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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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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, 2003



| ̈ |  | 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 000-29121



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IGN ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)



|Delaware                                                       |  | 94-3316902                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



3240 Bayshore
Boulevard, Brisbane, CA 94005

(Address of principal executive offices) (Zip Code)



(415) 508-2000

(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 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.  Yes  x  No ̈



Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).  Yes ̈No  x



The number of shares of the registrants common stock
outstanding as of July 31, 2003 was 2,292,971.



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[LOGO]



Form 10-Q

Table of Contents



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|                              |  |                                                                                                 |  | Page
|----------------------------- |  | ----------------------------------------------------------------------------------------------- |  | ----
|Part I. Financial Information |  |                                                                                                
|                              |  |                                                                                                
|Item 1.                       |  | Financial Statements                                                                            |  |     
|                              |  |                                                                                                
|                              |  | Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002                           |  | 3   
|                              |  |                                                                                                
|                              |  | Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2003 and 2002 |  | 4   
|                              |  |                                                                                                
|                              |  | Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 and 2002           |  | 5   
|                              |  |                                                                                                
|                              |  | Notes to Condensed Financial Statements                                                         |  | 6   
|                              |  |                                                                                                
|Item 2.                       |  | Management's Discussion and Analysis of Financial Condition and Results of Operations           |  | 11  
|                              |  |                                                                                                
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                      |  | 31  
|                              |  |                                                                                                
|Item 4.                       |  | Controls and Procedures                                                                         |  | 31  
|                              | 
|Part II. Other Information    |  |                                                                                                
|                              |  |                                                                                                
|Item 1.                       |  | Legal Proceedings                                                                               |  | 32  
|                              |  |                                                                                                
|Item 2.                       |  | Changes in Securities and Use of Proceeds                                                       |  | 32  
|                              |  |                                                                                                
|Item 3.                       |  | Defaults Upon Senior Securities                                                                 |  | 32  
|                              |  |                                                                                                
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                             |  | 32  
|                              |  |                                                                                                
|Item 5.                       |  | Other Information                                                                               |  | 32  
|                              |  |                                                                                                
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                |  | 32  
|                              | 
|Signatures                    |  | 34                                                                                             





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IGN ENTERTAINMENT, INC.

CONDENSED BALANCE SHEETS

(in thousands, except share data)



|                                                                                                                                                                          |  | June 30, 2003 |          |   | December 31, 2002(1) |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | -------- | - | -------------------- | -
|                                                                                                                                                                          |  | (unaudited)   |          |   |                      |  
|Assets                                                                                                                                                                    |  |               |          |   |                      |  
|Current assets:                                                                                                                                                           |  |               |          |   |                      |  
|Cash and cash equivalents                                                                                                                                                 |  | $             | 2,404    |   |                      | $
|Accounts receivable, net                                                                                                                                                  |  |               | 2,332    |   |                      |  
|Prepaid expenses and other current assets                                                                                                                                 |  |               | 481      |   |                      |  
|                                                                                                                                                                          |  |               |          |   |                      |  
|Total current assets                                                                                                                                                      |  |               | 5,217    |   |                      |  
|Restricted cash                                                                                                                                                           |  |               | 794      |   |                      |  
|Goodwill, net                                                                                                                                                             |  |               | 1,949    |   |                      |  
|Fixed assets, net                                                                                                                                                         |  |               | 1,083    |   |                      |  
|Other assets                                                                                                                                                              |  |               | 91       |   |                      |  
|                                                                                                                                                                          |  |               |          |   |                      |  
|Total assets                                                                                                                                                              |  | $             | 9,134    |   |                      | $
|                                                                                                                                                                          |  |               |          |   |                      |  
|Liabilities and stockholders equity                                                                                                                                      |  |               |          |   |                      |  
|Current liabilities:                                                                                                                                                      |  |               |          |   |                      |  
|Accounts payable                                                                                                                                                          |  | $             | 1,137    |   |                      | $
|Accrued liabilities and other                                                                                                                                             |  |               | 1,389    |   |                      |  
|Deferred revenue                                                                                                                                                          |  |               | 1,269    |   |                      |  
|Current accrued restructuring charges                                                                                                                                     |  |               | 243      |   |                      |  
|                                                                                                                                                                          |  |               |          |   |                      |  
|Total current liabilities                                                                                                                                                 |  |               | 4,038    |   |                      |  
|Accrued restructuring charges, less current portion                                                                                                                       |  |               | 1,191    |   |                      |  
|Deferred rent                                                                                                                                                             |  |               | 310      |   |                      |  
|Stockholders equity:                                                                                                                                                     |  |               |          |   |                      |  
|Common stock, $0.001 par value: 100,000,000 shared authorized, 2,285,170 and 2,182,191 shares issued and outstanding at June 30,
2003 and December 31, 2002, respectively |  |               | 2        |   |                      |  
|Treasury stock 270,501 at June 30, 2003 and December 31, 2002, respectively                                                                                               |  |               | (1,176   | ) |                      |  
|Additional paid-in capital                                                                                                                                                |  |               | 152,395  |   |                      |  
|Other stockholders equity                                                                                                                                                |  |               |         |   |                      |  
|Accumulated deficit                                                                                                                                                       |  |               | (147,626 | ) |                      |  
|                                                                                                                                                                          |  |               |          |   |                      |  
|Total stockholders equity                                                                                                                                                |  |               | 3,595    |   |                      |  
|                                                                                                                                                                          |  |               |          |   |                      |  
|Total liabilities and stockholders equity                                                                                                                                |  | $             | 9,134    |   |                      | $
|                                                                                                                                                                          |  |               |          |   |                      |  

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|(1) |  | The balance sheet at December 31, 2002 has been derived from the audited financial statements
at that date, but does not include all the information and footnotes required by generally accepted principles for complete financial statements.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



See notes to condensed financial statements







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IGN ENTERTAINMENT, INC.

CONDENSED STATEMENTS OF OPERATIONS (unaudited)

(in thousand, except per share data)



|                                                      |  | Three Months Ending June 30, |       |   | Six Months Ending June 30, |  
|----------------------------------------------------- |  | ---------------------------- | ----- | - | -------------------------- | -
|                                                      |  | 2003                         |       |   | 2002                       |  
|Revenue                                               |  | $                            | 3,679 |   |                            | $
|Cost of revenue                                       |  |                              | 411   |   |                            |  
|                                                      |  |                              |       |   |                            |  
|Gross profit                                          |  |                              | 3,268 |   |                            |  
|Operating expenses:                                   |  |                              |       |   |                            |  
|Production and content                                |  |                              | 880   |   |                            |  
|Engineering and development                           |  |                              | 628   |   |                            |  
|Sales and marketing                                   |  |                              | 1,785 |   |                            |  
|General and administrative                            |  |                              | 480   |   |                            |  
|Stock-based compensation (a)                          |  |                              |      |   |                            |  
|Restructuring and impairment charges                  |  |                              |      |   |                            |  
|Gain on sale of assets                                |  |                              |      |   |                            |  
|Merger transaction costs                              |  |                              | 384   |   |                            |  
|                                                      |  |                              |       |   |                            |  
|Total operating expenses                              |  |                              | 4,157 |   |                            |  
|                                                      |  |                              |       |   |                            |  
|Loss from operations                                  |  |                              | (889  | ) |                            |  
|Interest income, net                                  |  |                              | 6     |   |                            |  
|                                                      |  |                              |       |   |                            |  
|Net loss                                              |  | $                            | (883  | ) |                            | $
|                                                      |  |                              |       |   |                            |  
|Basic and diluted net loss per share                  |  | $                            | (0.39 | ) |                            | $
|                                                      |  |                              |       |   |                            |  
|Shares used in per share calculation                  |  |                              | 2,260 |   |                            |  
|                                                      |  |                              |       |   |                            |  
|(a)Stock-based compensation relates to the following: |  |                              |       |   |                            |  
|Cost of revenue                                       |  |                              |       |   |                            |  
|Production and content                                |  |                              |       |   |                            |  
|Engineering and development                           |  |                              |       |   |                            |  
|Sales and marketing                                   |  |                              |       |   |                            |  
|General and administrative                            |  |                              |       |   |                            |  
|                                                      |  |                              |       |   |                            |  
|Total                                                 |  |                              |       |   |                            |  
|                                                      |  |                              |       |   |                            |  



See notes to condensed
financial statements



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IGN ENTERTAINMENT, INC.

STATEMENT OF CASH FLOWS (unaudited)

(in thousands)



|                                                                                           |  | Six Months Ended June 30, |       
|------------------------------------------------------------------------------------------ |  | ------------------------- | ------
|                                                                                           |  | 2003                      |       
|Cash flows from operations                                                                 |  |                           |       
|Net loss                                                                                   |  | $                         | (1,445
|Reconciliation to net cash used in operations:                                             |  |                           |       
|Depreciation and amortization                                                              |  |                           | 381   
|Stock-based compensation                                                                   |  |                           |      
|Non-cash restructuring and asset impairment charges                                        |  |                           |      
|Gain on sale of assets                                                                     |  |                           |      
|Other non-cash items, net                                                                  |  |                           | 9     
|Changes in assets and liabilities:                                                         |  |                           |       
|Accounts receivable                                                                        |  |                           | 588   
|Prepaid expenses and other assets                                                          |  |                           | 43    
|Accounts payable and accrued liabilities                                                   |  |                           | (320  
|Deferred revenue                                                                           |  |                           | 198   
|Accrued restructuring                                                                      |  |                           | (117  
|Deferred rent                                                                              |  |                           | (89   
|                                                                                           |  |                           |       
|Net cash used in operating activities                                                      |  |                           | (752  
|                                                                                           |  |                           |       
|Cash flows from investing activities                                                       |  |                           |       
|Establishment of facility letter of credits                                                |  |                           | (13   
|Reduction in facility letters of credit                                                    |  |                           |      
|Purchases of fixed assets                                                                  |  |                           | (547  
|Proceeds from sale of assets                                                               |  |                           |      
|Net refund on tenant improvements                                                          |  |                           |      
|                                                                                           |  |                           |       
|Net cash provided by (used in) investing activities                                        |  |                           | (560  
|                                                                                           |  |                           |       
|Cash flows from financing activities                                                       |  |                           |       
|Officer loan repayment                                                                     |  |                           | 70    
|Proceeds from issuance of common stock, net of issuance costs                              |  |                           |      
|Proceeds from employee stock purchase plan, stock options and warrants, net of repurchases |  |                           | 239   
|Repayment of equipment financing obligations                                               |  |                           |      
|Purchase of stock for treasury                                                             |  |                           |      
|                                                                                           |  |                           |       
|Net cash provided by financing activities                                                  |  |                           | 309   
|                                                                                           |  |                           |       
|Net decrease in cash and cash equivalents                                                  |  |                           | (1,003
|Cash and cash equivalents at beginning of period                                           |  |                           | 3,407 
|                                                                                           |  |                           |       
|Cash and cash equivalents at end of period                                                 |  | $                         | 2,404 
|                                                                                           |  |                           |       



See notes to condensed
financial statements



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IGN ENTERTAINMENT, INC.



