U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

           /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                                        -

                  For the quarterly period ended September 30, 2000
                                 --------------

                                       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 No. 0-25507
                                               -------

                                  iPARTY CORP.
                                  ------------
             (Exact name of registrant as specified in its charter)

              Delaware                                    13-4012236
              --------                                    ----------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation of organization)

130 West 30th Street, 10th Floor, New York, New York                  10001
----------------------------------------------------                  -----
   (Address of principal executive offices)                         (Zip Code)

       Registrant's telephone number, including area code: (212) 609-4300

 ------------------------------------------------------------------------------
         (Former name or former address, if changed since last report.)

         Check whether the Issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.

                                  Yes X    No ___

                  Transitional small business disclosure format

                                    Yes    No X



                                                                          Page 1
<PAGE>


                                  iPARTY CORP.

                         Quarterly Report on Form 10-QSB

                                Table of Contents

                                                                            PAGE

PART I   FINANCIAL INFORMATION

Item 1.           Financial Statements                                         3

                  Notes to Consolidated Financial Statements                   6

Item 2.           Management's Discussion and Analysis                         8


PART II  OTHER INFORMATION

Item 6.           Exhibits                                                    11


SIGNATURES


                                                                          Page 2


<PAGE>


<TABLE>
<CAPTION>


                                  iPARTY CORP.
                           CONSOLIDATED BALANCE SHEET


<S>                                                                             <C>               <C>

                                                                                September 30,     December 31,
                                                                                   2000              1999
                                                                                ------------      ------------
                                                                                (Unaudited)

ASSETS

Current assets:
     Cash and cash equivalents                                                  7,522,327         18,673,304
     Marketable securities                                                              -            973,877
     Cash, restricted                                                                   -             51,012
     Accounts receivable                                                          265,493             99,476
     Inventory                                                                  6,315,000                  -
     Prepaid expenses and other current assets                                    322,086            428,645
                                                                               ----------        -----------
       Total current assets                                                    14,424,906         20,226,314

     Property and equipment, net                                                1,091,246            860,457
     Intangible Assets                                                          4,578,466          6,119,734
     Other assets                                                                 213,961             50,245
                                                                               ----------       ------------

Total assets                                                                 $ 20,308,579       $ 27,256,750
                                                                             ============       ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                         $ 2,834,185        $ 1,749,806
     Accrued severance                                                             75,013            213,987
     Accrued expenses                                                           1,273,234            238,889
                                                                             ------------       ------------
       Total current liabilities                                                4,182,432          2,202,682

Other Liabilities:
     Line of credit                                                             1,601,000                  -
     Deferred Payables                                                            453,022                  -
                                                                             ------------       ------------

Total Liabilities                                                               6,236,454          2,202,682

Commitments and contingencies

Stockholders' Equity:
     Preferred stock - $.001 par value;  10,000,000 shares authorized;  Series A
       preferred stock - 1,000,000 authorized;
         1,000,000 shares issued and outstanding                                    1,000              1,000
       Series B preferred stock - 1,157,257 authorized;
         1,517,257 and 1,044,952 shares issued and outstanding                      1,517              1,045
       Series C preferred stock - 145,198 authorized;
         145,198 and 100,000 shares issued and outstanding                            145                100
     Series D preferred stock - 362,996 authorized;
         362,996 and 250,000 shares issued and outstanding                            363                250
     Series E preferred stock - 533,333 authorized;
         533,333 shares issued and outstanding                                        533                  -
     Series F preferred stock - 114,286 authorized;
         114,286 shares issued and outstanding                                        114                  -
    Common stock - $.001 par value; 50,000,000 shares authorized;
         11,136,107 and 11,005,691 shares issued and outstanding                   11,137             11,006
Additional paid in capital                                                     64,080,855         58,616,431
Accumulated deficit                                                           (50,023,539)      (33,575,764)
                                                                              ------------      ------------

       Total stockholders' equity                                              14,072,125         25,054,068
                                                                              ------------      ------------

Total liabilities and stockholders' equity                                   $ 20,308,579       $ 27,256,750
                                                                              ============      ============


</TABLE>



   The accompanying Notes to Consolidated  Financial  Statements are an integral
   part of this Consolidated Balance Sheet.


