June 2003 QSB

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

Form 10-QSB 

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE 

SECURITIES EXCHANGE ACT OF 1934 

For the quarterly period ended June 30, 2003 

or

[   ] 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 000-29929 

COMMUNICATE.COM INC. 

(Exact name of small business as specified in its charter) 

Nevada         33-0786959 

(State or other jurisdiction of                 (IRS Employer 

incorporation or organization)             Identification Number) 

#600 – 1100 Melville Street, Vancouver, B.C. V6E 4A6 

(Address of principal executive offices) 

(604) 697-0136 

(Issuer's telephone number) 

APPLICABLE ONLY TO CORPORATE ISSUERS 

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 

Common Stock    14,691,339 shares outstanding 

$.001 Par Value    as of August 14, 2003 

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] 


	Page - 1

COMMUNICATE.COM INC. 

REPORT ON FORM 10-QSB 

QUARTER ENDED JUNE 30, 2003 

TABLE OF CONTENTS 

PART I. Financial Information 

Item 1.             Financial Statements 

Balance sheets as of June 30, 2003 and December 31, 2002 

Statements of Operations as of June 30, 2003 and June 30, 2002 

Statements of Cash Flows as of June 30, 2003 

Notes to the Financial Statements 

Item 2.             Management's discussion and analysis of financial condition and results of operations 

Item 3.             Controls and Procedures. 

PART II. Other Information 

Item 1.    Legal Proceedings. 

Item 2.    Changes in Securities. 

Item 3.    Defaults Upon Senior Securities. 

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

Item 5.    Other Information. 

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

Signatures 

Certifications 


	Page - 2

PART I 

Item 1: Financial Statements. 

The response to Item 1 has been submitted as a separate section of this Report beginning on page F-1. 

Item 2: Management’s discussion and analysis of financial condition and results of operations 

Registrant, through its majority-owned subsidiary, Domain Holdings, Inc. (formerly Communicate.com Inc.) (the "Subsidiary"), is involved in businesses which exploit commercial uses of the Internet. The Subsidiary markets and licenses a portfolio of approximately 40 domain names, 30 of which generate high amounts of internet traffic because of, among other things, their generic description of a specific product or services category. 

Registrant has focused since the beginning of 2001 on developing revenue streams from its domain names and reducing the debt of the Subsidiary. Registrant generates revenue from leasing domain names, from sales commissions from the sale of third-party products and services utilizing the Internet, from "pay-per-click" revenue and from the sale of domain name assets that Registrant believes are not essential to its business. Since May 2003, Registrant has begun selling online directly to customers fragrances and other beauty products. 

Registrant presently has six sales and administrative staff and three technical employees, all of whom are employed by the Subsidiary. Whereas the Registrant previously has relied on hourly-contractors to meet its technical needs, improving business conditions enabled the hiring of full-time staff to sell its products and to service its websites. 

(a)    Selected Financial Data 

The following selected financial data was derived from Communicate’s unaudited financial statements. The information set forth below should be read in conjunction with the Company’s financial statements and related notes included elsewhere in this report. 


	Page - 3

	For the Quarters Ended						For the Six-Month Ended
		June 30, 2003			June 30, 2002			June 30, 2003			June 30, 2002

Statements of Operations Data

Domain Name Leasing and Advertising	$	118,203		$	112,502		$	199,294		$	182,023
Domain Name Sales		--			60,000			--			260,000
Product Sales and Other		55,692			11,926			55,758			37,814
Total Revenues	$	173,895		$	184,428		$	255,052		$	479,837

Domain Name Leasing and Advertising		--			--			--			--
Cost of Domain Name Sales		--		$	39,262			--		$	121,577
Product Purchases	$	46,401			--		$	46,401			--
Total Cost of Revenues	$	46,401		$	39,262		$	46,401		$	121,577

Gross Profit	$	127,494		$	145,166		$	208,651		$	358,260

General and Administrative		($ 36,531	)		($ 84,876	)		($ 56,893	)		($ 112,451	)
Professional Fees		(51,498	)		(58,124	)		(94,910	)		(117,209	)
Depreciation		(794	)		(1,248	)		(1,674	)		(2,678	)

Operating Income (Loss)	$	38,671		$	918		$	55,174		$	125,922

Interest		(10,870	)		(12,175	)		(21,503	)		(34,572	)
Loss on Acquisition of Minority Interest		--			(15,471	)		--			(15,471	)

Net Income (Loss) Before Accounting Change	$	27,801			($ 26,728	)	$	33,671		$	75,879

Cumulative Effect of Accounting Change		--			--			--			($1,426,736	)

Net Income (Loss) for the Period	$	27,801			($ 26,728	)	$	33,671			($1,350,857	)

Basic Earnings (Loss) per Share Before Accounting Change	$	0.002			($ 0.002	)	$	0.002		$	0.005
Effect of Accounting Change		--			--			--			($ 0.10	)
Basic Earnings (Loss) per Share	$	0.002			($ 0.002	)	$	0.002			($ 0.10	)
Weighted Average Shares Outstanding		14,691,339			14,202,328			14,691,339			14,196,864

