service and technical support, including acomplementary online and telephone ticketing system, a toll-freecall-in number, and a highly trained staff, to provide faster andspecialized attention to customer inquiries. As a result of our ongoingtraining, we have teams of customer service representatives whospecialize in key aspects of our business, and who are skilled inassisting our customers with our products, services and technology. Wealso handle a significant portion of customer inquiries made onlinethrough an outsourced facility.

We operate with a"continuous improvement" philosophy thatconsistently ensures our customers receive "best ofbreed" service and technical support, fueled by a focus oncontinuously raising the bar in delivery of industry-class servicelevel response times, first call resolution, superior technicalknowledge, and total customer satisfaction.

AdvertisingSales

Our goal is to partner with advertisers in order to offervarious business products and services to our customers, either on aco-branded or private label basis, or through a link to ouradvertisers' sites. We believe that our user base providesadvertisers and merchants with an attractive platform from which toreach 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 cost-effectively. Although we believethat our current 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.

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Facilities.    Our principalonline systems 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.

In March 2000, NetworkSolutions was acquired by VeriSign and in May 2001, ICANN finalizedagreements with VeriSign that superseded the original agreementsbetween the Department of Commerce and Network Solutions. Theseagreements enabled VeriSign to continue to operate the .com registryuntil at least 2007 and the .net registry until at least June30, 2005, even as it retained 

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ownership and control over its registrarbusiness through Network Solutions. The agreements also provide thatVeriSign could continue to operate both registries beyond these datesif it ceased to operation the .org registry and maintained a structuralseparation between its registry and its registrar businesses.Notwithstanding the above, in November 2003 VeriSign divested itsNetwork Solutions business and ceased to operate as a registrar,although VeriSign retained a small ownership interest in the registrarbusiness. VeriSign continues to operate the .com and .netregistries.

ICANN may create consensus policies governing thedomain name registration system if they pass through a consensus of theDomain Name Supporting Organization and its constituencies, and theother Supporting Organizations, and are adopted by the ICANN board ofdirectors. We would be affected by such policies, but none have beenadopted since the Uniform Dispute Resolution Policy (UDRP) was createdto address the problem of cybersquatting. We play an active role in thedevelopment of ICANN policies.

Recently the United Nations (UN)and the International Telecommunications Union (ITU) have expressed anincreased interest in Internet governance. The UN and ITU haveestablished a group to review whether ICANN's authority tooversee the Internet should be transferred away from ICANN, in whole orin part, to these organizations. Although such a result is unlikely in2004, it is possible that there will be changes in the area of Internetgovernance in the future. If new U.S. or international laws orregulations or ICANN policies regarding domain names and domain nameregistrars are adopted, we would be required to comply, which couldincrease our costs, distract time and energy from our operations andmake it more difficult for us to deliver our products and services. Newand 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 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

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for another person absent a showing of theregistrar's bad faith intent to profit from the use of the domainname. Registrars may be held liable, however, if they do not complypromptly with procedural provisions of the law. For example, if thereis a litigation involving a domain name, the registrar is required todeposit a certificate representing the domain name registration withthe court. To date, there is no precedent to specify under whatcircumstances we may suffer liability as a registrar under this law. Ifwe are held liable under this law, any liability could have a materialadverse effect on our business, financial condition and results ofoperations.

In 2003, the Federal Trade Commission (FTC)implemented several amendments to the Telemarketing Sales Rule (TSR)including the establishment of a national Do Not Call registryprohibiting telemarketers from calling numbers listed with theregistry. The amendments also created new requirements for upselling,negative option, free-to-pay continuity plans and for billing,authorization and the use of account information and pre-recordedcalls. As a result of these amendments, we were required to modify someof our inbound and outbound telemarketing procedures, but we arecurrently in compliance with these new requirements.

In December2003, the CAN-SPAM Act of 2003, a new federal anti-spam law, wasenacted. This new law pre-empts various state anti-spam laws andestablishes a single standard for email marketing and customercommunications. Among other things, this Act requires labelingcommercial email as an advertisement and prohibits harvesting emailaddresses and falsifying header information using deceptive ormisleading subject lines. We believe that this new law will benefit ourbusiness and marketing efforts as we do not use spam techniques orpractices and will benefit now that others are prohibited from doingso.

In addition, on January 1, 2004, Canada's new privacylaw, the Personal Information Protection and Electronic Documents Act,came fully into effect. This law imposes rules regarding how companiescan collect, use and distribute customer data in the course ofcommercial activities. The location of our customer service center inCanada, in particular, gives rise to the potential reach of theCanadian law over the company. We have examined the potential impact ofthis law on our policies and terms and conditions and, although we mayneed to modify certain of our processes, we believe that our systemsfor the protection of our customers' personal information alreadysubstantially comply with these requirements.

Competition

We believe that our industry experience, product and serviceofferings, brand name, customer service focus and distribution channelsenable us to compete favorably in providing domain name registrationservices and related products and services and in attractingadvertisers. However, many of our competitors may have competitiveadvantages over us. Although we have one of the longest operatinghistories of all the registrars and we are focused on strengthening ourcustomer relationship, we face competition both from resellers thathave greater name recognition and longer operating histories andregistrars that offer more aggressive pricing and newer systems andthat have a greater ability to automate their service offerings andlaunch 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 industry market share position and, together with areduction in the growth rate for domain names, have contributed to adecline in the number of our paid domain name registrations from 2003to 2002. In addition to other registrars, we also face competition fromresellers including, among others, ISPs, 

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web-hosting companies, Internet portals andsearch engines, telecommunication and cable companies and Internetprofessional service firms, who align themselves with accreditedregistrars to resell domain name registration services. Many of thesecompetitors may have strengths similar to ours but may also havestronger brand recognition and Internet industry experience.

Competition with Respect to Our Value-Added Services.    Animportant component of our business strategy is to offer value-addedproducts and services for the development of our customers'Internet presence, however, the marketplace for our products andservices is highly competitive. Other registrars have developed orentered into strategic relationships to offer products and servicessimilar to those that we now provide, including our email, domain nameforwarding and website hosting, or products and services that weanticipate offering in the future. In addition to competing with otherregistrars, we also compete with many other providers of these productsand services, including application service providers, Internetprofessional 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$38.3 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; |

|              |                                                                 |
|--------------|-----------------------------------------------------------------|
| •  | 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 

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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; |

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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 coulddecline.

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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   |
|                                                                                                                  |  | (Restated)            |         | (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                                                                                    |  |                  | (3,135  | )                                 |  |   | (1,195  | )  |  |   | 10,401  |    |  |   | 4,187  |    |  |   | — |    |
| Netincome(loss)                                                                                                       |  | $                     | 5,549   |                                   |  | $      | (10,409 | )  |  | $      | (21,587 | )  |  | $      | 270    |    |  | $      | (8,777  | )  |
|                                                                                                                  |  |                  |    |                                   |  |   |    |    |  |   |    |    |  |   |   |    |  |   |    |    |
| Basicincome (loss) pershare                                                                                           |  | $                     | 0.16    |                                   |  | $      | (0.26   | )  |  | $      | (0.58   | )  |  | $      | 0.01   |    |  | $      | (0.46   | )  |
| Dilutedincome (loss) pershare                                                                                         |  | $                     | 0.15    |                                   |  | $      | (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   |
|                         |  | (Restated)  |         |   |  | (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               |  |        | 62,916  |   |  |          | 117,337 |   |  |   | 120,592 |   |  |   | 92,160  |   |  |   | 29,813  |   |
| Available-for-salesecurities |  |        | 2,527   |   |  |          | 61,205  |   |  |   | 57,651  |   |  |   | 47,980  |   |  |   | — |   |
| Totalassets                  |  |        | 166,650 |   |  |          | 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          |  |        | 63,517  |   |  |          | 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.

