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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period

ended June 30, 2000

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|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period

from ________________________ to ____________________________

Commission file number: 0-29739

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(Exact name of registrant as specified in its charter)

Delaware 11-3239091

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(State or other jurisdiction of (I.R.S. Employer Identification No.)

incorporation or organization)

575 Eighth Avenue, 11th Floor, New York, New York 10018

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(Address of principal executive offices) (Zip Code)

(212) 798-9100

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(Registrant's telephone number, including area code)

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(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports

required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the

registrant was required to file such reports), and (2) has been subject to such

filing requirements for the past 90 days. |X| Yes |_| No

As of August 9, 2000, there were 31,991,411 shares of the registrant's

common stock outstanding.

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FORM 10-Q

INDEX

PART I: FINANCIAL INFORMATION Page Number

Item 1. Financial Statements 3

Balance Sheets at December 31, 1999 and

June 30, 2000 (unaudited) 3

Statements of Operations for the three months and

six months ended June 30, 1999 and 2000 (unaudited) 4

Unaudited Statements of Cash Flows for the six

months ended June 30, 1999 and 2000 (unaudited) 5

Notes to Unaudited Financial Statements 6

Item 2. Management's Discussion and Analysis of

Financial Condition and Results of Operation 8

Item 3. Quantitative and Qualitative Disclosure about Market Risk 36

PART II: OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds 37

Item 6. Exhibits and Reports on Form 8-K 37

Item 7. Signatures 38

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheet

December 31, June 30,

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

1999 2000

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

(Unaudited)

Assets

Current assets

Cash and cash equivalents ......................................... $ 40,944,122 $ 148,332,164

Short-term investments ............................................ 4,723,050 26,912,789

Accounts receivable, less allowance of $314,516 and

$804,576 (unaudited), respectively .............................. 2,516,186 6,259,784

Prepaid domain name registry fees ................................. 4,954,730 14,307,860

Deferred tax asset ................................................ 8,578,045 21,995,762

Prepaid income taxes .............................................. -- 1,608,000

Deferred offering costs ........................................... 390,000 --

Other current assets .............................................. 195,196 1,667,597

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

Total current assets ........................................... 62,301,329 221,083,956

Fixed assets, net .................................................. 2,458,386 7,296,257

Prepaid domain name registry fees, net of current portion .......... 3,576,331 5,476,523

Investments ........................................................ -- 2,500,000

Goodwill and other intangibles, net ................................ -- 11,341,302

Other assets ....................................................... -- --

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

Total assets ................................................... $ 68,336,046 $ 247,698,038

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

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable and accrued expenses ............................. $ 8,513,079 $ 11,777,790

Income taxes payable .............................................. 5,608,198 --

Deferred revenue, net ............................................. 18,193,871 63,509,292

Capital lease obligations, current portion ........................ 5,967 --

Notes payable ..................................................... -- --

Other current liabilities ......................................... 166,857 927,430

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

Total current liabilities ...................................... 32,487,972 76,214,512

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

Deferred revenue, net of current portion ........................... 13,907,361 24,029,534

Capital lease obligations, net of current portion .................. 27,858 --

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

Total liabilities .............................................. 46,423,191 100,244,046

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

Commitments and contingencies

Stockholders' equity

Preferred stock -- $.0001 par value, 5,000,000 shares authorized;

Series A convertible preferred; 4,694,333 issued and outstanding

at December 31, 1999 and none issued and outstanding at June

30, 2000 (liquidation preference of $16,094,844) ................ 469 --

Common stock -- $.0001 par value, 200,000,000 shares

authorized; 21,065,047 shares issued and outstanding at December

31, 1999, and 31,990,420 issued and outstanding at June 30, 2000. 2,106 3,199

Additional paid-in capital ........................................ 36,709,821 167,212,811

Unearned compensation ............................................. (2,647,770) (5,627,223)

Accumulated deficit ............................................... (12,151,771) (14,134,795)

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Total stockholders' equity ..................................... 21,912,855 147,453,992

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

Total liabilities and stockholders' equity ..................... $ 68,336,046 $ 247,698,038

