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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C.   20549





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FORM 10-Q





(Mark One)





| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE    SECURITIES EXCHANGE    ACT OF 1934 
| | ----------------------------------------------------------------------------------------------
| |                                                                                               
| | For the    quarterly period ended March 31, 2004                                              
| |                                                                                               
| | OR                                                                                            
| |                                                                                               
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE    SECURITIES EXCHANGE    ACT OF 1934
| |                                                                                               
| | For the    transition period from __________ to __________                                    
| |                                                                                               
| | Commission    File Number 000-25469                                                           




iVillage Inc.


(Exact  Name of Registrant as Specified in Its Charter)





|Delaware                                                                                 |  | 13-3845162                          
|---------------------------------------------------------------------------------------- |  | ------------------------------------
|(State    or Other Jurisdiction of Incorporation or Organization)                        |  | (IRS    Employer Identification No.)
|                                                                                         |  |                                     
|500 Seventh Avenue, New York, New York                                                   |  | 10018                               
|(Address    of Principal Executive Offices)                                              |  | (Zip    Code)                       
|                                                                                        
|(212) 600-6000                                                                          
|(Registrants    Telephone Number, Including Area Code)                                 
|                                                                                        
|                                                                                        
|(Former    Name, Former Address and Former Fiscal Year,    if Changed since Last Report)




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





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





As of May 10, 2004, the registrant had outstanding 58,971,439  shares of common stock.





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iVillage Inc.


Form  10-Q


For the Quarter ended March 31, 2004





INDEX





|                                                                                                      |                                                                                          | Page
|----------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | ----
|                                                                                                      |                                                                                          |     
|PART I.                                                                                               | FINANCIAL INFORMATION                                                                    |     
|                                                                                                      |                                                                                          |     
|Item 1.                                                                                               | Financial Statements (Unaudited):                                                        |     
|                                                                                                      |                                                                                          |     
|Condensed Consolidated Balance Sheets as of    March 31, 2004 and December 31, 2003                   | 1                                                                                       
|                                                                                                      |                                                                                         
|Condensed Consolidated    Statements of Operations for the three months ended March 31, 2004 and 2003 | 2                                                                                       
|                                                                                                      |                                                                                         
|Condensed Consolidated    Statements of Cash Flows for the three months ended March 31, 2004 and 2003 | 3                                                                                       
|                                                                                                      |                                                                                         
|Notes to Condensed Consolidated Financial    Statements                                               | 4                                                                                       
|                                                                                                      |                                                                                          |     
|Item 2.                                                                                               | Managements Discussion and Analysis of    Financial Condition and Results of Operations | 16  
|                                                                                                      |                                                                                          |     
|Item 3.                                                                                               | Quantitative and Qualitative Disclosures    About Market Risk                            | 50  
|                                                                                                      |                                                                                          |     
|Item 4.                                                                                               | Controls and Procedures                                                                  | 50  
|                                                                                                      |                                                                                          |     
|PART II.                                                                                              | OTHER INFORMATION                                                                        |     
|                                                                                                      |                                                                                          |     
|Item 1.                                                                                               | Legal Proceedings                                                                        | 50  
|                                                                                                      |                                                                                          |     
|Item 2.                                                                                               | Changes in Securities and Use of Proceeds                                                | 50  
|                                                                                                      |                                                                                          |     
|Item 3.                                                                                               | Defaults Upon Senior Securities                                                          | 51  
|                                                                                                      |                                                                                          |     
|Item 4.                                                                                               | Submission of Matters to a Vote of Security    Holders                                   | 51  
|                                                                                                      |                                                                                          |     
|Item 5.                                                                                               | Other Information                                                                        | 51  
|                                                                                                      |                                                                                          |     
|Item 6.                                                                                               | Exhibits and Reports on Form 8-K                                                         | 51  
|                                                                                                      |                                                                                          |     
|Signatures                                                                                            |                                                                                          | 52  
|                                                                                                      |                                                                                         
|Exhibit Index                                                                                         | 53                                                                                      




TRADEMARKS





iVillage®, iVillage.com®,  gURL.com®, Newborn Channel®, WebStakes.com®, iVillage Consulting®, iVillage  Solutions® and iVillageAccess® are registered trademarks of iVillage Inc. The  stylized iVillage logo, the Internet for Women, Astrology.com, Baby Steps,  Public Affairs Group, Inc., Business Womens Network, Business Womens Network  Government, Diversity Best Practices, Best Practices In Corporate  Communications and Promotions.com are trademarks of iVillage Inc. All other  brand names, trademarks or service marks referred to in this report are the  property of their owners.





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PART I


FINANCIAL INFORMATION





Item 1. Financial Statements.


iVillage  Inc. and Subsidiaries


Condensed  Consolidated Balance Sheets


(in  thousands, except share data)


(Unaudited)





|                                                                                                                                                                                                                                                                                |  | March 31,    2004 |          | December    31,    2003 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | ----------------------- | -
|                                                                                                                                                                                                                                                                                |  |                   |          |                         |  
|Assets                                                                                                                                                                                                                                                                          |  |                   |          |                         |  
|Current assets:                                                                                                                                                                                                                                                                 |  |                   |          |                         |  
|Cash and cash equivalents                                                                                                                                                                                                                                                       |  | $                 | 16,365   |                         | $
|Accounts receivable, less    allowance for doubtful accounts of     $1,134 as of March 31, 2004 and December 31, 2003, respectively                                                                                                                                             |  |                   | 6,617    |                         |  
|Prepaid rent                                                                                                                                                                                                                                                                    |  |                   | 318      |                         |  
|Other current assets                                                                                                                                                                                                                                                            |  |                   | 3,778    |                         |  
|                                                                                                                                                                                                                                                                                |  |                   |          |                         |  
|Total    current assets                                                                                                                                                                                                                                                         |  |                   | 27,078   |                         |  
|Fixed assets, net                                                                                                                                                                                                                                                               |  |                   | 7,179    |                         |  
|Goodwill, net                                                                                                                                                                                                                                                                   |  |                   | 22,580   |                         |  
|Intangible assets, net                                                                                                                                                                                                                                                          |  |                   | 10,819   |                         |  
|Prepaid rent, net of    current portion                                                                                                                                                                                                                                         |  |                   | 3,316    |                         |  
|Other assets                                                                                                                                                                                                                                                                    |  |                   | 158      |                         |  
|                                                                                                                                                                                                                                                                                |  |                   |          |                         |  
|Total    assets                                                                                                                                                                                                                                                                 |  | $                 | 71,130   |                         | $
|                                                                                                                                                                                                                                                                                |  |                   |          |                         |  
|Liabilities    and Stockholders Equity                                                                                                                                                                                                                                         |  |                   |          |                         |  
|Current liabilities:                                                                                                                                                                                                                                                            |  |                   |          |                         |  
|Accounts payable and    accrued expenses                                                                                                                                                                                                                                        |  | $                 | 9,518    |                         | $
|Deferred revenue                                                                                                                                                                                                                                                                |  |                   | 3,151    |                         |  
|Deferred rent                                                                                                                                                                                                                                                                   |  |                   | 144      |                         |  
|Other current liabilities                                                                                                                                                                                                                                                       |  |                   | 97       |                         |  
|                                                                                                                                                                                                                                                                                |  |                   |          |                         |  
|Total    current liabilities                                                                                                                                                                                                                                                    |  |                   | 12,910   |                         |  
|Deferred rent, net of    current portion                                                                                                                                                                                                                                        |  |                   | 1,447    |                         |  
|                                                                                                                                                                                                                                                                                |  |                   |          |                         |  
|Total    liabilities                                                                                                                                                                                                                                                            |  |                   | 14,357   |                         |  
|Commitments and    contingencies                                                                                                                                                                                                                                                |  |                   |          |                         |  
|Stockholders equity:                                                                                                                                                                                                                                                           |  |                   |          |                         |  
|Preferred stock  par value    $.01, 5,000,000 shares authorized; no shares issued and outstanding as of    March 31, 2004 and December 31, 2003, respectively                                                                                                                  |  |                   |         |                         |  
|Common stock - par value    $.01, 200,000,000 shares authorized;     59,872,283 and 57,233,470 shares issued at March 31, 2004 and December    31, 2003, respectively; 58,868,837 and 56,230,024 shares outstanding as of    March 31, 2004 and December 31, 2003, respectively |  |                   | 599      |                         |  
|Additional paid-in capital                                                                                                                                                                                                                                                      |  |                   | 551,441  |                         |  
|Treasury stock at cost    (1,003,446 shares)                                                                                                                                                                                                                                    |  |                   | (430     | )                       |  
|Stockholders notes    receivable                                                                                                                                                                                                                                               |  |                   | (127     | )                       |  
|Accumulated deficit                                                                                                                                                                                                                                                             |  |                   | (494,710 | )                       |  
|                                                                                                                                                                                                                                                                                |  |                   |          |                         |  
|Total    stockholders equity                                                                                                                                                                                                                                                   |  |                   | 56,773   |                         |  
|                                                                                                                                                                                                                                                                                |  |                   |          |                         |  
|Total    liabilities and stockholders equity                                                                                                                                                                                                                                   |  | $                 | 71,130   |                         | $
|                                                                                                                                                                                                                                                                                |  |                   |          |                         |  




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





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iVillage  Inc. and Subsidiaries


Condensed  Consolidated Statements of Operations


(in  thousands, except per share amounts)


(Unaudited)





|                                                                                                                 |  | Three    months ended    March 31, |       
|---------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ------
|                                                                                                                 |  |                                    |       
|                                                                                                                 |  |                                    | 2004  
|                                                                                                                 |  |                                    |       
|Revenues                                                                                                         |  | $                                  | 15,507
|Operating expenses:                                                                                              |  |                                    |       
|Editorial,    product development and technology                                                                 |  |                                    | 7,511 
|Sales    and marketing                                                                                           |  |                                    | 4,385 
|Sales    and marketing  Hearst Communications, Inc.                                                             |  |                                    |      
|General    and administrative                                                                                    |  |                                    | 2,908 
|Depreciation    and amortization                                                                                 |  |                                    | 1,804 
|                                                                                                                 |  |                                    |       
|Total    operating expenses                                                                                      |  |                                    | 16,608
|                                                                                                                 |  |                                    |       
|Loss from operations                                                                                             |  |                                    | (1,101
|Interest income, net                                                                                             |  |                                    | 18    
|Other income, net                                                                                                |  |                                    | 52    
|Gain on sale of joint    venture interest                                                                        |  |                                    | 167   
|                                                                                                                 |  |                                    |       
|Net loss before minority    interest                                                                             |  |                                    | (864  
|Minority interest                                                                                                |  |                                    |      
|                                                                                                                 |  |                                    |       
|Net loss                                                                                                         |  | $                                  | (864  
|                                                                                                                 |  |                                    |       
|Per share data:                                                                                                  |  |                                    |       
|Basic and diluted net loss    per share                                                                          |  | $                                  | (0.01 
|                                                                                                                 |  |                                    |       
|Weighted average shares of    common stock outstanding used in computing basic and diluted net loss per    share |  |                                    | 58,443
|                                                                                                                 |  |                                    |       




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





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iVillage  Inc. and Subsidiaries


Condensed  Consolidated Statements of Cash Flows


(in  thousands)


(Unaudited)





|                                                                                             |  | Three    months ended
  March 31, |       
|-------------------------------------------------------------------------------------------- |  | --------------------------------- | ------
|                                                                                             |  |                                   |       
|                                                                                             |  | 2004                              |       
|                                                                                             |  |                                   |       
|Cash flows from operating    activities:                                                     |  |                                   |       
|Net    loss                                                                                  |  | $                                 | (864  
|Adjustments to reconcile    net loss to net cash provided by (used in) operating activities: |  |                                   |       
|Depreciation    and amortization                                                             |  |                                   | 1,804 
|Deferred    rent amortization                                                                |  |                                   | (36   
|Gain    on sale of joint venture interest                                                    |  |                                   | (167  
|Bad    debt expense                                                                          |  |                                   |      
|Non-cash    print advertising expense                                                        |  |                                   |      
|Expense    recognized in connection with issuance/modification of terms of stock options     |  |                                   |      
|Minority    interest                                                                         |  |                                   |      
|Changes in operating assets    and liabilities:                                              |  |                                   |       
|Accounts    receivable                                                                       |  |                                   | 900   
|Prepaid    rent                                                                              |  |                                   | 38    
|Restricted    cash and other assets                                                          |  |                                   | (258  
|Accounts    payable and accrued expenses                                                     |  |                                   | (923  
|Deferred    revenue                                                                          |  |                                   | (172  
|                                                                                             |  |                                   |       
|Net cash provided by (used    in) operating activities                                       |  |                                   | 322   
|                                                                                             |  |                                   |       
|Cash flows from investing    activities:                                                     |  |                                   |       
|Purchase    of fixed assets                                                                  |  |                                   | (545  
|Cash    paid less cash acquired for acquisition of Promotions.com, Inc. ..                   |  |                                   |      
|Proceeds    from the sale of joint venture interest                                          |  |                                   | 75    
|                                                                                             |  |                                   |       
|Net cash used in investing    activities                                                     |  |                                   | (470  
|                                                                                             |  |                                   |       
|Cash flows from financing    activities:                                                     |  |                                   |       
|Proceeds    from exercise of stock options and warrants                                      |  |                                   | 576   
|Principal    payments on stockholders notes receivable                                      |  |                                   | 114   
|                                                                                             |  |                                   |       
|Net cash provided by    financing activities                                                 |  |                                   | 690   
|                                                                                             |  |                                   |       
|Net increase (decrease) in    cash for the period                                            |  |                                   | 542   
|Cash and cash equivalents,    beginning of period                                            |  |                                   | 15,823
|                                                                                             |  |                                   |       
|Cash and cash equivalents,    end of period                                                  |  | $                                 | 16,365
|                                                                                             |  |                                   |       




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





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Note 1 Organization and Basis of Presentation





iVillage is  the
    Internet for women and consists of several online and offline media-based
    properties, including the iVillage.com Web site, or iVillage.com, Knowledgeweb,
    Inc., operator of the Astrology.com Web site, or Astrology.com, iVillage
    Consulting, Promotions.com, Inc., or Promotions.com, iVillage Parenting Network,
    Inc., or IVPN, and Public Affairs Group, Inc., or PAG. Following is a synopsis
    of our principal operational activities:





|iVillage.com           | An online    destination providing practical solutions on a range of topics and everyday    support for women 18 years of age and over.                                                                                                                                                                                                                                                                      
|---------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                       |                                                                                                                                                                                                                                                                                                                                                                                                              
|Astrology.com          | An online    destination for individuals seeking daily horoscopes, astrological content    and personalized forecasts.                                                                                                                                                                                                                                                                                       
|                       |                                                                                                                                                                                                                                                                                                                                                                                                              
|iVillage    Consulting | Assists    companies in the creation and development of Web sites, digital commerce platforms    and other aspects of technological infrastructures, primarily for Hearst    Communications, Inc., and its affiliates, or Hearst, a related party.                                                                                                                                                           
|                       |                                                                                                                                                                                                                                                                                                                                                                                                              
|Promotions.com         | Includes    Promotions.com and Webstakes.com, which offer online and offline promotions and    direct marketing programs that are integrated with customers marketing    initiatives.                                                                                                                                                                                                                       
|                       |                                                                                                                                                                                                                                                                                                                                                                                                              
|IVPN                   | Through    IVPN, iVillage operates iVillage Integrated Properties, Inc., or IVIP, the    operator of The Newborn Channel and Lamaze Publishing Company, or Lamaze Publishing,    publisher of Lamaze Parents, which collectively provide informational and    instructional magazines, custom publications, television programming, videos    and online properties of interest to expectant and new parents.
|                       |                                                                                                                                                                                                                                                                                                                                                                                                              
|PAG                    | Comprised of    Business Womens Network, Diversity Best Practices and Best Practices in    Corporate Communications, each offering an extensive database of pertinent    information and events to subscribing companies and members, and relevant    publications.                                                                                                                                         




iVillage has  historically incurred  net losses and negative cash flows on an annual basis.  iVillages ability to meet its  obligations in the ordinary course of business is dependent upon its ability to  establish and sustain profitable operations, reduce expenditures and/or raise  additional financing through public or private equity financing, collaborative  or other arrangements with corporate sources, through the launch of new  subscription or other revenue-generating initiatives or other sources of  financing to fund operations.





Due primarily  to iVillages lack of historical profitability, it is unlikely that iVillage  would be able to obtain bank financing. Management believes that iVillages  current funds will be sufficient to enable iVillage to meet its planned  expenditures through the next twelve months.





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If anticipated operating  results are not achieved, management believes it has the ability to delay or  reduce expenditures, so as not to require additional financial resources,  although there can be no assurances in this regard. If iVillage needs to raise  funds through a public offering or private placement of its securities, funds  may not be available on acceptable terms, if at all.





