<PAGE>
 
                                  FORM 10 - Q/A
                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D. C. 20549
(MARK ONE)

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

          FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1998
 
                                       OR

(   )     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
          SECURITIES EXCHANGE ACT OF 1934
 
          FOR THE TRANSITION PERIOD FROM  ________________

COMMISSION FILE NUMBER:  000-22212

                           ONHEALTH NETWORK COMPANY
                              __________________
                         (Exact Name of Registrant as
                           specified in its charter)
                                        
       WASHINGTON                                      41-1686038
(State or other jurisdiction of              (IRS Employer Identification No.)
incorporation or organization)

                         808 HOWELL STREET, SUITE 400
                           SEATTLE, WASHINGTON 98101
                   (Address of principal executive offices)
                                  (Zip Code)
                                        
                                 206-583-0100
             (Registrant's telephone number, including area code)

                             IVI PUBLISHING, INC.
                         7500 FLYING CLOUD DRIVE, #500
                         EDEN PRAIRIE, MINNESOTA 55344
                           (Former Name and Address)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

               YES  X    NO
<PAGE>
 
                     APPLICABLE ONLY TO CORPORATE ISSUERS:
                                        
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

CLASS                         OUTSTANDING AS OF NOVEMBER 12, 1998
------                        -----------------------------------
COMMON STOCK                            11,880,581 SHARES
PAR VALUE $.01 PER SHARE

                                       2
<PAGE>
 
                                 INTRODUCTION

OnHealth Network Company (the "Company" or the "Registrant") hereby amends its
Quarterly Report on Form 10-Q, for the three months ended September 30, 1998 by
deleting its responses to Part I, Item 1 and Part I Item 2 and replacing such
sections in their entirety. The purpose of such amendment is to adjust certain
accretions to earnings relating to the Company's Series B Convertible Preferred
Stock issued on April 10, 1998 and warrants issued April 10, 1998. In
discussions with the Company's auditors in connection with the year end audit it
was decided to revise the time period for calculating the accretion for the
preferred stock and warrants issued in April, 1998. The effect of this decision
is to increase the accretion to be recognized in the third quarter by $275,000,
increasing the loss for such period by that amount. This nonoperating, noncash
adjustment does not increase the loss for the year.

                                       3
<PAGE>

                        PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS




                                       4
<PAGE>
 
                           OnHealth Network Company
                                Balance Sheets
                                   Unaudited
                                (In thousands)


<TABLE> 
<CAPTION> 
                                                               Sept. 30, 1998     Dec. 31, 1997
<S>                                                            <C>                <C>   
ASSETS
Current assets:
     Cash and cash equivalents                                    $ 1,020               $  2,488
     Accounts receivable, net of allowances
        for returns and doubtful accounts of
        $202 in 1998 and $1,011 in 1997                               311                    337
     Inventories                                                        -                    150
     Other current assets                                             333                    332
                                                                  -------               --------
Total current assets                                                1,664                  3,307

Furniture and equipment:
     Computers and software                                         1,171                  2,856
     Office equipment                                                 689                  1,403
                                                                  -------               --------
                                                                    1,860                  4,259
     Accumulated depreciation                                        (953)                (2,989)
                                                                  -------               --------
                                                                      907                  1,270

Total assets                                                      $ 2,571               $  4,577
                                                                  =======               ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                             $ 1,907               $  1,919
     Other accrued expenses                                         1,350                  2,640
                                                                  -------               --------
Total current liabilities                                           3,257                  4,559

Convertible preferred stock                                         2,156

Shareholders' equity:
     Common stock, $.01 par value:
         Issued and outstanding shares -
             10,811 and 10,106 at 1998
             and 1997, respectively                                   108                    101
     Additional paid-in capital                                    82,271                 78,493
     Accumulated deficit                                          (85,221)               (78,576)
                                                                  -------               --------
Total shareholders' (deficit) equity                               (2,842)                    18
                                                                  -------               --------
Total liabilities and shareholders' equity                        $ 2,571               $  4,577
                                                                  =======               ========
</TABLE> 

