As filed with the Securities and Exchange Commission on March 2, 2000.

Registration No. 333-93533

--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

---------------

Amendment

No. 5 to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

---------------

(Exact name of registrant as specified in its charter)

Delaware 7379 11-3239091

(State or other jurisdiction of (Primary standard industrial (I.R.S. employer

incorporation or organization) classification code number) identification number)

---------------

575 Eighth Avenue, 11th Floor

New York, NY 10018

Telephone: (212) 798-9100

(Address, including zip code, and telephone number, including area code, of

registrant's principal executive offices)

---------------

Richard D. Forman

President and Chief Executive Officer

575 Eighth Avenue, 11th Floor

New York, NY 10018

Telephone: (212) 798-9100

(Name, address, including zip code, and telephone number, including area code

of agent for service)

---------------

Copies to:

Alexander D. Lynch, Esq. Stacy J. Kanter, Esq.

Scott L. Kaufman, Esq. Skadden, Arps, Slate, Meagher & Flom LLP

Brobeck, Phleger & Harrison LLP Four Times Square

1633 Broadway, 47th Floor New York, NY 10036

New York, NY 10019 (212) 735-3000

(212) 581-1600

---------------

Approximate date of commencement of proposed sale to the public: As soon

as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered

on a delayed or continuous basis pursuant to Rule 415 under the Securities Act

of 1933, check the following box. / /

If this Form is filed to register additional securities for an offering

pursuant to Rule 462(b) under the Securities Act, check the following box and

list the Securities Act registration statement number of the earlier effective

registration statement for the same offering. / / ________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)

under the Securities Act, check the following box and list the Securities Act

registration statement number of the earlier effective registration statement

for the same offering. / / ________

If this Form is a post-effective amendment filed pursuant to Rule 462(d)

under the Securities Act, check the following box and list the Securities Act

registration statement number of the earlier effective registration statement

for the same offering. / / ________

If delivery of the prospectus is expected to be made pursuant to Rule 434,

check the following box. / /

---------------

CALCULATION OF REGISTRATION FEE

===============================================================================================================

Proposed Maximum Proposed Maximum

Title of Each Class of Amount to be Offering Aggregate Amount of

Securities to be Registered Registered(1) Price Per Share (2) Offering Price (2) Registration Fee

----------------------------------------------------------------------------------------------------------------

Common stock, par value $0.0001

per share .................... 5,750,000 $ 21.00 $120,750,000 $ 31,878(3)

===============================================================================================================

-----------

(1) Includes 750,000 shares of common stock to cover the over-allotment option

granted to the underwriters.

(2) Estimated solely for purposes of calculating the registration fee in

accordance with Rule 457(a).

(3) Previously paid.

---------------

The Registrant hereby amends this registration statement on such date or

dates as may be necessary to delay its effective date until the Registrant

shall file a further amendment which specifically states that this registration

statement shall thereafter become effective in accordance with Section 8(a) of

the Securities Act of 1933 or until the registration statement shall become

effective on such date as the Securities and Exchange Commission, acting

pursuant to said Section 8(a), may determine.

--------------------------------------------------------------------------------

The information in this preliminary prospectus is not complete and may be

changed. We may not sell these securities until the registration statement

filed with the Securities and Exchange Commission is effective. This

preliminary prospectus is not an offer to sell and is not soliciting an offer

to buy these securities in any jurisdiction where the offer or sale is not

permitted.

Subject to Completion, Dated March 2, 2000

[GRAPHIC OMITTED]

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5,000,000 Shares

Common Stock

--------------------------------------------------------------------------------

This is an initial public offering of common stock of Register.com, Inc. We

anticipate that the initial public

offering price will be between $19.00 and $21.00 per share.

We have applied to have our common stock approved for quotation on The Nasdaq

National Market under the symbol "RCOM."

Investing in our common stock involves risks. See "Risk Factors" beginning on

page 8.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES

COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED OR

PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO

THE CONTRARY IS A CRIMINAL OFFENSE.

Per Share Total

----------- --------

Public offering price $ $

Underwriting discounts and commissions $ $

Proceeds, before expenses, to Register.com $ $

Proceeds, before expenses, to selling

stockholders $ $

The underwriters have the right to purchase up to an additional 750,000 shares

from us and the selling stockholders at the public offering price within 30

days from the date of this prospectus to cover over-allotments. We will not

receive any of the proceeds from the sale of shares by the selling

stockholders.

Deutsche Banc Alex. Brown Thomas Weisel Partners LLC

Legg Mason Wood Walker

Incorporated

Wit SoundView

The date of this prospectus is , 2000.

[Inside Front Cover]

Internet screen shot of Register.com home page.

"Value-Added Products and Services" above six button links for online products

and services featured on the Register.com website.

"Co-Branded Websites" above the register.com and Net Objects logo taken from a

co-branded website.

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed

information regarding our company and the common stock we are selling in this

offering, including the risk factors and our financial statements and related

notes, included elsewhere in this prospectus.

Our Business

We are a provider of Internet domain name registration services worldwide.

Domain names, such as mybrand.com, are the equivalent of addresses on the

Internet and are registered through companies known as registrars. Domain names

serve as part of the infrastructure for Internet communications and registering

a domain name is one of the first steps for individuals and businesses seeking

to establish an online identity. We believe that we offer a quick and

user-friendly registration process and responsive and reliable customer

support. We also offer a suite of value-added products and services targeted to

assist our customers in developing and maintaining their online identities,

including:

Products and Services Products and Services

Provided by Us Provided by Others

o domain name forwarding, which o email

allows customers to link their new

domain names to their existing

websites

o real-time domain name management, o maintaining, storing and connecting

which allows customers to view websites to the Internet, also

online and change, on an known as web hosting

instantaneous basis, domain name

information o website-creation tools

Our goal is to become a one-stop resource through which our customers will

establish, maintain and enhance their presence on the Internet.

In June 1999, we became the first registrar other than Network Solutions,

Inc. to register domain names in the .com, .net and .org domains directly on

behalf of customers. For the three months ended December 31, 1999, we

registered approximately 308,000 domain names in these domains, representing an

increase of 94% over the approximately 159,000 domain names we registered in

these domains for the three months ended September 30, 1999.

We face a number of risks that you should consider before you decide to

buy our common stock. These risks include, among other things, that we have

never been profitable and anticipate incurring additional losses in the

foreseeable future, that our accumulated losses totaled $12.2 million as of

December 31, 1999 and that, following the consummation of the offering, our

existing stockholders will hold approximately 84% of our outstanding common

stock and will be able to control the election of directors and all other

matters requiring stockholder approval. In addition, we face substantial

competition from Network Solutions in particular and in the industry in

general. Based on its press release dated February 10, 2000,

Network Solutions registered 1.6 million net new registrations in the .com,

.net and .org domains for the three months ended December 31, 1999,

representing approximately 71% of new registrations in these domains for the

period. As of February 26, 2000, Network Solutions and 27 other registrars, not

including us, were registering domain names in these domains. An additional 62

registrars have been accredited to register but are not yet registering domain

names, and 18 registrars have qualified to register domain names but have not

yet signed the agreements required for registering domain names, in the .com,

.net and .org domains.

We derive our revenues from domain name registration fees, online products

and services and advertising. Our net revenues increased 137% from $2.2 million

for the three months ended September 30, 1999 to $5.2 million for the three

months ended December 31, 1999. Our cost of revenues increased 51% from $1.1

million for the three months ended September 30, 1999 to $1.7 million for the

three months ended December 31, 1999. Our net loss decreased 61% from $2.5

million for the three months ended September 30, 1999 to $1.0 million for the

three months ended December 31, 1999.

Market Opportunity

As a result of the growth of the Internet and the introduction of

competition into the domain name registration industry, we believe there is

great potential for growth in the market for domain name registrations. We also

believe that this growth will be driven by individuals' and businesses' desire

for an online identity and brand, as well as the need to promote products,

services and events. We estimate that growth in global domain name

registrations will accelerate over the next few years from approximately 11

million domain names registered through September 30, 1999 to approximately 140

million domain names by the end of 2003, based on our internal calculations.

Our Solution

Registration Services. Our core expertise is providing domain name

registration services. Domain names are generally classified according to

industry custom either as "generic" for the .com, .net, .org, .gov, .edu and

.mil domains or as "country code" if they are associated with a particular

country. In addition, the domain name system is organized according to industry

custom by levels so that, for example, in the domain name mybrand.com, .com is

the top level domain and mybrand is the second level domain. We register domain

names in the .com, .net and .org generic domains and are able to register

domain names in over 140 country code domains, of which 26 may currently be

registered directly through our www.register.com website.

In addition, through a dedicated team of account managers, our Corporate

Services department which targets the needs of corporate customers provides

domain name registration and other services, such as multiple domain name

registrations and international brand protection.

Online Products and Services. We have assembled a suite of targeted

products and services to assist our customers with their online identities,

including email, web hosting and real-time domain management.

Customer Service. Our customer support group seeks to provide dependable

and timely resolution of customer inquiries, 24 hours per day, seven days per

week. We manage and respond to customer inquiries through our internally

developed Internet-based customer care tracking system. We have teams of

customer service representatives who specialize in key aspects of our business,

and who are informed about our products, services and technology through our

ongoing training.

Distribution. We believe that our direct and indirect distribution

channels enable us to reach a broad range of potential customers with products

and services targeted to their needs and to increase our exposure across the

market. We provide our products and services

directly to our customers through our www.register.com website as well as

through our Corporate Services department. We also offer domain name

registration services indirectly through our network of co-brand and private

label websites, which include Internet service providers, also known as ISPs,

web-hosting companies and other companies whose websites may appeal to our

target customers. A co-brand network participant offers our domain name

registration services through a website similar in appearance to our

www.register.com website, but branded with the participant's and our logos. A

customer typically accesses a co-brand website through the participant's home

page. A co-brand website also typically provides links back to the

participant's website to facilitate the sale of products and services by the

participant. A private label network participant offers our domain name

registration and other services through a website of its own design but the

actual domain name registrations are processed through our systems. Private

label websites may also include the language "powered by register.com."

Our Strategy

Our objectives are to continue to increase our share of domain name

registrations, to differentiate our products and services and to develop

long-term relationships with our customers by helping them to establish,

maintain and enhance their online presence. Our key strategies for achieving

these objectives include:

o introducing new products and services, including the following that we

anticipate introducing this year:

o billing consolidation for registrants with multiple domain names

o account masking, to allow the domain name registrant to remain

anonymous

o a service designed to monitor usage of our customer's trademarks

on the Internet

o enhancing awareness of our brand;

o extending our distribution channels;

o expanding our Corporate Services department;

o pursuing strategic acquisitions;

o offering names in additional domains; and

o expanding internationally.