Factors that  could adversely affect iVillages ability to achieve profitable operations  include the loss of any of iVillages major customers, including Hearst, or a  significant downturn in the advertising market or economy, in general, as well  as iVillages ability to report significantly increased annual revenues.





iVillage  acquired
    the amended and restated magazine content license and hosting agreement with
    Hearst in connection with its acquisition of Women.com Networks, Inc, or
    Women.com.  iVillage recognized  approximately $1.5 million from this
    agreement for the three months ended March 31, 2004.  In May 2004, iVillage
    and Hearst entered into a non-binding memorandum of understanding regarding
    a renewal of the magazine content licensing and hosting agreement.  Under
    the proposed terms of the renewal, the term of the magazine content licensing
    and hosting agreement would be extended for three years until June 2007.  Hearst
    would pay iVillage a production service fee of $4.0 million during the first
    year of the renewed agreement, and the fee would increase by approximately
    $0.2 million in each subsequent year.  iVillage would  continue to receive
    a commission on magazine subscription sales, and Hearst would continue to
    receive a commission
    from iVillage on a percentage of the advertising sales from Hearst magazine
    Web sites hosted by iVillage.  These commissions paid to and received
    from Hearst will vary based on the level of net paid subscription sales.
    If magazine subscription sales do not reach a certain threshold in the second
    year of the extension, iVillage will not be entitled to any commission from
    magazine subscription sales in the third year of the extension. iVillage
    would no longer be required to offer Hearst, and Hearst would no longer be
    obligated to purchase, advertising on iVillage.com.  In
    the event that iVillage and Hearst do not enter into a definitive agreement,
    the amended
    and restated
    magazine
    content license and hosting agreement will expire in June 2004, but will
    continue afterwards on a month-to-month basis unless terminated by either
    party with 90 days prior notice. iVillage cannot assure that this contract
    will be renewed on the terms specified in the memorandum of understanding,
    or at all.





iVillage is  subject to the risks and uncertainties frequently encountered by companies in  the rapidly evolving markets for Internet and media products and services.  These risks include the failure to develop and extend iVillages brands, the  non-acceptance or rejection of iVillages services by Web consumers, vendors,  sponsors and/or advertisers and the inability of iVillage to maintain and  increase the levels of traffic on its online services. In the event iVillage  does not successfully implement its business plan, certain assets may not be  recoverable.





Unaudited Interim Financial Information





The unaudited  interim condensed consolidated financial statements of iVillage as of  March 31, 2004 and for the three months ended March 31, 2004 and 2003, respectively,  included herein, have been prepared in accordance with the instructions for  Form 10-Q under the Securities Exchange Act of 1934, as amended, or the  Exchange Act, and Article 10 of Regulation S-X of the rules and regulations of  the Securities and Exchange Commission. Certain information and footnote  disclosures normally included in financial statements prepared in accordance  with generally accepted accounting principles have been condensed or omitted  pursuant to such rules and regulations relating to interim financial  statements. These financial statements should be read in conjunction with  iVillages Annual Report on Form 10-K for the fiscal year ended December 31,  2003.





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In the opinion  of management, the accompanying unaudited interim condensed consolidated  financial statements reflect all adjustments, consisting only of normal  recurring adjustments and appropriate intercompany elimination adjustments,  necessary to present fairly the financial position of iVillage at March 31,  2004 and the results of its operations and its cash flows for the three months  ended March 31, 2004 and 2003, respectively. The results for the three months  ended March 31, 2004 are not necessarily indicative of the expected results for  the full fiscal year or any future period.





Principles of Consolidation





The unaudited  interim condensed consolidated financial statements include the accounts of  iVillage and its subsidiaries. Intercompany balances and transactions have been  eliminated in consolidation.





In accordance  with Statement of Financial Accounting Standard, or SFAS, No. 131, Disclosures  About Segments of an Enterprise and Related Information, or SFAS 131, segment  information is being reported consistent with iVillages method of internal  reporting. In accordance with SFAS 131, operating segments are defined as  components of an enterprise for which separate financial information is  available that is evaluated regularly by the chief operating decision maker in  deciding how to allocate resources and in assessing performance. iVillage is  organized primarily by subsidiaries and divisions. iVillages subsidiaries and  divisions have no operating managers who report to the chief operating decision  maker. The chief operating decision maker reviews information at a consolidated  results of operations level, although the chief operating decision maker does  review revenue results of subsidiaries and
divisions. As a result, iVillages  discussion of revenue has been organized into separate subsidiaries and  divisions, however operating expenses and results of operations are discussed  on a combined basis.





Revenues, Receivables and Customer Concentration





Two customers, Wal-Mart  Stores, Inc. and its affiliates, or Wal-Mart, and Hearst, a related party,  accounted for approximately 15% and 12% of total revenues for the three months  ended March 31, 2004, respectively. iVillages five largest customers accounted  for approximately 37% of total revenues for the three months ended March 31,  2004. One customer, Hearst,  accounted for approximately 13% of total revenues for the three months ended  March 31, 2003. iVillages five largest customers accounted for approximately  33% of total revenues for the three months ended March 31, 2003. At March 31, 2004  and December 31, 2003, Hearst accounted for approximately 29% and 20% of the  net accounts receivable, respectively.   The significance of revenues from any of iVillages customers can vary  on a quarter to quarter basis as a result of the number and timing of such  customers advertising and marketing
initiatives.





Hearst has been one of iVillages largest customers for each of the  last three years. Pursuant to an amended and restated magazine content license  and hosting agreement with Hearst, iVillage received the online distribution  rights to seven Hearst magazine Web sites. Under this agreement, iVillage  provides production, maintenance and hosting services, for which in the first  quarter of 2004 iVillage recognized approximately $0.8 million in fees, and





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advertising  services, for which iVillage recognized approximately $0.7 million in fees. In  addition, iVillage is entitled to a commission derived from the sale of Hearst  magazines, which in the first quarter of 2004 totaled approximately $0.2  million. As part of this magazine content license agreement iVillage pays  Hearst a royalty fee, which in the first quarter of 2004 totaled approximately  $0.2 million.





In May 2004,
    iVillage and Hearst entered into a memorandum of understanding regarding
    the renewal of the magazine content licensing and hosting agreement.  Under
    the proposed terms of the renewal, the term of the magazine content licensing
    and hosting agreement would be extended for three years until June 2007.  Hearst
    would pay iVillage a production service fee of $4.0 million during the first
    year of the renewed agreement, which would increase by approximately $0.2
    million in each subsequent year.   iVillage would continue to receive
    a commission on magazine subscription sales, and Hearst would continue to
    receive a commission from iVillage on a percentage of the advertising sales
    from Hearst magazine Web sites hosted by iVillage. These commissions paid
    to and received from Hearst will vary based on the level of net paid subscription
    sales. If magazine subscription sales do not reach a certain threshold in
    the second year of the extension, iVillage will not be entitled to any commission
    from magazine subscription sales in the third year of the extension. iVillage
    would no longer be required to offer Hearst, and Hearst would no longer be
    obligated to purchase advertising on iVillage.com.  In
    the event that iVillage and Hearst do not enter into a definitive agreement,
    the amended
    and restated
     magazine content license and hosting agreement will expire in June 2004,
    but will continue afterwards on a month-to-month basis unless terminated
    by either party with 90 days prior notice.





Included in  total revenues are barter transactions which totaled approximately $0.8  million, or 5% of total revenues, for the three months ended March 31,  2004.  For the corresponding period in  2003, barter transactions totaled approximately $1.0 million, or 8% of total  revenues.





Fixed Assets and Intangibles





Depreciation  of equipment, furniture and fixtures, and computer software is provided for by  the straight-line method over their estimated useful lives ranging from three  to five years. Amortization of leasehold improvements is provided for over the  lesser of the term of the related lease or the estimated useful life of the  improvement. The cost of additions and expenditures which extend the useful  lives of existing assets are capitalized, and repairs and maintenance costs are  charged to operations as incurred. Amortization of intangible assets are over  the expected life of the related asset and range from one to ten years.  Effective January 1, 2002, iVillage adopted SFAS No. 144, Accounting for the  Impairment or Disposal of Long-Lived Assets, or SFAS 144, regarding the  recognition and measurement of the impairment of long-lived assets to be held  and used.





iVillage  assesses the recoverability of its fixed assets and intangible assets by  determining whether the unamortized balance over the assets remaining lives  can be recovered through undiscounted forecasted cash flows. If undiscounted  forecasted cash flows indicate that the unamortized amounts will not be  recovered, an adjustment will be made to reduce the net amounts to an amount  consistent with forecasted future cash flows discounted at a rate commensurate  with the risk associated when estimating future discounted cash flows. Future  cash flows are based on trends of historical performance and iVillages  estimate of future performance, giving consideration to existing and  anticipated competitive and economic conditions.





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Goodwill





Goodwill is  not subject to amortization and is tested for impairment annually, or more  frequently if events or changes in circumstances indicate that the asset may be  impaired in accordance with SFAS No. 142, Goodwill and Other Intangible  Assets, or SFAS 142. The impairment test consists of a comparison of the fair  value of goodwill with its carrying amount. If the carrying amount of goodwill  exceeds its fair value, an impairment loss will be recognized in an amount  equal to that excess. Fair value is typically based upon future cash flows  discounted at a rate commensurate with the risk involved. After an impairment  loss is recognized, the adjusted carrying amount of goodwill is its new  accounting basis. (See Note 2  Goodwill).





Reclassifications





Certain  reclassifications have been made in the prior period condensed consolidated  financial statements to conform to the current period presentation.





Use of Estimates





The  preparation of financial statements in conformity with accounting principles  generally accepted in the United States of America requires management to make  estimates and assumptions that affect the reported amount of assets and  liabilities, disclosure of contingent assets and liabilities at the date of the  financial statements, and the reported amounts of revenues and expenses during  the reporting period.  Actual results  could differ from these estimates.   Significant estimates and assumptions made by iVillage include those  related to the useful lives of fixed assets and intangible assets, the  recoverability of fixed assets, goodwill, intangible assets and deferred tax  assets, the allowance for doubtful accounts and the assessment of expected  probable losses (if any) of claims and potential claims.





Accrued Expenses





In the  ordinary course of business, iVillage utilizes estimates to determine the  accrual of certain operating expenses. These estimates are reviewed on an  ongoing basis to determine the adequacy of these accruals. For the three months  ended March 31, 2004 and 2003, iVillage reversed approximately $30,000 and $0.1  million, respectively, of accruals included in operating expenses due to  changes in estimates on services previously provided. These amounts were offset  by additional accruals for various operating expenses.





Net Loss Per Share





Basic net loss  per share is computed using the weighted-average number of common shares  outstanding during the period.  Diluted  net loss per share is computed using the weighted-average number of common  shares and common stock equivalents outstanding during the period.  Common stock equivalent shares are excluded  from the computation if their effect is anti-dilutive.





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Included in  the March 31, 2004 and 2003 calculation of weighted average number of shares of  common stock outstanding are 62,467 and 202,985 shares, respectively, which  have not been issued.  These shares are  being held for former Women.com and Promotions.com stockholders that have not  yet exchanged their respective shares for shares of iVillage during the periods  presented, but are entitled to do so.





Stock options and warrants  in the amount of 9,810,612 shares and 12,421,561 shares for the three months  ended March 31, 2004 and 2003, respectively, were not included in the  computation of diluted net loss per share as they were anti-dilutive as a  result of net losses during the periods presented.





Stock-Based Compensation





iVillage  applies Accounting Principles Board Opinion, or APB, No. 25, Accounting for  Stock Issued to Employees, or APB 25, and related interpretations in  accounting for its stock option issuances, and has adopted the disclosure-only  provisions of SFAS No. 123, Accounting for Stock-Based Compensation, or SFAS  123. No compensation cost related to grants of stock options was reflected in  iVillages net loss, as all options granted under the plans had an exercise  price at least equal to the market value of the underlying common stock on the  date of grant. Compensation cost related to the modification of stock option  terms is measured at the quoted market price of iVillages common stock at the  measurement date and is amortized to expense over the vesting period.  Compensation costs related to the modification of stock option terms was  approximately $37,000 for the three months ended March 31,
2003. If  compensation cost for iVillages stock options, utilizing the Black Scholes  model, had been determined based on the fair value of the stock options at the  grant date for awards in the three months ended March 31, 2004 and 2003  consistent with the provisions of SFAS 123, iVillages net loss would have been  adjusted to the pro forma amounts indicated below:





|                                                              |  | Three    months ended     March 31,            |       
|------------------------------------------------------------- |  | ---------------------------------------------- | ------
|                                                              |  |                                                |       
|                                                              |  | 2004                                           |       
|                                                              |  |                                                |       
|                                                              |  | ($ in    thousands, except     per share data) |       
|Net loss- as reported                                         |  | $                                              | (864  
|Stock-based compensation    expense determined under SFAS 123 |  |                                                | (960  
|                                                              |  |                                                |       
|Net loss - pro forma                                          |  | $                                              | (1,824
|                                                              |  |                                                |       
|Net loss per share  as    reported                           |  | $                                              | (0.01 
|                                                              |  |                                                |       
|Net loss per share  pro    forma                             |  | $                                              | (0.03 
|                                                              |  |                                                |       




Because options vest over  several years and additional option grants are expected to be made in future  years, the above pro forma results are not representative of the pro forma  results for the full fiscal year or any future periods.





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The weighted average  assumptions used for grants made in 2004 and 2003 are as follows:





|                        |  | Options    granted     during thethree    months ended     March 31, |           
|----------------------- |  | -------------------------------------------------------------------- | ----------
|                        |  |                                                                      |           
|                        |  | 2004                                                                 |           
|                        |  |                                                                      |           
|Risk-free interest rate |  |                                                                      | 2.65      
|Expected option life    |  |                                                                      | 4    years
|Dividend yield          |  |                                                                      | 0.00      
|Volatility              |  |                                                                      | 101.00    




Recent Accounting Pronouncements





In December  2003, the Financial Accounting Standards Board, or FASB, issued Interpretation  No. 46R, Consolidation of Variable Entities, or FIN 46R. FIN 46R replaces the  same titled FIN 46 that was issued in January 2003. FIN 46R requires the  consolidation of a variable interest entity by a company that bears the  majority of risk of loss from the variable entitys activities, is entitled to  receive a majority of the variable interest entitys residual returns, or both.  The provisions of this interpretation are effective for iVillage beginning in  the first quarter of fiscal 2004. iVillages adoption of this interpretation  did not have a material impact on its financial position, cash flows or results  of operations.





Note 2 Goodwill





Intangible  assets with indefinite lives and goodwill are not amortized, but are tested at  least annually for impairment, or if circumstances change that will more likely  than not reduce the fair value of the reporting unit below its carrying amount.  iVillage performs its annual impairment analysis in the fourth quarter of the  fiscal year. In December 2003, iVillage completed the annual impairment test  and no impairment was recognized.





The following  table sets forth the components of goodwill, net as of December 31, 2003 and  March 31, 2004 (in thousands):





|                      |  | December    31,    2003 |        | Acquisition |   | Impairment    losses |  | March 31,    2004 |  
|--------------------- |  | ----------------------- | ------ | ----------- | - | -------------------- |  | ----------------- | -
|                      |  |                         |        |             |   |                      |  |                   |  
|Reporting    unit  1 |  | $                       | 19,084 |             | $ |                     |  | $                 | 
|Reporting    unit  2 |  |                         | 1,693  |             |   |                     |  |                   | 
|Reporting    unit  3 |  |                         | 1,803  |             |   |                     |  |                   | 
|Reporting    unit  4 |  |                         |       |             |   |                     |  |                   | 
|                      |  |                         |        |             |   |                      |  |                   |  
|                      |  | $                       | 22,580 |             | $ |                     |  | $                 | 
|                      |  |                         |        |             |   |                      |  |                   |  




|Reporting unit  | 1 includes iVillage Inc.,    Women.com Networks, Inc., Knowledgeweb, Inc., and Cooperative Beauty    Ventures, L.L.C.
|---------------- | ---------------------------------------------------------------------------------------------------------------------
|                 |                                                                                                                      
|Reporting unit  | 2 includes iVillage    Parenting Network, Inc., Lamaze Publishing Company and iVillage Integrated    Properties, Inc.
|                 |                                                                                                                      
|Reporting unit  | 3 includes Public Affairs    Group, Inc.                                                                             
|                 |                                                                                                                      
|Reporting unit  | 4 includes Promotions.com,    Inc.                                                                                   




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Note 3 Intangible Assets





iVillage  reviews for the impairment of long-lived assets and certain identifiable  intangibles whenever events or changes in circumstances indicate that the  carrying amount of an asset may not be recoverable in accordance with the  provisions of SFAS 144.