Restatement of FinancialStatements

We restated our financial statements for the year2003 to correct an error related to a deferred income tax benefit whichshould have been recorded in the first quarter of 2003 in connectionwith RCOM Europe's goodwill impairment charge of $8.3 million inthe third quarter of 2002. The goodwill was initially recorded in March2002 in connection with the acquisition of RCOM Europe. At the time ofthe goodwill impairment charge in the third quarter of 2002, no incometax benefit was recorded as the goodwill impairment was not deductiblefor tax purposes in the country of domicile of RCOM Europe andtherefore the tax benefit was not realizable. In March 2003, theCompany filed an election with the IRS to include the consolidatedincome or loss of RCOM Europe in the Company's consolidated U.S.federal tax return starting in the year 2003. Accordingly, the goodwillthat had been impaired for financial reporting purposes in the thirdquarter of 2002 became deductible in the U.S. over a period ofapproximately 14 years beginning on January 1, 2003. Based on theCompany's expectation of generating future taxable income in theU.S., realization of an income tax benefit related to the taxdeductibility of the goodwill is considered more likely than not andtherefore a deferred income tax asset of $3.2 million should have beenrecorded in the first quarter of 2003 upon the change in tax status.This restatement favorably impacted the provision for income taxes andincreased net income for the year 2003 by $3.2 million, and increaseddeferred tax assets and increased total stockholders' equity atDecember 31, 2003 by $3.2 million. The restatement did not affect theCompany's cash flow or loss from operations in 2003. The errorwas caused by a material control weakness, which is further discussedin Item 9A.

Overview

We are a provider of global domainname registration, website, email and other Internet services forbusinesses and consumers that wish to have a unique address and brandedidentity on the Internet. Domain names serve as addresses andidentities on the World Wide Web. They enable a business or person toestablish an Internet presence and are integral to 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 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.

30

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We believe that we offer a quick anduser-friendly domain name registration process as well as responsiveand reliable customer support. We also assist our customers in furtherdeveloping and maintaining their Internet presence by offering them arange of website, email and other value-added products andservices.

Domain name registration activity is driven by the useof the Internet 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.

In June 2000, we acquired Inabox, Inc. for $1.0million 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 

31

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have distracted us and taken time, energy andresources from our core business of operating a registrar and sellingrelated 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 recognizerevenue over the period during which we provide the registrationservices, including customer service and maintenance of the individualdomain name records. We require prepayment at the time of sale viacredit card for most online domain name registration sales, whichprovides us with the full cash fee at the beginning of the registrationperiod whereas we recognize the revenues over the registration period.For many of our customers who register domain names through ourCorporate Services division, and many of the participants in our GlobalPartner Network, we establish lines of credit based on creditworthiness.

Under current credit card industry practices, we areliable for fraudulent and disputed credit card transactions because wedo not obtain the cardholder's signature at the time of thetransaction, even though the financial institution issuing the creditcard may have approved the transaction. As a result, we must estimatethe amount of credit card chargebacks we will receive in the futurerelated to credit card sales in the current period. In determining ourestimate, on a monthly basis we review historical rates of credit cardchargebacks, current economic trends and changes in acceptance of ourproducts and services. Deferred revenues and revenues recognized arepresented net of provisions for estimated refunds to customers andchargebacks from customers.

The credit card associations mayimpose financial penalties if our chargebacks and/or refunds exceedcertain thresholds. Such penalties are not charged to revenues, but areclassified as general and administrative expenses. Because theimposition of any potential penalties is at the discretion of theassociation, subject to contractual limitations, we have accruedamounts to cover what we estimate to be the maximum potential penaltiesthat could be imposed under that association's rules. If thepenalty ultimately imposed is less than the maximum contractual amount,we would reverse any excess accounts previously accrued as a reductionof general and administrative expense at that time. If a significantpercentage of customers continue to request refunds from us or contacttheir bank to request that the amount we charged to their credit cardbe charged back to us based on claims that their credit card was usedfraudulently or without their consent, our business could be materiallyadversely affected. See "Risk Factors" andNote 14 to Consolidated Financial Statements "Commitmentsand Contingencies — 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.

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In addition to our standard registrationfees, many of which are published on our www.register.com website, wehave a number of different fee structures for our domain nameregistration services. Our Corporate Services division delivers adiversified range of generally higher-priced services for our corporatecustomers and also extends volume-based discounts for domain nameregistrations and transfers. We pay referral commissions to certainparticipants in our Global Partner Network and to participants in ouraffiliate network. Other participants in our Global Partner Network payus a wholesale price per registration, discounted off of our standardregistration fee.

We experienced a decrease in our total namesunder management to approximately 3.1 million as of December 31, 2003from approximately 3.3 million as of December 31, 2002.

Otherproducts and services, which primarily consist of email, domain nameforwarding, web hosting, site submission to search engines, applicationprocessing fees for new gTLDs, intellectual property protectionservices related to the introduction of new gTLDs and software, andfees for modifying existing registrations, are sold either as one timeofferings or through annual or monthly subscriptions, depending on theproduct or service. Revenues from our other products and services arerecognized ratably over the period in which we provide such services.Revenues from processing fees for domain name applications, which mayor may not result in domain name registrations, and other intellectualproperty protection services related to the introduction of new gTLDs,are recognized immediately upon the sale of the services.

Advertising revenues are derived from the sale of sponsorships andbanner advertisements, typically under short-term contracts that rangefrom one month to one year in duration. We recognize these revenues inthe periods in which the advertisements are displayed or the requirednumber of impressions are achieved, provided that no significantcompany obligation remains and collection of the resulting receivableis probable.

Cost of Revenues

Our cost ofrevenues consists of the costs associated with providing domain nameregistrations and other products and services. Cost of revenues fordomain name registrations represents amortization of registry fees on astraight-line basis over the registration term, depreciation of theequipment used to process the domain name registrations, fees paid forco-location facilities housing our equipment, and fees paid to thefinancial institutions to process credit card payments on our behalf.Cost of revenues does not include penalties for excessive credit cardchargebacks and refunds; such penalties are classified as general andadministrative expense. We pay registry fees for gTLDs ranging from$5.30 per year for each .biz and .info domain name registration to $6per year for each .com, .net and .org domain name registration. We payregistry fees ranging from $6 to $5,020 per year for one to ten-yearcountry code domain name registrations. The largest component of ourcost of revenues is registry fees which, while paid in full at the timethe domain name is registered, are recorded as a prepaid expense andamortized to cost of revenues ratably over the terms of theregistrations.

Cost of revenues for our other products andservices consists of fees paid to third-party service providers,depreciation of equipment used to deliver the services, fees paid forco-location facilities housing our equipment, and fees paid tofinancial institutions to process credit card payments on our behalf.Cost of revenues for other products and services is recognized ratablyover the periods in which the services are provided.

We have nodirect cost of revenues associated with our advertising revenues and wehave no incremental cost of revenues associated with deliveringadvertisements since we use the same equipment to deliver theadvertisements as we use for our domain name registration services.Therefore, the gross profit margin on advertising revenue is100%, and accordingly, any decrease in advertising revenue wouldrepresent a reduction of our gross profit of the same amount. We incurcosts including salaries and commissions for our advertising salesstaff, which are classified as operating expenses.