                                       5
<PAGE>
 
                           ONHEALTH NETWORK COMPANY
                           STATEMENTS OF OPERATIONS
                                   UNAUDITED
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                   Three Months Ended                   Nine Months Ended
                                                       Sept. 30                              Sept. 30
                                              1998                 1997                1998                1997
                                       ----------------     ---------------     ----------------     --------------
<S>                                    <C>                  <C>                 <C>                  <C>
Revenue                                        $    248             $   488             $    733           $  2,731
Cost of revenue                                     549                 311                1,571              1,347
                                       ----------------     ---------------     ----------------     --------------
Gross margin                                       (301)                177                 (838)             1,384
Operating expenses:
    Product development                             547                 378                2,105              2,779
    Sales and marketing                           1,265                 333                2,696                976
    General and administrative                      420               2,096                1,653              5,702
                                       ----------------     ---------------     ----------------     --------------
    Total operating expenses                      2,232               2,807                6,454              9,457
Loss from operations                             (2,533)             (2,630)              (7,292)            (8,073)
Other income                                          -               2,704                  563              2,704
Interest income (expense)                            30                 (68)                  84               (184)
                                       ----------------     ---------------     ----------------     --------------
Net (loss) income                                (2,503)                  6               (6,645)            (5,553)
Preferred stock dividends                           (36)                (30)                 (92)               (90)
Preferred stock accretion                          (374)                (13)                (528)               (39)
                                       ----------------     ---------------     ----------------     --------------
Net loss applicable to
    common shareholders                         ($2,913)               ($37)             ($7,265)           ($5,682)
                                       ================     ===============     ================     ==============
 
Net loss per common share --
    basic and diluted                            ($0.27)             ($0.00)              ($0.70)            ($0.74)
                                       ================     ===============     ================     ==============
 
Weighted average number of
    common shares outstanding                    10,698               7,618               10,323              7,636
                                       ================     ===============     ================     ==============
</TABLE>

                                       6
<PAGE>
 
                           ONHEALTH NETWORK COMPANY
                           STATEMENTS OF CASH FLOWS
                                   UNAUDITED
                                (IN THOUSANDS)
 

<TABLE> 
<CAPTION> 
                                                                                    Nine Months Ended
                                                                                        Sept. 30
                                                                              1998                    1997
                                                                       -----------------        ----------------
<S>                                                                    <C>                      <C> 
Operating activities:
   Net loss                                                                      ($6,645)                ($5,553)
   Adjustments to reconcile net loss to
      net cash used in operating activities
         Depreciation and amortization                                               663                     984
         Stock issued for litigation settlement                                                              433
         Changes in assets and liabilities:
            Decrease in accounts receivable                                           26                   3,697
            Decrease (increase) in inventories                                       150                    (146)
            Decrease (increase) in other current assets                               (1)                    168
            Decrease in other long-term assets                                                             1,103
            Decrease in accounts payable and accrued liabilities                  (1,302)                 (1,420)
                                                                       -----------------        ----------------
   Net cash used in operating activities                                          (7,109)                   (734)
 
Investing activities:
   Net furniture and equipment disposals                                             188
   Net furniture and equipment additions                                            (488)                    (14)
                                                                       -----------------        ----------------
   Net cash used in investing activities                                            (300)                    (14)
 
Financing activities:
   Proceeds from convertible preferred stock                                       5,000
   Proceeds from exercised stock options                                             941                      74
                                                                       -----------------        ----------------
   Net cash provided by financing activities                                       5,941                      74
 
Net decrease in cash and cash equivalents                                         (1,468)                   (674)
Cash and cash equivalents at beginning of period                                   2,488                   3,462
                                                                       -----------------        ----------------
Cash and cash equivalents at end of period                                      $  1,020                $  2,788
                                                                       =================        ================
</TABLE>

                                       7

<PAGE>
 
                           OnHealth Network Company
                 Notes to the Financial Statements (Unaudited)
                              September 30, 1998

BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X.  Preparing financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenue, and expenses.  Examples include provisions for
returns and bad debts and the length of furniture and equipment lives.  Actual
results may differ from these estimates.  Interim results are not necessarily
indicative of results for a full year.  For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1997.