NOTES TO CONDENSED FINANCIAL STATEMENTS



1. FINANCIAL
STATEMENT PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ materially from those estimates. The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-Q but do not include all of the information and footnotes
required by generally accepted accounting principles and should, therefore, be read in conjunction with our annual report on Form 10-K, as amended by Amendment No. 1 to Form 10-K for the year ended December 31, 2002. These financial statements
include all normal recurring adjustments that we believe necessary for a fair presentation of the statements. Certain reclassifications, none of which affected net loss, have been made to the prior periods amounts in order to conform to the
current periods presentation.



Reference herein to
IGN or the Company shall mean IGN Entertainment, Inc. The results of operations for the three and six months ended June 30, 2003 and 2002 are not necessarily indicative of results that may be expected for any other interim
period or for the full fiscal year ending December 31, 2003.



Going-Private
Merger Transaction



On May 2, 2003, the Company and GHP
Acquisition Corp. (GHP) entered into a definitive Agreement and Plan of Merger (the Merger Agreement). Pursuant to the Merger Agreement and subject to the terms and conditions set forth therein, GHP will be merged with and
into the Company (the Merger), with the Company surviving the Merger as a privately-held company that will cease to be a SEC registrant and will no longer be subject to public reporting requirements. At the effective time of the Merger,
which is expected to be on or about August 29, 2003, if IGNs stockholders approve the Merger at the special meeting of stockholders to be held on August 28, 2003 and all other conditions to the Merger have been satisfied, all outstanding
shares of the Companys common stock will be converted into the right to receive $12 per share in cash (without interest). Additionally, all options and warrants (other than options and warrants that are not automatically cancelable in
connection with the Merger) to purchase Company common stock that are outstanding as of immediately prior to the Merger and whose exercise prices are less than $12 per share will be converted into the right to receive for each share of Company
common stock subject to such options or warrants an amount in cash equal to the difference between $12 and the exercise price of such option (without interest and net of any per share tax withholding). The transaction will constitute a taxable
purchase of the Company securities.



Notwithstanding the
foregoing, if any of the conditions to the Merger (other than stockholder approval) have not been satisfied as of the date of IGNs special meeting of stockholders, the effective time of the Merger could be delayed. Therefore, no assurance can
be given as to when or if the Merger will occur. Among other conditions, the Merger is subject to approval of the Companys stockholders; a vote of these stockholders is expected to take place on August 28, 2003 at the special meeting of
stockholders for which the Company filed a definitive proxy statement and transaction schedule on Schedule 13E-3 with the SEC on August 6, 2003.



Costs related to the merger transaction have been expensed as incurred.



Employee Stock Based Compensation



The Company accounts for employee stock based compensation in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25) and related pro forma information presented below regarding net loss required under SFAS No. 123 Accounting for Stock-Based Compensation, has been determined as if the Company had accounted
for its stock options under the fair value method of SFAS No. 123. The pro forma net loss per share below reflects both (i) the



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IGN ENTERTAINMENT, INC.



charge for stock included in the historical net loss and (ii) the expense allocation based on the SFAS No. 123 fair value approach. For the
three and six months ended June 30, 2003, the fair value for the stock options was estimated at the date of each option grant using Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 2%;
dividend yields of zero; weighted-average expected lives of the options of 4.0 years; and volatility factors of 94% and 88%, respectively. For the three and six months ended June 30, 2002, the fair value for the stock options was estimated at the
date of each option grant using Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 2%; dividend yields of zero; weighted-average expected lives of the options of 4.0 years; and volatility
factors of 1.03% and 1.28%, respectively.



The Company pro
forma information is as follows (in thousands, except per share data):



|                                                                                                 |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|------------------------------------------------------------------------------------------------ |  | --------------------------- | ------ | - | ------------------------- | -
|                                                                                                 |  | 2003                        |        |   | 2002                      |  
|Net loss, as reported                                                                            |  | $                           | (883   | ) |                           | $
|Deduct: stock based employee compensation expense, included in reported net loss                 |  |                             |       |   |                           |  
|Add: stock based employee compensation expense determined under fair value method for all awards |  |                             | (449   | ) |                           |  
|                                                                                                 |  |                             |        |   |                           |  
|Pro forma net loss                                                                               |  | $                           | (1,332 | ) |                           | $
|                                                                                                 |  |                             |        |   |                           |  
|Basic and diluted loss per share:                                                                |  |                             |        |   |                           |  
|As reported                                                                                      |  | $                           | (0.39  | ) |                           | $
|                                                                                                 |  |                             |        |   |                           |  
|Pro forma                                                                                        |  | $                           | (0.59  | ) |                           | $
|                                                                                                 |  |                             |        |   |                           |  



Recent Accounting Pronouncements



In June 2002, the FASB issued SFAS No. 146, Accounting
for Exit or Disposal Activities. SFAS No. 146 addresses the recognition, measurement and reporting of costs that are associated with exit and disposal activities, including restructuring activities. The scope of SFAS No. 146 also includes (1)
costs related to terminating a contract that is not a capital lease and (2) termination benefits that employees who are involuntarily terminated receive under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or
an individual deferred compensation contract. SFAS No. 146 will be effective for financial statements issued for fiscal years beginning after December 31, 2002, with earlier application encouraged. Management has elected early adoption of the
standard which has not had a material effect on operations.



In
November 2002, the FASB issued FASB Interpretation (FIN) No. 45, Guarantors Disclosure Requirements for Guarantees, Including Indirect Guarantees of Others. FIN No. 45 clarifies the guarantors requirements relating to the
guarantors accounting for, and disclosure of, the issuance of certain types of guarantees and requires the guarantor to recognize at the inception of a guarantee in a liability for the fair value of the guarantee obligation. FIN No. 45 also
requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The provisions for the initial recognition and measurement of guarantees are effective on a
prospective basis for guarantees that are issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. IGN adopted the disclosure
requirements in its Form 10-Q for the quarter ended March 31, 2003. The accounting profession and regulatory agencies continue to discuss various provisions of this pronouncement with the objective of providing additional guidance on its
application. These discussions and the issuance of any new interpretations, once finalized, could lead to an unanticipated impact on the Companys future financial results. Therefore, although IGN does not believe these provisions will have a





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IGN ENTERTAINMENT, INC.



material effect on the Companys operating results or financial position, the Company will continue to evaluate any new authoritative
guidance that is issued relating to FIN No. 45.



In November
2002, the EITF reached a consensus on Issue No. 00-21 Revenue Arrangements with Multiple Deliverables (EITF No. 00-21). EITF No. 00-21 addresses certain aspects of accounting by a vendor for arrangements under which the vendor
will perform multiple revenue generating activities. EITF No. 00-21 is effective for fiscal years beginning after June 15, 2003. The Company does not expect the adoption of EITF No. 00-21 to have a material impact on its financial position and
results of operations.



In January 2003, the FASB issued
Interpretation No. 46 (FIN No. 46), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.FIN No. 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity
investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN
No. 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provision of FIN No. 46 must be applied for the first interim or
annual period beginning after June 15, 2003. The Company does not expect the adoption of FIN No. 46 will have a material effect on operation results or financial condition.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. SFAS No. 150 requires that certain financial instruments, which under previous guidance were accounted for as equity, must now be accounted for as liabilities. The financial instruments affected include mandatory
redeemable stock, certain financial instruments that require or may require the issuer to buy back some of its shares in exchange for cash or other assets and certain obligations that can be settled with shares of stock. SFAS No. 150 is effective
for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. SFAS No. 150 was adopted in the quarter ended June 30, 2003 and did not
have a material impact on the financial position or results of the Companys operations.



2. THE COMPANY



IGN is an Internet media company that operates a network of web sites that comprise the Internets leading information and entertainment destination
for teen and young adult gamers. The Companys web sites are primarily focused on editorial content, products and services relating to computer and video gaming and other forms of video and audio entertainment. As an Internet media company,
IGNs revenue is derived principally from:



| |  |  | advertising, marketing and commerce programs sold to companies that wish to reach its audience for branding, education and sales of their products and services;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | subscription programs, IGN Insider and IGN Downloads, whereby paid subscribers have access to premium content and services on the Companys web sites; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an online game store where members of the Companys audience can purchase computer and video game related merchandise as well as DVDs.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



The Company provides its business customers with various advertising and
marketing solutions, targeted communications to its audience and contextual integration of their products and services into its content. IGN serves its audience by providing both free and subscription based editorial content, including previews and
reviews of the latest video games and accessories; an online community forum including message boards, classifieds and interactive games; an online store with access to purchase third party merchandise and other related services.





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IGN ENTERTAINMENT, INC.



IGN organizes its web sites around networks and channels that target different segments of the teen and young adult
demographic. Currently, IGNs networks are:



| |  |  | IGN Games, which contains separate channels for all the different gaming platforms, as well as separate channels for its online store, message boards, codes and guides; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | IGN Entertainment, which contains separate channels covering DVDs, male lifestyle, gear, movies, television, music, cars and science-fiction.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



3. NET LOSS PER SHARE



The following table presents the calculation of basic and diluted net loss
per common share (in thousands, except per share data):



|                                                                               |  | Three Months Ended June 30, |       |   | Six Months Ended June 30, |  
|------------------------------------------------------------------------------ |  | --------------------------- | ----- | - | ------------------------- | -
|                                                                               |  | 2003                        |       |   | 2002                      |  
|Net loss                                                                       |  | $                           | (883  | ) |                           | $
|                                                                               |  |                             |       |   |                           |  
|Basic and diluted:                                                             |  |                             |       |   |                           |  
|Weighted average shares of common stock outstanding                            |  |                             | 2,263 |   |                           |  
|Less: weighted average shares subject to repurchase                            |  |                             | (3    | ) |                           |  
|                                                                               |  |                             |       |   |                           |  
|Weighted average shares used in computing basic and diluted net loss per share |  |                             | 2,260 |   |                           |  
|                                                                               |  |                             |       |   |                           |  
|Basic and diluted net loss per share                                           |  | $                           | (0.39 | ) |                           | $
|                                                                               |  |                             |       |   |                           |  



The following table
sets forth the weighted average potential shares of common stock that are not included in the basic and diluted net loss per share calculation above because to do so would be anti-dilutive for the periods indicated (in thousands):



|                                                         |  | Three Months EndedJune 30, |  | Six Months EndedJune 30,
|-------------------------------------------------------- |  | -------------------------- |  | ------------------------
|                                                         |  | 2003                       |  | 2002                    
|Weighted average effect of anti-dilutive securities:     |  |                            |  |                         
|Employee stock options (using the treasury stock method) |  | 240                        |  | 269                     
|                                                         |  |                            |  |                         



4.
RESTRUCTURING CHARGES



During 2001, the Board of Directors
approved and the Company implemented a restructuring program driven by the decline in revenue from 2000 levels and correspondingly, the Companys need to improve its cost structure by consolidating excess facilities, decreasing headcount and
exiting its non-IGN.com networks.