                                                                          Page 3


<PAGE>

<TABLE>
<CAPTION>

                                  iPARTY CORP.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)


<S>                                       <C>                                <C>



                                            For the three months ended        For the nine months ended
                                                    September 30,               September 30,
                                          ------------------------------     ------------------------------
                                               2000             1999              2000             1999
                                          ------------       -----------      ------------      -----------

Revenues                                  $  3,648,105        $    4,257     $   4,054,791      $     4,257

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

Operating costs:
     Cost of products sold                   2,685,984             5,107         3,178,704            5,107
     Amortization of partner warrant           377,744           379,262         1,133,233          379,262
     Marketing and sales                     2,160,959           632,442         7,176,081          878,372

     Product/technology development          1,068,973           399,143         4,510,562          893,466
     General and administrative              1,000,144           725,653         2,079,287        1,528,614
     Loss from abandonment of assets                -             92,924                 -          366,212
     Non-cash compensation expense              88,777           531,900           723,733          761,303
                                           -----------       -----------       ------------     -----------

Operating loss                              (3,734,476)       (2,762,174)      (14,746,809)      (4,808,079)

     Interest income                           144,039            41,141           644,172           42,688
     Interest expense                          (11,000)         (763,463)          (11,000)      (1,004,452)
                                           -----------       -----------       ------------     ------------

Net loss before income taxes                (3,601,437)       (3,484,496)      (14,113,637)      (5,769,843)

     Provision for income taxes                      -                 -            84,784                -
                                           -----------       -----------       ------------     ------------
Net loss                                 $  (3,601,437)     $ (3,484,496)    $ (14,198,421)     $(5,769,843)
                                         =============      ============      =============     ============
Loss per share:
     Basic and diluted                   $       (0.53)     $      (1.72)    $       (1.48)    $      (1.93)
                                           ===========       ===========      =============     ============
Weighted Average Shares Outstanding:
     Basic and diluted                      11,136,107        11,005,691         11,114,326       11,005,691
                                           ===========       ===========      =============     ============

</TABLE>




   The accompanying Notes to Consolidated  Financial  Statements are an integral
   part of these Consolidated Statements.


                                                                          Page 4

<PAGE>

<TABLE>
<CAPTION>

                                  iPARTY CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)



<S>                                                                             <C>

                                                                                For the nine months ended
                                                                                       September 30,
                                                                               -----------------------------
                                                                                 2000                1999
                                                                               ------------       ----------

Cash flows from operating activities:

Net loss                                                                      $(14,198,421)     $(5,769,843)

Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation and amortization                                                2,109,181           665,723
    Loss resulting from abandonment of assets                                            -           366,213
    Amortization of discount on issuance of convertible notes                            -           948,602
     Non-cash compensation expense                                                 723,733           761,303
     Decrease (increase) in:
       Accounts receivable                                                        (166,016)                -
       Prepaid expenses and other current assets                                   106,559          (150,292)
       Other assets                                                               (163,716)          (36,981)
       Inventory                                                                (6,315,000)                -
     Increase (decrease) in:
       Accounts payable                                                          1,084,379           857,606
       Accrued severance                                                          (138,974)                -
       Accrued expenses                                                          1,034,346                 -
       Other Liabilities                                                           453,022                 -
                                                                              ------------        ----------
       Net cash used in operating activities                                   (15,470,907)       (2,357,669)
                                                                              ------------        ----------

Cash flows from investing activities:

Purchase of property and equipment                                                (796,994)         (457,811)
Advances to officer                                                                      -            22,656
Equipment and software development                                                       -          (695,533)
Purchase of marketable securities                                                  973,877                 -
Increase in restricted cash                                                         51,012              (109)
                                                                               -----------        ----------
Net cash provided by (used in) investing activities                                227,895        (1,130,797)
                                                                               -----------        ----------