Balance Sheet Data		As at June 30, 2003			As at December 31, 2002

Current Assets	$	137,605		$	77,459
Fixed Assets		11,002			12,675
Intangible Assets		1,793,264			1,793,264
Total Assets	$	1,941,871		$	1,883,398

Accounts Payable & Accrued Liabilities	$	398,963		$	357,233
Loan Payable		375,000			375,000
Deferred Revenue		9,746			--
Total Liabilities	$	783,709		$	732,233

Common Stock	$	5,701		$	5,201
Additional Paid in Capital		3,066,516			3,066,516
Accumulated Deficit		($ 1,914,055	)		($ 1,921,052	)


	Page - 4

(b)    Results of Operations 

REVENUES AND COSTS OF REVENUES . 

Domain Name Leasing and Advertising . In the second quarter of 2003, Registrant generated domain name leasing and advertising revenue of $118,203 as compared to $112,502 in the second quarter of 2002, an increase of 5.1%. Revenues from leasing in the third and subsequent quarters are expected to decline monthly by $9,000 starting in August as a lessee for certain sports domain names has defaulted on its lease and purchase agreement with the Registrant; monthly revenues from advertising in the third and subsequent quarters are expected to increase to offset much of the d
ecline as a result of those sports domain names becoming available for advertising. While the pay-per-click revenue continues to perform as expected, growth is expected to come from providing leasing solutions to vendors and advertisers who seek specific demographic or traffic generated by the Registrant’s generic domain names. There is no assurance that Management can continue to grow this line of revenue. 

Domain Names Sales . In the second quarter of 2003, Registrant did not record any income from the trading of domain names as compared to revenue of $60,000 (cost of $39,262) in the second quarter of 2002. Registrant is currently in discussions to sell four domain names; however Management cannot predict the outcome of these discussions. Other than as disclosed Registrant is not expected to generate any other trading revenue in the coming quarters; however Registrant will evaluate opportunities as they arise. 

Management will continue to market its portfolio of domain names in fiscal 2003 and identify potential purchasers who have substantial liquid assets to complete any contemplated purchase transactions. Management believes that its portfolio of generic products or services category domain names will continue to generate interest from potential partners or purchasers despite a softened domain names after-sales market because of the intuitive and traffic-generating characteristics of Registrant’s domain names. 

Product Sales . Registrant began converting Internet traffic into customers by directly marketing and selling consumable goods. Beginning in May 2003, Registrant launched its cologne.com Internet site and perfume.com shortly thereafter. The sites are performing better than expected with sales in the second quarter of 2003 of $55,692, or approximately $1,200 per day, with cost of purchases and shipping totaling $46,401 resulting in gross profit margin of approximately 16.7%. Sales currently are averaging $1,500 per day with a steady profit margin. 

Other . Registrant continues to negotiate with its trade creditors and capital lessors to settle on a reduced amount owing by the Subsidiary. In the second quarter of 2003, no gain resulting from debt settlement has been recorded. In the first quarter of 2002, gain resulting from debt settlement amounted to $11,926 and has been classified as other revenue. Any cashflow generated, net of monthly cash operating expenses, has been applied to reduce debt. This debt management program shall continue for the foreseeable future. 


	Page - 5

GENERAL AND ADMINISTRATIVE. Registrant’s general and administrative expenses consist primarily of salaries and related costs for general and corporate functions, including all facilities fees. In the second quarter of 2003, Registrant recorded general and administrative expense of $36,531 as compared to $84,876 in 2002. The amount incurred in 2002 included a one-time work-related settlement. By excluding the previously noted amount, general and administrative expense would have been $34,876 in the second quarter of 2002. As such general and administrative expense has increased by approximately 4.7% in the second quarter year over year, and the increase is in line with the hiring of new staff in June 2003. Management expects expenses to increase as hiring continues and overhead adapts to
 increased sales activities albeit in a reasonable and controlled pace. 

PROFESSIONAL FEES. A substantial amount of the professional fees incurred were for legal and auditing fees related to costs of regulatory filings and for management’s consulting fees. Registrant continues to seek ways to reduce these costs. During the second quarter of 2003, professional fees totaled $51,498 as compared to $58,124 in 2002, a decrease of 11.4%. While the Company continues to pursue litigation, management is unaware of factors which are likely to increase professional fees for the remaining quarters in 2003. 

CHANGE IN ACCOUNTING POLICY. As at January 1, 2002, the Registrant recorded an impairment of its intangible assets held for resale as required upon adoption of SFAS 142 which resulted from a decline in the market value of the Registrant’s stock in the amount of $1,426,736. The charge is a non-cash item and does not affect the cash position of the Registrant. 