Under this program, the
Company recorded restructuring charges of $7,356,000 for the year ended December 31, 2002, which consisted of $7,283,000 in facility-related charges and $73,000 in severance-related charges. For the year ended December 31, 2001, the Company recorded
restructuring charges of $4,171,000, which





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IGN ENTERTAINMENT, INC.



consisted of $1,771,000 in facility-related charges, $728,000 in severance-related charges and $1,672,000 in other asset impairment charges.



For the six months ended June 30, 2003, accrued restructuring
charges pertained only to lease obligations; the rollforward of accrued restructuring activity during this period is as follows (in thousands):



|Balance at December 31, 2002 |  | $ | 1,551 |  
|---------------------------- |  | - | ----- | -
|Cash payments, net           |  |   | (117  | )
|                             |  |   |       |  
|Balance at June 30, 2003     |  | $ | 1,434 |  
|                             |  |   |       |  



5.
COMMITMENTS



IGN is under a lease commitment through February
2004 for its headquarters facility in Brisbane, California. The Company also leases sales and support offices in Los Angeles and New York with commitment dates through May 2005 and October 2004, respectively.



In addition to the facilities mentioned above, the Company is under lease
commitments for excess facilities in Connecticut and New York through June 2005 and October 2010, respectively. These excess facilities have been accounted for under IGNs current restructuring program. With respect to the Companys excess
New York facility, in July 2002 IGN entered into a sublease agreement with a term through July 2004 and two twelve-month sublease options to renew thereafter. As of June 30, 2003, IGN is committed under irrevocable standby letters of credit totaling
$794,000 as security deposits for its Brisbane and excess New York facilities. Irrevocable standby letters of credit are classified as restricted cash on the accompanying balance sheets at June 30, 2003 and December 31, 2002.



The following table summarizes IGNs future minimum lease payments under
all non-cancelable operating leases that expire at various times through 2010 and future sublease income under non-cancelable sublease as of June 30, 2003 (in thousands):



|                                   |  | Occupied Facilities |     | Excess Facilities |   |       | Total | 
|---------------------------------- |  | ------------------- | --- | ----------------- | - | ----- | ----- | 
|Six Months Ended December 31, 2003 |  | $                   | 303 |                   | $ | 355   |       | 
|Years Ended December 31,           |  |                     |     |                   |   |       |       | 
|2004                               |  |                     | 202 |                   |   | 711   |       | 
|2005                               |  |                     | 78  |                   |   | 683   |       | 
|2006                               |  |                     |    |                   |   | 688   |       | 
|2007                               |  |                     |    |                   |   | 688   |       | 
|2008                               |  |                     |    |                   |   | 688   |       | 
|Thereafter                         |  |                     |    |                   |   | 1,261 |       | 
|                                   |  |                     |     |                   |   |       |       | 
|                                   |  |                     | 583 |                   |   | 5,074 |       | 
|Less: future sublease income       |  |                     |     |                   |   | (604  | )     | 
|                                   |  |                     |     |                   |   |       |       | 
|Minimum lease payments             |  | $                   | 583 |                   | $ | 4,470 |       | 
|                                   |  |                     |     |                   |   |       |       | 





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Item 2Managements Discussion and Analysis of Financial Condition and Results of Operations



Certain statements contained in this Form 10-Q that are not statements of historical facts are forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on beliefs of management, as well as assumptions made by and information currently available to management. Such statements also are based on current
expectations, estimates and projections, beliefs and assumptions about our industry. All statements, other than statements of historical fact, included in this Form 10-Q, regarding our strategy, future operations, financial position, estimated
revenue, projected costs, prospects, plans and objectives of management are forward-looking statements. Words such as may, will, expects, believes and continues and variations of these
words and similar expressions, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements are only predictions and are subject to risks, uncertainties and other
factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The risks, uncertainties and assumptions referred to
above include our unproven business model, history of losses, prospects for obtaining additional financing and other risks that are described from time to time in our SEC reports, including but not limited to the items discussed in Risk
Factors set forth in Managements Discussion and Analysis of Financial Condition and Results of Operations in Item 2 in this quarterly report on Form 10-Q.



Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements. Further, these forward-looking statements are made under the assumption that we will continue to operate as an independent public company through the period to which our
forward-looking statements relate, despite the fact, as further described below, we are subject to a potential acquisition that would result in a change in our control and our becoming a privately-held company. You should not place undue reliance on
these forward-looking statements, which apply only as of the date of this report. IGN undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements, or to explain why actual results differ.
Readers should carefully review the risk factors described in this section below and any subsequently filed SEC reports.



As further described below, on May 2, 2003 we announced that we have entered into an agreement with GHP Acquisition Corp. that provides for a change in
control of IGN, which would result in our becoming a privately-held company. Information related to this proposed acquisition is contained in a definitive proxy statement on Schedule 14A and transaction statement on Schedule 13E-3, each filed with
the SEC on August 6, 2003. We advise you to carefully read this definitive proxy statement because it contains important information regarding this proposed acquisition.



Overview



IGNs business model, focus and sources of revenue have significantly changed since our inception. Our response to the difficult market conditions of
2001 was to focus on our core strengths and eliminate certain of our operations. Commencing in the fourth quarter of 2001, we focused our business on our IGN.com entertainment and gaming network and from the second quarter of 2002, virtually all of
our revenue has been derived from IGN-related advertising sales and subscriptions. We have diversified our revenue by adding new product lines, including subscription-based access models and an online game store. We have significantly reduced
operating costs, mainly by reducing headcount, renegotiating our facilities leases, decreasing marketing efforts and reducing the number of our affiliates. However, we still have not achieved profitability on an annual basis.



Our operating activities to date have been focused on enhancing the quality
of our content and services; expanding our audience and the usage of our services; establishing relationships with users and the companies who want to reach this large web-centric audience; building sales momentum and marketing







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our networks and IGN brands; developing our computer software and hardware infrastructure;
and growing our subscriber base.



Due in part to the financial
difficulties experienced by Internet and Internet-related companies and reductions in advertising budgets of many companies that advertise on the Internet, we cannot assure you that our revenue will grow or that we will ever achieve or maintain
profitability. Further, our experience is that trends in advertising spending are often unpredictable and subject to seasonality. We anticipate that unpredictability in advertising spending and weakness in advertising demand will continue until
overall business conditions improve and advertising expenditures rebound. Accordingly, we anticipate that we will incur additional operating losses on a quarterly or annual basis.



To supplement our financial statements presented in accordance with generally accepted accounting principles in the United
States (GAAP), we use non-GAAP measures of operating results, net income and earnings per share, which are adjusted from results based on GAAP to exclude certain expenses. These non-GAAP adjustments are provided to enhance
investors overall understanding of our current financial performance and our prospects for the future. In addition, since we have historically reported non-GAAP financial results to the investment community, we believe the inclusion of
non-GAAP financial information provides consistency in our financial reporting. Further, these non-GAAP results are one of the primary indicators our management uses for planning and forecasting in future periods. Accordingly, we believe this
information is useful for investors. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP. We urge readers to review and consider carefully GAAP
financial information contained within our SEC filings and in our earnings releases.



On May 2, 2003, we entered into a definitive Agreement and Plan of Merger with GHP Acquisition Corp. Pursuant to this agreement and subject to the terms and conditions set forth therein, GHP Acquisition Corp. will be
merged with and into IGN, with IGN surviving this merger. Information related to this proposed acquisition is contained in a definitive proxy statement on Schedule 14A and transaction statement on Schedule 13E-3, each filed with the SEC on August 6,
2003. We advise you to carefully read this Schedule 14A and Schedule 13E-3 because it contains important information regarding this proposed acquisition.



We expect this proposed acquisition to be completed on or about August 29, 2003, if our stockholders approve the merger at the special meeting of our
stockholders to be held on August 28, 2003 and all other conditions to its completion have been satisfied. Since Christopher Anderson, our Chairman and largest stockholder, and Mark Jung, our Chief Executive Officer and a member of our board of
directors, collectively own over 43% of our outstanding common stock and have agreed to vote their shares in favor of the merger, stockholder approval will be assured if an additional 7% of the total number of shares of our common stock outstanding
vote in favor of the merger (including Kenneth Keller our Vice President of Engineering, a person who is interested in the acquisition, and an owner of approximately 1.6% of the total number of shares our common stock outstanding). Notwithstanding
the foregoing, if any of the other conditions to the proposed merger have not been satisfied as of the date of our special meeting of stockholders, the completion of the merger could be delayed. Therefore, we cannot assure you as to when or if the
merger will occur. If the proposed merger is completed, our common stock will no longer be publicly traded.





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Critical Accounting Policies



The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in
accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent liabilities. On an
on-going basis, we evaluate estimates, including those related to revenue recognition, bad debts, goodwill and restructuring. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different
assumptions or conditions.



We believe the following critical
accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.



Revenue recognition



Our revenue is principally generated from short-term contracts for various sizes and types of time-based fixed placement and impression-based
advertisements. In accordance with GAAP, the recognition of these revenues is partly based on our assessment of the probability of collection of the resulting accounts receivable balance. As a result, the timing or amount of revenue recognition may
have been different if different assessments of the probability of collection of accounts receivable had been made at the time the transactions were recorded in revenue.



Collectibility of accounts receivable



Our management must make estimates of the collectibility of our accounts receivable, both for purposes of determining
whether revenue may be recognized on a given arrangement, and to determine the adequacy of our allowance for doubtful accounts. Management specifically analyzes accounts receivable and analyzes historical bad debts, customer concentrations, customer
credit-worthiness, current economic trends and changes in our customer payment terms when evaluating whether to recognize revenue on a given arrangement and when evaluating the adequacy of the allowance for doubtful accounts. The use of different
estimates or assumptions could produce different decisions regarding revenue recognition and allowance balances. If our estimates of collectibility are inaccurate or if the financial condition of our customers were to deteriorate, subsequent to the
date of our arrangements with them, this could result in an impairment of their ability to make payments and we may be required to make additional allowances.



Valuation of goodwill



We assess the impairment of goodwill assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors
we consider important which could trigger an impairment review include the following:



| |  |  | significant underperformance relative to expected historical or projected future operating results;
| | - |  | ---------------------------------------------------------------------------------------------------

| |  |  | significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and
| | - |  | -----------------------------------------------------------------------------------------------------------------

| |  |  | significant negative industry or economic trends.
| | - |  | -------------------------------------------------



When we determine that the carrying value of goodwill may not be recoverable based upon the existence of one or more of the above indicators of
impairment, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model. Significant judgment is involved in
both the estimation of future cash flows, as well as the discount rate used in the analysis.