Our History

We were founded by Richard D. Forman, Peter A. Forman and Dan B. Levine as

Forman Interactive Corp., a New York corporation, on November 23, 1994. Forman

Interactive merged with and into Register.com, Inc., a Delaware corporation, on

June 23, 1999. Our principal executive offices are located at 575 Eighth

Avenue, 11th Floor, New York, New York 10018. Our telephone number at that

location is (212) 798-9100. References in this prospectus to "Register.com,"

"we," "our" and "us" refer to Register.com, Inc. and Forman Interactive.

--------------------

We maintain a corporate website at www.register.com. The contents of our

website are not part of this prospectus.

The Offering

Common stock offered by Register.com ...................... 5,000,000 shares

Common stock to be outstanding after the offering ......... 30,759,380 shares

Use of proceeds ........................................... We plan to use the proceeds from

this offering for marketing, capital

expenditures, working capital,

acquisitions, investments and general

corporate purposes. Please see "Use

of Proceeds."

Proposed Nasdaq National Market symbol .................... RCOM

The foregoing information is based on the shares outstanding as of

December 31, 1999. The total number of shares of common stock that we assume

will be outstanding after the offering excludes:

o 1,750 shares of common stock issued upon the exercise of stock options

between January 1, 2000 and February 28, 2000.

o 4,353,286 shares of common stock issuable upon the exercise of stock

options outstanding as of February 28, 2000, with a weighted average

exercise price of $7.50 per share;

o 594,396 shares of common stock issuable upon exercise of stock options

outstanding as of February 28, 2000, with an exercise price equal to the

initial public offering price of our common stock;

o 4,185,568 shares of common stock available for issuance under our stock

option plans for options not yet granted;

o 350,000 shares reserved for issuance under our employee stock purchase

plan; and

o 6,155,675 shares of common stock issuable upon exercise of outstanding

warrants with a weighted average exercise price of $1.50 per share.

Unless otherwise noted, the information in this prospectus assumes:

o the conversion of each outstanding share of our preferred stock into one

share of our common stock upon the consummation of this offering; and

o no exercise of the underwriters' over-allotment option.

All share numbers in this prospectus have been adjusted to reflect

3.5-for-1 stock splits of our common stock and preferred stock effected in

January 2000 as stock dividends.

Our Summary Financial Data

The following table summarizes financial data for our business. You should

read the summary financial data in conjunction with "Management's Discussion

and Analysis of Financial Condition and Results of Operations" and our

financial statements and the notes to those financial statements included

elsewhere in this prospectus. The pro forma basic and diluted net loss per

share data give effect to the conversion of our Exchangeable Preferred Stock

and Series A Convertible Preferred Stock at the date of original issuance.

Year Ended December 31,

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1995 1996 1997 1998 1999

-------------- ---------------- -------------- ---------------- ----------------

Statement of Operations Data:

Net revenues ..................... $ 87,696 $ 868,018 $ 713,263 $ 1,319,359 $ 9,644,552

Gross profit ..................... 75,297 525,878 521,724 858,207 6,562,053

Operating expenses:

Sales and marketing ............ 166,330 935,495 366,975 863,720 7,149,693

Research and development ....... 102,901 390,814 71,471 276,687 1,767,158

General and administrative

(exclusive of non-cash

compensation ) ................ 94,704 743,609 263,017 795,425 2,380,190

Non-cash compensation .......... -- -- -- 149,682 4,929,200

---------- ------------ ---------- ------------ ------------

Total operating expenses ...... 363,935 2,069,918 701,463 2,085,514 16,226,241

Net loss ......................... $ (288,638) $ (1,714,076) $ (205,526) $ (1,160,748) $ (8,776,918)

========== ============ ========== ============ ============

Basic and diluted net loss per

share .......................... $ (0.07) $ (0.26) $ (0.02) $ (0.07) $ (0.46)

========== ============ ========== ============ ============

Weighted average common

shares used in basic and

diluted net loss per share ..... 4,429,859 6,633,905 8,884,709 15,697,013 19,117,027

========== ============ ========== ============ ============

Pro forma basic and diluted net

loss per share ................. $ (0.40)

============

Weighted average shares used

in pro forma basic and

diluted net loss per share ..... 22,112,252

============

The following table is a summary of our balance sheet at December 31,

1999. The pro forma data give effect to the conversion of each outstanding

share of preferred stock into one share of common stock and the pro forma as

adjusted data reflect the sale of 5,000,000 shares of common stock offered

hereby at an assumed initial public offering price of $20.00 per share, after

deducting underwriting discounts and commissions and estimated offering

expenses payable by us.

December 31, 1999

-----------------------------------------------

Pro Forma

Actual Pro Forma As Adjusted

-------------- -------------- ---------------

Balance Sheet Data:

Cash and cash equivalents ......... $40,944,122 $40,944,122 $132,744,122

Working capital ................... 29,813,357 29,813,357 121,613,357

Total assets ...................... 68,336,046 68,336,046 159,746,046

Total deferred revenue ............ 32,101,232 32,101,232 32,101,232

Total liabilities ................. 46,423,191 46,423,191 46,033,191

Stockholders' equity .............. 21,912,855 21,912,855 113,712,855

RISK FACTORS

Any investment in our common stock involves a high degree of risk. You

should consider carefully the risks described below, together with the other

information contained in this prospectus, before you decide to buy our common

stock. If any of the following events actually occurs, our business, financial

condition and results of operations may suffer materially. As a result, the

market price of our common stock could decline, and you could lose all or part

of your investment in our common stock.

Risks Related to Our Industry and Our Business

We have a limited operating history as a domain name registrar and expect to

encounter difficulties faced by early-stage companies.

We only recently entered the domain name registration industry. In

February 1998, we began providing a consumer interface for registering domain

names in the .com, .net and .org domains and in country code domains by

forwarding the information we gathered from the consumer to Network Solutions

or the applicable country code registrars or registries. In June 1999, we began

to compete directly with Network Solutions for registrations in the .com, .net

and .org domains. Accordingly, we have only a limited operating history as a

domain name registrar upon which our current business and prospects can be

evaluated, and our operating results, since June 1999, are not comparable to

our results for prior periods. As a company operating in a newly competitive

and rapidly evolving industry, we face risks and uncertainties relating to our

ability to implement our business plan successfully. We cannot assure you that

we will adequately address these risks and uncertainties or that our business

plan will be successful.

We have a history of losses and expect losses to continue for the foreseeable

future.

We have never been profitable. We incurred net losses of approximately

$1.2 million for the year ended December 31, 1998 and $8.8 million for the year

ended December 31, 1999. As of December 31, 1999, our accumulated losses

totaled $12.2 million. We anticipate that our operating expenses will increase

substantially in the foreseeable future as we develop new products and

services, increase our sales and marketing operations, develop new distribution

channels and strategic relationships, improve our operational and financial

systems and broaden our customer service capabilities. Accordingly, although we

had positive cash flow from operations for 1999, we expect to incur additional

losses for the foreseeable future, primarily due to an increase in our

marketing expenses to build our brand, which we expect to exceed $25.0 million

in 2000, and our capital expenditures, which we expect to exceed $10.0 million

in 2000. These losses are expected to increase significantly from current

levels, which in turn will increase our accumulated losses. We cannot assure

you that we will become profitable or, if we become profitable, that we will be

able to sustain or increase our profitability in the future.

Our earnings will decrease because of stock-based compensation that we have

incurred.

Non-cash compensation expenses are related to grants of common stock,

stock options and warrants made to employees, directors, consultants and

vendors. In 1999, we recorded a $4.9 million non-cash compensation charge.

Based principally on grants of common stock, stock options and warrants made to

date, we will record approximately $6.4 million of non-cash compensation

through 2003 as follows: $2.2 million in 2000, $1.8 million in each of 2001 and

2002 and $639,000 in 2003. These charges will reduce our earnings in future

periods.

We cannot predict with any certainty the effect that new governmental and

regulatory policies, or industry reactions to those policies, will have on our

business.

Before April 1999, the domain name registration system for the .com, .net

and .org domains was managed by Network Solutions pursuant to a cooperative

agreement with the U.S. government. In November 1998, the Department of

Commerce recognized the Internet Corporation for Assigned Names and Numbers,

commonly known as ICANN, to oversee key aspects of the Internet domain name

registration system. We cannot assure you that any future measures adopted by

the Department of Commerce or ICANN will benefit us or that they will not

materially harm our business, financial condition and results of operations. In

addition, we continue to face the risks that:

o the U.S. government may, for any reason, reassess its decision to

introduce competition into, or ICANN's role in overseeing, the domain name

registration market;

o the Internet community may become dissatisfied with ICANN and refuse to

recognize its authority or support its policies, which could create

instability in the domain name registration system; and

o ICANN may attempt to impose additional fees on registrars if it fails to

obtain funding sufficient to run its operations.

We may not be able to maintain or improve our competitive position because of

strong competition from Network Solutions.

Network Solutions' authorization by the U.S. government to act as the sole

domain name registrar prior to April 1999 in the .com, .net and .org domains

gives it a significant competitive advantage in the domain name registration

industry.

Before the recent introduction of competition into the domain name

registration industry, Network Solutions was the sole entity authorized by the

U.S. government to serve as the registrar for domain names in the .com, .net

and .org domains. This position allowed Network Solutions to develop a

substantial customer base, which gives it advantages in securing customer

renewals and in developing and marketing ancillary products and services. We

face significant competition from Network Solutions as we seek to increase our

overall share of the market for domain name registration services, and we

cannot assure you that we will be able to maintain or improve our competitive

position. Based on its press release dated February 10, 2000, Network Solutions

registered 1.6 million net new registrations in the .com, .net and .org domains

for the three months ended December 31, 1999, representing approximately 71% of

all new registrations for the period. For a more detailed discussion of the

introduction of competition into the domain name registration services

industry, see "Business--

Administration of the Internet; Government Regulation and Legal Uncertainties."

Network Solutions' exclusive control over the registry for the .com, .net

and .org domains has given it an advantage over all competitive registrars.

The Internet domain name registration system is composed of two principal

functions: registry and registrar. Registries maintain the database that

contain names registered within the top level domains and their corresponding

Internet protocol addresses. Registrars act as intermediaries between the

registry and individuals and businesses, referred to as registrants, seeking to

U.S. Department of Commerce have given Network Solutions the exclusive right to

operate and maintain the registry for the .com, .net and .org domains at least

until November 30, 2003. Registrars other than Network Solutions are known in

the industry as "competitive registrars." As the exclusive registry for these

domains, Network Solutions receives from us, and every other competitive

registrar, $6 per domain name per year. Although registry fees

may not be used directly to fund Network Solutions' registrar business, the

substantial net revenues from these fees, and the certainty of receiving them,

provide Network Solutions significant advantages over any competitive

registrar.

If Network Solutions sells the registry for the .com, .net and .org

domains and uses the proceeds to fund its registrar business or related product

and service offerings, it will have a substantial competitive advantage over

all competitive registrars.