(c)    Liquidity and Capital Resources 

At June 30, 2003 Registrant had current liabilities in excess of current assets resulting in a working capital deficit of $646,104. During the six-month ended June 30, 2003 Registrant had net income of $33,671 and an increase in cash of $52,463, compared to net income of $75,879 and an increase in cash of $31,652 for the same period of last year. Operating activities generated cashflows of $79,138 from an increase in accounts payable and deferred revenue and from net income generated during the six-month period, offset by an increase in receivables and prepaid expenses. Registrant has accumulated a deficit of $1,912,920 since inception and has a stockholders’ equity of $1,158,162 as at June 30, 2003. Due to the working capital deficit, there is substantial doubt about Registrant’s 
ability to continue as a going concern. Registrant will only be able to continue operations if it raises additional funds, either through operations or outside funding. Registrant cannot predict whether it will be able to do so. 

Registrant seeks to generate revenue from (i) leasing domain names to third parties to conduct on-line businesses; (ii) selling products and services of third parties; (iii) fees resulting from traffic click-throughs generated by the domain name assets; and (iv) trading of non-core domain name assets. 

Registrant and the Subsidiary may not be able to satisfy its cash requirements for the next 12 months without having to raise additional funds. The Subsidiary’s expected cash requirement for the next 12 months is $200,000. The Registrant negotiated with the lender to refinance a term loan $375,000 due and payable on June 28, 2003 with otherwise similar terms but with a new due and payable date of June 28, 2005. Registrant expects to raise any additional funds not related to the term loan by way of equity and/or debt financing, and through the sale of non-strategic domain name assets. However, Registrant may not be able to raise the required funds from such financings, particularly in light of existing market conditions and the perception by investors of those companies that, like the Re
gistrant, engage in e-commerce and related businesses. In that case Registrant will proceed by approaching current shareholders for loans or equity capital to cover operating costs. 


	Page - 6

Although the foregoing actions are expected to cover Registrant’s anticipated cash needs for working capital and capital expenditures for at least the next twelve months, no assurance can be given that Registrant will be able to raise sufficient cash to meet these cash requirements. 

Registrant has no current plans to purchase any plant or significant equipment. 

(d)    Uncertainties Relating to Forward-Looking Statements 

Management’s discussion and analysis of Registrant’s financial condition and the results of its operations and other sections of this report, contain forward looking statements, that are based upon the current beliefs and expectations of Registrant’s management, as well as assumptions made by, and information currently available to, Registrant’s management. Because these statements involve risks and uncertainties, actual actions and strategies and the timing and expected results may differ materially from those expressed or implied by the forward-looking statements. As well, Registrant’s future results, performance or achievements could differ materially from those expressed in, or implied by, any forward-looking statements. Future events and actual results could dif
fer materially from those set forth in or underlying the forward-looking statements. 

Item 3: Controls and Procedures. 

Based on their most recent evaluation, which was completed within 90 days of the filing of this Form 10-QSB, the Company’s Chief Executive Officer and Chief Financial Officer believe the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) are effective to ensure that information required to be disclosed by the Company in this report is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. There were no significant changes in the Company’s internal controls or other factors that could significantly affect these controls subsequent to the date of their evaluation and there were n
o corrective actions with regard to significant deficiencies and material weaknesses. 


	Page - 7

PART II OTHER INFORMATION 

Item 1. Legal Proceedings. 

In December 1999, the Subsidiary commenced a lawsuit in the Supreme Court of British Columbia (No. C996417) against Paul Green, the former chief executive officer of the Subsidiary, for breach of fiduciary duty for wrongfully attempting to appropriate the Subsidiary’s business opportunities. The Subsidiary is seeking an undetermined amount of damages and a declaration that it had just cause to terminate Paul Green as the CEO in or about June 1999. No decision has been rendered in this case and the Company cannot predict whether it will prevail, and if it does, what the terms of any judgment may be. 

On March 9, 2000, Paul Green commenced a separate action in the Supreme Court of British Columbia (No. S001317) against the Subsidiary. In that action, Paul Green claimed wrongful dismissal and a breach of contract on the part of the Subsidiary. Paul Green is seeking an undetermined amount of damages and, among others, an order of specific performance for the issuance of a number of shares in the capital of the Subsidiary equal to 18.9% or more of the outstanding shares of the Subsidiary. On June 1, 2000, the Subsidiary filed a statement of defence and counterclaim. Management intends to defend this action vigorously. 

On July 14, 2003, Multinational Investment Corp. ("MIC") commenced a legal action in the State of Virginia (No. L215105) against the Subsidiary for breach of contract regarding an agreement to purchase the domain name www.cricket.com and sought damages of $1.25 million plus interest at 9% from November 27, 2001 and title to the disputed domain name. On August 6, 2003 the Subsidiary filed its statement of defence and counterclaim for multiple breaches of contracts and sought damages of up to $3 million. The outcome of these legal actions is currently not determinable and as such the amount of loss, if any, resulting from this litigation is presently not determinable. 

Registrant is not aware of any other pending or threatened material legal proceedings. 

Item 2. Changes in Securities. 

None. 

Item 3. Defaults Upon Senior Securities. 

None. 

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

No matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the first three months of the fiscal year covered by this report. 


	Page - 8

Item 5. Other Information. 

None. 

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

(A)         Index to and Description of Exhibits. 