Cash flows from financing activities:

Proceeds from line of credit                                                     1,601,000                 -
Proceeds from note payable                                                               -         2,000,000
Proceeds from sale of stock, net of offering costs                               2,491,035        19,998,483
                                                                              ------------        ----------
       Net cash provided by investing activities                                 4,092,035        21,998,483
                                                                              ------------        ----------

Net (decrease)increase in cash and cash equivalents                            (11,150,977)       18,510,017

Cash and cash equivalents, beginning of period                                  18,673,304           346,751
                                                                              ------------        ----------

Cash and cash equivalents, end of period                                     $   7,522,327       $18,856,768
                                                                              ============        ==========

Cash paid for:
     Interest expense                                                        $      11,000       $         -
                                                                              ============        ==========
     Income taxes                                                            $      84,784       $         -
                                                                              ============        ==========

Supplemental disclosure of non-cash financing activities:
    Conversion of notes payable to Series A preferred
     Stock                                                                   $           -       $   250,000
                                                                              ============        ==========
     Conversion of notes payable and accrued interest to
     Series B preferred stock                                                $           -       $ 2,055,850
                                                                              ============        ==========


</TABLE>

     The accompanying Notes to Consolidated Financial Statements are an integral
     part of these Consolidated Statements.

                                                                          Page 5

<PAGE>
                                  iPARTY CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2000
                                   (Unaudited)

1. THE COMPANY

iParty LLC,  which was created on December 11, 1997 to launch an  Internet-based
merchant of party goods and services,  commenced  operations in January 1998. On
March 12, 1998,  iParty Corp.  was  organized  as a wholly owned  subsidiary  of
iParty LLC and the net assets and  operations of iParty LLC were  transferred to
iParty Corp. On April 9, 1998, StarGreetings,  Inc. ("Star") was incorporated as
a wholly owned  subsidiary of iParty Corp. to develop and operate a personalized
celebrity greeting service.

Effective July 2, 1998, iParty Corp. ("iParty" or the "Company") merged into WSI
Acquisition  Corp.  ("WSI"),  an inactive  company.  The merger was  consummated
through an exchange of shares that  resulted in iParty LLC  receiving  6,000,000
common shares or 54.5% of the outstanding  shares of WSI. In connection with the
merger and as a  condition  thereof,  WSI sold,  in two private  placements,  an
aggregate of 4,585,000  shares of common  stock of which  3,624,043  shares were
sold for $.01 per share and 960,957  shares,  together with warrants to purchase
1,000,000 shares of Series A preferred  stock,  were sold for $1.00 per share or
aggregate  proceeds of $997,197  before  related  expenses.  The merger has been
treated as a  re-capitalization  for accounting  purposes and iParty's  historic
capital  accounts were  retroactively  adjusted to reflect the 6,000,000  shares
issued by WSI in the transaction.  In addition,  as WSI had no assets before the
merger and the private placements,  the 420,421 outstanding common shares of WSI
have  been  recorded  at par value  with a  corresponding  charge to  additional
paid-in capital.  The statement of operations  reflects the operations of iParty
from the  commencement  of its operations  from March 12, 1998 and also reflects
the operations of iParty LLC, the predecessor company, from January 1998 through
March 12, 1998.  In connection  with the merger,  WSI changed its name to iParty
Corp. On August 3,2000,  iParty Corp.  formed a subsidiary  corporation,  iParty
Retail Stores Corp.  On August  15,2000 the  subsidiary  purchased the fixtures,
leases and inventory of 33 retail party stores.

The  Company's  efforts are devoted to  developing  the  Internet  resources  to
provide  consumers a  comprehensive  web site where they can seek party planning
advice and information and locate and contract for party goods and services.