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Operating Expenses

Ouroperating expenses consist of sales and marketing, research anddevelopment, general and administrative (including non-cashcompensation), and amortization of intangibles. Prior to January 1,2002 our operating expenses also included amortization of goodwill;effective January 1, 2002 we adopted SFAS 142 and ceased amortizationof goodwill. Our sales and marketing expenses consist primarily ofemployee salaries, marketing programs such as advertising, andcommissions paid to our sales representatives. Research and developmentexpenses consist primarily of employee salaries, fees for outsideconsultants, software licensing fees and related costs associated withthe development and integration of new products and services,enhancement of existing products and services, and quality assurance.General and administrative expenses, excluding non-cash compensation,include salaries and other personnel-related expenses for executive,financial and administrative personnel, as well as professional fees,insurance premiums, penalties for excessive credit card chargebacks andrefunds, and provisions for uncollectible receivables. Facilities costsare allocated across the various operating expense categories. Weaccount for 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.

We review our goodwill and intangibles for impairmentannually or whenever events or changes in circumstances indicate thatthe carrying amount of these assets may not be recoverable. We assessthe recoverability of goodwill and intangibles using estimatedundiscounted cash flows. These cash flows include an estimated terminalvalue based on a hypothetical sale of an acquisition at the end of therelated amortization period. We also compare the total market value ofour common stock with the book value of our stockholders' equity.Based on the foregoing factors, if we conclude that another-than-temporary impairment of goodwill or intangibles hasoccurred, we record an impairment writedown.

IncomeTaxes

In preparing our financial statements, we makeestimates of our current tax obligations and temporary differencesresulting from timing differences for reporting items for financialstatement and tax purposes, the most significant of which is deferredrevenue. We recognize deferred taxes by the asset and liability methodof accounting for income taxes. Under the asset and liability method,deferred income taxes are recognized for differences between thefinancial statement and tax bases of assets and liabilities at enactedstatutory tax rates in effect for the years in which the differencesare expected to reverse. The effect on deferred taxes of a change intax rates is recognized as income or expense in the period thatincludes the enactment date. Valuation allowances are established whenappropriate, 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 

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addition, unless we lower our credit cardrefunds and reduce our level of credit card chargebacks, we maycontinue to be potentially liable for significant penalties from creditcard associations, which would impact our profitability (see"Risk Factors" for additional information).Further, we anticipate that our revenues from advertising will bematerially lower in future periods.

For all the above reasons,we cannot assure you that we will be able to operate profitably orcontinue to generate positive cash flow in the future.

Year2003 compared with Year 2002

Net Revenues

Totalnet revenues decreased 2% to $104.3 million in 2003 from $106.3million in 2002.

Domain nameregistrations.    Recognition of revenues from domain nameregistrations decreased 6% to $91.4 million in 2003 from $97.3million in 2002. This decrease was due primarily to a lower number ofdomain names registered, and in part to lower average sale prices peryear of subscription term. These reductions were offset in part by theinclusion of RCOM Europe in our results of operations for the full yearin 2003 as compared to 2002, for which it was included from the date ofacquisition (March  8, 2002); revenues from RCOM Europe of $10.4million and $7.2  million were recognized in 2003 and 2002,respectively. We may face continued pricing pressure in the future,which would adversely impact our revenues and profitability.

Other Products and Services.    Revenues from otherproducts and services increased 85% to $8.9  million in2003 from $4.8  million in 2002. The largest component of theincreased revenues in this category was email services.

AtDecember  31, 2003, our deferred revenue balance was $86.9million, compared with $87.1 million at December  31, 2002,representing a decrease of $0.2  million for the year 2002. Ourdeferred revenue balance is an indicator of revenue to be recognized infuture periods.

Advertising.    Revenues fromadvertising decreased 4% to $4.0 million in 2003 from $4.2million in 2002. From the fourth quarter of 2002 through the thirdquarter of 2003, our largest advertising customer, a provider ofweb-hosting services, had accounted for approximately $1.0 million ofadvertising revenues per quarter. However in the fourth quarter of 2003we began to offer web-hosting services to our own customers, anddecided to discontinue this advertising relationship. Accordingly, wedid not sell advertising to this customer in the fourth quarter of 2003and we do not expect to sell advertising to this customer in futureperiods. Accordingly, we anticipate that our annualized advertisingrevenue will decline by approximately $4.0 million unless we canincrease our advertising sales to other customers. Our sales ofweb-hosting services directly to our own customers are classified asrevenues from other products and services.

Cost ofRevenues

Total cost of revenues decreased 7% to $32.7million in 2003 from $35.3 million in 2002.

Cost of DomainName Registrations.    Costs recognized for domain nameregistrations decreased 11% to $30.7 million in 2003 from $34.3million in 2002. The decrease resulted primarily from a lower number ofdomain names registered in 2003 and a reduction of data centeroperations expenses.

Cost of Other Products andServices.    Cost of other products and services increased44% to $2.0  million in 2003 from $1.0 million in 2002 inpart as a result of increased revenues from other products and servicesin 2003 (primarily email services), and in part because in 2002 we hadreceived a $0.4 million refund from the .biz registry as a result ofthat registry's decision to cancel certain .biz applications.

Gross Profit Margin

Our gross profit margin increased to68.7% in 2003 from 66.8% in 2002, primarily as a resultof lower costs of our data center operations, and in part due toincreases in revenues from other products and services, which have ahigher gross profit margin than domain name registration services.

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Operating Expenses

Totaloperating expenses decreased 18% to $72.2  million in 2003from $88.2  million in 2002.

Sales andMarketing.    Sales and marketing expenses decreased 16%to $26.2  million in 2003 from $31.2  million in 2002. Thedecrease was primarily due to reductions in online and off-line mediaspending. We anticipate that our marketing expense will increasesignificantly in 2004.

Research andDevelopment.    Research and development expenses increased39% to $18.6  million in 2003 from $13.4  million in2002. The increase resulted primarily from higher salaries andconsulting fees for personnel working to improve our systems andoperations. We anticipate that research and development expenses willcontinue to remain high during the first half of 2004, and perhapsbeyond, as we continue our efforts to upgrade and improve oursystems.

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.

As of December 31, 2003 our balance sheet reflected an accruedliability of $6.1 million for potential credit card penalties, whichrepresents our estimate of the maximum potential penalties that couldbe imposed under one credit card association's rules forchargebacks and/or refunds in excess of certain thresholds. Foradditional information in connection with potential credit cardpenalties, see "Risk Factors" and Note 14 toConsolidated Financial Statements, "Commitments andContingencies — Credit Card Penalties."

Amortization and Writedown of Goodwill and OtherIntangibles.    Amortization of intangibles was $0.6 million in2003 compared with amortization and writedown of goodwill and otherintangibles of $17.3  million in 2002. In September 2002, we madea decision to abandon the Afternic business. As a consequence of thatdecision, as well as negative industry and economic trends affecting usand the general 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 ourvarious acquisitions. Because the total market value of our commonstock at September  30, 2002 was lower than the book value of ourstockholders' equity, we recorded a goodwill impairment loss of$17.0 million in September 2002. Also, in accordance with SFAS 142, weceased amortization of goodwill effective January  1, 2002.

Other Income, Net

Other income, net, which consistedprimarily of interest income, net of interest expense, decreased to$3.0 million in 2003 from $5.6 million in 2002. The decrease wasprimarily due to lower prevailing interest rates and in part to areduction of $120 million in our investment portfolio in connectionwith our self-tender offer for $120 million of our common stock andwarrants completed in September 2003.