EXHIBIT	DESCRIPTION
F-1	Financial Statements.
10.1	Agreement to Extend Term of Promissory Note Dated May 19, 2003
31	Section 302 Certification of Chief Executive Officer and Chief Financial Officer
32	Section 906 Certificate of Chief Executive Office and Chief Financial Officer

(B)         Reports on Form 8-K. 

There were no report on Form 8-K filed by Registrant during the second quarter ending June 30, 2003. 


	Page - 9

PART II - SIGNATURES 

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

COMMUNICATE.COM INC. 

/s/ David M. Jeffs 

By :                 &n
bsp;    

Name:     David M. Jeffs 

Title :    Director and CEO 

Dated:    August 14, 2003 

/s/ J. Cameron Pan 

By :                 &n
bsp;    

Name:     J. Cameron Pan 

Title :    CFO 

Dated:    August 14, 2003 


	Page - 10

Exhibit 31


	Page - 11

CERTIFICATIONS 

I, David M Jeffs, certify that: 

1. I have reviewed this quarterly report on Form 10-QSB of Communicate.com Inc.; 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: 

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; 

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and 

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): 

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 

Date: August 14, 2003 

/s/ David M Jeffs
David M Jeffs, Director and CEO


	Page - 12

CERTIFICATIONS 

I, J Cameron Pan, certify that: 

1. I have reviewed this quarterly report on Form 10-QSB of Communicate.com Inc.; 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: 

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; 

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and 

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): 

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 

Date: August 14, 2003 

/s/ J Cameron Pan
J Cameron Pan - CFO


	Page - 13

 
Exhibit 32

 
Page - 14

CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 

In connection with the Quarterly Report of Communicate.com Inc. ("Communicate") on Form 10-QSB for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David M. Jeffs, President, Chief Executive Officer of Communicate and the sole member of the Board of Directors, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that: 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2) The information contained in the Report fairly represents, the financial condition and result of operations of Communicate. 

/s/ David M. Jeffs
David M. Jeffs 
Chief Executive Officer 

August 14, 2003 


	Page - 15

CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 

In connection with the Quarterly Report of Communicate.com Inc. ("Communicate") on Form 10-QSB for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, J. Cameron Pan, Secretary, Treasurer, and Chief Financial Officer of Communicate, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that: 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

(2) The information contained in the Report fairly represents, the financial condition and result of operations of Communicate. 

/s/ J. Cameron Pan
J. Cameron Pan 
Chief Financial Officer 

August 14, 2003 


	Page - 16

Exhibits 

Financial Statements                                                                                                                                 &n
bsp;                             F-1 


	Page - 17

COMMUNICATE.COM INC. 

INTERIM CONSOLIDATED FINANCIAL STATEMENTS 

JUNE 30, 2003 

(Unaudited) 


	Page - 18

CONSOLIDATED BALANCE SHEETS 

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS 

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS 

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 


	Page - 19

COMMUNICATE.COM INC. 

CONSOLIDATED BALANCE SHEETS 

		June 30, 2003			December 31, 2002

		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	107,990		$	55,527
Accounts receivable		15,255			19,957
Advances receivable		7,300			-
Prepaid expenses		7,060			1,975

		137,605			77,459

FIXED ASSETS (N ote 3)		11,002			12,675
INTANGIBLE ASSETS HELD FOR RESALE (Note 2)		1,793,264			1,793,264

	$	1,941,871		$	1,883,398

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	398,963		$	357,233
Loan payable (Note 4)		375,000			375,000
Deferred revenue		9,746			-

		783,709			732,233

COMMITMENTS AND CONTINGENCIES (Notes 1 and 9)

STOCKHOLDERS’ EQUITY
Capital stock (note 5)
Authorized
50,000,000 Common shares, $.001 par value
Issued and outstanding
14,691,339 (2002 – 14,691,339) Common shares		5,701			5,701
Additional paid in capital		3,066,516			3,066,516
Accumulated deficit		(1,912,920	)		(1,946,591	)
Accumulated other comprehensive income		(1,135	)		25,539

		1,158,162			1,151,165


	$	1,941,871		$	1,883,398

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


	Page - 20

COMMUNICATE.COM INC. 

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS 

(Unaudited) 

		Three months ended June 30, 2003			Three months ended June 30, 2002			Six months ended June 30, 2003			Six months ended June 30, 2002

REVENUES
Domain name leasing and advertising	$	118,203		$	112,502		$	199,294		$	182,023
Domain name sales		-			60,000			-			260,000
Product sales and other		55,692			11,926			55,758			37,814

Total revenue		173,895			184,428			255,052			479,837

COST OF REVENUES
Domain name leasing and advertising		-			-			-			-
Cost of domain name sales		-			39,262			-			121,577
Product purchases		46,401			-			46,401			-

Total cost of revenues		46,401			39,262			46,401			121,577

GROSS PROFIT		127,494			145,166			208,651			358,260

EXPENSES
General and administrative		36,531			84,876			56.893			112,451
Professional and consulting fees		51,498			58,124			94,910			117,209
Depreciation		794			1,248			1,674			2,678