2. UNAUDITED INTERIM FINANCIAL INFORMATION

The interim consolidated  financial statements as of September 30,2000 have been
prepared by the Company  pursuant to the rules and regulations of the Securities
and  Exchange  Commission  (the "SEC") for interim  financial  reporting.  These
consolidated statements are unaudited and, in the opinion of management, include
all  adjustments  (consisting  of normal  recurring  adjustments  and  accruals)
necessary  to  present  fairly the  consolidated  balance  sheets,  consolidated
operating  results,  and  consolidated  cash flows for the periods  presented in
accordance  with generally  accepted  accounting  principles.  The  consolidated
balance sheet at December 31,1999 has been derived from the audited consolidated
financial  statements at that date. Operating results for the three months ended
September  30,  2000 may not be  indicative  of the  results for the year ending
December  31,  2000.  Certain  information  and  footnote  disclosures  normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles  have  been  omitted  in  accordance  with the  rules and
regulations of the SEC. These consolidated  financial  statements should be read
in  conjunction  with  the  audited  consolidated   financial  statements,   and
accompanying notes, included in the Company's Annual Report on Form 10-K for the
year  ended   December  31,  1999.   Certain  prior  period  amounts  have  been
reclassified to conform to the current period presentation.


                                                                          Page 6

<PAGE>

2a. Segment  Reporting
         Segment  information  provided  below divides  revenues and expenses by
 corporation.  iParty  Corp.  income  and  expenses  relate to the  on-line  and
 catalogue  sales.  iParty  Retail  Stores Corp.  income and expenses  relate to
 retail operations exclusively.

<TABLE>
<CAPTION>

<S>                                           <C>                <C>                 <C>

       Three Months Ending September                            iParty Retail
                  30,2000                       iParty Corp     Stores Corp             Total
                                                -----------     --------------          -----
    Net Revenue                                 $348,105           $3,300,000      $3,648,105
                                               ==========           =========      ==========
    Net (Loss)                                $(2,911,438)         $(689,999)     $(3,601,437)
                                               ==========           =========      ==========

</TABLE>



On August 15,2000, iParty Retail Stores Corp. acquired the leases, inventory and
fixtures  of  33  retail  party  good  stores.   The  following  schedule  gives
comparative  information  reported as if the investment had been made on January
1, 1999.


<TABLE>
<CAPTION>
<S>                                    <C>              <C>               <C>               <C>
                                              Three Months Ended                  Nine Months Ended
                                                 September 30,                      September 30,
                                                 -------------                      -------------
                                            2000              1999              2000             1999
                                            ----              ----              ----             ----
    Revenues                           $7,410,105       $9,652,257        $29,078,791       $3,2826,257)
    Operating (Loss)                   $(4,630,440)     $(4,993,174)      $(17,530,773)     $(8,036,079)

    Net (Loss)                         $(4,501,401)     $(5,715,496)      $(16,986,385)     $(8,997,843)
    Preferred Stock                    $2,249,354       $(15,492,000)     $(2,249,354)      $(15,492,000)
    beneficial conversion              -------------    -------------     -------------     -------------
    feature
    Net (Loss) Available               $(6,750,755)     $(21,207,496)     $(19,235,739)     $(24,489,843)
    to Common Stockholders

    Per Share Information
    Net (Loss) per share:
        Basic and Diluted              $(.61)           $(1.93)            $(1.73)           $(2.23)
                                       ======            ======            =======            ======

    Weighted Average Shares:
        Basic and Diluted              $11,136,107      $11,005,691       $11,114,326       $11,005,691
                                       ===========      ===========       ==========        ===========
</TABLE>


2b. Earnings Per Share
The company has computed net income(loss) per share in accordance with Statement
of Financial  Accounting Standards No. 128, Earnings per Share ("SFAS No. 128").
Under the  provisions of SFAS No. 128, basic net  income(loss)  per common share
(Basic EPS") is computed by dividing net  income(loss)  by the weighted  average
number of common shares outstanding. Dilutive net income(loss) per common shares
(Diluted EPS") is computed by dividing net income (loss) by the weighted average
number of common shares and dilutive common share  equivalents  then outstanding
using the treasury-stock method.