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Restructuring charges



As of June 30, 2003 we carried an accrual for the unpaid portion of restructuring charges we expensed in the third quarter of 2002 relative to our excess
New York and Connecticut facilities. Significant factors used in calculating this accrual include estimates of sublease income, vacancy rates and brokerage costs. Changing economic conditions in future periods could lead management to revise its
estimates, which could result in adjustments to our estimated obligations under these lease arrangements.



Results of operations for the three and six months ended June 30, 2003 and 2002





|        |  | Three Months Ending June 30, |       | Six Months EndingJune 30,
|------- |  | ---------------------------- | ----- | -------------------------
|        |  | 2003                         |       | 2002                     
|        |  | (in thousands)               |       | (in thousands)           
|Revenue |  | $                            | 3,679 |                          
|        |  |                              |       |                          

Revenue was $3,679,000 and $2,563,000 for the three months ended June 30, 2003 and 2002,
respectively. This increase in revenue was primarily attributable to an increase of $857,000 in advertising and marketing revenues, resulting from increased product demand, and to growth of $243,000 in IGN Insider subscription revenues due to a
larger subscriber base. In addition, our revenue for the three months ended June 30, 2003 included $16,000 in e-commerce revenues from our online store, which we introduced in July 2002.



Revenue was $7,033,000 and $4,884,000 for the six months ended June 30, 2003 and 2002, respectively. This increase in
revenue was primarily attributable to an increase of $1,570,000 in advertising and marketing revenues, resulting from increased product demand, and to growth of $535,000 in IGN Insider subscription revenues due to a larger subscriber base. In
addition, our revenue for the six months ended June 30, 2003 included $44,000 in e-commerce revenues from our online store.



We currently believe that full year 2003 revenues will increase over our full year 2002 revenues.



|                      |  | Three Months EndingJune 30, |     |   | Six Months EndingJune 30, |  
|--------------------- |  | --------------------------- | --- | - | ------------------------- | -
|                      |  | 2003                        |     |   | 2002                      |  
|                      |  | (in thousands)              |     |   | (in thousands)            |  
|Cost of revenue       |  | $                           | 411 |   |                           | $
|                      |  |                             |     |   |                           |  
|Percentage of revenue |  |                             | 11  | % |                           |  
|                      |  |                             |     |   |                           |  



Cost of revenue
consists primarily of expenses related to bandwidth costs for hosting our web sites, costs of third-party fulfillment technologies, credit card processing fees and guaranteed payments or a portion of our revenue owed to affiliates for advertising
and marketing placed on their web sites.



For the three months
ended June 30, 2003 and 2002, cost of revenue was $411,000 and $372,000, respectively. This increase in absolute dollars was primarily due to increased bandwidth costs of $25,000 as a result of movie downloads we offered to IGN Insiders during the
quarter.



For the six months ended June 30, 2003 and 2002, cost
of revenue was $688,000 and $774,000, respectively. This decline was primarily attributable to a $97,000 decrease in bandwidth costs due to a more favorable hosting contract with our outside service provider, which was partially offset by an
increase of $25,000 in these costs due to movie downloads we offered to IGN Insiders during this period, a $47,000 decrease in cost associated with our affiliates, which was partially offset by a $25,000 increase in credit card processing fees due
to increased subscription revenues.





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During the fourth quarter of 2000, in connection with our strategy to deemphasize our affiliate relationships and to manage
our costs, we began to renegotiate, terminate or let expire many of our affiliate contracts and as of the second quarter of 2002, virtually all of these relationships had been terminated. Accordingly, costs from these affiliate relationships had no
meaningful effect on our cost of revenue for the periods presented.



Operating expenses



We categorize operating
expenses into production and content, engineering and development, sales and marketing, general and administrative, stock-based compensation, restructuring and impairment charges and gain on sale of assets. Prior to 2002, we incurred expenses for
amortization of goodwill; however, effective January 1, 2002, we adopted SFAS No. 142, which required the use of a nonamortization approach to account for purchased goodwill and certain intangibles. No goodwill amortization or impairment charges
were recorded during the three and six months ended June 30, 2003 and 2002, respectively; however, future impairment reviews may result in periodic write-downs.



Although we are endeavoring to control our operating expenses and have reduced many of our expenses from 2002 to 2003, we currently believe that each
of production and content, engineering and development, sales and marketing and general and administrative expenses will increase slightly for the full year 2003 as compared to 2002, primarily due to our expectation that we will need to add
headcount across all areas related to our expected increase in revenues.



|                       |  | Three Months EndingJune 30, |     |   | Six Months EndingJune 30, |  
|---------------------- |  | --------------------------- | --- | - | ------------------------- | -
|                       |  | 2003                        |     |   | 2002                      |  
|                       |  | (in thousands)              |     |   | (in thousands)            |  
|Production and content |  | $                           | 880 |   |                           | $
|                       |  |                             |     |   |                           |  
|Percentage of revenue  |  |                             | 24  | % |                           |  
|                       |  |                             |     |   |                           |  



Production and content
expenses consist primarily of personnel and related costs for editorial, artistic and production staff; payments to freelance writers and artists; telecommunications and computer related expenses for the creation of content for our web sites; and
corporate overhead cost allocations.



Production and content
costs for the three months ended June 30, 2003 and 2002 were relatively consistent at $880,000 and $889,000, respectively, primarily due to consistent staffing levels.



Production and content costs were $1,661,000 and $1,950,000 for the six months ended June 30, 2003 and 2002, respectively,
which represents a decrease of 15%. The decrease was due primarily to the reduction of corporate overhead cost allocations, and in particular rent expense, as we restructured and reduced our facilities in the first quarter of 2002.



|                            |  | Three Months EndingJune 30, |     |   | Six Months EndingJune 30, |  
|--------------------------- |  | --------------------------- | --- | - | ------------------------- | -
|                            |  | 2003                        |     |   | 2002                      |  
|                            |  | (in thousands)              |     |   | (in thousands)            |  
|Engineering and development |  | $                           | 628 |   |                           | $
|                            |  |                             |     |   |                           |  
|Percentage of revenue       |  |                             | 17  | % |                           |  
|                            |  |                             |     |   |                           |  



Engineering and
development expenses consist primarily of personnel and related costs; consultant and outside contractor costs; software and hardware maintenance; depreciation costs for our development and programming efforts, including internal information
services costs; and corporate overhead cost allocations. To date, all engineering and development expenses have been expensed as incurred.





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Engineering and development expenses were $628,000 and $725,000 for the three months ended June 30, 2003 and 2002,
respectively. The decrease in absolute dollars was due primarily to decreased depreciation expense as certain equipment became fully depreciated.



Engineering and development expenses were $1,270,000 and $2,028,000 for the six months ended June 30, 2003 and 2002, respectively. The decrease in
absolute dollars was due primarily to decreased depreciation expense as certain equipment became fully depreciated.



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Three Months Ending |       |   | Six Months Ending |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------- | ----- | - | ----------------- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | June 30,            |       |   | June 30,          |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 2003                |       |   | 2002              |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | (in thousands)      |       |   | (in thousands)    |  
|Sales and marketing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | $                   | 1,785 |   |                   | $
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                     |       |   |                   |  
|Percentage of revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                     | 49    | % |                   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                     |       |   |                   |  
|Sales and marketing expenses
consist primarily of personnel and related costs for our direct sales force; product management and advertising operations support personnel; marketing staff; and corporate overhead cost allocations. In addition, these expenses include costs of
tradeshows and promotional activities.  Sales and marketing
expenses were $1,785,000 and $1,294,000 for the three months ended June 30, 2003 and 2002, respectively. The increase in absolute dollars was due primarily to an increase in sales and marketing compensation expense as we increased staff and incurred
more commissions due to our higher revenue levels in the current period as compared to the prior period.  Sales and marketing expenses were $3,422,000 and $2,656,000 for the six months ended June 30, 2003 and 2002, respectively. The increase in absolute
dollars was due primarily to an increase in sales and marketing compensation expense as we increased staff and incurred more commissions due to our higher revenue levels in the current period as compared to the prior period.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Three Months Ending |       |   | Six Months Ending |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | June 30,            |       |   | June 30,          |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 2003                |       |   | 2002              |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | (in thousands)      |       |   | (in thousands)    |  
|General and administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | $                   | 480   |   |                   | $
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                     |       |   |                   |  
|Percentage of revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                     | 13    | % |                   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                     |       |   |                   |  



General and
administrative expenses consist primarily of personnel and related costs for our corporate functions including accounting and finance, human resources, facilities and legal as well as corporate overhead cost allocations.



General and administrative expenses were $480,000 and $625,000 for the three
months ended June 30, 2003 and 2002, respectively, and $1,064,000 and $1,180,000 for the six months ended June 30, 2003 and 2002, respectively. These decreases were primarily due to the deferral of our 2003 annual stockholders meeting and related
costs to periods later in 2003, in the event the merger with GHP Acquisition Corp. is not completed. In addition, salary expenses decreased due to decreased headcount, including an executive officer who was not replaced.



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|                         |  | Three Months Ended |     |   | Six Months Ended |  
|------------------------ |  | ------------------ | --- | - | ---------------- | -
|                         |  | June 30,           |     |   | June 30,         |  
|                         |  | 2003               |     |   | 2002             |  
|                         |  | (in thousands)     |     |   | (in thousands)   |  
|Merger transaction costs |  | $                  | 384 |   |                  | $
|                         |  |                    |     |   |                  |  
|Percentage of revenue    |  |                    | 10  | % |                  |  
|                         |  |                    |     |   |                  |  



On May 2, 2003, we
entered into a definitive Agreement and Plan of Merger with GHP Acquisition Corp. We expect this proposed acquisition to be completed on or about August 29, 2003, if our stockholders approve the merger at the special meeting of our stockholders to
be held on August 28, 2003 and all other conditions to its completion have been satisfied. Costs associated with this transaction have been expensed as incurred and through June 30, 2003 consist primarily of $270,000 in legal fees and $110,000 in
financial advisory fees.



|                                         |  | Three Months Ended |   |   | Six Months Ended |  
|---------------------------------------- |  | ------------------ | - | - | ---------------- | -
|                                         |  | June 30,           |   |   | June 30,         |  
|                                         |  | 2003               |   |   | 2002             |  
|                                         |  | (in thousands)     |   |   | (in thousands)   |  
|Interest and other income (expense), net |  | $                  | 6 |   |                  | $
|                                         |  |                    |   |   |                  |  
|Percentage of revenue                    |  |                    | 0 | % |                  |  
|                                         |  |                    |   |   |                  |  



Interest and other
income, net was $6,000 and $25,000 for the three months ended June 30, 2003 and 2002, respectively. This decrease was due primarily to our decreasing cash and cash equivalent position as a result of our operating losses.