Identifiable  intangible assets are amortized under the straight-line method over the period  of expected benefit ranging from one to ten years.  The following table sets forth the components of the intangible  assets subject to amortization as of March 31, 2004 and December 31, 2003 (in  thousands):





|                                                      |  |                           |  | March 31,    2004           |        | December    31, 2003        |  
|----------------------------------------------------- |  | ------------------------- |  | --------------------------- | ------ | --------------------------- | -
|                                                      |  |                           |  |                             |        |                             |  
|                                                      |  | Rangeof    useful    life |  | Gross    carrying    amount |        | Accumulated    amortization |  
|                                                      |  |                           |  |                             |        |                             |  
|Advertiser and member lists    and customer contracts |  | 2-10    years             |  | $                           | 20,727 |                             | $
|Trademarks and domain names                           |  | 3    years                |  |                             | 3,227  |                             |  
|Licensing agreement                                   |  | 10    years               |  |                             | 2,900  |                             |  
|Technology                                            |  | 3    years                |  |                             | 935    |                             |  
|Non-competition agreements                            |  | 1    year                 |  |                             | 810    |                             |  
|Content                                               |  | 3 years                   |  |                             | 600    |                             |  
|                                                      |  |                           |  |                             |        |                             |  
|                                                      |  |                           |  | $                           | 29,199 |                             | $
|                                                      |  |                           |  |                             |        |                             |  




Amortization  expense for the three months ended March 31, 2004 and 2003 was approximately  $1.2 million and $1.3 million, respectively.





Estimated  amortization expense for the twelve months ending March 31 are as follows (in  thousands):





|2005 |  | $ | 2,907  | 
|---- |  | - | ------ | 
|2006 |  |   | 1,892  | 
|2007 |  |   | 1,814  | 
|2008 |  |   | 1,760  | 
|2009 |  |   | 1,760  | 
|     |  |   |        | 
|     |  | $ | 10,133 | 
|     |  |   |        | 




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Note 4 Deferred Gain on Sale of Joint Venture Interest





In March 2003,
    iVillage and Tesco.com Limited, a division of Tesco, PLC, or Tesco, restructured
    the terms of their joint venture so that Tesco purchased iVillages
    entire ownership interest in iVillage UK. iVillage and Tesco also entered
    into a twenty-year license agreement for the use of certain of iVillages
    content and intellectual property, subject to earlier termination upon the
    occurrence of certain events, for the greater of a minimum monthly license
    fee or a percentage of iVillage UKs gross revenues.





All monies  received by iVillage under the license agreement will be classified as other  income and will be included in the condensed consolidated statements of  operations as a gain on sale of joint venture interest. iVillage has  earned  $0.8 million in year one of the  license agreement for services provided.   As of March 31, 2004, iVillage has received approximately $0.7 million  of this amount.





Note 5  Discontinued Operations





As of March 31, 2004 and  December 31, 2003, included in Other current liabilities in the consolidated  balance sheets is approximately $0.1 million of current liabilities of  discontinued operations.





Note 6  Related Party Transactions





America Online, Inc., a division of Time Warner Inc.





America Online, Inc., a  division of Time Warner Inc., or AOL, is a stockholder of iVillage.  Additionally, an employee of AOL is a member  of the board of directors. During 2003, iVillage signed six advertising  agreements with AOL to promote various AOL products. Of these six agreements,  five were completed as of December 31, 2003 and the remaining agreement was  completed in January 2004. In consideration of these services, AOL paid  iVillage approximately $0.5 million, of which approximately $0.1 million was  received in the first quarter of 2004.





In January  2004, AOL signed a contract for various services offered by PAG. In  consideration of these services, AOL paid PAG $22,500.





At March 31,
    2004 and December 31, 2003, no amounts and approximately $0.1 million were
    due from AOL, respectively, and no amounts were owed to AOL, respectively.
Included in Revenues in the condensed consolidated statements of
operations is approximately $38,000 and no amount from the AOL agreements for
the three months ended March 31, 2004 and 2003, respectively.





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Hearst Communications, Inc.





As of March 31, 2004, Hearst  owned approximately 31% of iVillages outstanding common stock and had board of  directors representation. (See Note 8  Capital Stock  Warrants)





As part of the acquisition  of Women.com, iVillage acquired approximately $4.9 million of prepaid print  advertising in certain Hearst magazines. These ads appeared through December  2003. iVillage recognized approximately $0.1 million of non-cash print  advertising expense from this advertising for the three months ended March 31,  2003.





Additionally, from time to  time, iVillage has provided other production services outside the scope of its  various agreements with Hearst.





Revenues, net  of royalty payments, from Hearst for the three months ended March 31, 2004 and  2003 were approximately $1.9 million and $1.6 million, respectively. As of  March 31, 2004 and December 31, 2003, iVillage was owed a net receivable of  approximately $1.7 million and $1.3 million, respectively, from this  stockholder.





Waterfront Media, Inc.





The Chief Executive Officer  of iVillage serves on the board of directors of one of iVillages customers,  Waterfront Media Inc, or Waterfront Media. During the first quarter of 2004,  iVillage signed three new advertising agreements with Waterfront Media.  Of the three agreements, two were completed as of March 31, 2004. As of March  31, 2004 and December 31, 2003, approximately $43,000 and $0.1 million were due from Waterfront  Media, respectively. Included in Revenues in the condensed consolidated statements of operations is  approximately $0.2 million and no amount from Waterfront Media for the three  months ended March 31, 2004 and 2003, respectively.





Stockholder Note Receivable





During the  first quarter of 2004, we received approximately $0.1 million from the  repayment of stockholder notes.





Note 7  Commitments and Contingencies





Leases





iVillage leases office space  and equipment, under non-cancelable operating leases expiring at various dates  through April 2015. The following is a schedule of future minimum lease  payments under non-cancelable operating leases as of March 31, 2004, for the  next five years:





|Twelve months ending March 31: |  | (in    thousands) |       
|------------------------------ |  | ----------------- | ------
|                               |  |                   |       
|2005                           |  | $                 | 2,130 
|2006                           |  |                   | 1,924 
|2007                           |  |                   | 1,691 
|2008                           |  |                   | 1,491 
|2009                           |  |                   | 1,476 
|Thereafter                     |  |                   | 6,983 
|                               |  |                   |       
|                               |  | $                 | 15,695
|                               |  |                   |       




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In addition,  in the ordinary course of business, iVillage enters into agreements with  various service providers for ad serving, satellite transmissions and  license/content arrangements.





Technology





Upon the  expiration of the contract related to the satellite technology used by iVillage  Parenting Network, Inc. to transmit its television channels, or in the event of  an unforeseen earlier interruption of such service, iVillage would need to  either negotiate a new contract, find another satellite provider and/or invest  in alternative technology to distribute this service.





Litigation





In the normal  course of business, iVillage is subject to proceedings, lawsuits and other  claims.  Such matters are subject to  many uncertainties, and outcomes are not predictable with assurance.  Consequently, the ultimate aggregate amount of monetary liability or financial  impact with respect to these matters at March 31, 2004 cannot be ascertained.  While these matters could affect the operating results of any one quarter when  resolved in future periods and while there can be no assurance with respect  thereto, management believes, with the advice of outside legal counsel, that  after final disposition any monetary liability or financial impact to iVillage  from these matters would not be material to iVillages results of operations  and financial condition.





Several plaintiffs have  filed class action lawsuits in federal court against iVillage, several of its  present and former executives and its underwriters in connection with its March  1999 initial public offering.  A similar  class action lawsuit was filed against Women.com, several of its former  executives and its underwriters in connection with Women.coms October 1999  initial public offering.  The complaints  generally assert claims under the Securities Act of 1933, as amended, the  Exchange Act and rules and regulations of the Securities and Exchange  Commission, or SEC.  The complaints seek  class action certification, unspecified damages in an amount to be determined  at trial, and costs associated with the litigation, including attorneys fees.





In February  2003, the defendants motion to dismiss certain of the plaintiffs claims was  granted in part, but, for the most part, denied. In June 2003, a proposed  settlement of this litigation was structured between the plaintiffs, the issuer  defendants, the issuer officers and directors named as defendants, and the  issuers insurance companies. The proposed settlement generally provides that  the issuer defendants and related individual defendants will be released from  the litigation without any liability other than certain expenses incurred to  date in connection with the litigation, the issuer defendants insurers will  guarantee $1.0 billion in recoveries by plaintiff class members, the issuer  defendants will assign certain claims against the underwriter defendants to the  plaintiff class members, and the issuer defendants will have the opportunity to  recover certain litigation-related expenses if the
plaintiffs recover more than  $5.0 billion from the underwriter defendants. The respective boards of directors  of iVillage and Women.com each approved the proposed settlement in July 2003.  The proposed settlement is now subject to approval by the other involved  parties as well as to the final approval of the court. There can be no  assurance that this proposed settlement would be approved and implemented in  its current form, or at all.





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In June 2001,  Euregio.net commenced an action in Belgium against Women.com claiming damages  in excess of one million Euros in connection with certain alleged copyright  infringements. Despite Women.coms arguments challenging the jurisdiction of  the Belgian court, the alleged infringements and the amount of damages, in  January 2003 a Belgian court issued a judgment against Women.com in the amount  of approximately 850,000 Euros (approximately $1.0 million based on the Euro  exchange rate as of March 31, 2004). Women.com has been advised by outside  legal counsel that Euregio.net would have to commence legal proceedings in the  United States to enforce this judgment. Women.com has appealed this judgment in  the Belgian courts and will also oppose any effort by the plaintiffs to enforce  this judgment in the United States court system.





iVillage, with
    the advice of outside legal counsel, believes that the lawsuits and claims
    asserted against iVillage and Women.com pursuant to these complaints are
    without merit and intends to vigorously defend against these claims. iVillage
    does not believe that any of these legal proceedings will have a material
adverse effect on iVillages results of operations or financial condition.





Note 8  Capital Stock  Warrants





On January 14, 2004, Hearst exercised a warrant it received in  connection with a securities purchase agreement related to iVillages acquisition  of Women.com and purchased 2,065,695 shares of common stock for $0.01 per  share. Pursuant to its terms, the warrant became exercisable when the average  closing price of our common stock had exceeded $3.75 for 15 consecutive trading  days prior to January 14, 2004, entitling Hearst to purchase each share for  $0.01. (See Note 6  Related Party Transactions  Hearst Communications, Inc.).





During February 2004, an aggregate of 29,449 shares of common stock  were issued to our existing investors in exchange for warrants they had  acquired in connection with iVillages acquisition of Women.com. The remaining  4,856 warrants issued in connection with iVillages acquisition of Women.com  went unexercised and expired on February 18, 2004.





As of March 31, 2004, there were outstanding warrants to purchase 5,282  shares of iVillage common stock with an exercise price of $14.35 per share.





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





Certain  statements in this Quarterly Report on Form 10-Q, including certain statements  contained in this Item 2, constitute forward-looking statements within the  meaning of Section 27A of the Securities Act of 1933, as amended, or the  Securities Act, and Section 21E of the Securities Exchange Act of 1934, as  amended, or the Exchange Act. The words or phrases can be, expects, may  affect, anticipates,  may depend, believes, estimates, plans,  projects and similar words and phrases are intended to identify such  forward-looking statements. These forward-looking statements are subject to  various known and unknown risks and uncertainties and we caution you that any  forward-looking information provided by or on our behalf is not a guarantee of  future results, performance or achievements. Actual results could differ
materially from those anticipated in these forward-looking statements due to a  number of factors, some of which are beyond our control.  In addition to those risks discussed below  in the section entitled Risk Factors and in our other public filings, press  releases and statements by our management, factors that may cause our actual  results, performance or achievements to differ materially from any future  results, performance or achievements expressed or implied in such forward  looking statements include: (i) the volatile and competitive nature of the  Internet industry and media industry, (ii) changes in domestic and foreign  economic, political and market conditions, (iii) the effect of federal, state  and foreign regulation on our business, (iv) the impact of recent and future  acquisitions and joint ventures by us on our business and financial condition,  (v) our ability to establish and maintain relationships with advertisers, sponsors,  and other third party providers and
partners, (vi) our ability to maintain  or increase user traffic levels, (vii) the loss of one or more of our  largest customers, and (viii) the impact of pending litigation on our  business, results of operations and financial condition. All such  forward-looking statements are current only as of the date on which such  statements were made. We do not undertake any obligation to publicly update any  forward-looking statement to reflect events or circumstances after the date on  which any such statement is made or to reflect the occurrence of unanticipated  events.





In this  Quarterly Report on Form 10-Q, iVillage, we, our and us refer to  iVillage Inc. and its consolidated subsidiaries.





Overview





The following  managements discussion and analysis is intended to provide information  necessary to understand our unaudited interim condensed consolidated financial  statements and highlight certain other information which, in the opinion of  management, will enhance a readers understanding of our financial condition,  changes in financial condition and results of operations. It is organized as  follows:





| |  | The section    entitled iVillage Background, briefly describes our principal operational    activities.                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                              
| |  | Critical Accounting    Policies discusses
      each of our most critical accounting policies, including revenue recognition,
      fixed assets and intangibles, goodwill,




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| |   | income    taxes, allowance for doubtful
      accounts and management estimates and assumptions.                                                                                                                                                                                                                                                                               
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| |  | Results of    Operations discusses the primary factors that are likely to contribute to    significant variability of our results of operations from period to period
  and then provides detailed narrative    regarding significant changes in our results of operations for the three    months ended March 31, 2004 compared to the three months ended March 31,    2003.
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| |  | Liquidity    and Capital Resources discusses our liquidity, cash flows for the three    months ended March 31, 2004 compared to those for the three months ended    March 31, 2003, factors that may influence our future cash requirements and    the status of certain contractual obligations as of March 31, 2004.                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| |  | Recent    Accounting Pronouncements discusses
      the significance of various recent accounting pronouncements to our financial
      reporting.                                                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| |  | Legal    Proceedings discusses the status of certain litigation.                                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                
| |  | Risk    Factors discusses various risks and uncertainties associated with our    business.                                                                                                                                                                                                                                                                                   




iVillage Background





iVillage is  the
    Internet for women and consists of several online and offline media-based
    properties, including the iVillage.com Web site, or iVillage.com, Knowledgeweb,
    Inc., operator of the Astrology.com Web site, or Astrology.com, iVillage
    Consulting, Promotions.com, Inc., or Promotions.com, iVillage Parenting Network,
    Inc., or IVPN, and Public Affairs Group, Inc., or PAG. Following is a synopsis
    of our principal operational activities:





|iVillage.com           | An online    destination providing practical solutions on a range of topics and everyday    support for women 18 years of age and over.                                                       
|---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                       |                                                                                                                                                                                               
|Astrology.com          | An online    destination for individuals seeking daily horoscopes, astrological content    and personalized forecasts.                                                                        
|                       |                                                                                                                                                                                               
|iVillage    Consulting | Assists    companies in the creation and development of Web sites, digital commerce    platforms and other aspects of technological infrastructures, primarily for    Hearst, a related party.
|                       |                                                                                                                                                                                               
|Promotions.com         | Includes    Promotions.com and Webstakes.com, which offer online and offline promotions    and direct marketing programs that are integrated with customers marketing    initiatives.        
|                       |                                                                                                                                                                                               
|IVPN                   | Through    IVPN, we operate iVillage Integrated Properties, Inc., or IVIP, the operator    of The Newborn Channel and Lamaze                                                                  




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|    | Publishing    Company, or Lamaze Publishing, publisher of Lamaze Parents, which    collectively provide informational and instructional magazines, custom    publications, television programming, videos and online properties of    interest to expectant and new parents. 
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                              
|PAG | Comprised of    Business Womens
      Network, Diversity Best Practices and Best Practices in Corporate Communications,
      each offering an extensive database of pertinent information and events
      to subscribing companies and members, and relevant publications.




Critical Accounting  Policies





Revenue Recognition





iVillage





Our revenues  are derived primarily from the sale of sponsorship and advertising contracts.  Sponsorship revenues are derived principally from contracts designed to support  a customers broad marketing objectives, including brand promotion, awareness,  product introductions and online research. Sponsorship agreements typically  include the delivery of impressions on our Web sites and occasionally the  design and development of customized sites that enhance the promotional  objectives of the sponsor. An impression is the viewing of promotional material  on a Web page, which may include rich media and display or banner  advertisements, links, or other text or images. As part of a few sponsorship  agreements, sponsors selling products may provide us with a commission on sales  of their products generated through our Web sites. To date, amounts received  from the sale of sponsors products have not been significant.





Advertising  revenues are derived principally from short-term advertising contracts in which  we typically guarantee a minimum number of impressions or pages to be delivered  to users over a specified period of time for a fixed fee. Sponsorship and  advertising revenues are recognized ratably in the period in which the  advertisement is displayed, provided that we have no continuing obligations and  the collection of the receivable is reasonably assured, at the lesser of the  ratio of impressions delivered over total guaranteed impressions or the  straight-line basis over the term of the contract. To the extent that minimum  guaranteed impressions are not met, we defer recognition of the corresponding  revenues until the guaranteed impressions are achieved.