The agreements among Network Solutions, ICANN and the U.S. Department of

Commerce provide that if Network Solutions separates its registry and registrar

operations by May 9, 2001 and sells the registry assets to a third party, the

term of exclusivity for the third party extends for an additional four years to

November 30, 2007. If a sale of the registry occurs, Network Solutions could

use the proceeds of the sale, which we believe would be substantial, to fund

its registration operations and related product and service offerings. We

believe that the use of these proceeds to finance Network Solutions' registrar

business could have a material adverse effect on our business, financial

condition and results of operations.

We also face competition from other competitive registrars and others in the

domain name registration industry and expect this competition to intensify.

Competition in the domain name registration services industry will

intensify as the number of entrants into the market increases.

When we began providing online domain name registrations in the .com, .net

and .org domains in June 1999, we were one of only five testbed competitive

registrars accredited by ICANN to interface with the Shared Registration

System. The Shared Registration System was designed to allow registrars to

interface directly with Network Solutions' registry for domain names. The

testbed period ended on November 30, 1999. As of February 26, 2000, ICANN had

accredited 91 competitive registrars, including us, to register domain names in

the .com, .net and .org domains. As of February 26, 2000, 27 of these

competitive registrars were registering domain names, and the other 62, while

accredited, had not begun registering domain names, in the .com, .net and .org

domains. An additional 18 companies have qualified for accreditation but have

yet to sign the agreements required by ICANN and Network Solutions. We face

substantial competition from competitive registrars and others in that:

o many accredited registrars that are not currently registering domain

names may begin to do so in the near future;

o companies that are not accredited registrars may offer domain name

registrations through a competing accredited registrar's system; and

o ICANN may accredit new registrars to register domain names in the .com,

.net and .org domains.

We face competition from other competitive registrars and others in the

domain name registration industry who may have longer operating histories,

greater name recognition or greater resources.

Our competitors in the domain name registration industry include companies

with strong brand recognition and Internet industry experience, such as major

telecommunications firms, cable companies, ISPs, web-hosting providers,

Internet portals, systems integrators, consulting firms and other registrars.

Many of these companies also possess core capabilities to deliver ancillary

services, such as customer service, billing services and network management.

Our market position could be harmed by any of these existing or future

competitors, some of which may have longer operating histories, greater name

recognition and greater financial, technical, marketing, distribution and other

resources than we do. Also, as a result of increased competition, our

period-over-period growth rates may decline.

Our ability to register domain names in the .com, .net and .org domains depends

upon the continued availability and functionality of the Shared Registration

System.

The success of our business as a competitive registrar depends upon the

continued availability and functionality of the Shared Registration System,

which is maintained by Network Solutions, and its ability to adapt to an

expanding market for domain name registrations. As of February 26, 2000, there

were 29 registrars, including us and Network Solutions, registering domain

names through the Shared Registration System. The 62 other accredited

registrars and the 18 registrars that have qualified for accreditation but not

yet signed the requisite agreements may begin using the system at any time.

Because the Shared Registration System has been in general use only since April

1999, we cannot assure you that it will be able to handle the growing traffic

generated by large numbers of registrars or registrations. Our ability to

provide domain name registration services in the

.com, .net and .org domains would be materially harmed by any failure of the

Shared Registration System to accommodate our registration needs.

Our business will be materially harmed if in the future the administration and

operation of the Internet no longer relies upon the existing domain name

system.

The Internet is expected to continue to develop at a rapid rate. This

development may include changes in the administration or operation of the

Internet, which could include the creation and institution of alternate systems

for directing Internet traffic without the use of the existing domain name

system. While we are not aware of any alternative systems currently in use or

being developed, widespread acceptance of any alternative systems would

eliminate the need to register a domain name to establish an online presence

and could materially adversely affect our business, financial condition and

results of operations.

Competition in the domain name registration industry could force us to reduce

our prices for our products and services and would negatively impact our

results of operations.

Since competition in the domain name registration industry is in its early

stages, we cannot assure you that we will not be required, by market factors or

otherwise, to reduce, perhaps significantly, the prices we charge for our

domain name registration and related products and services. Further, some of

our competitors are offering domain name registrations for free and derive

their revenues from other sources. Reducing the prices we charge for domain

name registration services in order to remain competitive could materially

adversely affect our results of operations.

If our customers do not renew their domain name registrations through us, and

we fail to replace their business or develop alternative sources of revenue,

our business, financial condition and results of operations would be materially

adversely affected.

The growth of our business depends in part on our customers' renewal of

their domain name registrations through us. Having only recently become an

accredited registrar, we do not have any actual experience with registration

renewals. If our customers decide, for any reason, not to renew their

registrations through us, our business, financial condition and results of

operations would be materially adversely affected.

If we fail to become accredited to offer domain names in additional generic top

level domains that may be introduced, or our customers turn to other registrars

for these registration needs, our business, financial condition and results of

operations would be materially adversely affected.

ICANN or another approving entity may introduce new generic top level

domains, such as .web, .firm and .store. We cannot assure you that, if

introduced, we will be accredited to offer

registrations in these domains or that customers will rely on us to provide

registration services within any new generic top level domains. Our business,

financial condition and results of operations would be materially adversely

affected if substantial numbers of our customers turn to other registrars for

these registration needs.

Our ability to register domain names in the .com, .net and .org domains depends

upon our continued accreditation by ICANN.

We need to be an ICANN-accredited registrar in order to register domain

names in the .com, .net and .org domains. Our current ICANN accreditation

agreement expires on April 26, 2000. While we anticipate that ICANN will renew

this agreement, we cannot assure you that it will do so. If ICANN does not

renew our accreditation, our business, financial condition and results of

operations would be materially adversely affected.

If our customers do not find our expanded product and service offerings

appealing, among other things, we may remain dependent on domain name

registrations as a primary source of revenue and our net revenues may fall

below anticipated levels.

Part of our long-term strategy includes diversifying our revenue base by

offering value-added products and services, including website applications that

enable electronic commerce and other business services, to our customers. We

expect to incur significant costs in acquiring, developing and marketing these

new products and services. Domain name registration services generated

approximately 46% of our net revenues during the year ended December 31, 1999

and we expect it to account for an increasing percentage of our revenues in

future periods. If we fail to offer products and services that meet our

customers' needs, or our customers elect not to purchase our products and

services, our anticipated net revenues may fall below expectations, we may not

generate sufficient revenue to offset these related costs and we will remain

dependent on domain name registrations as a primary source of revenue.

Our failure to establish and maintain online business relationships that

generate a significant amount of traffic could limit the growth of our

business.

We expect that in the future approximately 15% of our customers will

purchase their domain name registrations through our network of co-brand and

private label websites comprising our indirect distribution channel. We

currently have contractual agreements with participants in this network, and if

these third parties do not attract a significant number of visitors to their

websites, we may not receive a significant number of customers from these

network relationships and our net revenues may decrease or not grow. In

addition, we plan to expand our network of co-brand and private label websites.

Our net revenues may suffer if we fail to expand or maintain our network or if

our network does not result in a number of new customers sufficient to justify

the cost.

Rapid growth in our business could strain our managerial, operational,

financial, accounting and information systems, customer service staff and

office resources.

The anticipated future growth necessary to expand our operations will

place a significant strain on our resources. In order to achieve our growth

strategy, we will need to expand all aspects of our business, including our

computer systems and related infrastructure, customer service capabilities and

sales and marketing efforts. The demands on our network infrastructure,

technical staff and technical resources have grown rapidly with our expanding

customer base. In 1999, our number of full-time employees grew from

approximately 33 to approximately 122. We cannot assure you that our

infrastructure, technical staff and technical resources will adequately

accommodate or facilitate the anticipated growth of our customer base. We also

expect that we will need to continually improve our financial and managerial

controls, billing systems, reporting systems and procedures, and we will also

need to continue to expand, train and manage our workforce. If we fail to

manage our growth effectively, our business, financial condition and results of

operation could be materially adversely affected.

In addition, as we offer new products and services, we will need to

increase the size and expand the training of our customer service staff to

ensure that they can adequately respond to customer inquiries. If we fail to

provide our customer service staff training and staffing sufficient to support

new products and services, we may lose customers who feel that their inquiries

have not adequately been addressed.

If we are unable to attract and retain highly qualified management and

technical personnel, our business may be harmed.

Our success depends in large part on the contributions of our senior

management team and technology personnel and in particular Richard D. Forman,

our President and Chief Executive Officer. We face intense competition in

hiring and retaining personnel from a number of sectors, including technology

and Internet companies. Many of these companies have greater financial

resources than we do to attract and retain qualified personnel. In addition,

although we maintain employment agreements with Mr. Forman and Jack S. Levy,

our General Counsel, we have not in the past executed, and do not have any

current plans to execute, employment agreements with our other employees. As a

result, we may be unable to retain our employees or attract, integrate, train

and retain other highly qualified employees in the future. If we fail to

attract new personnel or retain and motivate our current personnel, our

business, financial condition and results of operations could be materially

adversely affected.

Our business will suffer if we fail to build awareness of our brand name.

Building recognition of our brand is critical to attracting additional

traffic and customers to our website, new business alliances, acquisition

candidates, advertisers and employees. Accordingly, we intend to continue

pursuing an aggressive brand-enhancement strategy, which includes mass market

and multimedia advertising, promotional programs and public relations

activities. We intend to make significant expenditures, over $25 million in

2000, on advertising and promotional programs and activities. These

expenditures may not result in an increase in net revenues sufficient to cover

our advertising and promotional expenses. We cannot assure you that promoting

our brand name will increase our net revenues. Accordingly, if we incur

expenses in promoting our brand without a corresponding increase in our net

revenues, our business, financial condition and results of operations would be

materially adversely affected.

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

harm our business.

If we are unable, for technological, legal, financial or other reasons, to

adapt in a timely manner to changing market conditions or customer

requirements, we could lose customers, strategic alliances and market share.

The Internet and electronic commerce are characterized by rapid technological

change. Sudden changes in user and customer requirements and preferences, the

frequent introduction of new products and services embodying new technologies

and the emergence of new industry standards and practices could render our

existing products, services and systems obsolete. The emerging nature of

products and services in the domain name registration industry and their rapid

evolution will require that we continually improve the performance, features

and reliability of our products and services. Our success will depend, in part,

on our ability:

o to enhance our existing products and services;

o to develop and license new products, services and technologies that

address the increasingly sophisticated and varied needs of our current and

prospective customers; and

o to respond to technological advances and emerging industry standards and

practices on a cost-effective and timely basis.

The development of additional products and services and other proprietary

technology involves significant technological and business risks and requires

substantial expenditures and lead time. We may be unable to use new

technologies effectively or adapt our websites, internally developed technology

and transaction-processing systems to customer requirements or emerging

industry standards. Updating our technology internally and licensing new

technology from third parties may require us to incur significant additional

capital expenditures.