Provision for IncomeTaxes

We recorded an income tax benefit, net, in 2003 of $3.1million, primarily as a result of our filing of an election with theIRS to include the consolidated income or loss of RCOM Europe in ourconsolidated U.S. federal tax return starting in the year 2003. Thatelection resulted in our recording a deferred tax benefit of $3.2million in 2003 because goodwill is deductible for U.S. federal incometax purposes but not for U.K. tax purposes. Our income tax benefit,net, is composed of the $3.2 million 

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deferred tax benefit, offset by $0.1 millionof income tax provision. This $0.1 million of income tax provisionresulted from our pre-tax income less tax-free interest income earnedon our investment portfolio. The provision for income taxes in 2002 wasa benefit 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.

At December  31, 2002, wehad $87.1 million of deferred revenue compared with $77.4million at December  31, 2001, representing an increase of$9.7  million for the year 2002. The increase was due primarilyto the acquisition of RCOM Europe on March  8, 2002, whosebalance sheet included deferred revenue of $6.9  million at thedate of acquisition. Our deferred revenue balance is an indicator ofrevenue to be recognized in future periods.

Other Productsand Services.    Revenues from other products and servicesdecreased 13% to $4.8 million in 2002 from $5.5  millionin 2001. The decrease was due primarily to the non-recurrence in 2002of $2.9 million of revenues received during 2001 from sales ofintellectual property services in connection with the launch of newgTLDs, offset in part by increased sales in 2002 of email andWebSiteNOW! services.

Advertising.    Revenues fromadvertising decreased 54% to $4.2  million in 2002 from$9.4  million in 2001, primarily as a result of softness in theInternet advertising market.

Cost of Revenues

Totalcost of revenues increased 1% to $35.3  million in 2002from $34.8 million in 2001.

Cost of Domain NameRegistrations.    Costs recognized for domain name registrationsincreased 3% to $34.3  million in 2002 from $33.3million in 2001. The increase was due to the inclusion of RCOM Europein our results of operations after March 8, 2002, for which costs of$2.4  million were recognized in 2002, more than offsetting thedecreased cost of domain name registrations that resulted from lowerregistration revenues recognized in 2002.

Cost of OtherProducts and Services.     Cost of other products and servicesdeclined to $1.0 million in 2002 from $1.5 million, primarily because2001 included $1.2 million of costs related to sales of intellectualproperty services in connection with the launch of new gTLDs, which didnot recur in 2002.

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Gross Profit Margin

Our grossprofit margin declined to 66.8% in 2002 from 70.1% in2001, in part due to lower advertising revenues, in part to loweraverage prices and in part to fixed costs for depreciation and datacenter operations which comprised a higher percentage of the lowerlevel of revenues.

Operating Expenses

Total operatingexpenses decreased 13% to $88.2  million in 2002 from$101.3  million in 2001.

Sales andMarketing.    Sales and marketing expenses decreased 7% to$31.2 million in 2002 from $33.5  million in 2001. The decreasewas primarily due to lower expenses related to media advertising,direct mail and other promotional activities, offset in part by theinclusion of RCOM Europe in our results of operations afterMarch  8, 2002.

Research andDevelopment.    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".

Amortization and Writedown ofGoodwill and Other Intangibles.    Amortization and writedown ofgoodwill and 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.

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Quarterly Results of Operations

The following table sets forth selected unaudited quarterlystatement of operations data, in dollar amounts and as percentages ofnet revenue, for the eight quarters ended December 31, 2003. In ouropinion this information has been prepared on substantially the samebasis as the audited financial statements appearing elsewhere in thisannual report, and all necessary adjustments, consisting only of normalrecurring adjustments, have been included in order to present fairlythe unaudited quarterly results of operations data. The quarterly datashould be read in conjunction with our annual financial statements andrelated notes appearing elsewhere in this annual report. The operatingresults for any quarter are not necessarily indicative of results forany futureperiod.

|                                                                                                                               |  |                                         |        |                    |  |              |        |                |  |                  |        |                    |  |              |        |               |  |        |        |         |  |        |         |         |  |        |        |        |  |        |        |        |  |  |
|-------------------------------------------------------------------------------------------------------------------------------|--|-----------------------------------------|--------|--------------------|--|--------------|--------|----------------|--|------------------|--------|--------------------|--|--------------|--------|---------------|--|--------|--------|---------|--|--------|---------|---------|--|--------|--------|--------|--|--------|--------|--------|--|--|
|                                                                                                                          |  | QuarterEnded                            |
|                                                                                                                          |  | December31, 2003                        |        | September 30, 2003 |  | June 30,2003 |        | March 31, 2003 |  | December 31,2002 |        | September 30, 2002 |  | June 30,2002 |        | March 31,2002 |
|                                                                                                                          |  |                                    |        |               |  | (Restated)   |        |
|                                                                                                                          |  | (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   | )             |  |         | (2,331 | )        |  |   | (140   | )  |  |   | (5,155  | )  |  |   | 2,063  |   |  |   | 2,037  |   |
| Netincome(loss)                                                                                                               |  | $                                       | 887    |               |  | $            | 2,423  |           |  | $                | (2,996 | )             |  | $            | 5,235  |          |  | $      | (347   | )  |  | $      | (14,563 | )  |  | $      | 847    |   |  | $      | 3,654  |   |
| Basic(loss) income pershare                                                                                                   |  | $                                       | 0.04   |               |  | $            | 0.06   |           |  | $                | (0.07  | )             |  | $            | 0.13   |          |  | $      | (0.01  | )  |  | $      | (0.36   | )  |  | $      | 0.02   |   |  | $      | 0.09   |   |
| Diluted(loss) income pershare                                                                                                 |  | $                                       | 0.04   |               |  | $            | 0.06   |           |  | $                | (0.07  | )             |  | $            | 0.12   |          |  | $      | (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 |
|                                                       |  |             |         | (Restated)         |  |
| 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     | )             |  |         | (9      | )        |  |   | (1      | )   |  |   | (20    | )   |  |   | 8       |    |  |   | 8       |    |
| Netincome(loss)                                            |  |             | 4       | %             |  |         | 9       | %         |  |             | (12    | )%            |  |         | 20      | %        |  |   | (1      | )%  |  |   | (57    | )%  |  |   | 3       | %  |  |   | 13      | %  |
|                                                            |

39

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Recent accountingpronouncements

SFAS 146 "Accounting for CostsAssociated with Exit or Disposal Activities" was issued inJune 2002, and requires that costs associated with exit or disposalactivities be recognized when the liability is incurred, rather than atthe date of commitment to an exit or disposal plan. Examples of coveredcosts are lease termination and certain employee severance. SFAS 146 isapplicable to exit or disposal activities initiated afterDecember  31, 2002.

SFAS 148 "Accounting forStock-Based Compensation — Transition and Disclosure — anamendment of FAS 123" was issued in December 2002,providing for alternative methods of transition for a voluntary changeto the fair market value based method of accounting for stock-basedemployee compensation.

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:

40

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|                            |  |                      |       |                 |  |           |       |           |  |                  |       |        |  |        |       |        |  |        |     |        |  |  |
|----------------------------|--|----------------------|-------|-----------------|--|-----------|-------|-----------|--|------------------|-------|--------|--|--------|-------|--------|--|--------|-----|--------|--|--|
|                       |  | 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. |

41

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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.

42

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Item8.    Financial Statements and Supplementary Data.