Interest and other income, net was $11,000 and $53,000 for the six months
ended June 30, 2003 and 2002, respectively. This decrease was due primarily to our decreasing cash and cash equivalent position as a result of our operating losses.



Liquidity and Capital Resources



|                                                |  | Six Months EndedJune 30, |     
|----------------------------------------------- |  | ------------------------ | ----
|                                                |  | 2003                     |     
|                                                |  | (in thousands)           |     
|Cash used in operating activities               |  | $                        | (752
|Cash (used in) provided by investing activities |  |                          | (560
|Cash provided by financing activities           |  |                          | 309 



Cash used in operating
activities totaled $752,000 during the six months ended June 30, 2003 compared to a cash usage of $5,271,000 in the comparative 2002 period. This improvement was primarily the result of a decrease in operating expenses, increased revenue and the
resulting decrease in net loss for the six months ended June 30, 2003 compared to the six months ended June 30, 2002. Working capital at June 30, 2003 was $1,179,000. Cash and cash equivalents at June 30, 2003 was $2,404,000.



Net cash used in investing activities for the six months ended June 30, 2003
was $560,000 due primarily to the purchase of fixed assets. Net cash provided by investing activities for the six months ended June 30, 2002 of $2,455,000 was due primarily to a reduction of our facility letters of credit of $1,584,000 and proceeds
of $1,000,000 from the sale of our HighSchoolAlumni web site in January 2002.



Net cash provided from financing activities for the six months ended June 30, 2003 was $309,000 consisting of $70,000 from the repayment of a loan to an officer and $239,000 of proceeds from issuance of common stock
to employees and warrant holders. Net cash provided by financing activities for the six months ended June 30, 2002 of $333,000 was due to proceeds of $2,000,000 less $232,000 in cash-based



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issuance costs related to our June 20, 2002, private placement in which we issued and sold to institutional investors 285,715 shares of
common stock at a price of $7.00 per share and warrants to purchase up to 85,715 shares of common stock with an exercise price of $9.00 per share. Partially offsetting these proceeds, in January 2002, we paid off the remaining $1,613,000 balance on
our equipment lease obligations.



In December 2000, our board
of directors authorized a stock repurchase program under which we are authorized to repurchase up to 277,778 shares of our common stock in the open market for cash. From the inception of this program through June 30, 2003, we repurchased 270,501
shares at an average purchase price of $4.35 per share; 1,190 of these shares were repurchased in the first quarter of 2002 with no shares repurchased since.



As of June 30, 2003, we had $794,000 remaining in letters of credit as security deposits associated with our headquarters facility in Brisbane, California
and our excess New York facility. This amount represents a decrease from our original letters of credit for these facilities of $5,111,000. During 2001, letters of credit of $2,815,000 were released in connection with the return of two of our
Brisbane buildings to our landlord. In the first quarter of 2002, $1,584,000 was forfeited to our landlord and $69,000 of new letters of credit were established under the terms of our March 2002 facility lease restructuring. In the first quarter of
2003, we increased our letters of credit by $13,000 in association with our January 2003 Brisbane facility lease amendment. Our letter of credit security deposits as of June 30, 2003 and December 31, 2002 have been classified as restricted cash on
the accompanying condensed balance sheets. These letters of credit expire at various times through 2010.



In addition to our headquarters facility in Brisbane, California, we currently lease sales and support offices in Los Angeles and New York. In addition to
our currently occupied facilities, we are under lease commitments for excess facilities in New York and Connecticut through October 2010 and June 2005, respectively. These excess facilities have been accounted for under our current restructuring
program. With respect to our excess New York facility, in July 2002 we entered into a sublease agreement with a term through July 2004 and two twelve month sublease options to renew thereafter.



The following table details our current lease commitments under
non-cancelable operating leases that expire at various times through 2010 and future sublease income under non-cancelable sublease as of June 30, 2003 (in thousands):



|                                   |  | Occupied   |     | Excess    |   |       |       | 
|---------------------------------- |  | ---------- | --- | --------- | - | ----- | ----- | 
|                                   |  | Facilities |     | Facilites |   |       | Total | 
|Six Months Ended December 31, 2003 |  | $          | 303 |           | $ | 355   |       | 
|Years Ended December 31,           |  |            |     |           |   |       |       | 
|2004                               |  |            | 202 |           |   | 711   |       | 
|2005                               |  |            | 78  |           |   | 683   |       | 
|2006                               |  |            |    |           |   | 688   |       | 
|2007                               |  |            |    |           |   | 688   |       | 
|2008                               |  |            |    |           |   | 688   |       | 
|Thereafter                         |  |            |    |           |   | 1,261 |       | 
|                                   |  |            |     |           |   |       |       | 
|                                   |  |            | 583 |           |   | 5,074 |       | 
|Less: future sublease income       |  |            |     |           |   | (604  | )     | 
|                                   |  |            |     |           |   |       |       | 
|Minimum lease payments             |  | $          | 583 |           | $ | 4,470 |       | 
|                                   |  |            |     |           |   |       |       | 



Through June 2003, we
have incurred $384,000 of expenses in connection with the negotiation and execution of the going-private transaction merger agreement. We expect that we will incur additional expenses in connection with the transactions contemplated by this
agreement. In addition, if either party terminates this agreement, under certain circumstances further described in this agreement and under our risk factor on page 21 captioned IGNs agreement to merge with GHP Acquisition Corp. may
result in a



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large break-up fee payment to GHP Acquisition Corp. under certain circumstances, we may be required to pay GHP Acquisition Corp. a fee
of $1,200,000, plus its reasonable expenses incurred in connection with these transactions.



Our capital requirements depend on numerous factors, including market acceptance of our products and services, the resources we allocate to developing our networks, our marketing and selling capabilities and
maintenance of our brands. Since our inception we experienced substantial expenditures as we grew our operations and personnel. Although we have significantly reduced our costs beginning in the second quarter of 2000, we have never achieved positive
cash flows from operations on an annual basis.



The report of
our independent auditor, Ernst & Young LLP, on our 2002 financial statements contains an explanatory paragraph describing conditions that raise substantial doubt about our ability to continue as a going concern. However, we believe that our
available cash, cash equivalents and short-term investments and cash flows from operations will be sufficient to meet our anticipated needs for working capital and capital expenditures at least until the end of our fiscal year 2003. To meet our
longer term liquidity needs, we may need to raise additional funds, establish additional credit facilities, seek other financing arrangements or further reduce costs and expenses. Additional funding may not be available on favorable terms, on a
timely basis or at all. See our risk factor entitled We have negative cash flow and may not have sufficient cash to continue operations or, even if we can continue operations, to effectively manage our working capital requirements and fund our
operations for the period required to achieve profitability as set forth below.



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RISK FACTORS



You should carefully consider the risks described below and in the other documents incorporated by reference before making a decision to invest in our common stock.
The risks and uncertainties described below are not the only ones facing IGN. Additional risks and uncertainties not presently known to us or that we do not currently believe are important to an investor may also harm our business operations. If any
of the events, contingencies, circumstances or conditions described in the following risks actually occur, our business, financial condition or our results of operations could be seriously harmed. If that occurs, the trading price of our common
stock could decline, and you may lose part or all of your investment.



Risks Related to Our Business



Our current business model
is unproven and may fail.



Our prospects and the merits of
investing in our stock will be difficult for you to evaluate because we have restructured our business and implemented a new and unproven business model in 2002. As of the first quarter of 2002, we have sold or ceased operating all our destination
web sites except our IGN network, and now focus our content and services almost exclusively on the interactive entertainment market, with a particular emphasis on video game-related information. If our business model proves to be unsuccessful, the
trading price of our stock will fall and our business may fail. Accordingly, our prospects and the merits of investing in our stock must be considered in light of the risks, expenses and difficulties encountered by Internet-related companies who
have restructured their business and adopted relatively new business models. To effectively execute our current business model, we expect that in the future we will need to increase revenues, raise additional funds, establish additional credit
facilities, seek other financing arrangements or further reduce costs and expenses. We may not increase revenues significantly in the future or additional funding may not be available on favorable terms, on a timely basis or at all.



We face risks in connection with our proposed merger with GHP Acquisition Corp., which may
adversely affect our business whether or not the merger is completed, and the merger may not be completed on a timely basis or at all.



Uncertainty surrounding our proposed merger with GHP Acquisition Corp., or GHP, may have an adverse effect on employee morale and retention, and result in
the diversion of management attention and resources. Completion of the merger is subject to numerous risks and uncertainties. IGN may be unable to obtain stockholder approval required to complete the proposed merger in a timely manner, or at all. If
the merger is not completed, the price of our common stock may decline, particularly to the extent that the current market price of our common stock reflects a market assumption that the merger will be completed. In addition, our business may be
harmed to the extent that our customers believe that we cannot effectively operate our business without the merger or there is customer and employee uncertainty surrounding the future direction of IGN. We also will be required to pay significant
costs incurred in connection with the merger, including legal, accounting and financial advisory fees, whether or not the merger is completed. We encourage you to carefully read the definitive proxy statement and transaction schedule on 13E-3 we
filed with the SEC on August 6, 2003, because it contains important information regarding this proposed merger.



We have a history of negative cash flow and may not have sufficient cash to continue operations or, even if we can continue operations, to effectively manage our
working capital requirements and fund our operations for the period required to achieve profitability.