The  following  table sets forth the  calculation  on a  pro-forma  basis of the
diluted earnings per share for the periods noted.


<TABLE>
<CAPTION>
<S>                                      <C>                  <C>               <C>                  <C>
                                         For the three months ended             For the nine months ended
                                                 September 30                          September 30,
                                                 ------------                          -------------
                                           2000               1999                2000                1999
                                           ----               ----                ----                ----
Net Loss                                  $(3,601,437)        (3,484,496)       ($14,198,421)        $(5,769,843)
Preferred Stock beneficial                ($2,249,354)       (15,492,000)        ($2,249,354)       $(15,492,000)
                                          ------------       ------------        ------------       -------------
conversion feature

Net(Loss) available to common            ($5,850,791)        (18,976,496)        ($16,447,775)       $(21,261,843)
                                         =============       ============         ============        ============
shareholders

Weighted Average Shares
Outstanding:
Basic and diluted                          11,136,107         11,005,691          11,114,326          11,005,691
                                           ==========         ==========          ==========          ==========


Loss per share - basic and diluted:            ($.53)            ($1.72)             ($1.48)             ($1.93)
                                               ======            =======             =======             =======

</TABLE>

                                                                          Page 7
<PAGE>

Safe Harbor Statement

         Certain statements in this Form 10-QSB, including information set forth
under Item 2 "Management's Discussion and Analysis" constitute or may constitute
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995 (the "Act"). We desire to avail ourself of certain
"safe harbor"  provisions of the Act and are  therefore  including  this special
note to enable us to do so.  Forward-looking  statements  included  in this Form
10-QSB or hereafter  included in other publicly  available  documents filed with
the Securities and Exchange  Commission,  reports to our  stockholders and other
publicly available statements issued or released by us involve known and unknown
risks,  uncertainties,  and other factors which could cause our actual  results,
performance  (financial or operating) or  achievements to differ from the future
results,  performance (financial or operating) achievements expressed or implied
by such forward-looking statement. Such factors include, but are not limited to:
(i) our  insignificant  historical  revenues;  (ii) our reliance of  third-party
suppliers;  (iii) our ability to expand our website;  (iv) our ability to manage
growth;  (v) our  ability to  develop  our brand;  (vi)  competition;  (vii) our
ability to adapt evolving  technologies;  and (viii) governmental  regulation of
the Internet.  Such future  results are based upon  management's  best estimates
based upon current conditions and the most recent results of operations.




Item 2.           Management's Discussion and Analysis

Overview

         We intend to become the premier  multi-channel  party  supply  resource
with distribution on-line, through catalogues and in retail stores.

         Our web site was launched in February  1999.  On October 12,  1999,  we
launched  the new  iParty.com  site,  a  destination  for party  goods and party
planning.  From Pokemon  costumes to birthday  party packs to fog  machines,  an
online party magazine to party safety tips,  iParty.com  presents consumers with
what we believe to be a sophisticated, yet fun and easy-to-navigate online party
resource.  Offering convenience and an extensive  assortment of merchandise,  we
believe  iParty.com is refocusing  the party goods industry back to the needs of
the consumer.  At the click of a mouse, party givers can enjoy one-stop shopping
and  easy-to-find  pricing while  purchasing  all their party needs for birthday
bashes, Super Bowl parties, Halloween festivals and more.

         In April 2000, we launched our catalogue operation, specializing in the
seasonal party needs of the consumer.

         On  August  15,2000  iParty  Retail  Stores  Corp.   purchased   assets
consisting  of 33 store  leases,  fixtures  and  inventory  from  The Big  Party
Corporation.  This  enabled  us to set up  retail  operations  and to  become  a
multi-channel outlet for party supplies.

Results of Operations

Three months ended  September 30, 1999 compared to three months ended  September
30, 2000

         Revenue for the three months  ended  September  30, 2000,  includes the
selling price of party goods sold by us, net of returns and  discounts,  as well
as outbound  shipping and handling  charges.  Revenue for the three months ended
September  30,  2000  and  1999  were  approximately  $  3,648,000  and $  4,000
respectively.  Revenue  is  recognized  at the  time  products  are  shipped  to
customers.