INDEX TOCONSOLIDATED FINANCIALSTATEMENTS

|                                                                                                               |  |        |    |        |  |  |
|---------------------------------------------------------------------------------------------------------------|--|--------|----|--------|--|--|
|                                                                                                          |  | Page   |
| Reportof PricewaterhouseCoopers LLP, Independent Registered Public AccountingFirm                             |  |   | 44 |   |
| Consolidated Balance Sheets as ofDecember 31, 2003 and 2002                                                   |  |   | 45 |   |
| ConsolidatedStatements of Operations for the years ended December 31, 2003,2002 and 2001                      |  |   | 46 |   |
| Consolidated Statements ofChanges in Stockholders' Equity for the years endedDecember  31, 2003, 2002 and2001 |  |   | 47 |   |
| Consolidated Statements of CashFlows for the years ended December  31, 2003, 2002 and2001                     |  |   | 48 |   |
| Notes to Consolidated FinancialStatements                                                                     |  |   | 49 |   |
|                                                                                                               |

43

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REPORT OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM

To the Board of DirectorsandStockholders of Register.com, Inc.

In our opinion,the accompanying consolidated balance sheets and the relatedconsolidated statements of operations, of stockholders' equityand of cash flows present fairly, in all material respects, thefinancial position of Register.com, Inc. at December  31, 2003and 2002, and the results of its operations and its cash flows for eachof the three years in the period ended December 31, 2003 in conformitywith accounting principles generally accepted in the United States ofAmerica. These financial statements are the responsibility of theCompany's management; our responsibility is to express an opinionon these financial statements based on our audits. We conducted ouraudits of these statements in accordance with auditing standards of thePublic Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financialstatements, assessing the accounting principles used and significantestimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audits provide areasonable basis for our opinion.

As discussed in Note 2 to theConsolidated Financial Statements, effective January  1, 2002,the Company adopted Statement of Financial Accounting Standards No.142, "Goodwill and Other IntangibleAssets".

As discussed in Notes 11 and 15, theCompany has restated its Consolidated Financial Statements as of andfor the year ended December 31, 2003 to reflect an increase in deferredincome taxes and related tax benefit.

/s/PricewaterhouseCoopers LLP

PricewaterhouseCoopersLLPNew York, New YorkFebruary  6, 2004, except forNotes 11 and 15, as to which the date is November 9, 2004

44

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REGISTER.COM, INC.

CONSOLIDATEDBALANCE SHEETS(in thousands, except sharedata)

|                                                                                                                                                                                    |  |                            |         |         |  |        |         |         |  |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|----------------------------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                                                                                                               |  | December31,                |
|                                                                                                                                                                               |  | 2003                       |         | 2002    |
|                                                                                                                                                                               |  | (Restated—SeeNote15) |         |
| **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                                                                                                                                                             |  |                       | 17,454  |    |  |   | 14,753  |    |
| Othercurrentassets                                                                                                                                                                 |  |                       | 2,388   |    |  |   | 3,303   |    |
| Totalcurrentassets                                                                                                                                                                 |  |                       | 132,858 |    |  |   | 197,806 |    |
| Fixedassets, net                                                                                                                                                                   |  |                       | 8,363   |    |  |   | 8,450   |    |
| Prepaiddomain name registry fees, net of currentportion                                                                                                                            |  |                       | 9,856   |    |  |   | 7,131   |    |
| Deferred taxasset, net                                                                                                                                                             |  |                       | 10,698  |    |  |   | 8,299   |    |
| Otherinvestments                                                                                                                                                                   |  |                       | 396     |    |  |   | 396     |    |
| Marketablesecurities                                                                                                                                                               |  |                       | 2,527   |    |  |   | 61,205  |    |
| Goodwill andother intangible assets,net                                                                                                                                            |  |                       | 1,952   |    |  |   | 2,317   |    |
| Totalassets                                                                                                                                                                        |  | $                          | 166,650 |    |  | $      | 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                                                                                                                                                                 |  |                       | (38,329 | )  |  |   | (43,878 | )  |
| Totalstockholders'equity                                                                                                                                                           |  |                       | 63,517  |    |  |   | 173,642 |    |
| Totalliabilities and stockholders'equity                                                                                                                                           |  | $                          | 166,650 |    |  | $      | 285,604 |    |
|                                                                                                                                                                                    |

Theaccompanying notes are an integral part of these consolidated financialstatements.

45

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REGISTER.COM,INC.

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

|                                                                                                       |  |                             |         |         |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------------------------------------------------------------------------|--|-----------------------------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                                  |  | Yearended December31,       |
|                                                                                                  |  | 2003                        |         | 2002    |  | 2001   |
|                                                                                                  |  | (Restated—SeeNote 15) |         |
| 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                                                                    |  |                        | (3,135  | )  |  |   | (1,195  | )  |  |   | 10,401  |    |
| Netincome(loss)                                                                                       |  |                        | 5,549   |    |  |   | (10,409 | )  |  |   | (21,587 | )  |
| Othercomprehensive income(loss):                                                                      |  |                        |    |    |  |   |    |    |  |   |    |    |
| Unrealized(loss) gain on marketablesecurities                                                         |  |                        | (693    | )  |  |   | (595    | )  |  |   | 1,002   |    |
| Gainon foreign currencytranslation                                                                    |  |                        | 658     |    |  |   | 1,388   |    |  |   | — |    |
| Comprehensiveincome(loss)                                                                             |  | $                           | 5,514   |    |  | $      | (9,616  | )  |  | $      | (20,585 | )  |
| Basicincome (loss) pershare                                                                           |  | $                           | 0.16    |    |  | $      | (0.26   | )  |  | $      | (0.58   | )  |
| Dilutedincome (loss) pershare                                                                         |  | $                           | 0.15    |    |  | $      | (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.

46

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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   | )  |
| Othercomprehensive income:                                |  |
| Net unrealized holding loss onmarketablesecurities        |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | (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 | )  |
| Othercomprehensive income:                                |  |
| Net unrealized holding loss onmarketablesecurities        |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | (693    | )  |  |   | — |    |  |   | (693     | )  |
| Foreigncurrencytranslation                                |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | 658     |    |  |   | — |    |  |   | 658      |    |
| Netincome (loss) (Restated—See Note15)              |  |                               | — |        |  |   | — |   |  |                     | —     |                  |  |                                | — |                |  |   | —  |    |  |   | — |    |  |   | — |    |  |   | 5,549   |    |  |   | 5,549    |    |
| Balanceat December 31, 2003 (Restated—See Note15)   |  |                               | — |        |  |   | — |   |  |                     | 23,536,801  |                  |  | $                                   | 2       |                |  | $      | 100,228  |    |  | $      | (528    | )  |  | $      | 2,144   |    |  | $      | (38,329 | )  |  | $      | 63,517   |    |
|                                                           |

Theaccompanying notes are an integral part of these consolidated financialstatements.

47

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REGISTER.COM, INC.CONSOLIDATEDSTATEMENTS OF CASH FLOWS

(inthousands)

|                                                                                                 |  |                             |          |         |  |        |          |         |  |        |          |         |  |  |
|-------------------------------------------------------------------------------------------------|--|-----------------------------|----------|---------|--|--------|----------|---------|--|--------|----------|---------|--|--|
|                                                                                            |  | Yearended December31,       |
|                                                                                            |  | 2003                        |          | 2002    |  | 2001   |
|                                                                                            |  | (Restated—SeeNote 15) |          |
| **Cash flows from operatingactivities**                                                         |  |                        |     |    |  |   |     |    |  |   |     |    |
| Net income(loss)                                                                                |  | $                           | 5,549    |    |  | $      | (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                                                                             |  |                        | (5,100   | )  |  |   | (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.

48

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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.

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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.