We do not know with certainty whether our cash reserves and any cash flows from operations or financing will be sufficient to fund our operations beyond
2003. The report of our independent auditor, Ernst & Young LLP, on our 2002 financial statements contained on our Form 10-K for the year ended December 31, 2002 contains an explanatory paragraph describing conditions that raise substantial doubt



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about our ability to continue as a going concern. We have limited cash and credit available, and may be unable to raise additional financing
on favorable terms or establish additional lines of credit to meet our anticipated and unanticipated working capital requirements. In the event we raise capital via equity financing, our existing stockholders could experience significant dilution.
If adequate funds are not available to satisfy either short- or long-term capital requirements, we might be required to significantly limit our operations or delay or abandon some of our planned future expenditures, any of which actions could harm
our business. Our future capital requirements depend upon many factors, including:



| |  |  | our ability to increase revenues;
| | - |  | ---------------------------------



| |  |  | the rate at which we expand or contract our sales and marketing operations;
| | - |  | ---------------------------------------------------------------------------



| |  |  | the extent to which we expand or contract our content and service offerings;
| | - |  | ----------------------------------------------------------------------------



| |  |  | the extent to which we develop and upgrade our technology and data network infrastructure;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | the timing of, and extent to which we are faced with, unanticipated marketing or technological challenges or competitive pressures;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to successfully transfer liability for or restructure long-term facility leases for facilities that exceed our present capacity needs;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount and timing of leasehold improvements and capital equipment purchases;
| | - |  | --------------------------------------------------------------------------------



| |  |  | the response of competitors to our content and service offerings; and
| | - |  | ---------------------------------------------------------------------



| |  |  | the willingness of advertisers to become and remain our customers.
| | - |  | ------------------------------------------------------------------



IGNs agreement to merge with GHP Acquisition Corp. may result in large break-up fee payments to GHP Acquisition Corp. under certain circumstances



If we are required to pay break-up fees under the terms of the agreement
relating to the Merger, our ability to operate our business would be significantly and adversely affected. As of June 30, 2003, our working capital and cash and cash equivalents were $1,179,000 and $2,404,000, respectively. Under the terms of the
agreement, we may be required to pay a $1,200,000 break-up fee, and to reimburse GHP Acquisition Corp. for its reasonable out-of-pocket costs and expenses related to the merger. Among other circumstances, if (i) our board fails to
recommend or withdraws its recommendation to the stockholders to vote to approve the proposed merger, (ii) our stockholders do not vote to approve the merger following a change in our boards recommendation that is adverse to GHP Acquisition
Corp., or (iii) the agreement is terminated for various reasons, including as a result of our incurable breach of a representation or warranty under the agreement, following our receipt of another offer to buy IGN, and we enter into an agreement
relating to a change in control of IGN during the twelve-month period following this termination, IGN is required to pay GHP Acquisition Corp. $1,200,000 and reimburse its reasonable out-of-pocket costs and related expenses, including legal and
accountant fees. In addition, under this agreement, we would be required to reimburse GHP Acquisition Corp.s reasonable out-of-pocket costs and related expenses, including legal and accountant fees, if this agreement is terminated because our
stockholders do not approve the proposed merger, we incurably breach a representation, warranty or covenant under this agreement. If we are required to pay these fees, it might harm our ability to continue as a going concern.



We have not achieved profitability and anticipate continued losses.



From our inception though the middle of 2000, we devoted substantially all
our resources to rapidly develop our business. Beginning in the later half of 2000, in response to weakening market conditions, we began to decrease expenses and restructure our business and have incurred substantial charges relating to facility
exit costs, goodwill impairment and employee severance. Despite our restructuring and expense management efforts, we have never been profitable on an annual basis and do not anticipate profitability for at least another year. Further, in the future
we may increase our operating expenses to develop and upgrade our technology, develop additional subscription offerings, buyout or restructure some or all of our long-term facility leases, develop additional networks, expand our sales and marketing
operations, and purchase equipment and leasehold improvements to support our operations and network infrastructure. We also may incur costs relating to the acquisition of technologies and content. Yet,



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whether or not we increase expenditures, we still may not generate sufficient revenue to attain profitability for any sustained period. Even
if we do achieve profitability, we might not be able to sustain profitability on a quarterly or annual basis in the future.



Our future success depends on our ability to increase and sustain advertising and marketing revenues.



Our business might fail if we do not increase and sustain our advertising
and marketing revenues. Even if we increase our advertising and marketing revenues from existing sources in any given period, we still may have to create new sources of revenue to survive.



Currently, the majority of our revenues are derived from paid advertisements
displayed on our web sites. Our ability to maintain current levels of, increase, or sustain new levels of, advertising revenue depends upon:



| |  |  | growth of our user base;
| | - |  | ------------------------



| |  |  | the attractiveness of our user base to advertisers;
| | - |  | ---------------------------------------------------



| |  |  | our ability to derive useful consumer patterns and other information from our users;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | acceptance by advertisers of the Internet as an advertising medium;
| | - |  | -------------------------------------------------------------------



| |  |  | advertisers allocating more of their advertising and marketing budgets to online media;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | our ability to create an adequate supply of viewed web content on which to sell advertising space; and
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | keeping our web sites technologically flexible in order to accommodate the latest advertiser demands.
| | - |  | -----------------------------------------------------------------------------------------------------



Our advertising orders tend to be specific campaign-based, cancelable without penalty and run over relatively short periods
of time. In the current economic climate, advertisers have a great deal of negotiating power; the advertisers for whom we compete have a large selection of media in which to advertise and can dictate many of the terms of their orders. Accordingly,
we are exposed to a great deal of competitive pressure and potentially severe fluctuations in our financial results. If we are unsuccessful in adapting to the needs of our advertisers or if we are otherwise unable to attract and retain advertisers,
our business could be harmed.



Additionally, we earn revenue
from corporate marketing partnerships through which we provide customers with various commerce and content initiatives. These partnerships are usually under contract with terms longer than six months but have termination rights at various points
during their respective terms. Our customers can and do decrease their spending levels and/or cancel these agreements on relatively short notice without penalty. We cannot assure you that these customers will continue to do business with us. The
termination of any of these longer-term agreements, if not replaced with new customers and/or contracts, would cause our revenue to decline.



Our revenues are greatly dependent upon the general video game industry.



Our traffic and revenues are directly related to events in, and the success of, the video game industry, particularly the platform and software markets
thereof. For instance, when new video game platforms and/or software titles are released, our traffic and our advertising and subscription revenues tend to increase as companies desire to promote their new products to our audience, and as our
audience wishes to gain access to information about these new products. The increased traffic related to the events in, or success of, the video game industry also generates business for us from advertisers outside of the video game industry that
wish to promote their products and services to individuals with the demographic characteristics of our user population. Accordingly, a downturn in the video game industry, particularly in the platform and software markets thereof, or a shift in
consumer interest in such products, would decrease traffic, advertising demand and subscription revenue. Any such decrease could harm our business.



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Our future success depends on our ability to increase and sustain subscription revenues.



Our subscription model is new and evolving and only in its second year of
operation. Under this program, we offer premium content and services to customers on a subscription fee basis. Some of our competitors offer content and services similar to ours at no charge to users. If our users are unwilling to pay or if
competing subscription programs better meet user expectations, our traffic and subscription revenue would decline.



Furthermore, even if users subscribe with us, we cannot assure you that they will renew their subscriptions or accept our services. If our subscription
program is not accepted by new and current subscribers, our subscription revenue and traffic would decline.



Because our subscriber base is significantly smaller than our active user base, certain initiatives used in attempt to increase subscribers, such as
making articles available only to paid subscribers, may result in decreased traffic. Our efforts to increase subscription revenues may result in declining traffic and as a result advertising revenues may decline.



Additional financings could disadvantage our existing stockholders.



If we raise additional funds through the issuance of equity securities, the
percentage ownership of our existing stockholders would be reduced and the value of their investments might decline. In addition, any new securities issued might have rights, preferences or privileges senior to those securities held by our existing
stockholders. If we raise additional funds through the issuance of debt, we might become subject to restrictive covenants.



Our ability to successfully raise awareness of our brand and web sites is crucial to our success.



We believe that broader recognition and a favorable user perception of our IGN brand and web sites are essential to our
future success. As we significantly decreased marketing related expenditures beginning 2001 through date, we are reliant mainly upon word of mouth for proliferation of our brand awareness. If our brand awareness is not promoted through word of
mouth, or if current or future marketing efforts are not accepted by our audience, our user base and revenue would decline.



Our quarterly revenue and operating results may fluctuate in future periods and we may fail to meet expectations, which may reduce the trading price of our common
stock.



We cannot forecast our revenue and operating
results with precision, particularly because we are in the early stages of operating our new business model; we are dependent upon general activity in the video game industry and development schedules for such video game platform or software
products are frequently unreliable; our current products and services are relatively new and evolving; and our liquidity prospects are uncertain. In particular, advertising revenue is greatly subject to fluctuation as companies tend to advertise
more in typically strong consumer spending periods, which are dependent upon overall economic conditions. Additionally, fluctuations occur as customer product releases and associated advertising tends to increase around holiday or tradeshow periods
and declines in periods of weaker demand. Further, the U.S. economy is much weaker now than when we started our business, and reductions of marketing and advertising budgets or delays in spending of budgeted resources could continue to have a
negative impact on our advertising revenue. This weakness has and could continue to have serious consequences for our business and operating results and, even if these conditions improve, we cannot assure you that marketing budgets and advertising
spending will increase from current levels. If revenue in a particular period does not meet expectations, it is unlikely that we will be able to adjust our level of expenditures significantly for the same period. If our operating results fail to
meet expectations, the trading price of our common stock would decline.



Financial results for any particular period will not predict results for future periods.



Because of the uncertain nature of the rapidly changing markets we serve, we believe that period-to-period comparisons are not necessarily meaningful and
are not necessarily indicative of future performance. We anticipate that the results of our operations will fluctuate significantly in the future as a



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result of a variety of factors, including: general developments in the video game industry; the long sales cycle we face selling advertising
and promotions; our ability to attract new and to retain existing audience and subscribers; seasonal trends in Internet usage, advertising placements, electronic commerce and video game product launches; and other factors discussed in this section.
As a result, it is likely that in some future quarters or years our results of operations will fall below the expectations of investors, which would cause the trading price of our common stock to decline.



If we fail to perform in accordance with the terms of our advertising agreements, we would
lose revenue.



Our advertising agreements typically
provide for minimum performance levels, such as click-throughs by web users or impressions. If we fail to perform in accordance with these terms, we typically must provide free advertising to the customer until the minimum level is met, causing us
to lose revenue and/or incur additional costs. Further, these performance levels are often based on the customers own records, which could be disadvantageous to us in cases of disagreement. In addition to minimum performance levels, we
occasionally guarantee the availability of advertising space in connection with promotion arrangements and content agreements and often guarantee exclusive placement on our network for our largest customers, which precludes us from permitting
certain competitors of these customers to offer products and services on our network that are similar to those offered by our exclusive customers. If we cannot fulfill the guarantees we make to our customers, or if we lose potential customers whose
advertisements, sponsorships and promotions conflict with those of other customers or our exclusive customers fail to renew their contracts, we will lose revenue and our future growth may be impeded.



Internet advertising is a highly competitive industry and some of our competitors may be
more successful in attracting and retaining customers.



The market for Internet advertising and services is highly competitive, and we expect that competition will continue to intensify. Negative competitive developments could have a material effect on our business. Many of our current
competitors, including CNET, Yahoo!, AOL, eUniverse, UGO Networks, as well as a number of potential new competitors, compete vigorously in this market. Further, many of our target and current customers own or have interests in certain of our
competitors, which creates a competitive disadvantage and makes us susceptible to significant pricing pressures. In addition to having greater traffic and financial backing, many of our competitors have significantly greater editorial, technical,
marketing, sales and other resources than we do. Our competitors may develop content and service offerings that are superior to ours or achieve greater market acceptance than ours or may combine or be purchased by advertisers to achieve market
dominance. We must continue to attract and retain users to compete successfully for advertising revenue. If we fail to attract and retain more users, our market share, brand acceptance and revenue would decline.



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Technical problems or intentional service adjustments with either our internal or our outsourced computer and communications systems
could interrupt or decrease our service, resulting in decreased customer satisfaction, the possible loss of users and advertisers and a decline in revenue.