		88,823			144,248			153,477			232.338

OPERATING INCOME		38,671			918			55,174			125,922
INTEREST EXPENSE		(10,870	)		(12,175	)		(21,503	)		(34,572	)
LOSS ON ACQUISITION OF MINORITY INTEREST		-			(15,471	)		-			(15,471	)

NET INCOME (LOSS) BEFORE THE FOLLOWING		27,801			(26,278	)		33,671			75,879
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (Note 2)		-			-			-			(1,426,736	)

NET INCOME (LOSS) FOR THE PERIOD	$	27,801		$	(26,278	)	$	33,671		$	(1,350,857	)

BASIC EARNINGS (LOSS) PER SHARE BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE		$ 0.00			$ (0.00	)	$	0.00		$	( 0.00	)
EFFECT OF ACCOUNTING CHANGE		-			-			-			(0.10	)

BASIC EARNINGS (LOSS) PER SHARE	$	0.00		$	(0.00	)	$	0.00		$	(0.10	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		14,691,339			14,202,328			14,691,339			14,196,864

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


	Page - 21

COMMUNICATE.COM INC. 

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Unaudited) 

		Six months ended June 30, 2003			Six months ended June 30, 2002

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the period	$	33,671		$	(1,324,129	)
Adjustments to reconcile net income (loss) to net cash used in operating activities
- cumulative effect of accounting change		-			1,426,736
- non-cash expenses and costs of revenue		-			121,577
- depreciation		1,674			2,678
- accrued interest		-			25,874
- accounts receivable		4,702			40,291
- advances receivable		(7,300	)		-
- prepaid expenses		(5,085	)		4,196
- accounts payable and accrued liabilities		41,730			35,345
- deferred revenue		9,746			2,912

CASH FROM OPERATING ACTIVITIES		79,138			308,752

CASH FLOWS FROM FINANCING ACTIVITIES
- loan proceeds (repayments)		-			(227,093	)
- lease obligation repayments		-			(9,947	)

CASH FLOWS USED IN FINANCING ACTIVITIES		-			(237,040	)

EFFECT OF EXCHANGE RATE CHANGES		(26,675	)		(40,060	)

INCREASE IN CASH AND CASH EQUIVALENTS		52,463			31,652

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		55,527			52,672

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	107,990		$	84,324

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


	Page - 22

COMMUNICATE.COM INC. 

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 

June 30, 2003 

(Unaudited) 

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION 

The Company was incorporated October 10, 1995 under the laws of the State of Nevada and effective August 24, 2000 changed its name from Troyden Corporation to Communicate.com Inc. ("CMNN" or "the Company"). Effective November 10, 2000 the Company acquired a 52% controlling interest in Communicate.com Inc., an Alberta private company that changed it sname to Domain Holdings Inc. on April 5, 2002 ("DHI"). During December 2000 CMNN acquired from minority shareholders an additional 31% of the outstanding shares of DHI and in the second quarter of 2002, CMNN acquired a further 10% of the outstanding shares of DHI from minority shareholders. At June 30, 2003, CMNN owns 93% of the outstanding shares of DHI. 

DHI owns a portfolio of simple, intuitive domain names. DHI’s current business strategy is to seek partners to develop its domain names to include content, commerce and community applications. DHI has also entered into agreements to sell or lease certain of its domain names. 

The consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At June 30, 2003 the Company has a working capital deficiency of $646,104 and has incurred substantial losses since inception raising substantial doubt as to the Company’s ability to continue as a going concern. The Company’s continued operations are dependent on its ability to obtain additional financing, settling its outstanding debts and to generate profitable operations. 

Unaudited Interim Financial Statements 

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB of Regulation S-B. They do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2002 included in the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission. The interim unaudited consolidated financial statements should be read in conjunction with those financial statements included in t
he Form 10-KSB. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Basis of presentation 

The accompanying financial statements are presented in United States dollars and are prepared in accordance with accounting principles generally accepted in the United States. 

Principles of Consolidation 

The financial statements include the accounts of the Company and the 93% interest in its subsidiary, DHI. All significant intercompany balances and transactions are eliminated on consolidation. 

Fixed assets 

Fixed assets are recorded at cost. Depreciation is computed at the following rates over the estimated useful lives of the assets: 

Computer equipment	30% declining balance
Furniture and fixtures	20% declining balance
Office equipment	20% declining balance

One-half year depreciation is taken in the year of acquisition on certain capital assets. 


	Page - 23

COMMUNICATE.COM INC. 

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 

June 30, 2003 

(Unaudited) 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 

Revenue recognition 

Revenues from the sale and lease of domain names, whose carrying values are recorded as intangible assets held for resale, consists primarily of funds earned for the transfer of rights to domain names that are currently in the Company’s control. Collectibility of these proceeds is subject to a high level of uncertainty; accordingly revenues are recognized only as received in cash. Lease payments paid in advance are recorded as deferred revenue. 

Web advertising revenue consists primarily of commissions earned from the referral of visitors to the Company’s sites to other parties. The amount and collectibility of these referral commissions is subject to uncertainty; accordingly revenues are recognized when the amount can be determined and collectibility can be reasonably assured. 