50

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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   |
|                                                                                              |  | (Restated—SeeNote 15)          |        |
|                                                                                              |  | (in thousands, except pershare data) |        |    |  |   |
| Net income(loss):                                                                                 |  |                                 |   |    |  |   |    |    |  |   |    |    |
| Asreported                                                                                        |  | $                                    | 5,549  |    |  | $      | (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                                                                                          |  | $                                    | 2,404  |    |  | $      | (12,122 | )  |  | $      | (24,973 | )  |
| Netincome (loss) pershare:                                                                        |  |                                 |   |    |  |   |    |    |  |   |    |    |
| As reported—diluted                                                                         |  | $                                    | 0.15   |    |  | $      | (0.26   | )  |  | $      | (0.58   | )  |
| Proforma —diluted                                                                           |  | $                                    | 0.06   |    |  | $      | (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. 

51

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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   |
|                                             |  | (Restated—SeeNote 15)             |        |
|                                             |  | (in thousands, except pershare amounts) |
| **Net income (loss) pershare —basic:**     |  |                                    |   |   |  |   |    |    |  |   |    |    |
| Net income(loss) available to commonshareholders |  | $                                       | 5,549  |   |  | $      | (10,409 | )  |  | $      | (21,587 | )  |
| Weightedaverage shares —basic              |  |                                    | 35,701 |   |  |   | 40,046  |    |  |   | 37,424  |    |
| Netincome (loss) per share —basic          |  | $                                       | 0.16   |   |  | $      | (0.26   | )  |  | $      | (0.58   | )  |
|                                             |  |                                    |   |   |  |   |    |    |  |   |    |    |
| **Netincome (loss) per share —diluted:**   |  |                                    |   |   |  |   |    |    |  |   |    |    |
| Net income(loss)                                 |  | $                                       | 5,549  |   |  | $      | (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        |  | $                                       | 0.15   |   |  |   |         | *  |  |   |         | *  |
|                                                  |

|  |
|--|
|  |  |
|  |

|   |                                                                                                                                                                                |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| * | 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 $35,000 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 $658,000.

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.

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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.

53

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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      |   |  | $      | — |    |
|                                     |

54

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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 

55

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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 

56

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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 |   |
|               |

57

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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.

58

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11.    Income Taxes

Temporary differences between the carrying amounts of assetsand liabilities for financial reporting and income tax purposesresulted in a net deferred tax asset of $24.9  million and$23.1  million at December  31, 2003 and 2002,respectively.

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

|                                 |  |                             |        |               |  |        |         |         |  |        |         |        |  |  |
|---------------------------------|--|-----------------------------|--------|---------------|--|--------|---------|---------|--|--------|---------|--------|--|--|
|                            |  | December31,                 |
|                            |  | 2003                        |        | 2002          |  | 2001   |
|                            |  | (Restated—SeeNote 15) |        | (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                         |  |                        | (3,552 | )        |  |   | (3,620  | )  |  |   | 1,513   |   |
| State                           |  |                        | (1,548 | )        |  |   | (1,016  | )  |  |   | 1,002   |   |
| Totaldeferred                   |  |                        | (5,100 | )        |  |   | (4,636  | )  |  |   | 2,515   |   |
| Totalprovision(benefit)         |  | $                           | (3,135 | )        |  | $      | (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    |
|                            |  | (Restated—SeeNote 15) |        |
|                            |  | (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    |    |  |   | — |    |
| Goodwillimpairmentcharge        |  |                        | 3,225  |    |  |   | — |    |
| Totaldeferred taxasset          |  |                        | 33,313 |    |  |   | 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            |  | $                           | 28,152 |    |  | $      | 23,052  |    |
|                                 |

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The income taxprovision (benefit) in the Statement of Operations differs from incometax provision (benefit) determined by applying the statutory Federalincome tax rate to the net income (loss) shown in the financialstatements as a result of thefollowing:

|                                                                                 |  |                              |         |          |  |        |         |          |  |        |         |          |  |  |
|---------------------------------------------------------------------------------|--|------------------------------|---------|----------|--|--------|---------|----------|--|--------|---------|----------|--|--|
|                                                                            |  | Yearended December31,        |
|                                                                            |  | 2003                         |         | 2002     |  | 2001   |
|                                                                            |  | (Restated—(SeeNote 15) |         |
| Tax provision (benefit) at Federalstatutoryrate                                 |  |                         | 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    |     |  |   | — |     |  |   | — |     |
| Benefitattributable to tax deductiblegoodwill                                   |  |                         | (133.6  | )   |  |   | — |     |  |   | — |     |
| Valuationallowance                                                              |  |                         | — |     |  |   | — |     |  |   | (19.8   | )   |
| Taxprovision (benefit) per statement ofoperations                               |  |                         | (129.9  | )%  |  |   | (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.

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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 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 because the goodwill was not deductible in the separatetax return of RCOM Europe. However, in 2003 the Company filed anelection with the Internal Revenue Service to include the consolidatedincome or loss of RCOM Europe in the Company's consolidated U.S.federal tax return starting in the year 2003. Since the goodwill isdeductible for U.S. federal tax purposes, that election resulted in theCompany's recording a deferred tax benefit of $3.2 million in2003.

A breakdown of the Company's intangible assets, allof which were recorded in connection with the acquisition of RCOMEurope, 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 

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Company's common stock, the Companyperformed an impairment analysis of the goodwill and intangible assetsrecorded in connection with its various acquisitions. Because the totalmarket value of the Company's common stock as of September30, 2002 was lower than the book value of its stockholders'equity, the Company recorded a goodwill impairment writedown ofapproximately $17.0  million in September 2002.

14.    Contingencies and Commitments

Litigation

In November 2001, the Company, itsformer Chairman, President and Chief Executive Officer Richard D.Forman and its former Vice President of Finance and Accounting, Alan G.Breitman (the "Individual Defendants"), andGoldman Sachs & Co. and Lehman Brothers, Inc., two of theunderwriters in the syndicate for our March 3, 2000 initial publicoffering, were named as defendants in a class action complaint allegingviolations of the federal securities laws in the United States DistrictCourt, Southern District of New York. Goldman Sachs & Co. andLehman Brothers, Inc. distributed 172,500 of the 5,750,000 shares inthe initial public offering. On April 19, 2002, the Company and theIndividual Defendants were named as defendants in a ConsolidatedAmended Complaint (now the operative complaint) filed in the SouthernDistrict of New York and captioned In re: Register.com, Inc. InitialPublic Offering Securities Litigation. The Consolidated AmendedComplaint seeks unspecified damages as a result of various allegedsecurities law violations arising from activities purportedly engagedin by the underwriters in connection with our initial public offering.Plaintiffs allege that the underwriter defendants agreed to allocatestock in the Company's initial public offering to certaininvestors in exchange for excessive and undisclosed commissions andagreements by those investors to make additional purchases of stock inthe aftermarket at pre-determined prices. Plaintiffs allege that theprospectus for the Company's initial public offering was falseand misleading in violation of the securities laws because it did notdisclose these arrangements. The action is being coordinated withapproximately three hundred other nearly identical actions filedagainst other companies before one judge in the U.S. District Court forthe Southern District of New York. On October  9, 2002, the Courtdismissed the Individual Defendants from the case without prejudicebased on Stipulations of Dismissal filed by the plaintiffs and theIndividual Defendants. On February  19, 2003, the Court deniedthe motion to dismiss the complaint against the Company. The Companyhas approved a Memorandum of Understanding("MOU") and related agreements which setforth the terms of a settlement between the Company and the plaintiffclass. It is anticipated that any potential financial obligation of theCompany to plaintiffs due pursuant to the terms of the MOU and relatedagreements will be covered by existing insurance. Therefore, theCompany does not expect that the settlement will involve any payment bythe Company. The MOU and related agreements are subject to a number ofcontingencies including the negotiation of a settlement agreement andapproval by the Court. We cannot predict whether or when a settlementwill occur or be finalized.