Our operations depend on our ability to maintain our computer systems and equipment in effective working order. Our web sites must accommodate a high
volume of traffic and deliver frequently updated information. Any sustained or repeated system failure or interruption would reduce the attractiveness of our web sites to customers and advertisers and could cause us to lose users and advertisers to
our competitors. This would cause our revenue to decline. In addition, interruptions in our systems could result from the failure of our telecommunications providers to provide the necessary data communications capacity in the time frame we require.
Unanticipated problems affecting our systems have caused from time to time in the past, and could cause in the future, slower response times and interruptions in our services.



We depend on third parties for co-location of our data servers and cannot guarantee the security of our servers. Our primary
servers currently reside in facilities in the San Francisco Bay area. Currently, these facilities do not provide the ability to switch instantly to another back-up site in the event of failure of the main server site. This means that an outage at
one facility could result in our system being unavailable for at least several hours. This downtime could result in increased costs and lost revenues which would be detrimental to our business.



Fire, earthquakes, power loss, water damage, telecommunications failures,
terrorism, vandalism and other malicious acts, and similar unexpected adverse events, may damage our computer systems and interrupt service. Moreover, scheduled upgrades and changes to our computer systems may increase our operating cost or result
in unsatisfactory performance. Our computer systems continuing and uninterrupted performance is critical to our success. Our insurance policies may not adequately compensate us for any losses that may occur due to any failures or interruptions
in our systems.



Any such interruptions in our ability to
continue operations could damage our reputation, harm our ability to retain existing customers and to obtain new customers and could result in lost revenue, any of which could substantially harm our business and results of operations.



If we lose key personnel or are unable to hire additional qualified personnel, or if our
management team is unable to perform effectively, we will not be able to implement our business strategy or operate our business effectively.



Our success depends upon the continued services of our senior management and other key personnel, many of whom would be difficult to replace. The loss of
any of these individuals would adversely affect our ability to implement our business strategy and to operate our business effectively. In particular, the services of Mark Jung, our chief executive officer, would be difficult to replace. None of our
officers or key employees is covered by key person life insurance policies.



Our success also depends upon our ability to continue to attract, retain and motivate skilled employees. We believe that there are only a limited number of persons with the requisite skills to serve in many key
positions and it is difficult to attract, retain and motivate these persons. We have in the past experienced, and we expect to continue to experience, difficulty in hiring and retaining skilled employees with appropriate qualifications.



Further, we have conducted several workforce reductions over our brief
operating history. These reductions can cause anxiety and uncertainty and could adversely affect employee morale. As a result,

our
remaining personnel may seek employment with larger, more established companies or companies they perceive as having less volatile stock prices.



Competitors and others have in the past attempted, and may in the future attempt, to recruit our employees. We could incur increasing salary, benefit and
recruiting expenses because of the difficulty in hiring and retaining employees.



Finally, our success depends on the ability of our management to perform effectively, both individually and as a group. If our management is unable to operate effectively in their respective roles or as a team, we
will not be able to implement our business strategy or operate our business effectively.





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We may be subject to legal liability for online services.



We host a wide variety of services that enable individuals to exchange information, generate content, conduct business and
engage in various online activities on an international basis, including public message posting and email services. The law relating to the liability of providers of these online services for activities of their users is currently unsettled both
within the United States and abroad. Claims may be threatened or brought against us for defamation, negligence, copyright or trademark infringement, unlawful activity, tort, including personal injury, fraud, or other theories based on the nature and
content of information that we provide links to or that may be posted online or generated by our users or with respect to auctioned materials. Due to the unsettled nature of the law in this area, we may be subject to liability in domestic or other
international jurisdictions in the future. Our defense of any such actions could be costly and involve significant distraction of our management and other resources.



It is also possible that, if any information provided directly by us contains errors or is otherwise negligently provided to
users, third parties could make claims against us. For example, we offer web-based email services, which expose us to potential risks, such as liabilities or claims resulting from unsolicited email, lost or misdirected messages, illegal or
fraudulent use of email, or interruptions or delays in email service. Investigating and defending any of these types of claims is expensive, even to the extent that the claims do not ultimately result in liability.



We may have to litigate to protect our intellectual property rights, or to defend claims
that we have infringed the rights of others, which could subject us to significant liability and be time consuming and expensive.



Our success depends significantly upon our copyrights, trademarks, service marks, trade secrets, technology and other intellectual property rights. The
steps we have taken to protect our intellectual property may not be adequate and third parties may infringe or misappropriate our intellectual property. If this occurs, we may have to litigate to protect our intellectual property rights. Such
litigation could disrupt our ongoing business, increase our expenses and distract our managements attention from the operation of our business. We have not applied for the registration of all of our trademarks and service marks, and effective
trademark, service mark, copyright and trade secret protection may not be available in every country in which our content, services and products are made available online. If we were prevented from using our trademarks, we would need to re-implement
our web sites and rebuild our brand identity with our customers, users and affiliates. This would increase our operating expenses substantially.



Companies frequently resort to litigation regarding intellectual property rights. From time to time, we have received, and we may in the future receive,
notices of claims of infringement by IGN or one of our affiliates of other parties proprietary rights. We may have to litigate to defend claims that we have infringed upon the intellectual property rights of others. Any claims of this type
could subject us to significant liability, be time-consuming and expensive, divert managements attention, require the change of our trademarks and the alteration of content, require us to redesign our web sites or services or require us to pay
damages or enter into royalty or licensing agreements. These royalty or licensing agreements, if required, might not be available on acceptable terms or at all. If a successful claim of infringement were made against us and we could not develop
non-infringing intellectual property or license the infringed or similar intellectual property on a timely and cost-effective basis, we might be unable to continue operating our business as planned.



We have adopted anti-takeover defenses that could delay or prevent an acquisition of our
company, even an acquisition that would be beneficial to our stockholders.



Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock. Issuance of the preferred stock would make it more difficult for a third party to acquire a majority of our outstanding
voting stock, even if doing so would be beneficial to our stockholders. Without any further vote or action on the part of the stockholders, our board of directors has the authority to determine the price, rights, preferences, privileges and
restrictions of the preferred stock. This preferred stock, if issued, might have conversion rights and other preferences that work to the disadvantage of the holders of common stock.







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Our certificate of incorporation, bylaws and equity compensation plans include provisions that may deter an unsolicited
offer to purchase IGN. These provisions, coupled with the provisions of the Delaware General Corporation Law, may delay or impede a merger, tender offer or proxy contest involving IGN. Furthermore, our board of directors has been divided into three
classes, only one of which will be elected each year. Directors will only be removable by the affirmative vote of at least 66 2/3% of all classes of voting stock. These factors may further delay or prevent a change of control of IGN and may be
detrimental to our stockholders.



Our ability to implement our business
strategy and our ultimate success depend on continued growth in the use of the Internet and the ability of the Internet infrastructure to support this growth.



Our business strategy depends on continued growth in the use of the Internet and increasing the number of users who visit
our sites. A decrease in the growth of web usage would impede our ability to implement our business strategy and our ultimate success. If the Internet continues to experience significant growth in the number of users, frequency of use and amount of
data transmitted, the Internet infrastructure might not be able to support the demands placed on it or the performance or reliability of the Internet might be adversely affected. Web sites have experienced interruptions in service as a result of
outages and other delays occurring throughout the Internet network infrastructure. If these outages or delays occur frequently in the future, Internet usage, as well as the usage of our web sites, could grow more slowly than expected or decline.
Security and privacy concerns may also slow growth. Because our revenue ultimately depends upon Internet usage generally as well as usage on our web sites, our business may suffer as a result of declines in Internet usage.



Risks Related to Our Industry



Since our revenue is derived primarily from selling advertisements, our revenue might
decline and we might not grow if advertisers do not continue or increase their usage of the Internet as an advertising medium.



In the past, we have derived, and we expect to continue to derive in the future, a majority of our revenue from selling advertisements and other marketing
initiatives. However, the prospects for continued demand and market acceptance for Internet marketing products are uncertain. In particular, during the economic slowdown of the U.S. economy, there has been a reduction of advertising and marketing
spending and a negative public perception of online media companies as well as technology companies in general. If advertisers do not continue or increase their usage of the Internet, our revenue might decline or not grow. Most advertising agencies
and potential advertisers, particularly local advertisers, have only limited experience advertising on the Internet and may not devote a significant portion of their advertising expenditures to Internet advertising. Moreover, advertisers that have
traditionally relied on other advertising media may not advertise on the Internet. As the Internet evolves, advertisers may find Internet advertising to be a less attractive or effective means of promoting their products and services relative to
traditional methods of advertising and may not continue to allocate funds for Internet advertising.



We cannot assure you that customers will continue to purchase advertising or marketing programs or commerce partnerships on our web pages, or that market
prices for web-based advertising will not decrease due to competitive or other factors. In addition, if a large number of Internet users use filter software programs that limit or remove advertising from the users monitor, advertisers may
choose not to advertise on the Internet. Moreover, there are no widely accepted standards for the measurement of the effectiveness of Internet advertising, and standards may not develop sufficiently to support Internet advertising as a significant
advertising medium.



We might have to expend significant capital or other
resources to protect our networks from unauthorized access, computer viruses and other disruptive problems.



Internet and online service providers have in the past experienced, and may in the future experience, interruptions in service as a result of the
accidental or intentional actions of Internet users,



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current and former employees or others. We might be required to expend significant capital or other resources to protect against the threat
of security breaches or to alleviate problems caused by such breaches. Nevertheless, security measures that we implement might be circumvented. Eliminating computer viruses and alleviating other security problems may also require interruptions,
delays or cessation of service to users accessing web pages that deliver our content and services. In addition, a party who circumvents our security measures could misappropriate proprietary information or cause interruptions in our operations.



We may be sued regarding privacy concerns, subjecting us to significant
liability and expense.



If a party were able to penetrate
our network security or otherwise misappropriate our users personal information or credit card information, we could be subject to significant liability and expense. We may be liable for claims based on unauthorized purchases with credit card
information, impersonation or other similar fraud claims. Claims could also be based on other misuses of personal information, such as unauthorized marketing purposes. These claims could result in costly litigation. The Federal Trade Commission and
state agencies have been investigating various Internet companies regarding their use of personal information. In 1998, the United States Congress enacted the Childrens Online Privacy Protection Act of 1998. We depend upon collecting personal
information from our customers and the regulations promulgated under this act have made it more difficult for us to collect personal information from some of our customers. We could incur additional expenses if new regulations regarding the use of
personal information are introduced or if our privacy practices are investigated. Furthermore, the European Union recently adopted a directive addressing data privacy that may limit the collection and use of information regarding Internet users.
This directive and regulations enacted by other countries may limit our ability to target advertising or to collect and use information internationally.



Information displayed on and communication through our and affiliated web sites could expose us to significant liability and expense.