If we are unable to make suitable acquisitions and investments, our long-term

growth strategy could be impeded.

Our long-term growth strategy includes identifying and, from time to time,

acquiring or investing in suitable candidates on acceptable terms. In

particular, we intend to acquire or make investments in providers of product

offerings that complement our business and other companies in the domain name

registration industry. In pursuing acquisition and investment opportunities, we

may be in competition with other companies having similar growth and investment

strategies. Competition for these acquisitions or investment targets could also

result in increased acquisition or investment prices and a diminished pool of

businesses, technologies, services or products available for acquisition or

investment. Our long-term growth strategy could be impeded if we fail to

identify and acquire or invest in promising candidates on terms acceptable to

us.

Our acquisition strategy could subject us to significant risks, any of which

could harm our business.

Acquisitions involve a number of risks and present financial, managerial

and operational challenges, including:

o diversion of management attention from running our existing business;

o increased expenses, including compensation expenses resulting from newly

hired employees;

o adverse effects on our reported operating results due to possible

amortization of goodwill associated with acquisitions; and

o potential disputes with the sellers of acquired businesses, technologies,

services or products.

In addition, we may not be successful in integrating the business, technology,

operations and personnel of any acquired company. Performance problems with an

acquired business, technology, service or product could also have a material

adverse impact on our reputation as a whole. In addition, any acquired

business, technology, service or product could significantly underperform

relative to our expectations. For all these reasons, our pursuit of an overall

acquisition and investment strategy or any individual acquisition or investment

could have a material adverse effect on our business, financial condition and

results of operations.

If we fail to comply with the regulations of the country code registries or are

unable to register domain names with those registries, our business would be

materially adversely affected.

Each of the country code registries requires registrars to comply with

specific regulations. Many of these regulations vary from country code to

country code. If we fail to comply with

the regulations imposed by country code registries, these registries will

likely prohibit us from registering or continuing to register names in their

country codes. Further, in most cases, our rights to provide country code

domain name registration services are not governed by written contract. In the

case of our written contracts, there is uncertainty as to what law may govern.

As a result, we cannot be certain that we will continue to be able to register

domain names in the country code domains we currently offer. Any restrictions

on our ability to offer domain name registrations in a significant number of

country codes could materially adversely affect our business, financial

condition and results of operations.

If country code registries cease operations or otherwise fail to process

registrations or related information accurately, we would be unable to honor

our subscriptions relating to those country codes.

Country code registries may be administered by the host country,

entrepreneurs or other third parties. If these registry businesses cease

operations or otherwise fail to process domain name registrations or the

related information in country code domains, we would be unable to honor the

subscriptions of registrants who have registered, or are in the process of

registering, domain names in the applicable country code domain. If we are

unable to honor a substantial number of subscriptions for our customers for any

reason, our business, financial condition and results of operations would be

materially adversely affected.

We are restricted from entering into agreements with web-hosting service

providers as a result of an agreement we have with Concentric Network

Corporation.

As part of our marketing and distribution agreement with Concentric

Network Corporation, we have agreed that no more than three service providers,

one of which must be Concentric, may market, advertise or otherwise promote

their web-hosting services on our website. This agreement expires on December

31, 2000 and may be renewed by the parties for an additional year. Accordingly,

we are severely restricted in our ability to enter agreements with other

providers of these services.

We cannot assure you that our standard registration agreement will be

enforceable.

All of our customers must execute our standard registration agreement as

part of the process of registering a domain name. This agreement contains a

number of provisions intended to limit our potential liability arising from our

registration of domain names for our customers including liability resulting

from our failure to register or maintain domain names. As most of our customers

these customers occurs electronically. If a court were to find that our

registration agreement is unenforceable, we could be subject to liability that

could have a materially adverse effect on our business, financial condition or

results of operations.

Our failure to register or maintain the domain names that we process on behalf

of our customers may subject us to negative publicity, which could have a

material adverse effect on our business.

Clerical errors or systems failures, including failures of the Shared

Registration System, have resulted in our failure to properly register or to

maintain the registration of domain names that we processed on behalf of our

customers. Our failure to properly register or to maintain the registration of

our customers' domain names may subject us to negative publicity, which could

have a material adverse effect on our business.

We may not be able to protect and enforce our intellectual property rights

or protect ourselves from the intellectual property claims of third parties.

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

from infringement.

We rely upon copyright, trade secret and trademark law, invention

assignment agreements and confidentiality agreements to protect our proprietary

technology, including software and applications and trademarks, and other

intellectual property to the extent that protection is sought or secured at

all. We do not have patents on any of our technologies or processes. While we

typically enter into confidentiality agreements with our employees, consultants

and strategic partners, and generally control access to and distribution of our

proprietary information, we cannot ensure that our efforts to protect our

proprietary information will be adequate to protect against infringement and

misappropriation of our intellectual property by third parties, particularly in

foreign countries where laws or law enforcement practices may not protect our

proprietary rights as fully as in the United States.

Furthermore, because the validity, enforceability and scope of protection

of proprietary rights in Internet-related industries is uncertain and still

evolving, we cannot assure you that we will be able to defend our proprietary

rights. In addition to being difficult to police, once any infringement is

detected, disputes concerning the ownership or rights to use intellectual

property could be costly and time-consuming to litigate, may distract

management from operating the business and may result in our losing significant

rights and our ability to operate our business.

We cannot assure you that third parties will not develop technologies or

processes similar or superior to ours.

We cannot ensure that third parties will not be able to independently

develop technology, processes or other intellectual property that is similar to

or superior to ours. The unauthorized reproduction or other misappropriation of

our intellectual property rights, including copying the look, feel and

functionality of our website, could enable third parties to benefit from our

technology without our receiving any compensation and could materially

adversely affect our business, financial condition and results of operations.

We may be subject to claims of alleged infringement of intellectual

property rights of third parties.

We do not conduct comprehensive patent searches to determine whether our

technology infringes patents held by others. In addition, technology

development in Internet-related industries is inherently uncertain due to the

rapidly evolving technological environment. As such, there may be numerous

patent applications pending, many of which are confidential when filed, with

regard to similar technologies. Third parties may assert infringement claims

against us and these claims and any resultant litigation, should it occur,

could subject us to significant liability for damages. Even if we prevail,

litigation could be time-consuming and expensive to defend, and could result in

the diversion of management's time and attention. Any claims from third parties

may also result in limitations on our ability to use the intellectual property

subject to these claims unless we are able to enter into agreements with the

third parties making these claims. Such royalty or licensing agreements, if

required, may be unavailable on terms acceptable to us, or at all. If a

successful claim of infringement is brought against us and we fail to develop

non-infringing technology or to license the infringed or similar technology on

a timely basis, it could materially adversely affect our business, financial

condition and results of operations.

As a registrar of domain names and a provider of web-hosting services, we

may be subject to various claims, including claims from third parties asserting

that their rights have been infringed by domain names registered or websites

hosted on behalf of other parties.

We may be subject to various claims, including trademark infringement,

unfair competition and violations of publicity and privacy rights, to the

extent that such parties consider their rights to be violated by the

registration of particular domain names by other parties or our hosting of

third-party websites. If these claims against us are successful, our business,

financial condition and results of operations could be materially adversely

affected.

We may be held liable if third parties misappropriate our users' personal

information.

A fundamental requirement for online communications is the secure

transmission of confidential information over public networks. If third parties

succeed in penetrating our network security or otherwise misappropriate our

customers' personal or credit card information, we could be subject to

liability. Our liability could include claims for unauthorized purchases with

credit card information, impersonation or other similar fraud claims as well as

for other misuses of personal information, including for unauthorized marketing

purposes. These claims could result in litigation and adverse publicity which

could have a material adverse effect on our business, financial condition and

results of operations, as well as our reputation.

In addition, the Federal Trade Commission and state agencies have been

investigating various Internet companies regarding their use of personal

information. We could have additional expenses if new regulations regarding the

use of personal information are introduced or if our privacy practices are

investigated.

We may incur significant expenses related to the security of personal

information online.

The need to securely transmit confidential information online has been a

significant barrier to electronic commerce and online communications. Any

well-publicized compromise of security could deter people from using online

services such as the ones we offer, or from using them to conduct transactions

that involve transmitting confidential information. Because our success depends

on the acceptance of online services and electronic commerce, we may incur

significant costs to protect against the threat of security breaches or to

alleviate problems caused by these breaches.

We may be held liable for Year 2000 problems relating to one of our former

product offerings.

From July 1995 until October 1998, we sold Internet Creator, a website

creation and management software program. We later offered this product to our

web-hosting customers at no cost. Although we have conducted usability tests to

confirm to our satisfaction that Internet Creator is Year 2000 compliant, we

cannot be certain that users of the product will not experience systems

failures, delays or miscalculations affecting their websites that result from

Year 2000 problems. If users of the product experience Year 2000 problems and

successfully assert actions against us, our business, financial condition and

results of operations could be materially adversely affected.

Risks Related to Our Technology and the Internet

Systems disruptions and failures could cause our customers and advertisers to

become dissatisfied with us and may impair our business.

Our customers, advertisers and business alliances may become dissatisfied

with our products and services due to interruptions in access to our website.

Our ability to maintain our computer and telecommunications equipment in

working order and to reasonably protect them from interruption is critical to

our success. Our website must accommodate a high volume of traffic and deliver

frequently updated information. Our website has in the past experienced slower

response times as a result of increased traffic. We have conducted planned site

outages and experienced unplanned site outages with minimal impact on our

business. Currently, our systems operate, on average, at approximately 50%

capacity. If we were to experience a substantial increase in traffic and fail

to increase our

capacity, our customers would experience slower response times or disruptions

in service. Our customers, advertisers and business alliances may become

dissatisfied by any systems failure that interrupts our ability to provide our

products and services to them. Substantial or repeated system failures would

significantly reduce the attractiveness of our website and could cause our

customers, advertisers and business alliances to switch to another domain name

registration service provider.

Our customers, advertisers and business alliances may become dissatisfied

with our products and services due to interruptions in our access to the Shared

Registration System or country code registries.

We depend on the Shared Registration System and country code registries to

experienced problems with the Shared Registration System, including outages,

particularly during its implementation phase. Any significant outages in the

Shared Registration System or country code registries would prevent us from

delivering or delay our delivery of our services to our customers. Prolonged or

repeated interruptions in our access to the Shared Registration System or

country code registries could cause our customers, advertisers and business

alliances to switch to another domain name registration service provider.

Delays or systems failures unrelated to our systems could harm our

business.

Our customers depend on ISPs, online service providers and others to

access our website. Many of these parties have experienced outages and could in

the future experience outages, delays and other difficulties due to systems

failures unrelated to our systems. Although we carry general liability

insurance, our insurance may not cover any claims by dissatisfied customers,

advertisers or strategic alliances, or may be inadequate to indemnify us for

any liability that may be imposed in the event that a claim were brought

against us. Our business could be materially harmed by any system failure,

security breach or other damage that interrupts or delays our operations.