Revenues from the on-line sales of products, currently consisting primarily of fragrances and other beauty products, are recorded upon shipment of products and determination that collection is reasonably assured. 

Stock-based compensation 

In December 2002, the Financial Accounting Standards Board issued Financial Accounting Standard No. 148, "Accounting for Stock-Based Compensation – Transition and Disclosure" ("SFAS No. 148"), an amendment of Financial Accounting Standard No. 123 "Accounting for Stock-Based Compensation" ("SFAS No. 123"). The purpose of SFAS No. 148 is to: (1) provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation, (2) amend the disclosure provisions to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation, and (3) to require disclosure of those effects in interim financial 
information. The disclosure provisions of SFAS No. 148 were effective for the Company commencing December 31, 2002 and the required disclosures have been made below. 

The Company has elected to continue to account for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", ("APB No. 25") and comply with the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148 as described above. In addition, in accordance with SFAS No. 123 the Company applies the fair value method using the Black-Scholes option-pricing model in accounting for options granted to consultants. Under APB No. 25, compensation expense is recognized based on the difference, if any, on the date of grant between the estimated fair value of the Company’s stock and the amount an employee must pay to acquire the stock. Compensation expense is recognized immediately for 
past services and pro-rata for future services over the option-vesting period. 

The following table illustrates the pro forma effect on net income (loss) and net income (loss) per share as if the Company had accounted for its for stock-based employee compensation using the fair value provisions of SFAS No. 123 using the assumptions as described in Note 6: 

			Six months ended June 30, 2003			Six months ended June 30, 2002


Net income (loss) for the period	As reported	$	33,671		$	-
SFAS 123 compensation expense	Pro-forma		(12,354	)		-


Net income for the period	Pro-forma		21,317		$	-


Pro-forma basic net income per share	Pro-forma	$	0.00		$	-

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force in Issue No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring or in Conjunction with Selling Goods or Services" ("EITF 96-18"). Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services as defined by
 EITF 96-18. 

 
Page - 24

COMMUNICATE.COM INC. 
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 
June 30, 2003 
(Unaudited) 
 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 

The Company has also adopted the provisions of the Financial Accounting Standards Board Interpretation No.44, Accounting for Certain Transactions Involving Stock Compensation – An Interpretation of APB Opinion No. 25 ("FIN 44"), which provides guidance as to certain applications of APB 25. FIN 44 is generally effective July 1, 2000 with the exception of certain events occurring after December 15, 1998. 

Income taxes 

The Company follows the liability method of accounting for income taxes. Under this method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Future tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. A valuation allowance is provided for deferred tax assets if it is more likely than not that
 the Company will not realize the future benefit, or if the future deductibility is uncertain. 

Use of estimates 

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the periods that the financial statements are prepared. Actual amounts could differ from these estimates. 

Foreign currency transactions 

The financial statements are presented in United States dollars. In accordance with Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation", foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates that prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the year. Related translation adjustments are reported as a separate component of stockholders’ equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations. 

Earnings (loss) per share 

Basic earnings (loss) per share is computed by dividing earnings (loss) for the period by the weighted average number of common shares outstanding for the period. Fully diluted earnings (loss) per share reflects the potential dilution of securities by including other potential common stock, including convertible preferred shares, in the weighted average number of common shares outstanding for a period and is not presented where the effect is anti-dilutive. The presentation is only of basic earnings (loss) per share as the effect of potential dilution of securities has no effect on the current period’s basic earnings per share. 

Comprehensive income 

Comprehensive income is defined as the change in equity from transactions, events and circumstances, other than those resulting from investments by owners and distributions to owners. Comprehensive income to date consists only of the net loss resulting from translation of the foreign currency financial statements of DHI. 

Intangible assets held for resale 

The Company has adopted the provision of the Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Intangible Assets", which revises the accounting for purchased goodwill and intangible assets. Under SFAS 142, goodwill and intangible assets with indefinite lives will no longer be amortized and will be tested for impairment annually. The determination of any impairment would include a comparison of estimated future operating cash flows anticipated during the remaining life with the net carrying value of the asset as well as a comparison of the fair value to book value of the Company. 

Effective January 1, 2002, the Company adopted the provisions of SFAS 142 which, upon adoption, requires the Company to make an initial determination as to whether an impairment of its intangible assets held for resale has occurred as a result of adopting this new accounting policy. In accordance with the provisions of SFAS 142, the Company is required to compare its net book value to the overall market capitalization of the Company and if the market capitalization is less than the Company’s net book value, to record an impairment of its intangible assets accordingly. As a result of applying this impairment test in the first quarter of 2002, the Company recorded a charge in the period of $1,426,736 as a cumulative effect of an accounting change. The balance of the Company’s intangi
ble assets, being $1,793,264 at June 30, 2003, has been determined to have an indefinite life and management has determined that the value of its intangible asset does not require a further impairment charge. 


	Page - 25

COMMUNICATE.COM INC. 