We also derive  sponsorship and advertising revenues from sponsored links appearing on our Web  site that are based upon relevant content or a World Wide Web search query  result. These revenues are earned on a cost per thousand impressions and/or a  percentage of the advertisers net revenue and are recognized upon notification  from the search engine provider.





For contracts  with multiple elements, namely those that include delivered and undelivered  products, or advertising and production revenue, we allocate revenue to each





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element based on evidence of  its fair value under the Financial Accounting Standards Board, or FASB,  Emerging Issues Task Force Issue No. 00-21, Accounting for Revenue  Arrangements with Multiple Deliverables, or EITF 00-21. Evidence of fair value  is the price of a deliverable when it is regularly sold on a stand-alone basis.  We recognize revenue allocated to each element when the criteria for revenue  set forth above are met.





Barter  revenues generally represent exchanges by us of advertising space on our Web  sites for reciprocal advertising space on or traffic from other Web sites.  Revenues and expenses from these barter transactions are recorded based upon  the fair value of the advertisements delivered. Fair value of advertisements  delivered is based upon our recent practice of receiving cash for similar  advertisements. Barter revenues are recognized when the advertisements are  displayed on iVillage.com and its affiliated properties. Barter expenses are  generally recognized when our advertisements are displayed on reciprocal Web  sites or properties, generally in the same period as when advertisements are  displayed on iVillage.com and its affiliated properties.  Barter expenses are included as part of  sales and marketing expenses.





We recognize  revenues from iVillage Consultings services based upon a number of factors,  including actual hours worked at negotiated hourly rates, completed contract or  straight-line over the life of the contract.





We have  received revenues from initiatives involving subscription-based properties, the  sale of iVillage-branded products and services, the sale of third-party  products, the licensing of portions of our content and services and the sale of  research. We recognize revenues from these initiatives when products are  shipped and/or provided to the customer, or straight-line over the life of the  agreement and when the collection of the receivable is reasonably assured and  no further obligation remains.





Astrology.com





Revenues from  Astrology.com consist primarily of the sale of astrological charts and other  related products to users of our astrology-related Web sites. We recognize  revenues from astrological product sales, net of any discounts, when products  are delivered to customers, the collection of the receivable is reasonably  assured and no further obligations remain.





Promotions.com





Promotions.com,  Inc. generates revenues through Promotions.com, an online and offline full  service promotions services group, and Webstakes.com, a division dedicated to  Internet sweepstakes and promotions.





Promotions.com  revenues are derived principally from contracts in which Promotions.com  provides custom services for the creation, administration and implementation of  a promotion on a customers Web site. Promotions.coms revenue recognition  policy related to its services is to recognize revenues as deliverables are met  and/or ratably over the period of the promotion, provided that no significant  obligations remain and collection of the receivable is reasonably assured.





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Webstakes.com  revenues are derived primarily from service contracts whereby Webstakes.com  recognizes revenues based on either a cost-per-click or a cost-per-action  pricing model. Webstakes.com recognizes revenue related to its cost-per-click  pricing model when a user has been delivered to the customers Web site, the  customer has reported such activity to us and the collection of the corresponding  receivable is reasonably assured. Revenue is recognized differently in a  cost-per-action pricing model, which requires Webstakes.com to not only deliver  the aforementioned user to a customers Web site, but also requires a specific  user action such as purchasing a product or registering for more information as  a member of the customers Web site in order for Webstakes.com to earn revenue.  Webstakes.com recognizes revenue related to the cost-per-action pricing model  when the specific action has
been performed on its customers Web site, the  customer has reported such activity to us, and the collection of the  corresponding receivable is reasonably assured.





IVPN





IVPNs  revenues have been derived primarily from advertising placements in IVPNs  publications, videos and Web site, and broadcasts of The Newborn Channel, The  Newborn Channel-Spanish, currently offered as an audio overlay to The Newborn  Channel, and The Wellness Channel.  In  addition, sponsorship and advertising revenues are generated through a sampling  and coupon program, which offers advertisers the ability to distribute samples,  coupons and promotional literature to new and expectant parents. Sponsorship  and advertising revenues are recognized on a straight-line basis over the term  of the contract, provided that IVPN has no continuing obligations and the  collection of the receivable is reasonably assured.





IVPN creates  and distributes custom publications and mailings primarily on behalf of one  advertiser. Revenues from the sale of custom publications and mailings are  recognized when IVPN fulfills all obligations under the terms of the contract  and the collection of the receivable is reasonably assured. IVPN has also  commenced the collection of an annual fee to hospitals for their receipt of  broadcasts of the Newborn Channel. Contracts related to this fee typically  range from three to five years in length. IVPN recognizes revenues from these  fees ratably over the term of the agreement provided the collection of the  receivable is reasonably assured.





PAG





Revenues from  PAG are generated primarily through subscription-based programs that convey  current best practices for both diversity issues in the workplace and corporate  communications and the hosting of events, most notably an annual two-day summit  and gala event that focuses on diversity and women. We recognize revenue from  subscriptions ratably over the term of the subscription agreement and from the  events when the events are held, provided the collection of the receivable is  reasonably assured.





Fixed Assets and Intangibles





Depreciation  of equipment, furniture and fixtures, and computer software is provided for by  the straight-line method over their estimated useful lives ranging from three  to five years. Amortization of leasehold improvements is provided for over the  lesser of the term of the related lease or the estimated useful life of the  improvement. The cost of additions and expenditures





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which extend the useful lives  of existing assets are capitalized and repairs and maintenance costs are  charged to operations as incurred. Amortization of intangible assets are over  the expected life of the related asset and range from one to ten years.  Effective January 1, 2002, we adopted Statement of Financial Accounting  Standard, or SFAS, No. 144, Accounting for the Impairment or Disposal of  Long-Lived Assets, regarding the recognition and measurement of the impairment  of long-lived assets to be held and used.





We assess the  recoverability of our fixed assets and intangible assets by determining whether  the unamortized balance over the assets remaining life can be recovered  through undiscounted forecasted cash flows. If undiscounted forecasted cash  flows indicate that the unamortized amounts will not be recovered, an  adjustment will be made to reduce the net amounts to an amount consistent with  forecasted future cash flows discounted at a rate commensurate with the risk  associated when estimating future discounted cash flows. Future cash flows are  based on trends of historical performance and our estimate of future  performance giving consideration to existing and anticipated competitive and  economic conditions.





Goodwill





Goodwill is  not subject to amortization and is tested for impairment annually, or more  frequently if events or changes in circumstances indicate that the asset may be  impaired in accordance with SFAS No. 142, Goodwill and Other Intangible  Assets. The impairment test consists of a comparison of the fair value of  goodwill with its carrying amount. If the carrying amount of goodwill exceeds  its fair value, an impairment loss will be recognized in an amount equal to  that excess. Fair value is typically based upon future cash flows discounted at  a rate commensurate with the risk involved. After an impairment loss is  recognized, the adjusted carrying amount of goodwill is its new accounting  basis.





Income Taxes





We recognize  deferred taxes by the asset and liability method of accounting for income taxes  in accordance with the provisions of SFAS No. 109, Accounting for Income  Taxes. Deferred income taxes are recognized for differences between the  financial statement and tax bases of assets and liabilities at enacted  statutory tax rates in effect for the years in which the differences are  expected to reverse. The effect on deferred taxes of a change in tax rates is  recognized in income in the period that includes the enactment date. In  assessing the realizability of deferred tax assets, we consider whether it is more  likely than not that some portion or all of the deferred tax assets will not be  realized. The ultimate realization of deferred tax assets is dependent upon the  generation of future taxable income or reversal of deferred tax liabilities  during the periods in which those temporary differences become deductible.
We  consider the scheduled reversal of deferred tax liabilities, projected future  taxable income, and tax planning strategies in making this assessment. Based on  this consideration, we believe it is more likely than not that the net deferred  tax assets will not be realized.





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Allowance for Doubtful Accounts





We assess the  required amount of allowance for doubtful accounts based on past experience,  our review of the accounts receivable agings and our analysis of specific  customer accounts.





Management Estimates and Assumptions





The  preparation of financial statements in conformity with accounting principles  generally accepted in the United States of America requires management to make  estimates and assumptions that affect the reported amount of assets and  liabilities, disclosure of contingent assets and liabilities at the date of the  financial statements, and the reported amounts of revenues and expenses during  the reporting period. Actual results could differ from these estimates.  Significant estimates and assumptions made by us include those related to the  useful lives of fixed assets and intangible assets, the recoverability of fixed  assets, goodwill and intangible assets, the allowance for doubtful accounts and  the assessment of expected probable losses (if any) of claims and potential  claims.





Results of Operations





In accordance  with SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information,  or SFAS 131, segment information is being reported consistent with our method  of internal reporting. In accordance with SFAS 131, operating segments are  defined as components of an enterprise for which separate financial information  is available that is evaluated regularly by the chief operating decision maker  in deciding how to allocate resources and in assessing performance. We are  organized primarily by subsidiaries and divisions. Our subsidiaries and  divisions have no operating managers who report to the chief operating decision  maker.  The chief operating decision  maker reviews information at a consolidated results of operations level,  although the chief operating decision maker does review revenue results of  subsidiaries and divisions. As a result, our discussion of revenue has been  organized into
separate subsidiaries and divisions, however operating expenses  and results of operations are discussed on a combined basis.





Our quarterly  results of operations fluctuate due to a variety of factors.  For example, we achieved net income for the  first time in the three months ended December 31, 2003.  However, we incurred a net loss of  approximately $0.9 million for the three months ended March 31, 2004.





We believe the  following factors may contribute to the variability of our results of  operations from period to period:





| |  | the loss of    a contract from a major customer;                                               
| | - | -----------------------------------------------------------------------------------------------
| |   |                                                                                                
| |  | the timing    of our recognition of revenue;                                                   
| |   |                                                                                                
| |  | the    volatility of the online advertising market;                                            
| |   |                                                                                                
| |  | an    interruption or malfunction in service from our primary third party service    providers;




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| |  | the timing    of our sponsored events and symposiums;                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                
| |  | the date of    commencement of a sponsorship and advertising campaign; and                                                                                     
| |   |                                                                                                                                                                
| |  | the date of    completion of printing and/or distribution of a custom publication or    magazine based upon a customers advertising and marketing initiatives.




Revenues





Starting with
    this quarterly report on Form 10-Q, we have reclassified Promotions.com revenues
    and have included these revenues
under iVillage.com.  As a result, the  following discussion of our revenues
will not correspond to similar discussions in prior quarterly and annual reports.   The
following table sets forth revenues by property (dollars in thousands):





|               |  | Three    Months Ended March 31, |       
|-------------- |  | ------------------------------- | ------
|               |  |                                 |       
|               |  | 2004                            |       
|               |  |                                 |       
|iVillage.com   |  | $                               | 8,616 
|Astrology.com  |  |                                 | 840   
|IVPN           |  |                                 | 5,377 
|PAG            |  |                                 | 674   
|               |  |                                 |       
|Total revenues |  | $                               | 15,507
|               |  |                                 |       

---

|(1) | Percent of total revenues.                                          
|--- | --------------------------------------------------------------------
|(2) | The aggregate of this    column does not equal 100% due to rounding.




iVillage.com





|                             |  | Three    Months Ended March 31, |      
|---------------------------- |  | ------------------------------- | -----
|                             |  |                                 |      
|                             |  | 2004                            |      
|                             |  |                                 |      
|                             |  | (dollars in
      thousands)    |      
|Sponsorship &    advertising |  | $                               | 5,308
|Barter                       |  |                                 | 833  
|iVillage Consulting          |  |                                 | 1,153
|Promotions.com               |  |                                 | 1,056
|Online services/other        |  |                                 | 266  
|                             |  |                                 |      
|                             |  | $                               | 8,616
|                             |  |                                 |      

---

|(1) | Percent of iVillage.coms    revenues.                              
|--- | --------------------------------------------------------------------
|(2) | The aggregate of this    column does not equal 100% due to rounding.




Revenues from  iVillage.com accounted for approximately 56% of total revenues for both the  three months ended March 31, 2004 and 2003. Revenues from iVillage.com  increased approximately $1.5 million, or 21%, for the three months ended March  31, 2004, as compared to the corresponding period in 2003. The increase in  revenues for the three months ended March 31, 2004, as compared to the  same period in 2003, was primarily due to an increase in sponsorship and  advertising revenues, which includes revenues from sponsored links, of approximately  $1.2 million and iVillage Consulting revenues of approximately $0.3 million.  The





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increase in sponsorship and  advertising revenues was primarily due to an increase in the number of  contracts and advertisers, coupled with higher pricing, in the first quarter of  2004, as compared to the corresponding period in 2003, generating incremental  revenues of approximately $0.9 million.   In addition, iVillages gURL.com division, the assets of which were  purchased by iVillage in July 2003, and revenues from sponsored links, which  commenced in the third quarter of 2003, contributed approximately $0.1 million  and $0.2 million, respectively, in revenues in the first quarter of 2004, with  no amounts for the three months ended March 31, 2003.  The approximately $0.3 million increase in iVillage Consulting  revenues was primarily due to a two-year Web site services agreement signed  with Hearst, a related party, in December 2003 for providing production,  maintenance and hosting services for three teen sites.





Revenues from  Promotions.com increased approximately $0.1 million, or 16%, for the three  months ended March 31, 2004, primarily due to a larger number of promotional  campaigns created and managed by the Promotions.com division for a customer in  the first quarter of 2004, as compared to the first quarter of 2003, resulting  in increased revenues of approximately $0.5 million.  This increase is offset by lower revenues of approximately $0.4  million from the Webstakes.com division due to the modification of its business  model during 2003, in anticipation of the federal CAN-SPAM Act of 2003, as well  as a deteriorating environment for email direct marketers.  Revenues from the Webstakes.com division have  continued to decline, and if such trend continues we believe we have the  ability to delay or reduce expenditures associated with this property.





Astrology.com





Revenues from  Astrology.com accounted for approximately 5% of total revenues for both the three  months ended March 31, 2004 and March 31, 2003.  Revenues from Astrology.com increased approximately $0.2 million,  or 23%, for the three months ended March 31, 2004, as compared to the  corresponding period in 2003. The increase was primarily due to a larger sales  volume of astrological charts and higher fees received from the licensing of  content in the first quarter of 2004, as compared to the corresponding period  in 2003.





IVPN





|                             |  | Three    Months Ended March 31,   |      
|---------------------------- |  | --------------------------------- | -----
|                             |  |                                   |      
|                             |  | 2004                              |      
|                             |  |                                   |      
|                             |  | (dollars in
           thousands) |      
|Sponsorship &    advertising |  | $                                 | 2,697
|Custom publications          |  |                                   | 2,265
|Licensing fees               |  |                                   | 415  
|                             |  |                                   |      
|                             |  | $                                 | 5,377
|                             |  |                                   |      

---

|(1) | Percent of IVPNs revenues.
|--- | ---------------------------




Revenues from  IVPN accounted for approximately 35% of total revenues for the three months  ended March 31, 2004.  For the  comparable period in 2003, revenues from IVPN accounted for approximately 34%.  Revenues from IVPN increased approximately $1.1 million, or 26%, for the three  months ended March 31, 2004, as compared to the corresponding period in 2003,  primarily due to an increase of approximately $1.0 million in revenues from  custom





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publications and an increase of  approximately $0.4 million in licensing fees, offset by a decrease of  approximately $0.3 million in sponsorship and advertising revenues. The  decrease in sponsorship and advertising revenues was primarily due to the loss  of two customers advertising on The Newborn Channel in the first quarter of  2004, compared to the corresponding period in 2003. Custom publications revenue  increased approximately 80% for the three months ended March 31, 2004, as compared  to the corresponding period in 2003, primarily due to an increase in the number  of publications created and distributed.   Revenues  from IVPN may vary based upon the timing and volume of customers advertising  and marketing initiatives.





Licensing fee  revenues increased for the three months ended March 31, 2004, as compared to  the corresponding period in 2003, due to the commencement of a larger number of  agreements in which hospitals pay an annual fee for The Newborn Channel. As of  March 31, 2004, 445 hospitals had agreed to pay a fee for The Newborn Channel  and 426 contracts had commenced. As of March 31, 2003, 70 hospitals had agreed  to pay a fee for The Newborn Channel and 53 contracts had commenced.





PAG





|                               |  | Three    Months Ended March 31, |    
|------------------------------ |  | ------------------------------- | ---
|                               |  |                                 |    
|                               |  | 2004                            |    
|                               |  |                                 |    
|                               |  | (dollars in
      thousands)    |    
|Subscription-based    programs |  | $                               | 662
|Events                         |  |                                 | 1  
|Barter                         |  |                                 | 11 
|                               |  |                                 |    
|                               |  | $                               | 674
|                               |  |                                 |    

---

|(1) | Percent of PAGs revenues.
|--- | --------------------------




Revenues from  PAG accounted for approximately 4% of total revenues for both the three months  ended March 31, 2004 and March 31, 2003. Revenues from PAG increased  approximately $0.1 million, or 23%, for the three months ended March 31, 2004,  as compared to the corresponding period in 2003, primarily due to an increase  of approximately $0.2 million in subscription-based programs revenue resulting  from an increase in the number of participating members and fees earned on  consulting agreements.