Our business would be materially harmed if our computer systems become

damaged.

Our network and communications systems are located at Exodus

Communications' hosting facility in Jersey City, New Jersey and Globix

Corporation's hosting facility in New York, New York. We are currently adding

network capacity to our systems located at Globix Corporation's New York, New

York hosting facility to make our systems geographically redundant. Although we

plan to complete this project by the end of the second quarter of 2000, we

cannot assure you that our systems will be geographically redundant by this

time. Fires, floods, earthquakes, power losses, telecommunications failures,

break-ins and similar events could damage these systems. Computer viruses,

electronic break-ins, human error or other similar disruptive problems could

also adversely affect our systems. We do not carry business interruption

insurance. Accordingly, any significant damage to our systems would have a

material adverse effect on our business, financial condition and results of

operations.

Our ability to deliver our products and services and our financial condition

depend on our ability to license third-party software, systems and related

services on reasonable terms from reliable parties.

We depend upon various third parties for software, systems and related

services, including access to the Shared Registration System provided by

Network Solutions. Some of these parties have a limited operating history or

may depend on reliable delivery of services from others. If these parties fail

to provide reliable software, systems and related services on agreeable license

terms, we may be unable to deliver our products and services.

Failure by our third-party provider of credit card processing services to

process payments in a timely fashion will have a negative effect on our

business.

Under the terms of our accreditation agreement with ICANN, we are required

to obtain a reasonable assurance of payment of registration fees prior to

registering or renewing domain

names. To satisfy this requirement, we have engaged Cybersource to process

credit card payments for our individual customers. Therefore, if Cybersource or

its system fails for any reason to process credit card payments in a timely

fashion, we may not be in compliance with ICANN's requirement and as a result

may not be allowed to process domain name registrations. In addition, the

domain name reservation process will be delayed and customers may be unable to

obtain their desired domain name.

If Internet usage does not grow, or if the Internet does not continue to expand

as a medium for commerce, our business may suffer.

Our success depends upon the continued development and acceptance of the

Internet as a widely used medium for commerce and communication. Rapid growth

in the uses of and interest in the Internet is a relatively recent phenomenon

and we cannot assure you that use of the Internet will continue to grow at its

current pace. A number of factors could prevent continued growth, development

and acceptance, including:

o the unwillingness of companies and consumers to shift their purchasing

from traditional vendors to online vendors;

o the Internet infrastructure may not be able to support the demands placed

on it, and its performance and reliability may decline as usage grows;

o security and authentication issues may create concerns with respect to

the transmission over the Internet of confidential information, such as

credit card numbers, and attempts by unauthorized computer users,

so-called hackers, to penetrate online security systems; and

o privacy concerns, including those related to the ability of websites to

gather user information without the user's knowledge or consent, may

impact consumers' willingness to interact online.

Any of these issues could slow the growth of the Internet, which could have a

material adverse effect on our business, financial condition and results of

operations.

If the use of the Internet as an advertising and marketing medium fails to

develop or develops more slowly than we expect, our future business could be

materially adversely affected.

Our future success depends in part on a significant increase in the use of

the Internet as an advertising and marketing medium. Advertising revenues

constituted 32% of our net revenues for the year ended December 31, 1999. The

Internet advertising market is new and rapidly evolving, and it cannot yet be

compared with traditional advertising media to gauge its effectiveness. As a

result, demand for and market acceptance of Internet advertising are uncertain.

Many of our current and potential customers have little or no experience with

Internet advertising and have allocated only a limited portion of their

advertising and marketing budgets to Internet activities. The adoption of

Internet advertising, particularly by entities that have historically relied

upon traditional methods of advertising and marketing, requires the acceptance

of a new way of advertising and marketing. These customers may find Internet

advertising to be less effective for meeting their business needs than

traditional methods of advertising and marketing. Furthermore, there are

software programs that limit or prevent advertising from being delivered to a

user's computer. Widespread adoption of this software by users would

significantly undermine the commercial viability of Internet advertising. These

factors could materially adversely affect our business, financial condition and

results of operations.

We depend on the technological stability and maintenance of the Internet

infrastructure.

Our success and the viability of the Internet as an information medium and

commercial marketplace will depend in large part upon the stability and

maintenance of the infrastructure

for providing Internet access and carrying Internet traffic. Failure to develop

a reliable network system or timely development and acceptance of complementary

products, such as high-speed modems, could materially harm our business. In

addition, the Internet could lose its viability due to delays in the

development or adoption of new standards and protocols required to handle

increased levels of Internet activity or due to increased government

regulation.

We may become subject to burdensome government regulations and legal

uncertainties affecting the Internet.

To date, government regulations have not materially restricted the use of

the Internet. The legal and regulatory environment pertaining to the Internet,

however, is uncertain and may change. Both new and existing laws may be applied

to the Internet by state, federal or foreign governments, covering issues that

include:

o sales and other taxes;

o user privacy;

o pricing controls;

o characteristics and quality of products and services;

o consumer protection;

o cross-border commerce;

o libel and defamation;

o copyright, trademark and patent infringement;

o pornography; and

o other claims based on the nature and content of Internet materials.

The adoption of any new laws or regulations or the new application or

interpretation of existing laws or regulations to the Internet could hinder the

growth in use of the Internet and other online services generally and decrease

the acceptance of the Internet and other online services as media of

communications, commerce and advertising. Our business may be harmed if any

slowing of the growth of the Internet reduces the demand for our services. In

addition, new legislation could increase our costs of doing business and

prevent us from delivering our products and services over the Internet, thereby

harming our business, financial condition and results of operations.

For example, in November 1999, the Anticybersquatting Consumer Protection

Act was enacted to curtail a practice commonly known in the industry as

"cybersquatting." A cybersquatter is generally defined in this Act as one who

registers a domain name that is identical or similar to another party's

trademark or the name of a living person, in each case with the bad faith

intent to profit from use of the domain name. Although the Act states that

registrars may not be held liable for registering or maintaining a domain name

for another person absent a showing of the registrar's bad faith intent to

profit from the use of the domain name, registrars may be held liable if they

fail to comply promptly with procedural provisions. If we are held liable under

this law, any liability could have a material adverse effect on our business,

financial condition and results of operations.

We file tax returns in such states as required by law based on principles

applicable to traditional businesses. However, one or more states could seek to

impose additional income tax obligations or sales tax collection obligations on

out-of-state companies, such as ours, which engage in or facilitate electronic

commerce. A number of proposals have been made at state and local levels that

could impose such taxes on the sale of products and services

through the Internet or the income derived from such sales. Such proposals, if

adopted, could substantially impair the growth of electronic commerce and

materially adversely affect our business, financial condition and results of

operations.

Legislation limiting the ability of the states to impose taxes on

Internet-based transactions has been enacted by the United States Congress.

However, this legislation, known as the Internet Tax Freedom Act, imposes only

a three-year moratorium, which commenced October 1, 1998 and ends on October

21, 2001, on state and local taxes on electronic commerce. It is possible that

the tax moratorium could fail to be renewed prior to October 21, 2001. Failure

to renew this legislation would allow various states to impose taxes on

Internet-based commerce. The imposition of such taxes could materially

adversely affect our business, financial condition and results of operations.

Risks Related to This Offering

There has been no prior market for our common stock and our stock may

experience extreme price and volume fluctuations.

The stock market has experienced extreme price and volume fluctuations

that have particularly affected the market prices of the securities of

Internet-related companies. Prior to this offering, there has been no public

market for our common stock. We cannot predict the extent to which investor

interest in our stock will lead to the development of an active trading market

or how liquid that market might become. The initial public offering price for

the shares will be determined by negotiations between us and the

representatives of the underwriters and may not be indicative of prices that

will prevail in the trading market. The market price of our common stock may

decline below the initial public offering price. In the past, companies that

have experienced volatility in the market price of their stock have been the

objects of securities class action litigation. If we were the object of

securities class action litigation, it could result in substantial costs and a

diversion of our management's attention and resources.

Our management has broad discretion over how to use the proceeds of this

offering and may not use the proceeds in ways that help our business succeed.

We estimate that our net proceeds from this offering will be $91.8

million, assuming an initial public offering price of $20.00 per share after

deducting underwriting discounts and estimated offering expenses. Other than

our 2000 marketing and capital expenditure plans, we have no specific plans for

the net proceeds of this offering other than to fund general corporate

purposes, including working capital, and acquisitions and strategic

investments. Accordingly, our management will have broad discretion as to how

to apply the net proceeds of this offering. If we fail to use the proceeds

effectively, our business may not grow and our net revenues and net income may

decline.

Our directors, executive officers and principal stockholders own enough of our

shares to control Register.com, which will limit your ability to influence

corporate matters.

Our directors, executive officers and principal stockholders currently

beneficially own approximately 88.5% of our common stock and, after the

offering, will beneficially own approximately 78.2% of our common stock.

Accordingly, these stockholders could control the outcome of any corporate

transaction or other matter submitted to our stockholders for approval,

including mergers, consolidations and the sale of all or substantially all of

our assets, and also could prevent or cause a change in control. The interests

of these stockholders may differ from the interests of our other stockholders.

In addition, third parties may be discouraged from making a tender offer or bid

to acquire us because of this concentration of ownership.

Shares eligible for public sale after this offering could adversely affect our

stock price.

Based on shares outstanding on January 31, 2000, from time to time after

this offering, a total of 26,880 and 23,245,177 shares of common stock may be

sold in the public market by existing stockholders 90 days and 180 days,

respectively, after the date of this prospectus, subject to applicable volume

and other limitations imposed under federal securities laws. The 180-day

restriction on resales is the result of lock-up agreements with our

underwriters for this offering. Deutsche Bank Securities may release, in its

sole discretion, all or any portion of the securities subject to the 180-day

lock-up agreements prior to the expiration of their term. Deutsche Bank

Securities may waive these restrictions at our request or upon the request of a

stockholder. In evaluating whether to grant such a request, Deutsche Bank

Securities may consider a number of factors with a view toward maintaining an

orderly market for, and minimizing volatility in the market price of, our

common stock. These factors include, among others, the number of shares

involved, recent trading volume and prices of the stock, the length of time

before the lock-up expires and the reasons for, and the timing of, the request.

In addition, existing stockholders owning an aggregate of 29,894,846

shares of common stock and common stock issuable upon the exercise of

outstanding options and warrants have the right to require us to register their

shares under the Securities Act. If we register these shares, they can be sold

in the public market. The market price of our common stock could decline as a

result of sales by these existing stockholders of their shares of common stock

in the market after this offering, or the perception that these sales could

occur. These sales also might make it difficult for us to sell equity

securities in the future at a time and price that we deem appropriate.

Our charter documents and Delaware law may inhibit a takeover that stockholders

may consider favorable.