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 

June 30, 2003 

(Unaudited) 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) 

Website Development Costs 

The Company has adopted the provisions of EITF 00-2 "Accounting for Web Site Development Costs" and AICPA SOP 98-1 "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" whereby costs incurred in the preliminary project phase are expensed as incurred; costs incurred in the application development phase are capitalized; and costs incurred in the post-implementation operating phase are expensed as incurred. To date the Company has not capitalized any website development costs. 

Recent accounting pronouncements 

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations", which eliminates the pooling method of accounting for business combinations initiated after June 30, 2001. In addition, SFAS 141 addresses the accounting for intangible assets and goodwill acquired in a business combination. This portion of SFAS 141 is effective for business combinations completed after June 30, 2001. The adoption of SFAS 141 does not have a material impact on the Company’s financial position or results of operations. 

Comparative figures 

Certain of the comparative figures have been restated to conform to the current year’s presentation. 

NOTE 3 – FIXED ASSETS 

		June 30, 2003			December 31, 2002

Computer equipment	$	208,388		$	208,388
Furniture and fixtures		6,568			6,568
Office equipment		3,993			3,993

		218,949			218,949
Less: accumulated depreciation		(63,524	)		(61,851	)
Less: accumulated impairment provision		(144,423	)		(144,423	)

	$	11,002		$	12,675

NOTE 4 – LOAN PAYABLE 

In connection with the acquisition of DHI, the Company entered into a Loan and Security Agreement dated November 10, 2000 with Pacific Capital Markets Inc. ("PCMI"), a British Columbia corporation. Under the terms of the agreement, PCMI agreed to loan the Company up to $1,500,000 to satisfy its obligation pursuant to the DHI purchase agreement dated November 10, 2000. Amounts loaned by PCMI are secured by a promissory demand note (subsequently amended to a promissory note due June 28, 2005), bearing interest at the Royal Bank of Canada United States dollar prime rate plus 2%. In the event that the Company fails to repay the amounts due under this agreement, PCMI may, at its option, convert the balance of principal and interest due pursuant to this agreement into shares of the Company’s 
common stock at a price equal to 80% of the average selling price of the Company’s common stock for the fifteen days prior to conversion. As at June 30, 2003, $375,000 has been loaned by PCMI to the Company and a total of $21,503 of interest has been paid for the six month period ended June 30, 2003. 


	Page - 26

COMMUNICATE.COM INC. 

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 

June 30, 2003 

(Unaudited) 

NOTE 5 – CAPITAL STOCK 

The authorized capital of the Company consists of 50,000,000 Common Shares with a par value of $.001. 

During June 2002, the Company issued 500,000 shares of restricted common stock of the Company in settlement of certain accounts payable of DHI in the amount of $50,000 owing to an individual who became a director of the Company in July 2002. 

Share Purchase Warrants 

On June 28, 2002, the Company issued 2,000,000 share purchase warrants entitling the holder to purchase one share of common stock at $0.05 for a period of two years in settlement of certain accounts payable of $122,500 subsequently extended to June 28, 2005. The Company has accounted for these share purchase warrants in accordance with SFAS No. 123 by applying the fair value method using the Black-Scholes option pricing model assuming a dividend yield of 0%, a risk-free interest rate of 4%, an expected life of two years and an expected volatility of 201%. The fair value of these warrants is $85,100 which resulted in a contribution to paid in capital of $85,100. 

Stock options 

The Company does not have a formal Stock Option Plan, however, options may be granted with terms and conditions at the discretion of the Company’s board of directors. 

On July 24, 2002 the Company granted an officer 580,000 stock options at an exercise price of $0.10 per share. The options vest evenly over two years commencing July 24, 2002. No compensation expense will be recorded upon vesting of these options in accordance with the provisions of APB No. 25 as the exercise price of the options awarded approximated the market price of the Company’s common shares as at the date of the award. 

In accordance with the provisions of SFAS No. 123, for stock options granted to officers, directors and employees, the Company has provided pro forma information regarding net income (loss) and net income (loss) per share as if the Company had accounted for these stock options using the fair value method. The fair value of the options granted in the period was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: risk free interest rate of 4%; dividend yield of 0%; volatility factor of the expected market price of the Company's common stock of 205% and a weighted average expected life of the option of 2 years. 

For purposes of the pro-forma disclosures, the estimated fair value of the options of $49,823 is amortized to expense over the vesting period. In accordance with the provisions of SFAS 148, the Company’s pro-forma information relating to the granting and vesting of stock options has been shown in Note 2. 

NOTE 6 – RELATED PARTY TRANSACTIONS 

During the period ended June 30, 2003 consulting fees and salaries totalling $72,000 (2002 - $2,000) were incurred and paid to the two officers of the Company. At June 30, 2003 $76,000 remains owing to one officer and is included in accounts payable. The $76,000 payable is unsecured and non-interest bearing and has no fixed terms of repayment however, management plans on paying the officer during the current fiscal year as funds become available. 

NOTE 7 – FINANCIAL INSTRUMENTS 

Interest rate risk exposure 

The Company has limited exposure to any fluctuation in interest rates. 

Foreign exchange risk 

The Company is subject to foreign exchange risk for sales and purchases denominated in foreign currencies. Foreign currency risk arises form the fluctuation of foreign exchange rates and the degree of volatility of these rates relative to the United States dollar. The Company does not actively manage this risk. 