Revenues, Receivables and Customer  Concentration





Our five  largest customers accounted for approximately 37% of total revenues for the  three months ended March 31, 2004 and 33% of total revenues for the three  months ended March 31, 2003. Wal-Mart Stores, Inc. and its affiliates, or Wal-Mart, accounted for  approximately 15%, and Hearst Communications, Inc. and its affiliates, or  Hearst, a related party, accounted for approximately 12%, of total revenues for  the three months ended March 31, 2004. No other single customer accounted for  more than 10% of our total revenues for the three months ended March 31, 2004.  One customer, Hearst accounted for approximately 13% of total revenues for the  three months ended March 31, 2003. At March 31, 2004, Hearst accounted for approximately  29% of the net accounts receivable.  At  December 31, 2003, Hearst accounted for approximately 20% of the net accounts  receivable.  The significance of  revenues from any of our customers
can





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vary on a quarter to quarter basis as a  result of the number and timing of such customers advertising and marketing  initiatives.





We anticipate
    that our results of operations in any given period will continue to depend
    to a significant extent on revenues from a small number of customers. Hearst
    has been one of our largest customers for each of the last three years. The
    majority of revenue earned from Hearst in the first quarter of 2004 is pursuant
    to an amended and restated magazine content license and hosting agreement
    with
    Hearst,
    which grants to US
    the online distribution rights to seven Hearst magazine Web sites. Under
    this agreement, we provide production, maintenance and hosting services,
    for which in the first quarter of 2004 we recognized approximately $0.8 million
    in fees, and advertising services, for which we recognized approximately
    $0.7 million in fees. In addition, we are entitled to a commission derived
    from the sale of Hearst magazines, which in the first quarter of 2004 totaled
    approximately $0.2 million. As part of this magazine content license agreement
    we pay  Hearst a royalty fee, which in the first quarter of 2004 totaled
    approximately $0.2 million.





In May 2004,  we entered into a non-binding memorandum of understanding with Hearst regarding  a renewal of the magazine content licensing and hosting agreement.  Under the proposed terms of the renewal,





| |  | the term of    the magazine content
      licensing and hosting agreement would be extended for three years until
      June 2007;                                                                                                                                                                                         
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                            
| |  | Hearst would    pay us a production service fee of $4.0 million during the first year of the    renewed agreement which would increase by approximately $0.2 million in each    subsequent year;                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                            
| |  | We would    continue to receive
      a commission on magazine subscription sales and if magazine subscription
      sales do not reach a certain threshold in the second year of the extension,
      we will not be entitled to any commission from magazine subscription sales
      in the third year of the extension.
| |   |                                                                                                                                                                                                                                                                                                                            
| |  | We would no longer be required
         to offer Hearst, and Hearst would no longer be obligated to purchase,
      advertising on iVillage.com; and                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                            
| |  | Hearst would    continue to receive
      a commission from us on a percentage of the advertising sales from the
      Hearst magazine Web sites we host,  the commissions paid to and received
      from Hearst will vary based on performance.                                                                          




If we do not
    enter into a definitive agreement with Hearst, the amended and restated magazine
    content license and hosting agreement will expire in June 2004, but will
    continue afterwards on a month-to-month basis unless terminated by either
    party with 90 days prior notice. We cannot assure that this contract will
    be renewed on the terms specified in the memorandum of understanding, or

at all. A copy of the memorandum of understanding is filed with this report as
    an exhibit. The foregoing summary is qualified in its entirely by the full
    text of that document.





Because our  largest customers have varied over time in the past, we anticipate that they  will continue to do so in the future. Consequently, the loss of even a small  number of our largest customers at any one time may adversely affect our  business, financial condition and results of operations, unless we are able to  enter into contracts to replace lost revenues.





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Operating Expenses





The following  table sets forth our operating expenses by type (dollars in thousands):





|                                                 |  | Three Months Ended March 31, |       
|------------------------------------------------ |  | ---------------------------- | ------
|                                                 |  |                              |       
|                                                 |  | 2004                         |       
|                                                 |  |                              |       
|Editorial,    product development and technology |  |                              | 7,511 
|Sales    and marketing                           |  |                              | 4,385 
|General    and administrative                    |  |                              | 2,908 
|Depreciation    and amortization                 |  |                              | 1,804 
|                                                 |  |                              |       
|Total operating expenses                         |  | $                            | 16,608
|                                                 |  |                              |       

---

|(1) | Percent of total revenues.
|--- | --------------------------




Total  operating expenses have declined primarily as a result of cost reductions and  reduced depreciation and amortization.   In the past, we have achieved cost reductions through increased  managerial efficiencies and several expense reduction initiatives targeted at  certain expenses, including reduced advertising, reduced lease commitments,  targeted staff reductions and reduced employee benefit plan costs





Editorial, Product Development and Technology





Editorial, product  development and technology expenses consist primarily of the following:





| |  | payroll,    severance and related expenses for the editorial, technology, Web site design    and production staffs;                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                           
| |  | the cost of    communications;                                                                                                                                                            
| |   |                                                                                                                                                                                           
| |  | related    expenditures necessary to support iVillages Web sites, software development,    technology and support operations;                                                            
| |   |                                                                                                                                                                                           
| |  | costs    associated with IVPNs magazines, onsert program, which bundles samples and    promotional literature in a poly-bag with a magazine, and the broadcasting of    its programs; and
| |   |                                                                                                                                                                                           
| |  | an    allocation of facility expenses, which is based on the number of personnel in    editorial, product development and technology roles.                                               




Editorial,  product development and technology expenses for the three months ended March  31, 2004 were approximately $7.5 million, or 48% of total revenues. Editorial,  product development and technology expenses were approximately $7.6 million, or  60% of total revenues, for the corresponding period in 2003. The approximately  $0.1 million decrease between the comparable periods was primarily attributable  to a decrease in salaries, severance and related expenses of approximately $0.5  million and lower facility costs resulting in a decreased facilities allocation  of approximately $0.3 million. These amounts were partially offset by an  increase in consultant expenses from the Promotions.com division of  approximately $0.4 million and increased production costs of approximately $0.4  million associated with a larger number of IVPNs custom publications created  and distributed in the first quarter of 2004, as compared to the
corresponding  period in 2003. Facility costs decreased in 2004, as compared to





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the corresponding period in  2003, primarily due to a lease amendment entered into with the landlord of our  New York leased space, in the third quarter of 2003, whereby we received a  reduction in our leased space, as well as a reduction in our rent per square  foot. As a result, total costs for the New York lease facility decreased by  approximately $0.4 million in the first quarter of 2004, as compared to the  corresponding period in 2003. In addition, several vendor contracts were  renegotiated which decreased facility costs by approximately $0.2 million the  first quarter of 2004, as compared to the corresponding period in 2003.  Editorial, product development and technology expenses decreased as a  percentage of total revenues for the three months ended March 31, 2004, when  compared to the same period in 2003, primarily as a result of an increase in  revenues.





Sales and Marketing





Sales and  marketing expenses consist primarily of the following:





| |  | payroll,    commissions, severance and related expenses for sales and marketing    personnel;                    
| | - | -----------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                  
| |  | advertising    and other marketing-related expenses; and                                                         
| |   |                                                                                                                  
| |  | an    allocation of facility expenses, which is based on the number of personnel in    sales and marketing roles.




Sales and  marketing expenses for the three months ended March 31, 2004 were approximately  $4.4 million, or 28% of total revenues. Sales and marketing expenses were  approximately $5.5 million, or 44% of total revenues, for the corresponding  period in 2003. The approximate $1.1 million decrease in sales and marketing  expenses for the three months ended March 31, 2004, as compared to the same  period in 2003, was primarily attributable to a decrease in media expenses of  approximately $0.4 million, lower facility costs resulting in a decreased  facilities allocation of approximately $0.3 million and a decrease in salaries,  severance and related expenses of approximately $0.3 million. Sales and  marketing expenses decreased as a percentage of total revenues for the three  months ended March 31, 2004, when compared to the corresponding period in 2003,  due to a decrease in sales and marketing expenses, as a result of our overall
effort to manage costs, coupled with an increase in revenues.





Included in  sales and marketing expenses are barter transactions, which amounted to  approximately 19% of total sales and marketing costs during the three months  ended March 31, 2004, compared to approximately 20% of total sales and  marketing costs for the comparable period in 2003.





General and Administrative





General and  administrative expenses consist primarily of the following:





| |  | payroll,    severance and related expenses for executive management, finance, human    resources and in-house legal counsel;
| | - | ----------------------------------------------------------------------------------------------------------------------------




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| |  | directors    and officers insurance;                                                                                  
| | - | ------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                         
| |  | general    corporate overhead;                                                                                          
| |   |                                                                                                                         
| |  | professional    fees; and                                                                                               
| |   |                                                                                                                         
| |  | an    allocation of facility expenses, which is based on the number of personnel in    general and administrative roles.




General and  administrative expenses for the three months ended March 31, 2004 were $2.9  million, or 19% of total revenues. For the comparable period in 2003, general  and administrative expenses were approximately $3.0 million, or 24% of total  revenues. The approximately $0.1 million decrease in general and administrative  expenses for the three months ended March 31, 2004, as compared to the same  period in 2003, was primarily attributable to lower bad debt expense of  approximately $0.1 million, a decrease in salaries, severance and related  expenses of approximately $0.2 million, and lower facility costs resulting in a  decreased facilities allocation of approximately $0.1 million, offset by an  increase in professional fees of approximately $0.3 million. Professional fees  increased in 2004 primarily due to costs of compliance with the Sarbanes Oxley  Act of 2002.  General and administrative  expenses decreased as a
percentage of total revenues for the three months ended  March 31, 2004, when compared to the comparable period in 2003, primarily as a  result of an increase in revenues.





In the  ordinary course of business, we utilize estimates to determine the accrual of  certain operating expenses. These estimates are reviewed on an ongoing basis to  determine the adequacy of these accruals. For the three months ended March 31,  2004 and 2003, we reversed approximately $30,000 and $0.1 million,  respectively, of accruals included in operating expenses due to changes in  estimates on services previously provided. These amounts were offset by  additional accruals for various operating expenses.





Depreciation and Amortization





Depreciation  and amortization expenses for the three months ended March 31, 2004 were  approximately $1.8 million, or 12% of total revenues. For the comparable period  in 2003, depreciation and amortization expenses were approximately $2.7  million, or 22%, of total revenues. The decrease in depreciation and  amortization for the comparable periods was primarily due to the impairment of  intangible assets and fixed assets in the second and third quarters of 2003  associated with the restructuring of our headquarters lease, the restructuring  of the business operations of the Promotions.com division and by changing the  Webstakes.com business model, which each reduced the cost basis on which  depreciation and amortization is calculated.





Interest Income, Net





Interest income,  net includes primarily interest income from our cash balances and interest  earned on stockholders notes receivable. Interest income, net for the three  months ended March 31, 2004 was approximately $18,000, or less than 1% of total  revenues. For the comparable period in 2003, interest income, net was  approximately $0.1 million, or 1% of total





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revenues. The decrease between  2004 and 2003 was primarily due to lower cash and cash equivalents balances in  2004.





Other Income, Net





Other income,  net for the three months ended March 31, 2004 was approximately $0.1 million,  or less than 1% of total revenues. There was no amount for the comparable  period in 2003. Other income, net primarily includes moneys received from a  legal settlement and from a distribution in a bankruptcy claim acquired in the  acquisition of Promotions.com.





Gain on Sale of Joint Venture Interest





Gain on sale  of joint venture interest for the three months ended March 31, 2004 was  approximately $0.2 million, or 1% of total revenues. For the comparable period  in 2003, gain on sale of joint venture interest and other assets was  approximately $25,000, or less than 1% of total revenues. Gain on sale of joint  venture interest resulted from the restructuring of our Tesco, PLC, or Tesco,  relationship in March 2003, under which a division of Tesco purchased our  entire ownership interest in iVillage UK.   The gain on sale also related to amounts we received pursuant to the  license agreement entered into with the Tesco division contemporaneously with  such restructuring.





Net Loss





We recorded a  net loss of approximately $0.9 million, or $0.01 per share, for the three  months ended March 31, 2004. For the comparable period in 2003, we recorded a  net loss of approximately $6.1 million, or $0.11 per share. The decrease in net  loss for the three months ended March 31, 2004 compared to the same period in  2003 was primarily due to the following 2004 events: increased revenues of  approximately $2.9 million, lower sales and marketing costs of approximately  $1.1 million due to our cost reduction initiatives and a decrease in  depreciation and amortization expense of approximately $0.9 million resulting  from the restructuring of both our headquarters lease and Promotions.com  business in the second and third quarters of 2003.





Liquidity and Capital  Resources





Financial  Reporting Release No. 61, released by the Securities and Exchange Commission,  requires all companies to include a discussion to address, among other things,  liquidity, off-balance sheet arrangements, contractual obligations and  commercial commitments. iVillage currently does not maintain any off-balance  sheet arrangements.





As of March  31, 2004, we had approximately $16.4 million in cash and cash equivalents. Cash  equivalents include money market accounts. We maintain our cash and cash  equivalents in highly rated financial institutions and at times these balances  exceed insurable amounts.





Net cash  provided by operating activities was approximately $0.3 million for the three  months ended March 31, 2004. For the comparable period in 2003, approximately  $2.5 million of net cash was used in operations. We were able to generate net  cash from operating activities for the three months ended March 31, 2004, as  compared to net cash used in operating activities





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for the corresponding period in  2003, due primarily to a decrease in net loss, less non-cash adjustments, of  approximately $4.0 million. This amount was offset by a lower inflow of cash  received in 2004 of approximately $0.6 million due to the timing of receipt of  payments and an increase in other assets of approximately $0.3 million in 2004  compared to a utilization of other assets of approximately $0.5 million in 2003.  The decrease in other assets in 2003 was  primarily from the receipt of certain construction expenses from the landlord  of our New York leased headquarters space of approximately $0.3 million.





Net cash used  in investing activities increased to approximately $0.5 million for the three  months ended March 31, 2004, from approximately $32,000 for the three months  ended March 31, 2003. The increase in net cash used in investing activities for  the three months ended March 31, 2004 compared to the corresponding period in  2003 was primarily due to a decrease in cash received in connection with the  March 2003 license agreement with a Tesco division of approximately $0.4  million in 2004.





Net cash  provided by financing activities was approximately $0.7 million for the three  months ended March 31, 2004. There was no amount for the corresponding period  in 2003. Cash provided by financing activities for the three months ended March  31, 2004 included principal payments received for stockholders notes  receivable of approximately $0.1 million and proceeds from the exercise of  stock options and warrants of approximately $0.6 million.





We have historically incurred net losses and  negative cash flows on an annual basis.   Our ability to meet our obligations in the ordinary course of  business is dependent upon our ability to establish and sustain profitable  operations, reduce expenditures, and/or raise additional financing through  public or private equity financing, collaborative or other arrangements with  corporate sources, through the launch of new subscription or other  revenue-generating initiatives or other sources of financing to fund  operations.





Due primarily  to our lack of historical profitability, it is unlikely that we would be able  to obtain bank financing. Management believes that our current funds will be  sufficient to enable us to meet our planned expenditures through the next  twelve months. If anticipated operating results are not achieved, management  believes it has the ability to delay or reduce expenditures, so as not to  require additional financial resources, although there can be no assurances in  this regard. If we need to raise funds through a public offering or private  placement of our securities, funds may not be available on acceptable terms, if  at all.





Management
    has provided guidance that iVillage anticipates achieving profitability on
    a fiscal year basis in 2004 and achieving net income for 2004 by growing
    revenues
    approximately 25% in 2004 as compared to 2003, while holding expenses relatively
    unchanged year over year.   Management has also provided guidance that
    iVillage expects to achieve net income for 2004 of between approximately
    $0.75 million and $1.25 million.  However, we may not achieve  profitable
    operations or increase revenues as much as we anticipate. Factors that could
    adversely affect our ability to achieve profitable operations on a fiscal
    year basis include the loss of any of our major customers or a significant
    downturn in the advertising market or economy, in general, as well as our
    ability to report increased revenues at the approximately 25% growth rate
    indicated. The guidance provided by management contemplates our ability to
    enter into a definitive agreement with Hearst on terms substantially similar
    to those contained in the memorandum of understanding as discussed elsewhere
    in this quarterly report. Additional factors that could adversely affect
    our ability to meet our guidance are
    described
below under Risks Factors as well as elsewhere in this Managements
Discussion and Analysis of Financial Condition and Results of Operations.