         Cost of  products  sold  consists  of the cost of  merchandise  sold to
customers,  store rent,  warehousing  costs, store payroll and outbound shipping
and handling costs charged to us by our fulfillment  partner,  Taymark.  Cost of
products  sold  the  three  months  ended  September  30,  2000  and  1999  were
approximately

                                                                          Page 8
<PAGE>

$2,686,000  and $ 5,000  respectively.  Taymark began  fulfilling
orders placed on our web site on October 1, 1999.

         Amortization of fulfillment  partner  warrant  expense  consists of the
amortization  of the  estimated  fair value of the warrant  issued to Taymark to
provide inventory and fulfillment services to deliver merchandise ordered on the
site, or directly through a toll-free  telephone number,  directly to consumers.
On July 8, 1999, we entered into a product  fulfillment  agreement with Taymark.
The initial term of the agreement runs through  December 31, 2002. The agreement
contains  certain  restrictions  on  competition  by  the  direct  marketer.  As
additional consideration for such restrictions and services, we issued a warrant
to purchase  3,000,000 shares of common stock at an exercise price of $3.75. The
warrant  expires on October 1, 2002.  The estimated fair value of the warrant on
the date of issue  was  approximately  $5.3  million  as  determined  using  the
Black-Scholes  option  pricing  model.  The value of the  warrant is included in
intangible assets on the accompanying Balance Sheet as of September 30, 2000 and
is being amortized over the initial term of the fulfillment  agreement.  For the
three months ended  September  30, 2000 and 1999,  amortization  of  fulfillment
partner  warrant  expense  was   approximately   $378,000   resulting  from  the
amortization of this warrant.

         Marketing and sales expenses consist  primarily of advertising,  public
relations  and  promotional  expenditures,  and all related  payroll and related
expenses for personnel  engaged in marketing and selling  activities.  Marketing
and sales  expenses for the three months ended  September 30, 2000 and 1999 were
approximately $2,161,000 and $632,000,  respectively.  Included in the September
30, 2000 expense was approximately  $135,000  resulting from the amortization of
the Margaritaville warrant.

         Product and  technology  development  expenses  consist  principally of
payroll and related  expenses for product  development,  editorial,  systems and
operations personnel and consultants, and systems infrastructure.  Operating and
development expenses for the three months ended September 30, 2000 and 1999 were
approximately $1,069,000 and $399,000 respectively.

         General  and  administrative  ("G&A")  expenses  consist of payroll and
related   expenses  for  executive,   finance  and   administrative   personnel,
professional  fees and other general  corporate  expenses.  G&A expenses for the
three months ended September 30, 2000 and 1999 were approximately $1,000,000 and
$726,000, respectively.

         We incurred  approximately  $89,000 and  $532,000  for the three months
ended  September  30,  2000  and 1999  respectively,  in  non-cash  compensation
expenses. The non-cash compensation expenses resulted from stock options granted
to consultants and stock options granted to celebrities who provided services to
StarGreetings.

         Interest income on cash and cash equivalents for the three months ended
September   30,2000  and  1999,   was   approximately   $144,000   and  $41,000,
respectively.
The increase in income was due to higher cash and investment  balances resulting
from our financing activities, principally the private placement of Series B, C,
D, E, and F Preferred Stock completed in 1999 and 2000.

         Interest  expense for the three  months  ended  September  30, 2000 and
1999,  was  approximately  $ 11,000 and  $763,000,  respectively.  The  interest
expense  in 2000 was  related  to the line of  credit in our  subsidiary  iParty
Retail  Stores  Corp.  The interest  expense in 1999 was related to  convertible
notes payable that were converted to preferred stock in September 1999.