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

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

Statement of Operations

Three Months Six Months

Ended June 30, Ended June 30,

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

1999 2000 1999 2000

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

(unaudited) (unaudited)

Net revenues .................. $ 1,521,762 $ 20,249,886 $ 2,269,062 $ 32,667,756

Cost of revenues .............. 232,665 5,286,689 324,783 9,387,700

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

Gross profit ............... 1,289,097 14,963,197 1,944,279 23,280,056

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

Operating costs and expenses

Sales and marketing .......... 998,064 14,980,181 1,717,763 22,153,387

Research and development ..... 356,606 1,236,329 623,552 1,954,097

General and administrative

(exclusive of non-cash

compensation) .............. 199,732 1,644,058 402,325 3,342,079

Non-cash compensation ........ 3,945,248 458,320 4,530,815 1,290,093

Amortization of goodwill

and other intangibles ...... -- 298,455 -- 298,455

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

Total operating cost and

expenses .................. 5,499,650 18,617,343 7,274,455 29,038,111

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

Loss from operations .......... (4,210,553) (3,654,146) (5,330,176) (5,758,055)

Other income (expenses), net 70,552 2,662,014 83,173 3,775,031

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

Net loss ................... $ (4,140,001) $ (992,132) $ (5,247,003) $ (1,983,024)

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

Basic and diluted net loss

per share ................. $ (.23) $ (.03) $ (.30) $ (.07)

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

Weighted average

common shares used in

basic and diluted net

loss per share ............ 18,193,318 31,623,494 17,747,079 27,901,444

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

Pro forma basic and diluted

net loss per share

(unaudited) .................. $ (.03) $ (.07)

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

Weighted average common

shares used in pro forma

basic and diluted net loss

per share (unaudited) ........ 31,623,494 29,526,406

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

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

Statement of Cash Flows

Six Months Ended

June 30,

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

1999 2000

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

(unaudited)

Cash flows from operating activities

Net loss .............................. $ (5,247,003) $ (1,983,024)

Adjustments to reconcile net loss

to net cash provided by (used

in) operating activities

Deferred revenues .................. 2,655,896 55,437,594

Depreciation and

amortization ..................... (3,314) 849,675

Compensatory stock options

and warrants expense ............. 4,530,815 1,290,093

Deferred income taxes .............. -- (13,417,717)

Changes in assets and liabilities

affecting operating cash flows

Accounts receivable ................. (1,195,679) (3,743,598)

Prepaid domain name registry

fees ............................... (1,820,584) (11,253,322)

Prepaid income taxes ................ -- (1,608,000)

Other current assets ................ (18,958) (1,472,401)

Other assets ........................ (852) --

Accounts payable and accrued

expenses ........................... 525,352 3,264,711

Accrued registry fees ............... -- --

Accrued advertising ................. -- --

Income taxes payable ................ -- (5,608,198)

Other current liabilities ........... -- 760,573

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

Net cash provided by (used

in) operating activities ......... (574,327) 22,516,386

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

Cash flows from investing activities

Purchases of fixed assets ............. (961,790) (5,389,091)

Deferred offering costs ............... -- 390,000

Purchases of investments .............. -- (24,689,739)

Acquisition of Inabox, net ............ -- (1,091,083)

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

Net cash used in investing

activities ....................... (961,790) (30,779,913)

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

Cash flows from financing activities

Proceeds from notes payable ........... -- --

Repayment of notes payable ............ -- --

Net proceeds from issuance of

common stock and warrants ........... 6,693,497 115,685,394

Net proceeds from issuance of

preferred stock and warrants ........ 13,030,500 --

Principal payments on capital

lease obligations ................... (3,135) (33,825)

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

Net cash provided by

financing activities ............. 19,720,862 115,651,569

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

Net increase in cash and cash

equivalents ........................... 18,184,745 107,388,042

Cash and cash equivalents at

beginning of period ................... 1,284,648 40,944,122

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

Cash and cash equivalents at end of

period ................................ $ 19,469,393 $ 148,332,164

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

Supplemental disclosure of cash

flow information

Cash paid for interest ................ $ 2,689 $ 15,493

Cash paid for income taxes ............ $ -- $ 20,687,509

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

Notes to Unaudited Financial Statements

1. Nature of Business and Organization

Nature of Business

domain name registration and other online services such as web-hosting, email,

domain name forwarding and advertising. The Company has also marketed software

for creation of Internet websites.