	Page - 27

COMMUNICATE.COM INC. 
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 
June 30, 2003 
(Unaudited) 

NOTE 7 – FINANCIAL INSTRUMENTS (cont’d) 

Concentration of credit risk 

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and trade accounts receivable. The Company limits its exposure to credit loss by placing its cash and cash equivalents on deposit with high credit quality financial institutions. Receivables arising from sales to customers are generally not significant individually and are not collateralized; as a result, management continually monitors the financial condition of its customers to reduce the risk of loss. 

Fair values of financial instruments 

The Company’s financial instruments include cash and cash equivalents, accounts receivable, bank indebtedness, accounts payable and accrued liabilities, loan payable, and lease obligation. The fair values of these financial instruments approximate their carrying values. 

NOTE 8 – INCOME TAXES 

The Company’s subsidiary, DHI is subject to Canadian federal and British Columbia provincial taxes in Canada and the Company is subject to United States federal and state taxes. 

As at June 30, 2003 the Company and its subsidiary have net operating loss carryforwards of approximately $3,600,000 that result in deferred tax assets. The carryforwards will expire, if not utilized, commencing in 2006. The Company’s subsidiary also has approximately $1,150,000 in fixed assets that have not been amortized for tax purposes. These fixed assets may be amortized in future at declining balance rates ranging from 20% to 100%, as necessary to reduce taxable income. M anagement believes that t he realization of the benefits from these deferred tax assets appears uncertain due to the Company’s limited operating history and history of operating losses. Accordingly, a full deferred tax asset valuation allowance has been provided and no deferred tax asset benefit has been recorded. 

No tax provision has been recorded in the current year as the Company and DHI have sufficient loss carryforwards to offset all taxable income recorded in the year. 

NOTE 9 – CONTINGENCIES 

The former Chief Executive Officer of DHI commenced a legal action against DHI on March 9, 2000 for wrongful dismissal and breach of contract. He is seeking, at a minimum, 18.39% of the outstanding shares of DHI, specific performance of his contract, special damages in an amount of CAN $37,537, aggravated and punitive damages, interest and costs. On June 1, 2000, Communicate.com commenced an action against this individual claiming damages and special damages for breach of fiduciary duty and breach of his employment contract. The outcome of these legal actions is currently not determinable and as such the amount of loss, if any; resulting from this litigation is presently not determinable. 

On July 14, 2003, Multinational Investment Corp. ("MIC") commenced a legal action in the State of Virginia against DHI for breach of contract regarding an agreement to purchase the domain name www.cricket.com and sought damages of $1.25 million plus interest at 9% from November 27, 2001 and title to the disputed domain name. On August 6, 2003 DHI filed its statement of defence and counterclaim for multiple breaches of contracts and sought damages of up to $3 million. The outcome of these legal actions is currently not determinable and as such the amount of loss, if any, resulting from this litigation is presently not determinable. 


	Page - 28

AGREEMENT TO EXTEND TERM OF PROMISSORY NOTE 

THIS AGREEMENT dated for reference 19 May 2003 is between Communicate.com Inc ., a Nevada corporation with a business office at Suite 600, 1100 Melville Street, Vancouver, BC, V6E 4A6 ("Communicate"); and Pacific Capital Markets Inc. , a British Columbia company with a business office at Suite 600, 1100 Melville Street, Vancouver, BC V6E 4A6 ("PCMI"). 

BACKGROUND: 

A.      PCMI agreed to lend Communicate up to $1.5 million in November 2000. Communicate signed a demand promissory note in favour of PCMI to secure the entire amount of the loan. PCMI advanced a total of $400,000 under the loan agreement, all of it on 8 November 2000.

B. In May 2002, Communicate asked PCMI to change the note from a demand note to a term note. PCMI agreed to a one-year term ending 28 June 2003. as consideration for PCMI’s agreeing to the term and consenting to the transfer to Communicate of a finders’ fee that Domain Holdings Inc. owed to PCMI in connection with an unrelated transaction, Communicate issued to PCMI two-year warrants exercisable for 2 million shares of Communicate’s common stock at $0.05 per share expiring 28 June 2004.

C. Communicate wants to extend the term of the promissory note by two years.

D. Communicate is up to date in its interest payments due under the note and has paid $25,000 on account of principal, leaving a principal balance owing to PCMI of $375,000.

IN CONSIERATION of $1 and the following mutual promises, the parties agree that: 

PCMI will extend the term of the promissory note for two years ending at 5:00 pm in Vancouver, British Columbia, on 28 June 2005.

Communciate will extend the exercise period of the warrants for one year ending 5:00 pm in Vancouver, British Columbia, on 28 June 2005.

All other terms and conditions of the note and the warrants remain effective.

THE PARTIES’ SIGNATURES below are evidence of their agreement. 

Communicate.com Inc.                Pacific Capital Markets Inc. 

/s/ David M. Jeffs	/s/ Rick Jeffs


	Page - 29


	Page - 14


	Page - 24