Nine months ended September 30, 1999 compared to nine months ended September 30,
2000

         Revenue for the nine months  ended  September  30,  2000,  includes the
selling price of party goods sold by us, net of returns and  discounts,  as well
as outbound  shipping  and handling  charges.  Revenue for the nine months ended
September 30, 2000 and 1999 was approximately  $4,055,000 and $4,000. Revenue is
recognized at the time products are shipped to customers.

                                                                          Page 9
<PAGE>

         Cost of  products  sold  consists  of the cost of  merchandise  sold to
customers  and  outbound  shipping  and  handling  costs  charged  to us by  our
fulfillment  partner,  Taymark. For the nine months ended September 30, 2000 and
1999  the  cost  of  products  sold  was  approximately  $3,179,000  and $ 5,000
respectively.  Taymark began fulfilling orders placed on our web site on October
1, 1999.

         Amortization of fulfillment  partner  warrant  expense  consists of the
amortization  of the  estimated  fair value of the warrant  issued to Taymark to
provide inventory and fulfillment services to deliver merchandise ordered on the
site, or directly through a toll-free  telephone number,  directly to consumers.
On July 8, 1999, we entered into a product  fulfillment  agreement with Taymark.
The initial term of the agreement runs through  December 31, 2002. The agreement
contains  certain  restrictions  on  competition  by  the  direct  marketer.  As
additional consideration for such restrictions and services, we issued a warrant
to purchase  3,000,000 shares of common stock at an exercise price of $3.75. The
warrant  expires on October 1, 2002.  The estimated fair value of the warrant on
the date of issue  was  approximately  $5.3  million  as  determined  using  the
Black-Scholes  option  pricing  model.  The value of the  warrant is included in
intangible assets on the accompanying Balance Sheet as of September 30, 2000 and
is being amortized over the initial term of the fulfillment  agreement.  For the
nine months  ended  September  30, 2000 and 1999,  amortization  of  fulfillment
partner warrant expense was approximately  $1,133,000 and $379,000 respectively;
resulting from the amortization of this warrant.

         Marketing and sales expenses consist  primarily of advertising,  public
relations  and  promotional  expenditures,  and all related  payroll and related
expenses for personnel  engaged in marketing and selling  activities.  Marketing
and sales expenses for the nine months ended  September 30, 2000 and 1999,  were
approximately   $7,176,000   and   $878,000.   Included  in  this   expense  was
approximately  $408,000  resulting from the  amortization of the  Margaritaville
warrant recorded in the period ending September 30, 2000

         Product and  technology  development  expenses  consist  principally of
payroll and related  expenses for product  development,  editorial,  systems and
operations personnel and consultants, and systems infrastructure.  Operating and
development  expenses for the nine months ended September 30, 2000 and 1999 were
approximately $4,511,000 and $893,000 respectively.

         General  and  administrative  ("G&A")  expenses  consist of payroll and
related   expenses  for  executive,   finance  and   administrative   personnel,
professional  fees and other general  corporate  expenses.  G&A expenses for the
nine months ended September 30, 2000 and 1999 were approximately  $2,079,000 and
$1,529,000 respectively.

         We incurred  approximately  $724,000  and  $761,000 for the nine months
ended  September  30,  2000 and 1999,  respectively,  in  non-cash  compensation
expenses. The non-cash compensation expenses resulted from stock options granted
to consultants,  stock options  granted to celebrities who provided  services to
StarGreetings  and  the  compensation  expense  associated  with  the  cash-less
exercise of stock options.

         Interest income on cash and cash  equivalents for the nine months ended
September  30,  2000  and  1999,   was   approximately   $644,000  and  $43,000,
respectively.  The  increase  in income  was due to higher  cash and  investment
balances  resulting  from our  financing  activities,  principally  the  private
placement of Series B, C, and D Preferred  Stock completed in 1999, and Series E
and F completed in 2000.

            Interest  expense for the nine months ended  September  30, 2000 and
1999,  was  approximately  $11,000 and  $1,004,000,  respectively.  The interest
expense in 2000 was related to a line of credit in our subsidiary  iParty Retail
Stores  Corp.  The  interest  expense in 1999 was related to  convertible  notes
payable that were converted to preferred stock in September 1999.