Provisions in our amended and restated certificate of incorporation, our

amended and restated bylaws and Delaware law could delay or prevent a change of

control or change in management that would provide stockholders with a premium

to the market price of their common stock. The authorization of undesignated

preferred stock, for example, gives our board the ability to issue preferred

stock with voting or other rights or preferences that could impede the success

of any attempt to change control of the company. If a change of control or

change in management is delayed or prevented, this premium may not be realized

or the market price of our common stock could decline.

You will incur immediate and substantial dilution.

The initial public offering price per share will significantly exceed the

net tangible book value per share. Accordingly, investors purchasing shares in

this offering will suffer immediate dilution of their investment equal to

$16.58 per share, based on an assumed initial offering price of $20.00. If we

issue additional shares of common stock in the future, investors purchasing

shares in this offering may experience further dilution. Any further dilution

could adversely affect the trading price of our stock.

USE OF PROCEEDS

We estimate that we will receive net proceeds from the sale of the shares

of common stock in this offering of approximately $91.8 million, assuming an

initial public offering price of $20.00 per share and after deducting

underwriting discounts and commissions and estimated offering expenses. If the

underwriters exercise their over-allotment option in full, we estimate that our

net proceeds will be approximately $95.9 million.

We plan to use the proceeds from this offering for marketing, capital

expenditures, working capital, development of new products and services,

acquisitions of and investments (where we acquire less than a controlling

interest) in companies whose businesses, products or services complement our

own and general corporate purposes. We intend to spend over $25.0 million in

2000 on advertising and promotional programs and activities and over $10.0

million in 2000 for capital expenditures, including expenditures for servers,

co-location equipment and other hardware and software necessary to support our

registration systems. As of the date of this prospectus, we have not made any

other specific expenditure plans with respect to the proceeds of this offering.

Therefore, we cannot specify with certainty the particular uses for the

remaining net proceeds to be received upon completion of this offering.

Accordingly, our management will have significant flexibility in applying the

net proceeds of this offering. Pending any use, we intend to invest the net

proceeds of this offering in short-term, investment-grade, interest-bearing

securities.

The principal purposes of this offering are to increase our working

capital, to create a public market for our common stock, to facilitate future

access to the public capital markets and to increase our visibility in the

marketplace. Although we engage in discussions with potential acquisition, and

strategic investment, candidates from time to time, we have no present

commitments with respect to any acquisition or investment.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our common stock. We

currently anticipate retaining any future earnings for the development and

operation of our business. Accordingly, we do not anticipate declaring or

paying any cash dividends in the foreseeable future.

CAPITALIZATION

The following table shows our capitalization as of December 31, 1999 on an

actual basis, a pro forma basis and a pro forma as adjusted basis. The pro

forma column reflects the conversion of each outstanding share of preferred

stock into one share of common stock, which will occur upon the closing of this

offering. The pro forma as adjusted column further reflects our sale of shares

of common stock in this offering at an assumed initial public offering price of

$20.00 per share, after deducting underwriting discounts and commissions and

estimated offering expenses payable by us.

You should read the following table in conjunction with our financial

statements and the notes to those financial statements included elsewhere in

this prospectus.

December 31, 1999

----------------------------------------------------

Pro Forma

Actual Pro Forma As Adjusted

--------------- --------------- ----------------

Capital lease obligations ...................... $ 33,825 $ 33,825 $ 33,825

----------- ----------- ------------

Stockholders' equity:

Preferred Stock, $.0001 par value; 5,000,000

shares authorized:

Series A Convertible Preferred Stock;

5,000,000 shares authorized; 4,694,333

shares issued and outstanding (actual);

no shares issued or outstanding (pro

forma and pro forma as adjusted) .......... 469 -- --

Common Stock, $.0001 par value;

60,000,000 shares authorized; 21,065,047

shares issued and outstanding (actual);

25,759,380 shares issued and outstanding

(pro forma); 30,759,380 shares issued and

outstanding (pro forma as adjusted) ......... 2,106 2,575 3,075

Additional paid-in capital ................... 36,709,821 36,709,821 128,509,321

Unearned compensation ........................ (2,647,770) (2,647,770) (2,647,770)

Accumulated deficit .......................... (12,151,771) (12,151,771) (12,151,771)

----------- ----------- ------------

Total stockholders' equity .................. 21,912,855 21,912,855 113,712,855

----------- ----------- ------------

Total capitalization ...................... $21,946,680 $21,946,680 $113,746,680

=========== =========== ============

The number of shares of common stock to be outstanding after this offering

is based on the number of shares outstanding as of December 31, 1999. It does

not include:

o 1,750 shares of common stock issued upon the exercise of stock options

between January 1, 2000 and February 28, 2000;

o 4,353,286 shares of common stock issuable upon the exercise of stock

options outstanding as of February 28, 2000, with a weighted average

exercise price of $7.50 per share;

o 594,396 shares of common stock issuable upon the exercise of stock

options outstanding as of February 28, 2000, with an exercise price equal

to the initial offering price of our common stock;

o 4,185,568 shares of common stock available for issuance under our stock

option plans for options not yet granted;

o 350,000 shares reserved for issuance under our employee stock purchase

plan; and

o 6,155,675 shares of common stock issuable upon exercise of outstanding

warrants with a weighted average exercise price of $1.50 per share.

DILUTION

If you invest in our common stock, your interest will be diluted to the

extent of the difference between the public offering price per share of our

common stock and the pro forma net tangible book value per share of our common

stock after this offering. We calculate pro forma net tangible book value per

share by dividing the net tangible book value (total tangible assets less total

liabilities) by the pro forma number of outstanding shares of common stock.

Our pro forma net tangible book value at December 31, 1999 was $12.9

million or $0.50 per share, based on 25,759,380 shares of our common stock

outstanding after giving effect to the conversion of all outstanding shares of

our preferred stock into common stock upon the closing of this offering.

After giving effect to the issuance and sale of the shares of common stock

that we are offering (less the underwriting discounts and estimated offering

expenses payable by us), our pro forma net tangible book value at December 31,

1999 would be $105.1 million or $3.42 per share or if the underwriters exercise

their over-allotment option in full, $109.3 million or $3.53 per share. This

represents an immediate increase in pro forma net tangible book value of $2.92

per share to existing stockholders or $3.03 per share if the underwriters

exercise their over-allotment option in full, and an immediate dilution of

$16.58 per share or, if the underwriters exercise their over-allotment option

in full, $16.47 per share to investors purchasing shares in the offering. If

the initial public offering price is higher or lower, the dilution to new

investors will be greater or less, respectively. The following table

illustrates this per share dilution:

Assumed initial public offering price per share ........................... $ 20.00

Pro forma net tangible book value per share at December 31, 1999 .......... $ 0.50

Increase in pro forma net tangible book value per share attributable to

this offering ........................................................... 2.92

------

Pro forma net tangible book value per share after this offering ........... 3.42

-------

Dilution per share to new investors ....................................... $ 16.58

=======

The following table shows on a pro forma basis at December 31, 1999, after

giving effect to the conversion of all outstanding shares of our preferred

stock into an aggregate of 4,694,333 shares of common stock upon the closing of

this offering, the number of shares of common stock purchased from us, the

total consideration paid to us and the average price per paid share by existing

stockholders and by new investors purchasing common stock in this offering:

Shares Purchased Total Consideration Average Price

Number Percentage Amount Percentage Per Share

------------ ------------ -------------- ------------ --------------

Existing stockholders (1) ......... 25,759,380 83.7% $ 28,809,799 22.3% $ 1.12

New investors ..................... 5,000,000 16.3 100,000,000 77.7 20.00

---------- ----- ------------ -----

Total (1) ....................... 30,759,380 100.0% $128,809,799 100.0%

========== ===== ============ =====

If the underwriters exercise their over-allotment option in full, the

number of shares of common stock held by existing stockholders will be reduced

to 25,231,659 or 81.4% of the total number of shares of common stock to be

outstanding after this offering. The average price per share for existing

stockholders would increase to $1.14. In addition, the number of shares of

common stock held by new investors will be increased to 5,750,000, or 18.6% of

the total number of shares of common stock to be outstanding after this

offering.

-------------

(1) The above information is based on shares outstanding as of December 31,

1999. It excludes:

o 1,750 shares of common stock issued upon the exercise of stock options

between January 1, 2000 and February 28, 2000;

o 4,353,286 shares of common stock issuable upon the exercise of stock

options outstanding as of February 28, 2000, with a weighted average

exercise price of $7.50 per share;

o 594,396 shares of common stock issuable upon the exercise of stock

options outstanding as of February 28, 2000, with an exercise price equal

to the initial offering price of our common stock.

o 4,185,568 shares of common stock available for issuance under our stock

option plans for options not yet granted;

o 350,000 shares reserved for issuance under our employee stock purchase

plan; and

o 6,155,675 shares of common stock issuable upon exercise of outstanding

warrants with a weighted average exercise price of $1.50 per share.

To the extent that any of these stock options or warrants are exercised,

new investors will experience further dilution.

SELECTED FINANCIAL DATA

The selected financial data below as of December 31, 1998 and 1999 and for

the years ended December 31, 1997, 1998 and 1999 have been derived from our

financial statements included in this prospectus, which have been audited by

PricewaterhouseCoopers LLP, independent accountants. The selected financial

data as of December 31, 1997 have been derived from our audited financial

statements not included in this prospectus. The selected financial data below

as of and for the years ended December 31, 1995 and 1996 have been derived from

our unaudited financial statements. These unaudited financial statements have

been prepared on the same basis as our audited financial statements and, in our

opinion, include all adjustments, consisting of normal recurring adjustments,

necessary for the fair presentation of our financial position and results of

operations. Historical results are not necessarily indicative of results to be

expected for any future period. You should read the data below together with

"Management's Discussion and Analysis of Financial Condition and Results of

Operations" and the financial statements and the notes to those statements

included in this prospectus. The pro forma basic and diluted net loss per share

data give effect to the conversion of our Exchangeable Preferred Stock and the

Series A Convertible Preferred Stock at the date of original issuance.