In April 1999, the Company was selected as one of the initial five

testbed registrars by the Internet Corporation for Assigned Names and Numbers

("ICANN"), an independent non-profit organization selected by the Department of

Commerce to manage and oversee the system for generic top level domain name

registration. In June 1999, the Company commenced online registration as an

ICANN-accredited registrar of .com, .net and .org domains.

Organization

The Company originally operated as Forman Interactive Corp. ("Forman"),

a New York Corporation that was formed in November 1994. Pursuant to a Merger

Agreement dated June 23, 1999 by and among Register.com, a Delaware Corporation

formed in May 1999 specifically for the purpose of this merger, and Forman, the

stockholders of Forman exchanged their shares for an equivalent number of shares

of Register.com. References herein to the operations and historical financial

information of the "Company" prior to the date of the merger refer to the

operations and historical financial information of Forman.

Stock Split

In January 2000, the Company effected a 3.5 to 1 stock split. All

common and preferred shares, options, warrants and related per-share data

reflected in the accompanying financial statements and notes thereto have been

adjusted to give retroactive effect to the stock split.

2. Summary of Significant Accounting Policies

Interim Financial Statements

The interim financial statements have been prepared by Register.com

without audit, pursuant to the rules and regulations of the Securities and

Exchange Commission ("SEC"). In the opinion of management, financial statements

included in this report reflect all normal recurring adjustments which

operations for the interim periods covered and of the financial position of

footnote disclosures normally included in the annual financial statements

prepared in accordance with generally accepted accounting principles have been

condensed or omitted pursuant to such rules and regulations. However,

information presented. The operating results for interim periods are not

necessarily indicative of the operating results for the entire year. These

interim financial statements should be read in conjunction with Register.com's

December 31, 1999 audited financial statements and notes thereto included in

Revenue Recognition

The Company's revenues are primarily derived from domain name

registration fees, advertising and online products and services.

Domain name registration fees

Registration fees charged to end-users for registration services are

recognized on a straight-line basis over the life of the registration term.

Substantially all end-user subscribers pay for services with major credit cards

for which the Company receives daily remittances from the credit card carriers.

A provision for chargebacks from the credit card carriers is included in

accounts payable and accrued expenses. Such amounts are separately recorded and

deducted from gross registration fees in determining net revenues. Referral

commissions earned by our private label and co-brand partners are deducted from

gross registration fees in determining net revenues.

Online products and services

Revenue from online products and services is recognized over the period

in which services are provided, generally monthly. Payments received in advance

of services being provided are included in deferred revenue.

Advertising

Advertising revenues are derived principally from short-term

advertising contracts in which the Company typically guarantees a minimum number

of impressions or pages to be delivered to users over a specified period of time

for a fixed fee. Advertising revenues are recognized ratably in the period in

which the advertisement is displayed, provided that no significant obligations

remain, at the lesser of the ratio of impressions delivered over total

guaranteed impressions or the straight line basis over the term of the contract.

To the extent that minimum guaranteed impressions are not met, the Company

defers recognition of the corresponding revenues until the guaranteed

impressions are achieved.

3. Initial Public Offering

In March 2000, Register.com sold 5,222,279 shares of common stock

through its initial public offering including 222,279 shares through an over

allotment clause. Net proceeds from the offering and over allotment were

approximately $115.3 million, after deducting the discount granted to the

underwriters and other offering expenses. At the time of the initial public

offering, all of Register.com's preferred stock automatically converted into

4,694,333 shares of common stock.

4. Investment

In February 2000, the Company purchased 476,784 shares of Series A

Convertible Preferred Stock and warrants to acquire an additional 95,357 shares

of Series A Convertible Preferred Stock of Great Domains.com, Inc ("Great

Domains")

Filing Type:	10-Q
Description:	Quarterly Report
Filing Date:	Aug 14, 2000
Period End:	Jun 30, 2000

Primary Exchange:	NASDAQ - National Market System
Ticker:	RCOM

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