                                                                         Page 10


<PAGE>

Liquidity and Capital Resources

         We  used  cash  in  operating  activities  for the  nine  months  ended
September 30, 2000 and 1999 totaling  $15,471,000 and $2,357,669,  respectively.
In addition,  we invested  cash in property and  equipment,  including  web site
development  expenditures  for the nine months ended September 30, 2000 and 1999
totaling  $797,000  and  $1,152,000,   respectively.   During  1999,  we  raised
$21,593,000, net of offering expenses, in financing with the proceeds being used
for  working  capital  and  capital  expenditures.  For the nine  months  ending
September 30, 2000 we raised $2,491,035 net of offering expenses.

         In 1999, we raised an aggregate of $28.5 million in equity financing.
In January and February of 1999,  we received net proceeds of $650,000  from the
exercise  of  warrants  for Series A  convertible  preferred  stock.  In August,
September  and  December  of 1999,  we sold an  aggregate  of $27.9  million  of
convertible  preferred  stock and redeemable  common stock purchase  warrants in
private offerings. The financings included the conversion of our $2.0 million of
outstanding   senior  debt.  Net  proceeds  to  us  from  the  financings   were
approximately  $26.3 million  (including  the  conversion of the $2.0 million in
debt and interest  thereon).  In September  2000,  Paragon Capital issued a $7.5
million line of credit, secured by inventory,  to the iParty Retail Stores Corp.
As of  September  30,2000,  the  portion  of the line of  credit in use was $1.6
million.

          We believe, based on currently proposed plans and assumptions relating
to its  operations,  that the net  proceeds  from  the  financings  and  related
interest income, together with anticipated revenues from operations and the line
of  credit,  will be  sufficient  to fund our  operations  and  working  capital
requirements  for at  least  twelve  months.  In the  event  that  our  plans or
assumptions change or prove inaccurate (due to unanticipated expenses, increased
competition, unfavorable economic conditions, or other unforeseen circumstances)
we  could  be  required  to seek  additional  financing  sooner  than  currently
expected.  There  can be no  assurance  that  such  additional  funding  will be
available to us, or if available,  that the terms of such  additional  financing
will be acceptable to us.

Acquisition
On August  3,2000  iParty Corp formed a subsidiary  corporation,  iParty  Retail
Stores Corp. On August 15, 2000,  iParty Retail Stores Corp. paid $4,858,289 for
33 building leases, fixtures and inventory from The Big Party Corporation.


PART II  OTHER INFORMATION

Item 6.  Exhibits.

         (a) Exhibit 27.1    Financial Data Schedule

         (b) During the period  commencing last quarter of the period covered by
this  report  to date,  the  following  reports  on Form  8-K were  filed by the
Registrant:

Date of Report          Item Reported               Descriptioned Item
--------------          -------------               ------------------
August 30, 2000         Item 2. Acquisitioned       The Company acquired certain
                        Assets                      assets from the Big Party
                        Item 5. Other Events        Corporation that involved
                                                    33 retail stores. The
                                                    Company completed a private
                                                    placement of Series E
                                                    Convertible Preferred Stock
                                                    raising $2,000,000. The
                                                    proceeds of the private
                                                    placement were used to
                                                    finance the acquisition.

September 15, 2000      Item 5. Other Events        The Company completed a
                                                    private placement of Series
                                                    F Convertible Preferred
                                                    Stock raising $500,000. The
                                                    proceeds of the private
                                                    placement were used in part
                                                    to finance the acquisition
                                                    of certain assets by the
                                                    Company of the Big Party
                                                    Corporation.


                                                                         Page 11


<PAGE>

                                   SIGNATURES

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

                                              iPARTY CORP.

Dated:    November 14,2000                         By:   /s/ Sal Perisano
                                                         -----------------------
                                                         Sal Perisano
                                                         Chief Executive Officer

                                                   By:   /s/ Patrick Farrell
                                                         -----------------------
                                                         Patrick Farrell





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