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IVPN currently
    broadcasts television programming to hospitals via a 24-hour, 7 days a week
    satellite broadcast. This satellite is scheduled to go offline in 2005. Upon
    the expiration of the contract or in the event of an unforeseen earlier interruption
    of service, we would need to either negotiate a new contract, find another
    satellite provider and/or invest in alternative technology to distribute
    the service. IVPN is in the process of converting many of its hospitals from
    the satellite broadcast to a new system that eliminates the need for a constant
    satellite feed. This new technology will only require a limited amount of
    satellite time each month resulting in reduced operating costs in the next
    several years. IVPN estimates that it will cost approximately $3.0 million
    to $4.0 million to
    convert to the new technology. In 2003, IVPN initiated the collection of
    an annual fee from hospitals to receive programming broadcast by IVPN. These
    fees result from agreements between IVPN and the hospitals that generally
    have a length of three to five years. As of March 31, 2004, approximately
    41% of participating hospitals have agreed to pay this fee, however, we can
    make no assurance that all of the hospitals will agree to pay a fee. The
total value of signed contracts at March 31, 2004 is in excess of  $6.0
million, which will be recognized as revenue over the next several years.





Our February  2000 advertising agreement with Unilever, as amended, provided for a Unilever  advertising purchase commitment of $14.5 million. This agreement expired in  June 2003. In October 2003, we entered into a new agreement with Unilever that  terminates the February 2000 advertising agreement and provides for Unilevers  purchase of an additional $0.1 million in advertising and receipt of the  remaining advertising not received under the previous agreement of  approximately $0.9 million. The new agreement expires in December 2004 and  approximately $0.7 million remains to be earned.


Pursuant to  the amended and restated magazine content license and hosting agreement with  Hearst, Hearst committed to purchase from us between approximately $16.4  million and $18.2 million of production and advertising services over a  three-year period beginning in June 2001. This agreement also provides for  revenue sharing between Hearst and us with respect to advertising revenues  obtained by us from the Hearst magazine Web sites and our other Web sites  containing substantial Hearst content. This revenue-sharing arrangement  requires that we pay Hearst a royalty payment, based on net advertising  revenues, of at least approximately $2.6 million during the three-year term of  the agreement. This amount would be reduced on a pro rata basis if Hearst fails  to expend its stated annual minimum in production fees in any year of the  agreement. In addition, if a shortfall in production fees occurs in any year of  the agreement, Hearst
  must place additional advertising in an amount equal to  40% of the production fee
  shortfall.


In May 2004, we entered into a non-binding
      memorandum of understanding with Hearst regarding a renewal of the magazine
      content licensing and hosting agreement. Under the proposed terms of the
      renewal, the term of the magazine content licensing and hosting agreement
      would be extended for three years until June 2007. Hearst would pay us
      a production service fee of $4.0 million during the first year of the renewed
      agreement, and the fee would increase by approximately $0.2 million in
      each subsequent year. We would continue to receive a commission on magazine
      subscription sales, and Hearst would continue to receive a commission from
      us on a percentage of the advertising sales from Hearst magazine Web sites
      that we host. These commissions paid to and received from Hearst will vary
      based on the level of net paid subscription sales. If magazine subscription
      sales do not reach a certain threshold in the second year of the extension,
      we will not be entitled to any commission from magazine subscription sales
      in the third year of the extension. We would no long be required to offer
      Hearst, and Hearst would no longer be obligated to purchase, advertising
      on iVillage.com. In the event that we do not enter into a definitive agreement
      with Hearst, the
      amended
      and
      restated
      magazine
      content
      license and hosting agreement will expire in June 2004, but will continue
      afterwards on a month-to-month basis unless terminated by either party
      with 90 days prior notice. We cannot assure that this contract will be
      renewed on the terms specified in the memorandum of understanding, or at
      all.


In December  2003, we signed a Web site services agreement in which Hearst will pay  approximately $1.9 million for production, maintenance and hosting services for  three teen Web sites: Seventeen.com, CosmoGirl.com and Teen.com. The agreement  terminates in December 2005. As of March 31, 2004, we have received  approximately $0.1 million and earned approximately $0.2 million in connection  with this agreement.





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In March 2003,
    we restructured the terms of our joint venture so that a division of Tesco
    purchased our entire ownership interest in iVillage UK. We also entered into
    a twenty-year agreement with that division, subject to earlier termination
    upon the occurrence of certain events, whereby we will license to iVillage
    UK certain of our content and intellectual property, including trademarks
    and copyrights, for use in the United Kingdom and Ireland in connection with
    the business of the former joint venture exchange for the greater of a
    minimum monthly license fee or a percentage of iVillage
    UKs gross  revenues.





We lease  office space and equipment under non-cancelable operating leases expiring at  various dates through April 2015. In addition, in the ordinary course of  business we enter into agreements with various service providers for ad  serving, satellite transmissions and   license/content arrangements. The following is a schedule of future  minimum non-cancelable contractual obligations and the effect such obligations  are expected to have on our liquidity and cash flows in future periods as of  March 31, 2004 (in thousands):





|                                   |  | Total |        | Less than    1    year |   | 1  3    years |  | 3-5 years |       | Thereafter |  
|---------------------------------- |  | ----- | ------ | ---------------------- | - | -------------- |  | --------- | ----- | ---------- | -
|                                   |  |       |        |                        |   |                |  |           |       |            |  
|Non-cancelable operating    leases |  | $     | 15,695 |                        | $ | 2,130          |  | $         | 3,615 |            | $
|Purchase obligations               |  |       | 5,211  |                        |   | 1,913          |  |           | 803   |            |  
|                                   |  |       |        |                        |   |                |  |           |       |            |  
|Total contractual    obligations   |  | $     | 20,906 |                        | $ | 4,043          |  | $         | 4,418 |            | $
|                                   |  |       |        |                        |   |                |  |           |       |            |  




Capital  expenditures were approximately $0.5 million for the three months ended March  31, 2004 and were primarily for computer hardware and software purchases as  well as the capitalization of certain Web site development costs.  Our capital requirements depend on numerous  factors, including:





| |  | market    acceptance of our services;                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                              
| |  | the amount    of resources we devote to investments in our business, including entering    into joint ventures with and/or the acquisition of other entities;
| |   |                                                                                                                                                              
| |  | the    resources we devote to marketing;                                                                                                                     
| |   |                                                                                                                                                              
| |  | the    resources we devote to building the infrastructure necessary to enable us to    sell subscription-based products and services; and                    
| |   |                                                                                                                                                              
| |  | the    resources we devote to selling our products and services.                                                                                             




Off-Balance Sheet  Arrangements





In the  ordinary course of business, we enter into agreements that contingently require  us to indemnify counterparties against third-party claims. These may include:  agreements with advertisers and sponsors, under which we may indemnify them  against claims arising from their use of our products or services; agreements  with customers, under which we may indemnify them against claims arising from  their use of our products or services; real estate and equipment leases, under  which we may indemnify lessors against third-party claims relating to use of  their property; agreements with licensees or licensors, under which we may  indemnify the licensee or





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licensor against claims arising  from their use of our intellectual property or our use of their intellectual  property; and agreements with initial purchasers and underwriters of our  securities, under which we indemnify them against claims relating to their  participation in the transactions.





The nature and  terms of these indemnifications vary from contract to contract, and generally a  maximum obligation is not stated. Because we are unable to estimate our  potential obligation, historically we have had no obligation arising from these  indemnifications, and because management does not expect these indemnifications  to have a material and adverse effect on our consolidated financial position,  results of operations or cash flows, no related liabilities are recorded as of  March 31, 2004. We hold insurance policies that mitigate potential losses  arising from certain indemnifications and, historically, we have not incurred  significant costs related to performance under these obligations.





Recent Accounting  Pronouncements





In December  2003, the Financial Accounting Standards Board, or FASB, issued Interpretation  No., or FIN, 46R, Consolidation of Variable Entities, or FIN 46R. FIN 46R  replaces the same titled FIN 46 that was issued in January 2003. FIN 46R  requires the consolidation of a variable interest entity by a company that  bears the majority of risk of loss from the variable entitys activities, is  entitled to receive a majority of the variable interest entitys residual  returns or both. The provisions of this interpretation are effective for us  beginning in the first quarter of fiscal 2004. The adoption of this  interpretation did not have a material impact on our financial position, cash  flows or results of operations.





Legal Proceedings





In January
     2003, a Belgian court issued a judgment against Women.com in the amount
    of approximately 850,000 Euros, or approximately U.S. $1.0 million based
    on the Euro exchange rate as of May 10, 2004, relating to a claim by Euregio.net
    of copyright infringement. We are appealing the judgment in the Belgian court
    system, and we have been advised by outside counsel that Euregio.net would
    have to commence legal proceedings in the United States in order to enforce
    any judgment by a Belgian court.





Several plaintiffs have  filed class action lawsuits in federal court against us, several of our present  and former executives and our underwriters in connection with its March 1999  initial public offering.  A similar  class action lawsuit was filed against Women.com Networks, Inc., or Women.com,  several of its former executives and its underwriters in connection with  Women.coms October 1999 initial public offering.  The complaints generally assert claims under the Securities Act,  the Exchange Act and rules and regulations promulgated by the Securities and  Exchange Commission, or SEC.  The  complaints seek class action certification, unspecified damages in an amount to  be determined at trial, and costs associated with the litigation, including  attorneys fees.





In February  2003, the defendants motion to dismiss certain of the plaintiffs claims was  granted in part, but, for the most part, denied. In June 2003, a proposed  settlement of this litigation was structured between the plaintiffs, the issuer  defendants, the issuer officers and directors named as defendants, and the  issuers insurance companies. The proposed settlement generally provides that  the issuer defendants and related individual defendants will be released





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from the litigation without any  liability other than certain expenses incurred to date in connection with the  litigation, the issuer defendants insurers will guarantee $1.0 billion in  recoveries by plaintiff class members, the issuer defendants will assign  certain claims against the underwriter defendants to the plaintiff class  members, and the issuer defendants will have the opportunity to recover certain  litigation-related expenses if the plaintiffs recover more than $5.0 billion  from the underwriter defendants. The respective boards of directors of iVillage  and Women.com each approved the proposed settlement in July 2003. The proposed  settlement is now subject to approval by the other involved parties as well as  to the final approval of the court. There can be no assurance that this  proposed settlement would be approved and implemented in its current form, or  at all.





We believe,  based upon the advice of outside legal counsel, that the aforementioned  lawsuits and claims asserted against us and our subsidiary pursuant to these  complaints are without merit and we intend to vigorously defend against these  claims. If we lose our appeal of the judgment in the Belgian case or if the  proposed settlement in the initial public offering laddering cases is  ultimately not approved by the courts, defending against these claims could  require the expenditure of significant financial and managerial resources,  which could harm our business.





We are not  currently subject to any other material legal proceedings. We may from time to  time, however, become a party to various legal proceedings arising in the  ordinary course of business.





Risk Factors





We operate in an environment  that involves a number of risks and uncertainties. The risks and uncertainties  described below are not the only ones we face.   Additional risks and uncertainties not presently known to us or that we  currently deem immaterial may also impair our business.  If any of the following risks actually  occur, our business, operating results and financial position could be  harmed.  This could cause the trading  price of our stock to decline, and you could lose all or part of your  investment.  These risks should be read  in conjunction with the other information set forth in this Form 10-Q and with  iVillages Annual Report on Form 10-K for the fiscal year ended December 31,  2003.





Risks of Our Business





We have a history of net losses
        on a quarterly and annual basis, and a history of negative cash flows,
        and we may have further continuing losses from operations.





We have incurred
    significant net losses on an annual basis in each year of our operations,
    have a history of negative cash flows and may continue to incur net losses
    for the foreseeable future. We incurred net losses of approximately $0.9
    million for the three months ended March 31, 2004, $27.1 million for the
    year ended December 31, 2003 and $33.9 million for the year ended December
    31, 2002. As of March 31, 2004, we had an accumulated deficit of approximately
$494.7 million.





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We cannot assure you that we  will be able to achieve, sustain or increase net income on a quarterly or  annual basis. If our revenues grow slower than we anticipate, or if our  operating expenses exceed expectations or cannot be adjusted accordingly, we  will continue to suffer substantial losses.





Our quarterly and annual revenues and  operating results are not indicative of future performance, are difficult to  forecast and have been and are likely to continue to fluctuate.





We do not believe that  period-to-period comparisons of our operating results are necessarily  meaningful nor should they be relied upon as reliable indicators of future  performance. This makes it difficult to forecast with certainty quarterly and  annual revenues and results of operations. In addition, our operating results  are likely to fluctuate significantly from fiscal quarter to quarter and year  to year as a result of several factors, many of which are outside our control,  and any of which could materially harm our business. Some of these factors  include:





| |  | fluctuations    in the demand for advertising or electronic commerce                                             |  |  | fluctuations    in marketing expenses and technology infrastructure costs           
| | - | ---------------------------------------------------------------------------------------------------------------- |  | - | ------------------------------------------------------------------------------------
| |   |                                                                                                                  |  |   |                                                                                     
| |  | the    unpredictability of our success in new revenue and cost reduction initiatives                             |  |  | changes in    the level of traffic on our network of Web sites                      
| |   |                                                                                                                  |  |   |                                                                                     
| |  | the timing    of custom publications or magazines based upon customers advertising and    marketing initiatives |  |  | bankruptcies    or other payment defaults of companies that are a source of revenues
| |   |                                                                                                                  |  |   |                                                                                     
| |  | volatility    in the media market                                                                                |  |   |                                                                                     




Our revenues for the  foreseeable future will remain primarily dependent on user traffic levels and  advertising activity on our Web sites and, as a result, are difficult to  forecast. In addition, the time between the date of initial contact with a  potential advertiser or sponsor and the execution of a contract with the  advertiser or sponsor may be lengthy, especially for larger, higher rate  contracts, and is subject to delays over which we have little or no control,  including:





| |  | advertisers    and sponsors budgetary constraints                                 |  |  | advertisers    and sponsors internal reviews                                                        
| | - | ----------------------------------------------------------------------------------- |  | - | ------------------------------------------------------------------------------------------------------
| |   |                                                                                     |  |   |                                                                                                       
| |  | the    possibility of cancellation or delays of projects by advertisers or sponsors |  |  | the success    and continued internal support of advertisers and sponsors own development    efforts




We may be unable
    to adjust spending quickly enough to offset any unexpected reduction in revenues
    in a particular fiscal quarter or year, which may materially adversely affect
our results of operations.





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We have a small number of major customers and the loss of any number of  these customers could adversely affect our business, financial condition and  results of operations.





We anticipate that our  results of operations in any given period will continue to depend to a  significant extent on revenues from a small number of customers. As a result,  the loss of even a small number of our largest customers at any one time would  significantly reduce our revenue, which would adversely affect our business,  financial condition and results of operations, unless we are able to enter into  contracts to replace lost revenues.





Our five  largest
    customers accounted for approximately 37% of total revenues for the three
    months ended March 31, 2004 and 33% of total revenues for the three months
    ended March 31, 2003. Our five largest customers accounted for approximately
    27% of total revenues for the twelve months ended December 31, 2003. Wal-Mart,
    accounted for approximately 15% and Hearst, accounted for approximately 12%
    of total
    revenues
    for the
    three
    months
    ended
    March
    31,
    2004. No other
    single
    customer accounted for more than 10% of our total revenues for the three
    months ended March 31, 2004. One customer, Hearst accounted for approximately
    13% of total revenues for the three months ended March 31, 2003. In 2003,
    Hearst accounted for approximately 11% of total revenues. At March 31, 2004,
    Hearst accounted for approximately 29% of the net accounts receivable.  At
    December 31, 2003, Hearst accounted for approximately 20% of the net accounts
    receivable.  Because our largest customers have varied over time in
    the past, we anticipate they will continue to do so in the future. The significance
    of revenues from any of our customers can vary on a quarter to quarter basis
    as a result
    of
    the
    number
    and timing
    of such customers  advertising and marketing initiatives.





If we are unable to turn our
         memorandum of understanding with Hearst into a definitive Agreement
        renewing
        our Amended and Restated Magazine and Content License Agreement prior
        to its expiration in June 2004 and either party terminates the current
        agreement, our business, financial condition and results of operations
could be materially adversely affected.





Our contract
    with Hearst expires in June 2004, but continues on a month-to-month basis
    afterwards unless terminated by either party with 90 days prior notice. We
    have signed a memorandum of understanding with Hearst containing proposed
    terms for renewal of this agreement.  However,
    we cannot assure that this contract will be renewed on the terms specified
    in the memorandum of understanding, or at all. The guidance provided by management
    contemplates our ability to enter into a definitive agreement with Hearst
    on terms substantially similar to those contained in the memorandum of understanding.
    If we are unable to reach agreement on a renewal of the contract and if either
    party
    then
    terminates
    the agreement, our business, financial condition and results of operations
could be materially adversely affected.





Restrictions on our ability to enter into  sponsorship, advertising or other business relationships with Hearsts  competitors may adversely affect our business.