Year Ended December 31,

-----------------------------------------------------------------------------------

1995 1996 1997 1998 1999

------------- --------------- ------------- --------------- ---------------

Statement of Operations Data:

Net revenues ......................... $ 87,696 $ 868,018 $ 713,263 $ 1,319,359 $ 9,644,552

Cost of revenues ..................... 12,399 342,140 191,539 461,152 3,082,499

---------- ------------ ---------- ------------ ------------

Gross profit ......................... 75,297 525,878 521,724 858,207 6,562,053

Operating expenses:

Sales and marketing ................ 166,330 935,495 366,975 863,720 7,149,693

Research and development ........... 102,901 390,814 71,471 276,687 1,767,158

General and administrative

(exclusive of non-cash

compensation) ..................... 94,704 743,609 263,017 795,425 2,380,190

Non-cash compensation .............. -- -- -- 149,682 4,929,200

---------- ------------ ---------- ------------ ------------

Total operating expenses ........... 363,935 2,069,918 701,463 2,085,514 16,226,241

---------- ------------ ---------- ------------ ------------

Loss from operations ................. (288,638) (1,544,040) (179,739) (1,227,307) (9,664,188)

Other income (expenses), net ......... -- (170,036) (25,787) 66,559 887,270

---------- ------------ ---------- ------------ ------------

Net loss ............................. $ (288,638) $ (1,714,076) $ (205,526) $ (1,160,748) $ (8,776,918)

========== ============ ========== ============ ============

Basic and diluted net loss per

share .............................. $ (0.07) $ (0.26) $ (0.02) $ (0.07) $ (0.46)

========== ============ ========== ============ ============

Weighted average shares used

in basic and diluted net loss

per share .......................... 4,429,859 6,633,905 8,884,709 15,697,013 19,117,027

========== ============ ========== ============ ============

Pro forma basic and diluted net

loss per share ..................... $ (0.40)

============

Weighted average shares used

in pro forma basic and

diluted net loss per share ......... 22,112,252

============

December 31,

------------------------------------------------------------------------------

1995 1996 1997 1998 1999

----------- ------------- --------------- ------------- --------------

Balance Sheet Data:

Cash and cash equivalents .............. $226,995 $ 21,074 $ 60,845 $1,284,684 $40,944,122

Working capital (deficiency) ........... 179,345 (949,383) (1,131,173) 569,616 29,813,357

Total assets ........................... 260,002 141,774 180,786 1,611,025 68,336,046

Total deferred revenues ................ -- -- 32,038 113,527 32,101,232

Total liabilities ...................... 147,451 1,002,920 1,243,457 788,245 46,423,191

Stockholders' equity (deficit) ......... 112,551 (861,146) (1,062,671) 822,780 21,912,855

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and

results of operations together with "Selected Financial Data," our financial

statements, the notes to those statements and the other information appearing

elsewhere in this prospectus.

Overview

We are a provider of Internet domain name registration services worldwide.

Domain names serve as part of the infrastructure for Internet communications

and registering a domain name is one of the first steps for individuals and

businesses seeking to establish an online identity. We believe that we offer a

quick and user-friendly registration process and responsive and reliable

customer support. We also offer a suite of value-added products and services

targeted to assist our customers in developing and maintaining their online

identities, including:

Products and Services Products and Services

Provided by Us Provided by Others

o domain name forwarding o email

o web hosting

o real-time domain name management, o website-creation tools

Our goal is to become a one-stop resource through which our customers will

establish, maintain and enhance their presence on the Internet.

We are the successor by merger to Forman Interactive Corp. Forman

Interactive commenced operations in 1994 as a developer of electronic commerce

software, and began offering web-hosting and related products and services in

1997. In February 1998, we began to distribute domain names either for free or,

to a lesser extent, were paid commissions for the domain names we distributed

for international registrars and registries. In April 1999, we commenced

offering registration services for country code domains and in June 1999, we

began offering registrations in the .com, .net and .org domains.

Net Revenues

We derive our net revenues from domain name registrations, online products

and services and advertising. Net revenues from domain name registrations

consist of fees paid by registrants over the course of the registration period

reduced by referral commissions and a provision for credit card chargebacks. We

currently earn registration fees in connection with new registrations and

transferred registrations. We pay referral commissions on domain name

registrations processed through the participants in our network of co-brand and

private label websites and those we process through our www.register.com

website that are referred to us by participants in our affiliate network. From

June 1999 until January 14, 2000, we offered two-year registration periods for

the initial domain name registration in the .com, .net and .org domains with

annual renewals and either one- or two-year registration periods for domain

names in the country code domains. As of January 15, 2000, we have supplemented

our registration period offerings to include one-, five- and ten-year

registration periods for both initial and renewal domain name registrations in

the .com, .net, and .org domains. For our .com, .net and .org domain names, we

currently charge $35 for a one-year registration, $70 for a two-year

registration, $159 for a five-year registration and $299 for a ten-year

registration. For our country code domains, we currently charge approximately

$40 to $299 for one- or two-year registrations. We intend to charge the same

rates for renewals as we do for corresponding initial registration periods.

Because we only began operating as a registrar in April 1999, we have not

processed any registration renewals. We anticipate that registration renewals

will contribute to our net revenues once our customers' initial registrations

reach the end of their terms.

Domain name registration revenues are deferred at the time of the

registration and are recognized ratably over the term of the registration

period. Under this subscription-based model, we recognize revenue when we

provide the registration services, including customer service and maintenance

of the individual domain name records. ICANN requires us to have reasonable

assurance of payment in order to register a domain name. Therefore, we require

prepayment via credit card for all online domain name registration sales, which

provides us with the full cash fee at the beginning of the registration period

while recognizing the revenues over the registration period. For some of our

customers who register domain names through our Corporate Services department,

we establish lines of credit based on credit worthiness, thereby reasonably

assuring payment.

Online products and services, which consist of email, domain name

forwarding and web hosting, are sold either as annual or monthly subscriptions,

depending on the product or service offering. These revenues are recognized

ratably over the period in which we provide our services. We offer web hosting

through our own servers and through web-hosting services provided by third

parties. We have shifted our business model, and have chosen to direct our

resources, toward our domain name registration business and not toward our own

web-hosting business. As such, while we continue to offer our own web-hosting

services, we do not actively promote this service and, therefore, do not

anticipate significant revenue growth from our own web-hosting service in

future periods. We intend, however, to continue actively promoting web-hosting

services provided by third parties.

Advertising revenues are derived from the sale of sponsorships and banner

advertisements under short-term contracts that range from one month to one year

in duration. We recognize these revenues ratably over the period in which the

advertisements are displayed provided that no significant company obligation

remains and collection of the resulting receivable is probable.

Cost of Revenues

Our cost of revenues consists of the costs associated with providing

domain name registrations and online products and services. Cost of revenues

for domain name registrations primarily consists of registry fees, depreciation

on the equipment used to process the domain name registrations, the fees paid

to the co-location facilities maintaining our equipment and fees paid to the

financial institutions to process credit card payments on our behalf. Through

January 14, 2000, we paid a $9 per year registry fee for each .com, .net and

.org domain name registration. This fee has been reduced to $6 per year

commencing on January 15, 2000. We currently pay registry fees of approximately

$5 to $150 for one- or two-year country code domain name registrations. The

largest component of our cost of revenues is the registry fees which, while

paid in full at the time that the domain name is registered, are recorded as a

prepaid expense and recognized ratably over the term of the registration.

Cost of revenues for our online products and services consists of fees

paid to third party service providers, depreciation on the equipment used to

deliver the services, fees paid to the co-location facilities maintaining our

equipment and fees paid to the financial institutions to process credit card

payments on our behalf.

While we have no direct cost of revenues associated with our advertising

revenue we do incur operational costs including salaries and commissions which

are classified as operating expenses. We have no incremental cost of revenues

associated with advertising since we use the same equipment to deliver the

advertisements as we use for our domain name registration services.

Operating Expenses

Our operating expenses consist of sales and marketing, research and

development, general and administrative and non-cash compensation expenses. Our

sales and marketing expenses consist primarily of employee salaries, marketing

programs such as advertising and,

to a lesser extent, commissions paid to our sales representatives. Research and

development expenses consist primarily of employee salaries, fees for outside

consultants and related costs associated with the development and integration

of new products and services, the enhancement of existing products and services

and quality assurance. General and administrative expenses consist primarily of

employee salaries and other personnel related expenses for executive, financial

and administrative personnel, as well as professional services fees and bad

debt accruals. Non-cash compensation expenses are related to grants of common

stock, stock options and warrants made to employees, directors, consultants and

vendors. Facilities expenses are allocated across our different operating

expense categories. In addition to the $4.9 million non-cash compensation

charge taken in 1999, we will be recording $2.2 million in non-cash

compensation charges in 2000, $1.8 million in each of 2001 and 2002, and

$639,000 in 2003. These charges primarily relate to the issuance through

February 2000 of employee stock options having exercise prices below fair

market value on the date of grant.

Net Losses

We have incurred annual and quarterly losses from our operations since our

inception, and we expect to incur operating losses on both an annual and

quarterly basis for the foreseeable future. We have incurred significant net

losses in the past and expect these losses to continue to increase from current

levels as we grow our business by hiring additional employees, increasing our

marketing expenses to build our brand and increasing our capital expenditures.

We incurred net losses of $8.8 million in 1999, $1.2 million in 1998 and

$206,000 in 1997. We intend to spend over $25 million in 2000 on advertising

and promotional programs and approximately $10 million in capital expenditures.

Furthermore, given the rapidly evolving nature of our business and our limited

operating history as a competitive registrar, our operating results are

difficult to forecast, and period-to-period comparisons of our operating

results will not be meaningful and should not be relied upon as an indication

of future performance. Due to these and other factors, many of which are

outside our control, quarterly operating results may fluctuate significantly in

the future.

Results of Operations

Because we began operating as a domain name registrar only in the second

quarter of 1999 and generated only limited revenues from domain name

registration services prior to this time, we believe that year-to-year

comparisons of 1997 against 1998 and 1998 against 1999 are not meaningful and

you should not rely upon them as indications of our future performance.

We anticipate that in future periods net revenues from domain name

registrations will be the largest component of our net revenues and cost of

domain name registrations will be the largest component of our cost of

revenues. The following table presents selected statement of operations data

for the periods indicated as a percentage of net revenues.

Year Ended December 31,

-----------------------------------

1997 1998 1999

---------- ---------- ---------

Net revenues ........................... 100% 100% 100%

Cost of revenues ....................... 27 35 32

--- --- ---

Gross profit ........................... 73 65 68

--- --- ---

Operating expenses

Sales and marketing ................. 51 66 74

Research and development ............ 10 21 18

General and administrative (exclusive

of non-cash compensation) ......... 37 60 25

Non-cash compensation ............... -- 11 51

--- --- ---

Total operating expenses ............... 98 158 168

--- --- ---

Loss from operations ................... (25) (93) (100)

Other income (expenses), net ........... (4) 5 9

------ --- ----

Net loss ............................... (29)% (88)% (91)%

===== === ====

Years Ended December 31, 1998 and 1999

Net Revenues

Total net revenues increased from $1.3 million for 1998 to $9.6 million

for 1999.

Domain Name Registrations. Revenues from domain name registrations

increased from $37,000 for 1998 to $4.5 million for 1999. Domain name

registrations represented 3% of 1998 net revenues and 46% of 1999 net revenues.

This increase was primarily from the shift in our business from serving as a

distributor of domain names to serving as a generic top level domain name

registrar in June 1999. Additionally, we had no deferred revenue from domain

name registrations in 1998 while deferred revenue was $32.1 million in 1999. We

anticipate that revenues from domain name registrations will increase in

absolute dollars and as a percentage of our net revenues in future periods as a

result of growth in the market for domain name registrations, renewals and

transfers and the implementation of our business strategy.