Register.com has been named as adefendant in a purported class action lawsuit filed on May 2, 2002,which alleges that our SafeRenew program violates New York law. Thislawsuit was filed by Brian Wornow, on behalf of himself and all otherssimilarly situated, in the Supreme Court of the State of New York. OurSafeRenew 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 

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motion to dismiss the complaint in itsentirety. On April 17, 2003, Register.com's motion was granted asto two counts (declaratory judgment and breach of contract), but deniedas to two other counts (unjust enrichment and money had and received).On April 28, 2003, Register.com filed an answer denying the materialallegations of the complaint. On May 2, 2003, Plaintiff filed a noticeof appeal to the Appellate Division, First Department of the two countsthat were dismissed. On May 15, 2003, Plaintiff filed an amendedcomplaint asserting new causes of action against Register.com for (i)deceptive trade practices in violation of New York General Business LawSection 349; (ii) conversion; and (iii) breach of the implied covenantof good faith and fair dealing. On June 9, 2003, Register.com moved todismiss Plaintiff's newly asserted causes of action. On July 23,2003 the Court heard oral arguments on Register.com's motion. OnFebruary 2, 2004, Plaintiff filed an appeal of the dismissal of theSection 5-903 claims. On February 19, 2004, Register.com's motionto dismiss 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 each of the individual members of the Company's Boardof Directors. The complaints were styled as Lanza v. Morten, et al(C.A. No. 20123) and Norton v. Morten, et al (C.A. No.20124). The complaints alleged, among other things, breaches offiduciary duty by the directors in connection with certain publiclydisclosed indications of interest in the acquisition of Company andfurther alleged that the directors were not fulfilling their fiduciaryduties in connection with their review and response to such indicationsof interest. On January 9, 2004 the complaints were withdrawn by theplaintiff and on January 12, 2004 the court approved the dismissal ofthe complaints without prejudice.

In February 2001, Register.comwas named as a defendant in a purported class action lawsuit pending inthe Supreme Court of the State of New York. The complaint alleges thatby linking new domain names registered through Register.com to a"Coming Soon" web page that informs visitorsthe name was recently registered through Register.com, and provideslinks to services provided by Register.com and its business partners,as well as a banner advertisement for such services, Register.com has(i) breached an implied covenant of good faith and fair dealing; (ii)engaged in deceptive trade practices in violation of New York GeneralBusiness Law Section 349; and (iii) been unjustly enriched. Prior tothe filing of the lawsuit, in addition to disclosing the Coming Soonpage by means of such domain names, Register.com also disclosed theexistence 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 

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connection with the self tender that theCompany commenced in August 2003 and completed in September 2003, andthat the self tender is an attempt by the individual defendants toentrench their positions in the Company.   The complaint seeks,among other things, the court's certification as a class actionlawsuit, unspecified damages and rescission of the self tender. OnDecember 5, 2003 Register.com filed a motion to dismiss for failure tostate a claim upon which relief can be granted and failure to complywith 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 this commitment.

Note 15— Restatement of Financial Statements

The Companyrestated its consolidated financial statements as of and for the yearended December 31, 2003. The restatement reflects the recognition of adeferred income tax asset as a result of a tax election made in thefirst quarter of 2003 which allowed the Company to record a tax benefitrelating to an otherwise non-deductible goodwill impairment charge of$8.3 million recorded by RCOM Europe in the third quarter of 2002. Atthe time of the goodwill impairment charge, no income tax benefit wasrecorded as the goodwill impairment was not deductible for tax purposesin the country of domicile of RCOM Europe and therefore the tax benefitwas not realizable. In March 2003, the Company filed an election withthe IRS to include the consolidated income or loss of RCOM Europe inthe Company's consolidated U.S. federal tax return starting inthe year 2003. Accordingly, the goodwill that had been impaired forfinancial reporting purposes in the third quarter of 2002 becamedeductible in the U.S. over a period of approximately 14 yearsbeginning on January 

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1, 2003. Based on the Company'sexpectation of generating future taxable income in the U.S.,realization of an income tax benefit related to the tax deductibilityof the goodwill is considered more likely than not and therefore adeferred income tax asset of $3.2 million should have been recorded inthe first quarter of 2003 upon the change in tax status.

Thisrestatement favorably impacted the provision for income taxes andincreased net income for the year 2003 by $3.2 million, and increaseddeferred tax assets and increased total stockholders' equity atDecember 31, 2003 by $3.2 million. The restatement did not affect theCompany's cash flow or loss from operations for the year endedDecember 31, 2003. In addition, there was a reclassification fromcurrent deferred tax asset to noncurrent deferred tax asset ofapproximately $7.8 million.

A summary of the aggregate effect ofthis restatement on the Company's Consolidated Balance Sheet asof December 31, 2003 and Consolidated Statement of Operations for theyear ended December 31, 2003 is shown below.

|                                           |  |                        |         |            |  |   |         |         |  |  |
|-------------------------------------------|--|------------------------|---------|------------|--|---|---------|---------|--|--|
|                                      |  | Asof December 31, 2003 |
|                                      |  | As Reported            |         | AsRestated |
| Changes to Consolidated BalanceSheet:     |  |
| Changes to ConsolidatedBalance Sheet:     |  |
| Deferred tax asset, net –current    |  | $                      | 24,927  |       |  | $ | 17,454  |    |
| Total current assets                      |  | $                      | 140,331 |       |  | $ | 132,858 |    |
| Deferred tax asset, net –noncurrent |  | $                      | — |       |  | $ | 10,698  |    |
| Total assets                              |  | $                      | 163,425 |       |  | $ | 166,650 |    |
| Accumulated deficit                       |  | $                      | (41,554 | )     |  | $ | (38,329 | )  |
| Totalshareholders' equity                 |  | $                      | 60,292  |       |  | $ | 63,517  |    |
|                                           |

|                                                 |  |                             |       |             |  |   |        |         |  |  |
|-------------------------------------------------|--|-----------------------------|-------|-------------|--|---|--------|---------|--|--|
|                                            |  | Year ended December 31,2003 |
|                                            |  | As Reported                 |       | As Restated |
| Changes to ConsolidatedStatement of Operations: |  |
| Provision (benefit)for income taxes             |  | $                           | 90    |        |  | $ | (3,135 | )  |
| Net income                                      |  | $                           | 2,324 |        |  | $ | 5,549  |    |
| Comprehensiveincome                             |  | $                           | 2,289 |        |  | $ | 5,514  |    |
| Basicincome pershare                            |  | $                           | 0.07  |        |  | $ | 0.16   |    |
| Dilutedincome pershare                          |  | $                           | 0.06  |        |  | $ | 0.15   |    |
|                                                 |

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REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To theBoard of Directors and Stockholders of Register.com, Inc.:

In connection with our audits of the financial statements ofRegister.com, Inc. as of December  31, 2003 and 2002 and for eachof the three years in the period ended December  31, 2003, whichfinancial statements are included in the Form 10-K/A, we have alsoaudited the financial statement schedule listed in Part II herein.

In our opinion, this financial statement schedule, whenconsidered in relation to the basic financial statements taken as awhole, presents fairly, in all material respects, the informationrequired to be included therein.