Our amended and restated  magazine content license and hosting agreement with Hearst restricts our  ability to enter into relationships with competitors of Hearst.  These restrictions may prevent us from  expanding our network and enhancing our content and the visibility of our  brand, and may cause us to forego potential advertising revenues from  competitors of Hearst. Specifically, the agreement provides that we may not,  without Hearsts consent:





| |  | enter into    any agreement to include in our network any Web sites for magazines that    compete with Hearst magazines |  |  | display on    our Web pages the brands, logos, trademarks or proprietary content of both    Hearst and a Hearst competitor
| | - | ----------------------------------------------------------------------------------------------------------------------- |  | - | --------------------------------------------------------------------------------------------------------------------------




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| |  | display on    the Hearst magazine Web sites any advertising or other promotional materials    from magazines that compete with Hearst magazines |  |  | 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------- |  |  | 




Our principal investors investments in our  competitors may result in conflicts of interest that could harm our business.





Our principal investors, such  as Hearst, Rho Capital Partners, Inc. and AOL, a division of Time Warner Inc.,  or Time Warner, may have conflicts of interests by virtue of their own  businesses, as in the case of Time Warner and Hearst, or investments in other  companies that may compete with us. These investments may result in a conflict  of interest for our principal investors or result in the diversion of  attractive business opportunities from our principal investors to other  companies. We are unable to determine all of the competing investments held by  these principal investors. In addition, we do not have the ability to constrain  the investment activity of any of our principal investors and therefore cannot  predict the extent of any future investments in businesses that are competitive  with us.





Our business is highly dependent upon user  traffic.





Our business is inherently  dependent upon high user traffic levels. The rates we charge to advertisers and  sponsors and the number of products and services we sell are directly related  to the number of users visiting iVillages Web sites. User traffic from certain  Web sites that are non-proprietary to iVillage are sometimes included in the  reported information regarding our network of Web sites. These properties  include the Hearst magazine Web sites and other parties who have agreed by  contract to have traffic from their Web sites incorporated within our network.  The number of users visiting our Web sites may decline. In addition, Hearst or  other third parties may discontinue allowing us to include their Web sites as  part of our network for traffic reporting purposes. Any decline in user traffic  levels may cause our revenues to decrease and could have a material and adverse  affect on our business, financial condition
and results of operations.





Our business will be materially
        adversely affected if we cannot maintain the popularity of our Web site
offerings among Internet users.





We will be successful only if  a critical mass of Internet users, especially women, continue to view our Web  sites as popular destinations on the Internet. It is difficult to predict the rate  at which users will sample our offerings and the extent to which they will  become members and/or return users.  At
    any time, users of our services might revert to other offerings. We cannot
    assure you that widespread use and acceptance of our offerings will occur.
    If we cannot maintain the popularity of our offerings among Internet users,
    our business, results of operations and financial condition will be materially
adversely affected.





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There is intense competition among media  companies focused on women, and this competition could result in price  reductions, reduced margins or loss of market share.





Increased competition could  result in advertising and sponsorship price reductions, reduced margins or loss  of market share, any of which could adversely affect our business, financial  condition and results of operations. There are a large number of Web sites  competing for the attention and spending of members, users and advertisers. Our  Web sites compete for members, users and advertisers with the following types  of companies:





| |  | Web search    and retrieval and other online service companies, commonly referred to as    portals, such as Time Warners AOL service, Microsoft Corporations MSN    service and Yahoo! Inc. |  |  | online    services or Web sites targeted at women, such as lifetime.com
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | -----------------------------------------------------------------------
| |   |                                                                                                                                                                                              
| |  | publishers    and distributors of traditional media, such as television, radio and print                                                                                                     
| |   |                                                                                                                                                                                               |  |   |                                                                        
| |  | cable    networks targeting women, such as Oxygen Media, Inc., Womens Entertainment    Network and Lifetime Television                                                                       |  |  | e-commerce    companies such as Amazon.com, Inc.                       




Lamaze Publishings magazines  directly compete with publishers of pre- and post-natal publications such as  Gruner and Jahr, Primedia and Time Inc. These publishers have substantially  greater marketing, research and financial resources than Lamaze Publishing.  Increased competition may result in less advertising in Lamaze Publishings  magazines and a decline in Lamaze Publishings advertising rates, which could  adversely affect our business, financial condition and results of operations.





If we fail to attract and retain
key personnel, our business would be materially adversely affected.





Our future success depends to  a significant extent on the continued services of our senior management and  other key personnel, particularly Douglas W. McCormick, our Chairman of the  Board and Chief Executive Officer. Mr. McCormicks current employment agreement  expires in May 2005. The loss of the services of Mr. McCormick would likely  harm our business. We currently do not maintain key person life insurance for  any of our senior management.





We may be unable to retain  our key employees or attract, assimilate or retain other highly qualified  employees in the future. We have from time to time experienced, and expect to  continue to experience, difficulty in hiring and retaining highly skilled  employees with appropriate qualifications as a result of our financial  condition and relatively low common stock price. As a result, we have in the  past and may in the future incur increased salary and benefit costs. If we do  not succeed in attracting new personnel or retaining and motivating our current  personnel, our business, and our ability to develop and execute on our business  strategies, will be materially harmed.





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We rely on third parties to provide  reliable software, systems and related services.





We depend on various third  parties for software, systems and related services, including SAAVIS  Communications Corporation, or SAAVIS, Verio, Inc., or Verio, Google, Inc., or  Google, DoubleClick, Inc., Tacoda Systems, Inc. and Prospero Technologies LLC.  If for any reason one or more of these service providers becomes unable or  unwilling to continue to provide services of acceptable quality, at acceptable  costs and in a timely manner, our ability to deliver our product and service  offerings to our advertisers, sponsors and users could be severely impaired. We  would have to identify and qualify substitute service providers, which could be  time consuming and difficult and could result in unforeseen operational  difficulties. Although we are confident that alternative service providers are  available, we cannot assure that we will be able to obtain such services on as  favorable terms as we currently receive or in a timely
manner.





We rely on third parties to adequately  measure the demographics of our user base.





It is important to our advertisers that we  accurately measure the demographics of our user base and the delivery of  advertisements on our Web sites. We depend on third parties to provide many of  these measurement services and to do so accurately and reliably. If these third  parties are unable or unwilling to provide these services to us in the future,  we would need to perform them ourselves or obtain them from another provider.  This could cause us to incur additional costs or cause interruptions in our  business until these services are replaced. Companies may choose not to  advertise on our Web sites or may pay us less for our sponsorship or  advertising if they perceive our demographic measurements as not reliable.





We are subject to legal proceedings that  could result in liability and adversely affect to our business.





From time to time, we have  been, and expect to continue to be, subject to legal proceedings that  individually, or in the aggregate, could adversely affect our business.





| |  | A Belgian    court issued a judgment against Women.com, relating to alleged copyright    infringements, in the amount of approximately 850,000 Euros (approximately    U.S. $1.0 million based on the Euro exchange rate as of    May 10, 2004) in January 2003. The continuing defense of this action could    involve significant legal expense, diversion of management attention and,    ultimately, we may be required to pay the judgment awarded by the Belgian    court.                                                                                                                                                                                                                                                                                                                              
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Several    plaintiffs have filed class action lawsuits in federal court against us,    several of our former executives and our underwriters in connection with our    March 1999 initial public offering. A similar class action lawsuit was filed    against Women.com, several of our former executives and Women.coms    underwriters in connection with Women.coms October 1999 initial public offering.    In June 2003, the parties agreed in principle to settle the matter, along    with similar lawsuits against other issuers. If the proposed settlement is    ultimately not approved by the courts, even if these claims are not    meritorious, defending against them could require the expenditure of    significant financial and managerial resources, which could harm our    business.




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Our operation of IVPN poses
        a number of risks that could materially adversely affect our business
strategy.





There are a number of risks  in operating IVPN related to Lamaze Publishing, Baby Steps magazine and The  Newborn Channel, including a Spanish audio overlay, and the Wellness Channel,  all of which we refer to as the Channels, which are all primarily non-Internet  businesses, including:





| |  | the    competitiveness of the media, television and publishing industries                                         |  |  | our ability    to continue to commercialize and protect the Lamaze mark                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------- |  | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                   |  |   |                                                                                                                                                               
| |  | our ability    to maintain and market the Lamaze.com Web site                                                     |  |  | demand for    our custom publications and controlled circulation magazines                                                                                    
| |   |                                                                                                                   |  |   |                                                                                                                                                               
| |  | our ability    to sell advertising and sponsorships on IVPNs magazines, videos, the    Channels and our websites |  |  | our ability    to identify and predict trends in a timely manner that may impact consumer    tastes in baby- and health-related information on IVPNs Channels




Our failure to perform the  functions required for the operation of IVPN in an efficient and timely manner  could result in a disruption of IVPNs operations that could result in a loss  of revenues and have a material and adverse effect on our business strategy.





Our business could be adversely affected if  transmission of the Channels were interrupted.





There is a risk that the  satellite or the in-hospital delivery system which transmits the Channels may  malfunction, which would result in an interruption of broadcasts. Extreme  adverse weather conditions or third parties could damage or disable receivers  and transmitters on the ground hindering transmission of the Channels signal. This  satellite is scheduled to go offline in 2005. Upon the expiration of the  contract or in the event of an unforeseen earlier interruption of service, we  would need to either negotiate a new contract, find another satellite provider  and/or invest in alternative technology to distribute the service. If any of these events occur, there may be a  period of time before transmission of all or some of the Channels could resume.  Any interruption in our ability to transmit the Channels could jeopardize our  viewer base and negatively impact our revenues related to the Channels.





We may not be able to expand
        our business through acquisitions and joint ventures and, even if we
        are successful, our operations may be materially adversely affected as
a result of an acquisition or joint venture.





Our business
    strategy includes growth through business combinations, acquisitions and
    joint ventures. Our business could be materially adversely affected if we
    are unable to implement this business strategy. Our ability to implement
    this business strategy depends in large part on our ability to compete successfully
    with other entities for acquisition candidates and joint venture partners.
Factors affecting our ability to compete successfully in this regard include:





| |  | our    financial condition relative to the    financial condition of our competitors |  |  | our ability    to obtain additional financing from    investors
| | - | ------------------------------------------------------------------------------------ |  | - | ---------------------------------------------------------------




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| |  | the    attractiveness of our common stock as potential consideration for entering    into these types of transactions as compared to the common stock of other    entities competing for these opportunities |  |  | our    available cash, which in turn depends upon our results of operations and the    cash demands of our business
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | - | -------------------------------------------------------------------------------------------------------------------




Many of the
    entities with which we compete for acquisition candidates and joint venture
    partners have greater financial resources than we do. In addition, our ability
    to make acquisitions using our stock has been materially adversely affected
    by the overall decline in the market price of our common stock over the last
several years.





If, despite
    these factors, we are successful in entering into additional business combinations,
    acquisitions and joint ventures, our business, financial condition and results
    of operations could be materially adversely affected if we are unable to
    integrate the operations of the acquired companies or joint ventures. Our
    ability to integrate the operations of the acquired companies or joint ventures
will depend, in part, on our ability to overcome or address:





| |  | the    difficulties of assimilating the operations and personnel of the acquired    companies and the potential disruption of our ongoing business                            |  |  | the need to    incorporate successfully the acquired or     shared technology or content and rights into our products, services    and media properties             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                               |  |   |                                                                                                                                                                     
| |  | the    difficulties of establishing a new joint venture, including the need to    attract and retain qualified personnel and the need to attract customers and    advertisers |  |  | the    potential impairment of relationships with employees and customers as a    result of any integration of new management personnel or reduction of    personnel
| |   |                                                                                                                                                                               |  |   |                                                                                                                                                                     
| |  | the difficulties    of maintaining uniform standards, controls, procedures and policies                                                                                       |  |   |                                                                                                                                                                     




In addition,
    completing acquisitions could require use of a significant amount of our
    available cash. Furthermore, we may have to issue equity or equity-linked
    securities to pay for future acquisitions, and any of these issuances could
    be dilutive to existing and future stockholders. Acquisitions and investments
    may also have negative effects on our reported results of operations due
    to acquisition-related charges, amortization of acquired technology and other
    intangibles, and/or actual or potential liabilities, known and unknown, associated
    with the acquired businesses or joint ventures. Any of these acquisition-related
    risks or costs could materially adversely affect our business, financial
condition and results of operations.





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If we fail to maintain effective
        internal financial and managerial systems, controls and procedures, our
results of operations may be materially adversely affected.





In the past, we have sought  cost reductions through increased managerial efficiencies and expense reduction  initiatives, including targeted staff reductions. These reductions in workforce  placed a significant strain on our managerial staff, financial controls and  operational resources as our employees have assumed greater responsibilities  and learned to manage their increased workload with reduced resources. We  continue to evaluate our operational and financial systems and our managerial  controls and procedures to determine what additional changes, if any, might  help us to manage our current operations better. We face the risk that our  systems, procedures and controls might not be adequate to support our operations  or to maintain accountability for our assets. Any such failure could have a  material and adverse effect on our business, financial condition and results of  operations.





Risks Related to Our Industry





The operating performance of computer  systems and Web servers is critical to our business and reputation.





Any system failure, including  network, software or hardware failure, due to a computer virus or otherwise,  that causes an interruption in our Internet offerings could result in reduced  traffic on our Web sites and reduced revenues for our business. Substantially  all of our communications hardware and some of our other computer hardware  operations are located at SAAVIS facilities in New Jersey and Verios  facilities in California. Fire, floods, earthquakes, power loss,  telecommunications failures, break-ins and similar events could damage these  systems. We do not presently have any secondary off-site systems or a formal  disaster recovery plan.





Our Web sites could also be  affected by computer viruses, electronic break-ins or other similar disruptive  problems, such as those historically experienced by several leading Web sites.  In addition, our users depend on Internet service providers, online service  providers and other Web site operators for access to our Web sites. Many of  them have experienced significant outages in the past, and could experience  outages, delays and other difficulties due to system failures unrelated to our  systems. If we experience outages or degraded service, user satisfaction would  decrease, we would likely lose advertising revenue and our reputation and  brands could be permanently harmed.





Our insurance policies may  not adequately compensate us for any losses that may occur due to any failures  or interruptions in our systems. In addition, we cannot assure you that SAAVIS,  which purchased the assets of Cable and Wireless Plc and Exodus Communications,  Inc., both of which had filed for bankruptcy protection, and Verio will be able  to provide sufficient services for us or that we would be able to engage  satisfactory alternative service providers.





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If the Internet fails to gain further  acceptance as a medium for advertising, we would have slower revenue growth  than expected and would incur greater than expected losses.





We compete with traditional  advertising media, including television, radio and print, along with other  high-traffic Web sites, for sponsorships and advertising expenditures. Although  there are currently several standards to measure the effectiveness of Internet  advertising, the industry has had difficulty convincing potential advertisers  that Internet advertising is a significant advertising medium. Advertisers and  advertising agencies that have historically relied on traditional forms of  advertising may be reluctant or slow to adopt online advertising. In addition,  advertisers and advertising agencies that use the Internet as an advertising  medium may find online advertising to be less effective for promoting their  products and services than traditional advertising media. Advertisers and  advertising agencies that have invested substantial resources in traditional  methods of advertising may also be reluctant to reallocate
their resources to  online advertising. Moreover, software programs that limit or prevent  advertising from being delivered to an Internet users computer are available.  Widespread adoption of this software could adversely affect the commercial  viability of Internet advertising. If the market for online advertising fails  to develop or develops more slowly than we expect, or if we are unable to adapt  to new forms of Internet advertising, we would have slower than expected  revenue growth and would incur greater than expected losses, and our business,  results of operations and financial condition would be adversely affected.





Web-based business models are still  evolving and make it difficult to predict our long-term revenues.





A decrease
    in revenues relating to changes in Internet advertising pricing models or
    our inability to convert users to purchasers of our products and services
    could materially adversely affect our business, results of operations and
    financial condition. Different pricing models are used to sell advertising
    on the Internet, including models based on the number of impressions delivered,
    numbers of click-throughs by users and number of key words to which an advertisement
    is linked. It is difficult to predict which, if any, of the models will emerge
    as the industry standard. This uncertainty makes it difficult to project
our long-term advertising rates and revenues.





Furthermore, consumer  reluctance to subscribe to or pay for Internet content may limit our ability to  supplement Internet advertising as our most significant source of revenue in  the foreseeable future. Inability to supplement our advertising revenues could  limit our growth and adversely affect our business.





We may be unable to respond to the rapid  technological change in our industry.





Our product and service  offerings compete in a market characterized by rapidly changing technologies,  frequent innovations and evolving industry standards. A growing number  of individuals access the Internet through devices other than personal  computers, such as cell phones, personal digital assistants or television  set-top devices. The low resolution, functionality and memory currently  associated with some of these alternative devices might prevent or impede users  from accessing our graphics-rich Web sites.   Our future success will depend on our ability to adapt to rapidly  changing technologies by continually improving the performance features and  reliability of our offerings. We  could incur substantial costs to modify our services or infrastructure to adapt  to the changing technology environment.