PRODUCT DEVELOPMENT COSTS

Product development costs consist principally of compensation to Company
employees, interactive design costs paid to outside consultants, travel and
supplies.  All costs are expensed as incurred.

Costs related to research, design and development of products are charged to
product development expenses as incurred.  Under Statement of Financial
Accounting Standards No. 86 (SFAS No. 86), software development costs are
capitalized beginning when a product's technological feasibility has been
established and ending when a product is available for general release to
customers.  The Company has not capitalized any software development costs since
such costs meeting the requirements of SFAS No. 86 have not been significant.

NET LOSS PER SHARE

Net loss per share is computed using the weighted average number of shares of
common stock outstanding.  Common equivalent shares from stock options,
convertible preferred stock and warrants are excluded from the computation, as
their effect is anti-dilutive.

In February 1997, the Financial Accounting Standards Board issued Statement
No.128, "Earnings Per Share."  This statement establishes standards for
computing and presenting basic and diluted earnings per share (EPS) for
financial statements issued for periods ending after December 15, 1997.  The
adoption of this statement will not have a material effect on the Company's
reported EPS.

REVENUE RECOGNITION

The Company's revenues consist of product sales and licensing revenue, contract
development revenue, fees relating to the licensing of its content for use on
cable television, and advertising fees for online services.

                                       8
<PAGE>
 
Product sales and licensing revenues are made up of retail distribution sales,
direct mail sales, and product sales and royalties on licenses to original
equipment manufacturers.  These revenues are recognized upon shipment of the
product or when the Company's obligations under the licensing agreements are
complete.  Allowances for returns are recorded at the time revenue is
recognized.

Contract development revenue is generated through the use of the Company's
personnel and facilities for the creation of custom multimedia products.  This
revenue is recognized by contract on a percentage-of-completion basis or at a
specific hourly rate, depending on the terms of the contract.

Revenues are generated through the licensing of the Company's health and medical
content for use on cable television channels.  Through March 31, 1997, the
Company recognized revenue under its cable agreement ratably over the life of
the contract.  Thereafter, revenue is recognized on a cash basis.

Revenues are generated through the sale of sponsorships and advertising on the
Company's web site.  Revenues are also generated from the licensing of the web
site's content.  These revenues are recognized as they are earned.

PREFERRED SHARES

On April 10, 1998, the Company received gross proceeds of $5 million from a
private placement of 5,000 shares of non-voting Series B 5% Convertible
Redeemable Preferred Stock (the "Preferred Shares") and 66,778 five-year
warrants with an exercise price of $11.23125 per share.  The Preferred Shares
are convertible into shares of Common Stock at a price which depends on the
market price and varies with respect to when the conversion occurs.  In July
1998, the Company issued 389,003 shares of common stock in conversion of 2,715
shares of the Preferred Shares.  In July 1998, the Company issued 46 Preferred
Shares in payment of dividends on the Preferred Shares.  In October 1998, the
Company issued 69,052 shares of common stock in conversion of 200 shares of the
Preferred Shares.  In October 1998, the Company issued 28 Preferred Shares in
payment of dividends on the Preferred Shares.  In October, 1998, the Company
redeemed 1,470 Preferred Shares.  The two purchasers of such Preferred Shares
were both accredited investors.

For this transaction, the Company claimed exemption from registration under
Section 4(2) of the Securities Act of 1933 and Regulation D promulgated
thereunder because, to the Company's knowledge, the purchases were made for the
purchaser's own investment purposes and not for further distribution or resale.
In addition, the Company satisfied the other applicable requirements of
Regulation D in connection with each such offering and sale.