As discussed in Notes 11 and 15,the Company has restated its Consolidated Financial Statements as ofand for the year ended December 31, 2003 to reflect an increase indeferred income taxes and related tax benefit.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLPNew York, NewYorkFebruary 6, 2004 except for Notes 11 and 15, as to which thedate is November 9, 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  |   |
|                                          |

Item9A. Controls and Procedures

In connection with preparation ofour 2003 U.S. federal tax returns and the"true-up" of the tax amount reflected on the2003 tax returns to the 2003 financial statement tax provision, wefound that an error had been made in the first quarter of 2003 in thatwe failed to recognize a deferred income tax asset which resulted froma tax election we made in that quarter. After we found that an errorhad been made, we performed a thorough analysis of the issue, includinga calculation of the appropriate amount of deferred tax asset to berecognized, together with the corresponding increases to net income andstockholders' equity. This error was corrected by the filing ofthis Amendment, together with amendments to the Company'sQuarterly Reports on Form 10-Q for the three and six months ended March31, 2004 and June 30, 2004, which included an appropriate restatementof the 2003 financial statements.

This restatement favorablyimpacted the provision for income taxes and increased net income forthe year 2003 by $3.2 million, and increased deferred tax assets andincreased total stockholders' equity at December 31, 2003 by $3.2million. The restatement did not affect the Company's cash flowor loss from operations in 2003.

At the time this erroroccurred, although the Company had control procedures in place todetermine its financial statement tax provision, those controlprocedures were not adequate to prevent the occurrence of this error.The Company has received a letter from its independent registeredpublic accountants indicating that the error was attributable to amaterial weakness in the Company's internal control overfinancial reporting in 2003. The Company has informed the auditcommittee of this material weakness. The Company has implemented newcontrol procedures which require the Controller of the Company tocalculate the financial statement tax provision which is reviewed bythe Chief Financial Officer and is implementing procedures to send thiscalculation to outside tax advisors for review. In addition, the newcontrol procedures include an assessment of the financial statementimpact of each non-recurring transaction, and documentation of suchanalysis with a memorandum to be prepared by the Company's ChiefFinancial Officer. The Company believes that these new controlprocedures will adequately remediate this material weakness.

Prior to the initial filing of the Company's Annual Report onForm 10-K for the fiscal year ended December 31, 2003, the Companycompleted an evaluation under the supervision and with theparticipation of the Company's management, including theCompany's principal executive officer and principal financialofficer, of the effectiveness of the design and operation of theCompany's disclosure controls and procedures as of December 31,2003. Based on this evaluation, the Company's principal executiveofficer and principal financial officer concluded that theCompany's disclosure controls and procedures were effective as ofDecember 31, 2003 to ensure that information required to be disclosedby the Company in the reports it files or submits under the SecuritiesExchange Act of 1934, as amended, is recorded, processed, summarizedand reported within the time periods specified in the SEC's rulesand forms. However, as a result of the Company's decision torestate its financial statements, the Company completed in earlyNovember 2004, prior to filing this Amendment, a second evaluationunder the supervision and with the participation of the Company'smanagement, including the Company's principal executive officerand principal financial officer, of the effectiveness 

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of the design and operation of theCompany's disclosure controls and procedures as of December 31,2003. Based on this second evaluation, the Company's principalexecutive officer and principal financial officer concluded that,solely as a result of the material weakness referred to above, theCompany's disclosure controls and procedures were not effectiveas of December 31, 2003. However, as a result of the analysis andcalculations discussed above, management believes that the restatedfinancial statements included in this Amendment fairly present in allmaterial respects the Company's financial condition, results ofoperations and cash flows for the fiscal periods presented.

Inthe past we have had material weaknesses in our internal control overfinancial reporting. During the fourth quarter of 2003, we completedthe implementation of a number of new processes and new accountingsystem modules which have since corrected these weaknesses. Otherwise,there were no significant changes in our internal control overfinancial reporting subsequent to our evaluation of the Company'sinternal control over financial reporting that could materially affector are reasonably likely to materially affect our internal control overfinancial reporting.

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PART IV

Item 15.    Exhibits, Financial Statement Schedules, and Reportson 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.

3.    Exhibits.

The following Exhibitsare incorporated herein by reference or are filed with this report asindicatedbelow.

|               |  |                                                                                                                                                                                                                                                                                                    |  |  |  |  |
|---------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| 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). |
|               |

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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |  |  |  |
|---------------|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 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).                                                                                                                                                                                                                                                                                                                                                                        |
| 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).                                                                                                                                                                                                                                                                                                                  |
|               |

70

----

|               |  |                                                                                                                                                                                                                |  |  |  |  |
|---------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                    |
| 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).                                                         |
| 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).                                             |
|               |

71

----

|               |  |                                                                                                                                                                                                                                                                             |  |  |  |  |
|---------------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                 |
| 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).                                                                 |
| 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).                                                                                                   |
|               |

72

----

|               |  |                                                                                                                                                                                                                                                                   |  |  |  |  |
|---------------|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                       |
| 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, withAlan Kipust (Incorporated by reference to Exhibit 10.39 of theRegistrant's Annual Report on Form 10-K for the year endedDecember 31, 2003 as filed with the SEC on March 12,2004). |
| 21.1          |  | Subsidiariesof Registrant (Incorporated by reference to Exhibit 21.1 of theRegistrant's Annual Report on Form 10-K for the year endedDecember 31, 2003 as filed with the SEC on March 12,2004).                                                                   |
| 23.1          |  | Consentof PricewaterhouseCoopersLLP.                                                                                                                                                                                                                              |
| 31.1          |  | Certificationof Peter A. Forman, Chief Executive Officer of the Company, pursuant toRules 13a-14(a) and 15d-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 15d-14(a) of the Securities Exchange Act of 1934,asamended.                                                                                                |
| 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

----

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 this9th day of November, 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) |  | November 9,2004 |
|                         |
| Peter A.Forman          |
|                         |
| /s/ Jonathan Stern      |  | Chief Financial Officer (PrincipalAccounting and Financial Officer)          |  | November 9,2004 |
|                         |
| JonathanStern           |
|                         |
| /s/ Mitchell I.Quain    |  | Chairman of theBoard of Directors                                            |  | November 9,2004 |
|                         |
| Mitchell I. Quain       |
|                         |
| /s/ Niles H. Cohen      |  | Director                                                                     |  | November 9,2004 |
|                         |
| Niles H.Cohen           |
|                         |
| /s/ Dewain K. Cross     |  | Director                                                                     |  | November 9,2004 |
|                         |
| DewainK. Cross          |
|                         |
| /s/ James A.Mitarotonda |  | Director                                                                     |  | November 9,2004 |
|                         |
| James A.Mitarotonda     |
|                         |
| /s/ Stanley Morten      |  | Director                                                                     |  | November 9,2004 |
|                         |
| StanleyMorten           |
|                         |
| /s/ Jim Rosenthal       |  | Director                                                                     |  | November 9,2004 |
|                         |
| JimRosenthal            |
|                         |
| /s/ Reginald VanLee     |  | Director                                                                     |  | November 9,2004 |
|                         |
| 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, withAlan Kipust (Incorporated by reference to Exhibit 10.39 of theRegistrant's Annual Report on Form 10-K for the year endedDecember 31, 2003 as filed with the SEC on March 12,2004).           |
|               |

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|               |  |                                                                                                                                                                                                 |  |  |  |  |
|---------------|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                     |
| 21.1          |  | Subsidiariesof Registrant (Incorporated by reference to Exhibit 21.1 of theRegistrant's Annual Report on Form 10-K for the year endedDecember 31, 2003 as filed with the SEC on March 12,2004). |
| 23.1          |  | Consentof PricewaterhouseCoopersLLP.                                                                                                                                                            |
| 31.1          |  | Certificationof Peter A. Forman, Chief Executive Officer of the Company, pursuant toRules 13a-14(a) and 15d-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 15d-14(a) of the Securities Exchange Act of 1934,asamended.                              |
| 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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|   |                                                                  |
|---|------------------------------------------------------------------|
| * | Indicatesmanagement contract or compensatory plan orarrangement. |

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