Online Products and Services. Revenues from online products and services

increased 91% from $1.1 million in 1998 to $2.1 million for 1999 primarily from

increased sales of web hosting provided through our servers. Online products

and services represented 87% of 1998 net revenues and 22% of 1999 net revenues.

We anticipate that revenues from online products and services will remain flat

in the near term as we begin to introduce new online products and services and

no longer actively promote our own web-hosting services. We anticipate that

these revenues will increase over the longer term as we expand our online

product and service offerings.

Advertising. Revenues from advertising increased from $133,000 for 1998 to

$3.1 million for 1999 primarily from the increased number of page views and the

volume of advertising and sponsorships sold on our www.register.com and

FutureSite websites. Advertising represented 10% of 1998 net revenues and 32%

of 1999 net revenues. We anticipate that revenues from advertising will

increase in absolute dollars but decrease as a percentage of total net

revenues.

Cost of Revenues

Total cost of revenues increased from $461,000 for 1998 to $3.1 million

for 1999.

Cost of Domain Name Registrations. Cost of domain name registrations

increased from $19,000 for 1998 to $2.5 million for 1999. The increase was

primarily from the shift in our business from serving as a distributor of

domain names to serving as a generic top level domain name registrar in June

1999. As a distributor, we generally passed through registry costs to the

applicable registry or registrar. We anticipate that cost of revenues for

domain name registrations will increase in absolute dollars primarily as a

result of growth in our domain name registrations and renewals.

Cost of Online Products and Services. Cost of online products and services

increased 24% from $442,000 for 1998 to $548,000 for 1999. The increase was

primarily from the additional depreciation expense associated with the

equipment dedicated to our operations to support our growing online product and

service offerings. We anticipate these costs will increase in absolute dollars

as we expand our online product and service offerings.

Operating Expenses

Total operating expenses increased from $2.1 million for 1998 to $16.2

million for 1999.

Sales and Marketing. Sales and marketing expenses increased from $864,000

for 1998 to $7.1 million for 1999. The increase was primarily from the costs

associated with the launch of our radio and print media advertising campaign in

September 1999 and from salaries

associated with newly hired sales, marketing and customer service

professionals. We anticipate that sales and marketing expenses will increase

substantially in absolute dollars as we further our marketing programs and

international expansion. Additionally, we anticipate increasing our customer

service staff and domain name registration sales force to support both the

demands of our customers as well as to further our direct and indirect sales

strategy for domain name registrations.

Research and Development. Research and development expenses increased from

$277,000 for 1998 to $1.8 million for 1999. The increase resulted primarily

from salaries associated with newly hired technology personnel to support our

growth. We anticipate that research and development expenses will continue to

increase in absolute dollars as we continue to invest in developing and

modifying our systems to grow our business.

General and Administrative. General and administrative expenses increased

from $795,000 for 1998 to $2.4 million for 1999. The increase was primarily

from salaries associated with newly hired personnel and related costs required

to manage our growth and facilities expansion. We expect that our general and

administrative expenses will increase in absolute dollars to support our

overall growth including increased expenses relating to our new

responsibilities as a public company.

Non-cash Compensation. Non-cash compensation expenses increased from

$150,000 for 1998 to $4.9 million for 1999. The increase in non-cash

compensation was primarily associated with the modification of warrants

previously granted to some of our stockholders and the issuance of warrants in

connection with a financial consulting agreement. Non-cash compensation expense

included $18,000 in 1998 and $329,000 in 1999 of amortization of deferred

compensation related to employee stock options. Amortization of deferred

compensation primarily related to employee stock options issued through

February 2000 will be $2.2 million in 2000, $1.8 million in each of 2001 and

2002, and $639,000 in 2003.

Other Income (Expenses), Net.

Other income (expenses), net consists primarily of interest income net of

interest expense. Other income (expenses), net increased from $67,000 for 1998

to $887,000 for 1999. The increase was primarily from interest earned on our

cash balance as a result of our equity financings and cash provided by

operations.

Net Loss

Net loss increased $7.6 million to $8.8 million in 1999 from $1.2 million

in 1998.

Years Ended December 31, 1997 and 1998

Net Revenues

Total net revenues increased 85% from $713,000 for 1997 to $1.3 million

for 1998.

Domain Name Registrations. We had no revenues from domain name

registrations for 1997 as we did not distribute domain names until February

1998. Revenues from commissions earned from distributing domain name

registrations was $37,000 in 1998 and represented 3% of 1998 net revenues.

Online Products and Services. Revenues from online products and services

increased 54% from $713,000 for 1997 to $1.1 million for 1998. Online products

and services represented 100% of 1997 net revenues and 87% of 1998 net

revenues. The increase in net revenues from 1997 to 1998 was attributable to

the growth of our web-hosting service.

Advertising. We had no revenues from advertising for 1997. Revenues from

advertising were $133,000 for 1998 and represented 10% of 1998 net revenues.

The increase in net revenues from 1997 to 1998 was attributable to the launch

of our www.register.com website and our initial advertising sales efforts.

Cost of Revenues

Total cost of revenues increased 141% from $192,000 for 1997 to $461,000

for 1998.

Cost of Domain Name Registrations. We incurred no cost of domain name

registrations for 1997 because we did not begin to distribute domain names

until February 1998. As a distributor of domain names, we simply forwarded a

registration request to the appropriate registrar without paying any registry

fees. Cost of domain name registrations was $19,000 for 1998.

Cost of Online Products and Services. Cost of online products and services

increased 131% from $192,000 for 1997 to $442,000 for 1998. The increase

resulted primarily from the depreciation expense associated with the equipment

dedicated to our operations to support our web-hosting business.

Operating Expenses

Total operating expenses increased 197% from $701,000 for 1997 to $2.1

million for 1998.

Sales and Marketing. Sales and marketing expenses increased 135% from

$367,000 for 1997 to $864,000 for 1998. The increase was primarily attributable

to costs associated with additional customer service personnel, marketing

personnel and telemarketers for our web-hosting business as well as limited

advertising campaigns.

Research and Development. Research and development expenses increased 287%

from $71,000 for 1997 to $277,000 for 1998. The increase was primarily

attributable to the salaries associated with newly hired technology personnel.

General and Administrative. General and administrative expenses increased

202% from $263,000 for 1997 to $795,000 for 1998. The increase was primarily

due to salaries of newly hired executive and financial personnel to help manage

our growth.

Non-cash Compensation. We had no non-cash compensation expenses for 1997.

Non-cash compensation expenses were $150,000 for 1998, which was primarily from

our issuance of non-plan options at exercise prices below fair market value.

Other Income (Expenses), Net.

Other income (expenses), net increased from ($26,000) for 1997 to $67,000

for 1998, which was primarily from interest earned on our cash balance as a

result of our equity financings.

Net Loss

Net loss increased $1.0 million to $1.2 million in 1998 from $200,000 in

1997.

Quarterly Results of Operations

The following tables set forth selected unaudited quarterly statement of

operations data, in dollar amounts and as a percentage of net revenue, for each

of the four quarters ended December 31, 1999. In our opinion this information

has been prepared substantially on the same basis as the audited financial

statements appearing elsewhere in this prospectus, and all necessary

adjustments, consisting only of normal recurring adjustments, have been

included in the amounts stated below to present fairly the unaudited quarterly

results of operations data. The quarterly data should be read with our

financial statements and the notes to those statements appearing elsewhere in

this prospectus. The operating results for any quarter are not necessarily

indicative of results for any future period.

Three Months Ended

---------------------------------------------------------

March 31, June 30, September 30, December 31,

1999 1999 1999 1999

----------- ------------ --------------- -------------

(in thousands)

Net revenues .............................. $ 747 $ 1,521 $ 2,187 $ 5,189

Cost of revenues .......................... 92 233 1,097 1,661

-------- -------- -------- --------

Gross profit .............................. 655 1,288 1,090 3,528

-------- -------- -------- --------

Operating expenses

Sales and marketing .................... 720 998 2,898 2,534

Research and development ............... 267 357 470 673

General and administrative (exclusive of

non-cash compensation) ............... 202 199 553 1,426

Non-cash compensation .................. 586 3,945 41 357

-------- -------- -------- --------

Total operating expenses .................. 1,775 5,499 3,962 4,990

-------- -------- -------- --------

Loss from operations ...................... (1,120) (4,211) (2,872) (1,462)

Other income (expenses), net .............. 13 71 336 468

-------- -------- -------- --------

Net loss .................................. $ (1,107) $ (4,140) $ (2,536) $ (994)

======== ======== ======== ========

Three Months Ended

-------------------------------------------------------

March 31, June 30, September 30, December 31,

1999 1999 1999 1999

----------- ---------- --------------- -------------

Net revenues .............................. 100% 100% 100% 100%

Cost of revenues .......................... 12 15 50 32

--- --- --- ---

Gross profit .............................. 88 85 50 68

--- --- --- ---

Operating expenses

Sales and marketing .................... 96 66 133 49

Research and development ............... 36 24 21 13

General and administrative (exclusive of

non-cash compensation) ............... 27 13 25 27

Non-cash compensation .................. 79 259 2 7

--- --- --- ---

Total operating expenses .................. 238 362 181 96

--- --- --- ---

Loss from operations ...................... (150) (277) (131) (28)

Other income (expenses), net .............. 2 5 15 9

---- ---- ---- ---

Net loss .................................. (148)% (272)% (116)% (19)%

==== ==== ==== ===

Our net revenues have increased significantly in absolute dollars over the

past four quarters as a result of repositioning our focus on the domain name

registration services business. We expect that net revenues will continue to

increase in the future as we continue to expand our business and the market for

domain name registrations grows.

Our operating expenses have increased significantly in absolute dollars

over the past four quarters as a result of our repositioning our focus on the

domain name registration service business. We expect operating expenses will

continue to increase in the future as we continue to expand our business.

Liquidity and Capital Resources

Since 1997, we have funded our operations and met our capital expenditure

requirements primarily through private sales of equity securities, cash

generated from operations, and borrowings. Since inception, proceeds from the

sale of our common and preferred stock through 1999 totaled approximately $28.8

million. At December 31, 1999, we had $40.9 million of cash.

Our business generated $22.4 million of cash from operations during 1999.

This cash generated from operations was primarily due to increased domain name

registrations. Net cash

used in operating activities was $693,000 and $123,000 for 1998 and 1997,

respectively. The principal use of cash for these periods was to fund our

losses from operations.

Net cash used for investing activities was $7.7 million, $267,000 and

$16,000 for 1999, 1998 and 1997, respectively. In

Filing Type:	S-1/A
Description:	Registration Statement
Filing Date:	Mar 2, 2000
Period End:	N/A

Primary Exchange:	NASDAQ - National Market System
Ticker:	RCOM

S-1/A

EX-5.1

EX-10.13