COMMON SHARES

On October 30, 1998, the Company closed a private placement with one accredited
investor (the "Investor") of: (i) 1,000,898 shares of Common Stock and (ii)
66,778 five-year warrants with an exercise price of $4.81 per share (the
"October 1998 Private Placement").  In connection with the October 1998 Private
Placement, the Company redeemed 1,470 Preferred Shares owned by the Investor.
The Company's gross proceeds from the

                                       9
<PAGE>
 



October 1998 Private Placement were $3,690,500, and its net proceeds were
$2,000,000.  On certain dates in the future, approximately quarterly, beginning
in the first quarter of 1999, the number of shares of Common Stock issuable
pursuant to the October 1998 Private Placement will be subject to adjustment
depending on current market prices.  In connection with the October 1998 Private
Placement, the Company was granted an option to sell to the Investor up to an
additional $2.0 million in Common Stock at a price of $3.69 per share (on the
same terms as the October 1998 Private Placement), subject to the satisfaction
of certain conditions including the continued accuracy of the representations
and warranties of the Company in the subscription documents delivered in the
October 1998 Private Placement.  Through December 31, 1998, the Company may, at
its option, repurchase from the Investor any of the shares of Common Stock
issued in the October 1998 Private Placement at a price of $3.87 per share.
After December 31, 1998, the Company may similarly repurchase such shares of
Common Stock, but the price that such repurchases may be effected will vary
depending on market prices and when the repurchase occurs.

The Company will file a registration statement with the Securities and Exchange
Commission prior to the end of the year relating to the registration of the
resale of the shares of Common Stock issued in the October 1998 Private
Placement and any additional shares sold pursuant to the above described option.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Overview

Since its inception, the Company's strategy has been to develop online and cable
television platforms, as well as maintain its staple platform, CD-ROMs, in order
to enhance an integrated approach to publishing electronic health and medical
information.  In 1997, the Company was distributing its health and medical
information to end users via all three platforms.  Under this strategy, the
Company was never able to attain profitability, and, at December 31, 1997, had
an accumulated deficit of $78,576,000.  In 1997, the Company's Board of
Directors revised its business strategy and brought in an entirely new
management team and other key employees skilled in the development of internet
web sites.  The Company's current strategy is to focus its resources on an
internet-delivered, consumer-oriented network of health and wellness sites.

Results of Operations

The following table sets forth selected income statement data for OnHealth
Network Company and such data as a percentage of net revenues for the three
months ended September 30, 1998 and 1997 (dollar amounts in thousands):

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
                                         1998                            1997
------------------------------------------------------------------------------------------
<S>                               <C>             <C>             <C>               <C>
Net revenues                      $   248            100%         $   488            100%
------------------------------------------------------------------------------------------
Gross margin                         (301)          (121%)            177             36%
------------------------------------------------------------------------------------------
Operating expenses                  2,232            900%           2,807            575%
------------------------------------------------------------------------------------------
Operating loss                     (2,533)        (1,021%)         (2,630)          (539%)
------------------------------------------------------------------------------------------
Net loss                           (2,913)        (1,175%)            (37)            (8%)
------------------------------------------------------------------------------------------
</TABLE>

                                      10
<PAGE>
 
The following table sets forth selected income statement data for OnHealth
Network Company and such data as a percentage of net revenues for the nine
months ended September 30, 1998 and 1997 (dollar amounts in thousands):

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
                                           1998                           1997
-----------------------------------------------------------------------------------------
<S>                               <C>               <C>          <C>               <C>
Net revenues                      $   733            100%        $ 2,731            100%
-----------------------------------------------------------------------------------------
Gross margin                         (838)          (114%)         1,384             51%
-----------------------------------------------------------------------------------------
Operating expenses                  6,454            880%          9,457            346%
-----------------------------------------------------------------------------------------
Operating loss                     (7,292)          (995%)        (8,073)          (296%)
-----------------------------------------------------------------------------------------
Net loss                           (7,265)          (991%)        (5,682)          (208%)
-----------------------------------------------------------------------------------------
</TABLE>