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Possible infringement by third parties of  our intellectual property rights could have a material and adverse affect on  our business, financial condition and results of operations.





We cannot be certain that the  steps we have taken to protect our intellectual property rights will be  adequate or that third parties will not infringe or misappropriate our  proprietary rights. Enforcing our intellectual property rights could entail  significant expense and could prove difficult or impossible. Any infringement  or misappropriation by third parties could have a material and adverse effect  on our business, financial condition and results of operations. Furthermore, we  have invested resources in acquiring domain names for existing and potential  future use. We cannot guarantee that we will be entitled to use these domain  names under applicable trademark and similar laws or that other desired domain  names will be available.





New privacy and data security laws may  require changes in our practices, and there is a potential for enforcement  actions due to noncompliance.





Any new law or regulation  pertaining to the Internet, or the application or interpretation of existing  laws, could decrease the demand for our services, increase our cost of doing  business or otherwise seriously harm our business. There is, and will likely  continue to be, an increasing number of laws and regulations pertaining to the  Internet. These laws or regulations may relate to liability for information  retrieved from or transmitted over the Internet, online content regulation,  user privacy, taxation and the quality of products and services. There is a  trend toward more burdensome regulations and stiffer penalties, all of which  could negatively impact our business. There is also a trend toward giving  consumers greater information regarding control over how their personal data is  used, and requiring notification where unauthorized access to such data occurs.





In particular, several  jurisdictions, including foreign countries, have recently proposed and/or  adopted privacy-related laws that restrict or prohibit unsolicited email  solicitations, commonly known as spamming, and that impose significant  monetary and other penalties for violations. These laws may increase concern on  the part of advertisers regarding advertising in our email newsletters, and  advertisers may seek to impose indemnity obligations on us in an attempt to  mitigate any liability under these laws. Moreover, Internet service providers  may increasingly block legitimate marketing emails in an effort to comply with  these laws.





One such law, the CAN-SPAM  Act of 2003, or CAN-SPAM, became effective in the United States on January 1,  2004. CAN-SPAM imposes complex and often burdensome requirements in connection  with the sending of commercial email. The language of CAN-SPAM contains  ambiguities, and CAN-SPAM has yet to be interpreted by the courts. Depending on  how it is interpreted, CAN-SPAM may impose burdens on our email marketing  practices, on joint marketing initiatives that we undertake with our business  partners, and on features of our services.   CAN-SPAM also requires the Federal Trade Commission to report to  Congress regarding the advisability of a federal Do-Not-E-Mail Registry. If  the registry is created, it could have a detrimental effect on our ability to  continue our email marketing practices as well as advertisers willingness to  participate in email marketing.





In addition to impacting our  business through decreased collection and use of user data, the enactment of  privacy and data security laws may increase our legal compliance costs. While





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we believe that we comply with currently  applicable laws, as such laws proliferate there may be uncertainty regarding  their application or interpretation, and there is increased risk of  noncompliance. Even if a claim of noncompliance against us does not ultimately  result in liability, investigating a claim may present a significant cost.  Future legislation may also require changes in our data collection practices,  which may be expensive to implement, and may further increase the risk of  noncompliance.





Data security laws are becoming  more stringent in the United States and abroad. Third parties are engaging in  increased cyber-attacks against companies doing business on the Internet, and  individuals are increasingly subjected to identity and credit card theft on the  Internet. Although we use what we consider to be industry standard security  measures, there is a risk that we may fail to prevent such activities and that  users or others may assert claims against us. In addition, the Federal Trade  Commission and state consumer protection authorities have brought a number of  enforcement actions against U.S. companies for alleged deficiencies in those  companies data security practices, and they may continue to bring such  actions. Enforcement actions, which may or may not be based upon actual cyber  attacks or other breaches in such companies data security, present an ongoing  risk of liability to us, could result in a
loss of users and could damage our  reputation.





We may face potential liability, loss of  users and damage to our reputation for violation of privacy practices.





Our privacy policy prohibits  the sale or disclosure to any third party of any members personal identifying  information. Growing public concern about privacy and the collection,  distribution and use of information about individuals may subject us to  increased regulatory scrutiny and/or litigation. In the past, the Federal Trade  Commission has investigated companies that have used personally identifiable  information without permission or in violation of a stated privacy policy. If  we are accused of violating the stated terms of our privacy policy, we may face  a loss of users and damage to our reputation and be forced to expend  significant amounts of financial and managerial resources to defend against  these accusations and we may face potential liability.





We may be liable if third parties  misappropriate our users personal information.





Third parties may be able to  hack into or otherwise compromise our network security or otherwise  misappropriate our users personal information or credit card information. If  our network security is compromised, we could be subject to liability arising  from claims related to, among other things, unauthorized purchases with credit  card information, impersonation or other similar fraud claims or other misuse  of personal information, such as for unauthorized marketing purposes.  Consumer protection privacy regulations  could impair our ability to obtain information about our users, which could  result in decreased advertising revenues.





We ask our members and users  to opt-in to receive special offers and other direct marketing opportunities  from us, our advertisers and partners. Our network also requests and obtains  personal data from users who register to become members of the network. Registration  as a member is required in order for users to have full access to the services  offered by our network. Personal data gathered from members is used to  personalize or tailor content to them and is provided, on an aggregate basis,  to advertisers to assist them in targeting their advertising





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campaigns to particular demographic groups.  Current or prospective advertisers evaluate our ability to provide user data to  support targeted advertising. Privacy concerns may cause users to resist  providing personal data, however. If we become unable to collect personal data  from a sufficient number of our users, we may lose significant advertising  revenues.





Changes in public acceptance  of email marketing, and the perception of security and privacy concerns, may  indirectly inhibit market acceptance of our use of personal data. Our failure  to implement industry-standard Platform for Privacy Preferences protocols could  discourage users from using our Web sites, products and services and from  providing their personal data to us. In addition, pending and recently enacted  legislative or regulatory requirements that businesses notify Internet users  that their data may be used by marketing entities to direct product promotion  and advertising to the user may heighten these concerns.





Our network also uses  cookies to track user behavior and preferences. A cookie is information keyed  to a specific server, file pathway or directory location that is stored on a  users hard drive, possibly without the users knowledge, but is generally  removable by the user. Information gathered from cookies is used by us to  tailor content to users of our network and may also be provided to advertisers  on an aggregate basis. In addition, advertisers may themselves use cookies to  track user behavior and preferences. A number of Internet commentators,  advocates and governmental bodies in the United States and other countries have  urged the passage of laws limiting or abolishing the use of cookies. If these  laws are passed, it may become more difficult for us to tailor content to our  users, making our network less attractive to users. Similarly, the  unavailability of cookies may restrict the use of targeted
advertising, making  our network less attractive to advertisers and causing us to lose significant  advertising revenues.





We may face potential products liability  claims based upon our iVillageSolutions products.





As with other retailers,  distributors and manufacturers of products that are ingested, we face an  inherent risk of exposure to product liability claims in the event that the use  of our iVillageSolutions products results in injury or death. We may be  subjected to various product liability claims, including, among others, that  our products contain contaminants or include inadequate instructions as to use  or inadequate warnings concerning side effects and interactions with other  substances. Insurance may not be adequate to cover any liabilities and may not  continue to be available at a reasonable cost.





Our business could be affected by future  terrorist attacks or acts of war.





The terrorist attacks in the  United States in recent years disrupted global commerce. The continued threat  of future terrorist attacks in the United States, and particularly in New York  City where our headquarters are located, acts of war involving the United  States, or any response of the United States government to any future terrorist  actions or acts of war, may cause future significant disruptions in commerce  throughout the world. The proximity of our headquarters to certain possible  targets in New York City could, in the event of war or future terrorist  attacks, result in damage to or destruction of our headquarters as well as the  permanent or temporary loss of key personnel. We have not developed a disaster  recovery plan and we cannot assure that our





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insurance coverage would adequately reimburse  us for any damages suffered as a result of a terrorist attack or act of war.





Risks Related to Our Common Stock





As of March 31, 2004, Hearst owned  approximately 31% of our outstanding common stock and had three representatives  on our board of directors. As a result, Hearst is able to significantly  influence our corporate direction and policies.





Hearsts board representation  and stock ownership allows Hearst to significantly influence our corporate  direction and policies, including any mergers, acquisitions, consolidations,  strategic relationships or sales of assets. Hearsts board representation and  stock ownership may also discourage or prevent transactions involving an actual  or potential change of control, including transactions in which our  stockholders would otherwise receive a premium for their shares.





As of March 31, 2004, Hearst  owned approximately 31% of our outstanding common stock. Pursuant to an amended  and restated stockholder agreement we entered into with Hearst on June 20,  2001, we appointed three Hearst representatives to our board of directors, with  one Hearst designee appointed to each class of director. The amended and  restated stockholder agreement provides that the number of Hearst  representatives is subject to reduction if Hearsts ownership of our common  stock falls below certain threshold levels. There is also a Hearst  representative on our nominating and compensation committees.





Although Hearst is required  to vote all shares that it holds in excess of 25% (subject to adjustment) of  our outstanding voting securities in accordance with the recommendation of our  board of directors, Hearst may effectively control certain stockholder actions,  including approving changes to our certificate of incorporation or by-laws and  adopting or changing equity incentive plans. Hearsts effective control over  stockholder actions may also determine the outcome of any merger,  consolidation, sale of all or substantially all of our assets or other form of  change of control that we might consider. In addition, the interests of Hearst,  which owns or has significant investments in other businesses, including cable  television networks, newspapers, magazines and electronic media, may from time  to time compete with, or otherwise diverge from, our interests, particularly  with respect to new business opportunities and future
acquisitions.





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Market fluctuations or volatility could  cause the market price of our common stock to decline and limit our ability to  raise capital.





The stock market in general  and the market for stocks of Internet-based companies in particular have  experienced extreme price and volume fluctuations, often unrelated to the  operating performance of the affected companies. The market price of the  securities of Internet companies has been highly volatile and is likely to  remain so in the future. We believe that in the past, similar levels of  volatility have contributed to the decline in the market price of our common  stock, and may do so again in the future. Trading volumes of our common stock  can increase dramatically, resulting in a volatile market price for our common  stock. In addition, the trading price of our common stock could decline  significantly as a result of sales of a substantial number of shares of our  common stock, or the perception that significant sales could occur. In the  past, securities class action litigation has been brought against companies  that
experienced volatility in the market price of their securities. Market  fluctuations in the price of our common stock could also adversely affect our  ability to sell equity securities at a price we deem appropriate.





If we fail to meet the expectations of  public market analysts and investors, the market price of our common stock may  decrease significantly.





Public market analysts and  investors have not been able to develop consistent financial models for the  Internet market because of the unpredictable rate of growth of Internet use,  the rapidly changing models of doing business on the Internet and the  Internets relatively low barriers to entry. Our sales cycle is also  unpredictable and sales to advertisers or sponsors forecast in a particular  period may be delayed or may not otherwise occur based upon the timing  of our customers own marketing initiatives.   As a result, and because  of the other risks noted in this discussion, our actual results might not meet  the expectations of public market analysts and investors in future periods. If  this occurs, the price of our common stock will likely decrease.





Our future capital-raising activities could  involve the issuance of equity securities, which would dilute your investment  and could result in a decline in the trading price of our common stock.





We may sell  securities in the public or private equity markets if and when conditions are  favorable, even if we do not have an immediate need for additional capital at  that time. Raising funds through the issuance of equity securities will dilute  the ownership of our existing stockholders. Furthermore, we may enter into  financing transactions at prices that represent a substantial discount to the  market price of our common stock. A negative reaction by investors and  securities analysts to any discounted sale of our equity securities could  result in a decline in the trading price of our common stock.





Future sales of our stock could
        affect our share price.





If our stockholders sell  substantial amounts of our common stock, including shares sold by directors or  officers and shares issued upon the exercise of outstanding options or in  connection with acquisitions, the market price of our common stock could fall.  These sales also might 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.





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Item 3.  Quantitative and  Qualitative Disclosures About Market Risk.





As of March  31, 2004 and December 31, 2003, our financial instruments include cash and cash  equivalents. Cash equivalents include interest bearing accounts. We do not use  derivative financial instruments in our investment portfolio. Our exposure to  market risk for changes in interest rates relates primarily to our interest  bearing accounts. We do not expect interest rate fluctuations to materially  affect the aggregate value of our financial assets. While we maintain our cash  and cash equivalents in highly rated financial institutions, at times these  balances exceed insurable amounts.





Item 4.  Controls and Procedures.





(a) Evaluation  of Disclosure Controls and Procedures.





Our chief  executive officer and our chief financial officer, after evaluating the  effectiveness of our disclosure controls and procedures (as defined in Rules  13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period  covered by this quarterly report, have concluded that, as of that date, our  disclosure controls and procedures were effective in ensuring that information  required to be disclosed by us in reports that we file or submit under the  Exchange Act is recorded, processed, summarized and reported within the time  periods specified in SEC rules and forms.





(b) Changes in  Internal Controls over Financial Reporting.





There were no  changes in our internal controls over financial reporting during the first  quarter of 2004 that have materially affected, or are reasonably likely to  materially affect, our internal controls over financial reporting.





PART II


OTHER INFORMATION





Item 1.  Legal Proceedings.





Not  Applicable.





Item 2.  Changes in Securities and  Use of Proceeds.





On January 14,  2004, Hearst Communications, Inc. exercised a warrant it received in connection  with a securities purchase agreement related to our acquisition of Women.com  and purchased 2,065,695 shares of common stock for $0.01 per share. Pursuant to  its terms, the warrant became exercisable when the average closing price of our  common stock had exceeded $3.75 for 15 consecutive trading days prior to  January 14, 2003. We relied on the exemption from registration under Section  4(2) of the Securities Act of 1933, as amended, or Securities Act, for the sale  of the securities issued in connection with the exercise of this warrant.





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During  February 2004, an aggregate of 29,449 shares of common stock were issued to  certain of our existing security holders in exchange for warrants they had  acquired in connection with our acquisition of Women.com. In each case, we  relied on the exemption provided by Section 3(a)(9) of the Securities Act.





Item 3.   Defaults Upon Senior  Securities.





Not  Applicable.





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





Not  Applicable.





Item 5.   Other Information.





Not  Applicable.





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





(a) Exhibits.





The exhibits listed on the  accompanying Exhibit Index are filed or incorporated by reference as a  part of this report and such


Exhibit Index is incorporated herein by  reference.





(b) Reports on  Form 8-K.





|Item #     |  | Description                                                                                                                                                                                                                                                        |  | Date            
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------
|           |  |                                                                                                                                                                                                                                                                    |  |                 
|(i)  7, 12 |  | Reporting the Companys
      financial results for the three months and year ended December 31, 2003
      (The information furnished under Items 7 and 12 and Exhibit 99.1 is not    incorporated by reference into existing or future registration statements). |  | February 3, 2004




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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.





|                     | iVILLAGE INC.
|-------------------- | -------------
|                     | (Registrant) 
|                     |              
|Dated:  May 14, 2004 | By:          
|                     |              
|                     |              
|                     |              
|                     |              
|Dated:  May 14, 2004 | By:          
|                     |              
|                     |              




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EXHIBIT INDEX





|Number |  | Description                                                                                                                                                                                                                                                                                           
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                                                                                                                                                                                                       
|3.1    |  | Restated    Certificate of Incorporation, as amended, of the Registrant (incorporated by    reference from Exhibit 3.1 to the Registrants Form 8-A/A registration    statement, filed on April 4, 2004).                                                                                             
|       |  |                                                                                                                                                                                                                                                                                                       
|3.2    |  | By-Laws, as    amended, of the Registrant (incorporated by reference from Exhibit 3.2 to the    Registrants Form 8-A/A registration statement, filed on April 4, 2004).                                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                       
|10     |  | Memorandum    of Understanding, dated May 12, 2004, between Hearst Communications, Inc. and    iVillage Inc.                                                                                                                                                                                          
|       |  |                                                                                                                                                                                                                                                                                                       
|11     |  | Statement    re: computation of earnings per share.                                                                                                                                                                                                                                                   
|       |  |                                                                                                                                                                                                                                                                                                       
|31.1   |  | Certification    of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under    the Securities Exchange Act of 1934, as amended.                                                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                       
|31.2   |  | Certification    of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a)    under the Securities Exchange Act of 1934, as amended.                                                                                                                                                   
|       |  |                                                                                                                                                                                                                                                                                                       
|32     |  | Certifications    of Principal Executive Officer and Principal Financial Officer furnished    pursuant to Rules 13a-14(b) and 15d-14(b) under the Securities Exchange Act    of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to    Section 906 of the Sarbanes-Oxley Act of 2002.




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