We face possible liability for defamation, negligence, copyright, patent or
trademark infringement and other claims, such as product or service liability, based on the nature and content of the materials published on or downloaded from our and affiliated web sites. These types of claims have been brought, sometimes
successfully, against Internet companies and print publications in the past, and the potential liability associated with these claims is significant. We could also be subjected to claims based upon the online content that is accessible from our web
sites through links to other web sites or through content and materials that may be posted in chat rooms or bulletin boards. We do not verify the accuracy of the information supplied by third-party content providers, including freelance writers and
affiliates. We also offer email services which may subject us to potential risks, such as liabilities or claims resulting from unsolicited email, lost or misdirected messages, illegal or fraudulent use of email or interruptions or delays in email
service. The law in these areas is unclear. Accordingly, we are unable to predict the potential extent of our liability. Our insurance may not cover potential claims of this type and our defense of any such actions could be costly and involve
significant distraction of our management and other resources.



Changes in
regulation of domain names may result in the loss or change of our domain names, a reduction in brand awareness among our customers and a diminished ability to attract advertisers and generate revenue.



We hold various domain names relating to our networks and brands. In the
United States, the National Science Foundation has appointed a limited number of entities as the current exclusive registrars for the .com, .net and .org generic top level domains. We expect future changes in the
United States to include a transition from the current system to a system controlled by a non-profit corporation and the creation of additional top level domains. Requirements for holding domain names also are expected to be affected. These changes
may result in the loss or change of our domain names, a reduction in brand awareness among our customers and a diminished ability to attract advertisers and generate revenue. Furthermore, the relationship between regulations governing domain names
and laws protecting trademarks and similar proprietary rights is unclear. Therefore, we may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our trademarks



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and other proprietary rights. In addition, we may lose our domain names to third parties with trademarks or other proprietary rights in
those names or similar names.



Future regulation of the Internet may slow
its growth, resulting in decreased demand for our services and increased costs of doing business.



Although we are subject to regulations applicable to businesses generally, few laws or regulations exist that specifically regulate communications and
commerce over the Internet. We expect more stringent laws and regulations relating to the Internet to be enacted due to the increasing popularity and use of the Internet and other online services. Future regulation of the Internet may slow its
growth, resulting in decreased demand for our services and increased costs of doing business. New and existing laws and regulations are likely to address a variety of issues, including:



| |  |  | user privacy and expression;
| | - |  | ----------------------------



| |  |  | taxation and pricing;
| | - |  | ---------------------



| |  |  | the rights and safety of children;
| | - |  | ----------------------------------



| |  |  | intellectual property;
| | - |  | ----------------------



| |  |  | defamation;
| | - |  | -----------



| |  |  | sweepstakes and promotions; and
| | - |  | -------------------------------



| |  |  | information security.
| | - |  | ---------------------



Currently we may be subject to Sections 5 and 12 of the Federal Trade Commission Act, which regulate advertising in all media, including the Internet, and
require advertisers to have substantiation for advertising claims before disseminating advertisements. The Federal Trade Commission recently brought several actions charging deceptive advertising via the Internet, and is actively seeking new cases
involving advertising via the Internet. We also may be subject to the provisions of the recently enacted Communications Decency Act, which, among other things, imposes substantial monetary fines and/or criminal penalties on anyone who distributes or
displays certain prohibited material over the Internet or knowingly permits a telecommunications device under its control to be used for this purpose. In addition, government agencies may impose regulatory access fees on Internet usage. If this were
to occur, the cost of communicating on the Internet could increase substantially, potentially decreasing the use of the Internet.



Finally, the applicability to the Internet and other online services of existing laws in various jurisdictions governing issues such as property
ownership, sales and other taxes, libel and personal privacy is uncertain and may take years to resolve. Any new legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to our business,
or the application of existing laws and regulations to the Internet and other online services could also increase our costs of doing business, discourage Internet communications and reduce demand for our services.



Risks Related to the Securities Markets



We expect to experience volatility in our stock price, which could negatively affect your
investment.



The trading price of our common stock is
likely to be highly volatile in response to a number of factors, such as:



| |  |  | actual or anticipated variations in our quarterly results of operations;
| | - |  | ------------------------------------------------------------------------



| |  |  | our cash position;
| | - |  | ------------------



| |  |  | our limited amount or availability of public float shares;
| | - |  | ----------------------------------------------------------



| |  |  | changes in ownership percentage as a result of the issuance of equity securities;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | changes in the market valuations of other Internet content and service companies;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | public perception of Internet content and service companies;
| | - |  | ------------------------------------------------------------



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| |  |  | public perception of growth prospects for the video game and entertainment industries;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | announcements by us of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | changes in financial estimates or recommendations by securities analysts;
| | - |  | -------------------------------------------------------------------------



| |  |  | additions or departures of key personnel;
| | - |  | -----------------------------------------



| |  |  | additions or departures of key customers;
| | - |  | -----------------------------------------



| |  |  | our ability to attract or retain subscribers; and
| | - |  | -------------------------------------------------



| |  |  | failure to maintain minimum NASDAQ listing requirements.
| | - |  | --------------------------------------------------------



In addition, broad market and industry factors may materially and adversely affect the market price of our common stock, regardless of our operating performance. The
NASDAQ Stock Market, and the market for Internet and technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.



Should our stockholders sell a substantial number of shares of common stock
in the public market, the price of our common stock could fall.



Our current stockholders include individuals or firms that hold a substantial number of shares that they are entitled to sell in the public market. Sales of a substantial number of these shares could reduce the market price of our common
stock. These sales could make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.



Our officers and directors and their affiliates exercise significant control over us, which could disadvantage other stockholders.



Our executive officers and directors and their affiliates together owned
approximately 50% of our outstanding common stock as of June 30, 2003. Christopher Anderson, the chairman of our board of directors, owned approximately 37% of our outstanding common stock alone. As a result, these stockholders exercise significant
control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of control could disadvantage other stockholders with interests different from those
of our officers, directors and their affiliates. For example, stockholders who are officers and directors could delay or prevent someone from acquiring or merging with us even if the transaction would benefit other stockholders.





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Class action litigation resulting from volatility of the trading price of our common stock would likely result in substantial costs and a
diversion of managements attention and resources.



Volatility in the trading price of our common stock could result in securities class action litigation. Any litigation would likely result in substantial costs and a diversion of managements attention and resources.



If our common stock ceases to be listed for trading on the NASDAQ SmallCap Market, the
value and liquidity of your investment may be adversely affected.



We cannot assure you that we will be able to meet or maintain all of the requirements for continued listing on the NASDAQ SmallCap Market in the future. Additional requirements that we must meet to remain listed on the NASDAQ SmallCap
Market include (i) maintaining a minimum bid price of $1.00 per share, and (ii) having either (a) stockholders equity of $2.5 million, (b) a market capitalization of $35 million, or (c) net income from continuing operations (in the latest
fiscal year or in two of the last three fiscal years) of $500,000. Currently, we satisfy these selected quantitative requirements (i) and (ii). Given our market capitalization is currently less than $35 million and our net income from operations (in
the latest fiscal year or in two of the last three fiscal years) was less than $500,000, it is reasonably possible that our stockholders equity, which was $3,595,000 as of June 30, 2003, could decline below $2.5 million in future periods and
that such decline could jeopardize our continued listing on the NASDAQ SmallCap Market. If we do not meet NASDAQ listing requirements, we expect that our common stock would be traded on the NASD Over-The-Counter Bulletin Board. If our common stock
were to be delisted from the NASDAQ SmallCap Market, the liquidity of your investment would be diminished and the volatility of the trading price of our common stock would increase. Further, our stock could then potentially be subject to what are
known as the penny stock rules, which place additional requirements on broker-dealers who sell or make a market in such securities. Consequently, if we were removed from the NASDAQ SmallCap Market, the ability or willingness of
broker-dealers to sell or make a market in our common stock might decline. As a result, your ability to resell your shares of our common stock could be harmed.



Item 3Quantitative and Qualitative Disclosures About Market Risk



Our exposure to market risk is limited to interest income sensitivity, which is affected by changes in the general level of interest rates in the United
States, particularly since the majority of our investments are short-term and issued by corporations or divisions of the United States government. We place our investments with high quality issuers and limit the amount of credit exposure to any one
issuer. Due to the nature of our short-term investments, we believe that we are not subject to any material market risk exposure.



We had no foreign currency hedging or other derivative financial instruments as of June 30, 2003.



Item 4Controls and Procedures



Based on their evaluation, as of the end of the period covered by this Form 10-Q, our principal executive officer and principal financial officer have concluded that as of the date of the date of this evaluation our disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective. During the period covered by this report, there have been no changes in our internal controls over financial reporting that
have materially affected or are reasonably likely to materially affect our internal control over financial reporting.



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Part IIOTHER INFORMATION



Item 1Legal Proceedings



Not
applicable



Item 2Changes in Securities and Use of Proceeds



Not applicable



Item 3Defaults Upon Senior Securities



Not applicable



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



No matters were submitted to a vote of security holders during the first six months of 2003.



Item 5Other Information



Not applicable



Item 6Exhibits and Reports on Form 8-K



(a) Exhibits



|Exhibit Number |  | Description                                                                                                                                                                          
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.01          |  | Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|               | 
|31.02          |  | Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|               | 
|32.01          |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                               
|               | 
|32.02          |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                               





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(b) Reports on Form 8-K



On May 1, 2003, we filed a report on Form 8-K dated April 25, 2003 to report under Item 12: Results of Operations and Financial Condition our preliminary
quarterly earnings release, and related financial and operating information, and Item 7: Financial Statements and Exhibits with respect to an earnings release exhibit.



On May 5, 2003, we filed a report on Form 8-K dated May 1, 2003 to report under Item 5: Other Events financial information
for the three month ended March 31, 2003 and to report under Item 12: Results of Operations and Financial Condition our quarterly earnings release and investor conference call, and related financial and operating information, and Item 7: Financial
Statements and Exhibits with respect to earnings release and conference call transcript exhibits.



On May 5, 2003, we filed a report on Form 8-K dated May 2, 2003 to report under Item 5: Other Events that we had entered into a definitive agreement to be
acquired by GHP Acquisition Corp., and information related to this acquisition, and under Item 7: Financial Statements and Exhibits with respect to this definitive agreement, voting agreements related thereto and press release exhibits.



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SIGNATURES



Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                      |  |  |  | IGN ENTERTAINMENT, INC.
|--------------------- |  |  |  | -----------------------
|                      |  |  | 
|Date: August 13, 2003 |  |  |  | By:                    
|                      |  |  |  |                        



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|--------------------- |  |  | 
|Date: August 13, 2003 |  |  | 
|                      |  |  | 

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Quarterly Report on Form 10-Q

Index to Exhibits



|ExhibitNumber |  | Description                                                                                                                                                                          
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.01         |  | Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|              | 
|31.02         |  | Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|              | 
|32.01         |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                               
|              | 
|32.02         |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.