Revenues

Revenues for the three months ended September 30, 1998 and 1997 were as follows:

<TABLE>
<CAPTION>
                                                    1998              1997
                                              ---------------   --------------
<S>                                           <C>               <C>
Online revenue                                          $ 121            $  37
Product sales and licensing revenue                        72              251
Contract development revenue and other                     55              200
                                              ---------------   --------------
 
Net revenues                                            $ 248            $ 488
</TABLE>

Revenues for the nine months ended September 30, 1998 and 1997 were as follows:

<TABLE>
<CAPTION>
                                                    1998              1997
                                              ---------------   --------------
<S>                                           <C>               <C>
Contract development revenue and other                  $ 465           $  742
Online revenue                                            267               37
Product sales and licensing revenue                         1            1,459
Cable television licensing revenue                          -              493
                                              ---------------   --------------
 
Net revenues                                            $ 733           $2,731
</TABLE>

Sales for the three and nine months ended September 30, 1998 decreased 49% and
73%, respectively, compared to the same periods in the previous year.  Affecting
both periods were reduced product sales and licensing revenue, and reduced
contract development revenue and other, which were partially offset by an
increase in online revenues.  Also affecting the nine-month period is a decrease
in cable television licensing revenues.  Product sales and licensing revenue
decreases reflect market conditions for CD ROM products, the lack of new CD ROM
product releases, and the Company's cancellation of a CD ROM distribution
agreement. Cable television licensing revenue decreases reflect a cash basis
revenue recognition policy related to a cable television content licensing
contract with America's Health Network (AHN) and AHN's failure in 1998 to make
two scheduled payments totaling $1.125 million.  The 1998 online revenues were
generated primarily from the Company's OnHealth.com web site through site
sponsorships and advertising.  The Company redesigned and relaunched the
OnHealth.com web site in July 1998.

                                      11
<PAGE>
 
Gross margin

Gross margin as a percentage of net revenues for the three and nine months ended
September 30, 1998 was (121%) and (114%), respectively, compared to 36% and 51%,
respectively, for comparable periods in 1997.  The negative gross margin for the
three and nine months ended September 30, 1998 is a result of OnHealth.com
editorial costs included in cost of revenue.  The negative gross margin
percentage for the nine months ended September 30, 1998 is also the result of CD
ROM royalty expenses, CD ROM inventory write-offs, and royalty expenses related
to cable television licensing revenue.

Operating expenses

Product Development

Product development expenses were $547,000 and $2,105,000 for the three and nine
months ended September 30, 1998, respectively, compared to $378,000 and
$2,779,000 for the same periods in 1997.  The third quarter 1997 development
costs included an adjustment related to an agreement with Mayo Foundation.
Under the agreement, Mayo assumed all operating expenses for the Mayo Health
O@sis web site, retroactive to January 1, 1997.  The operating costs, which the
Company recorded during the first half of 1997, were reversed during the third
quarter 1997, after the agreement was signed.  For the nine month period,
product development costs decreased $674,000, or 24%.  The decrease relates to a
shift away from the CD-ROM product development business and a shift towards an
internet focused business.

Sales and Marketing

Sales and marketing expenses for the three and nine months ended September 30,
1998 increased $932,000 and $1,720,000, respectively, compared to the same
periods in the previous year.  Sales and marketing expenses relate to the
OnHealth.com web-site and consist primarily of advertising and other marketing
related expenses (which include distribution agreement costs), compensation and
employee-related expenses.  The increase in the current year relates to a
marketing campaign related to the launch of the OnHealth.com web site and
distribution costs related to agreements signed in July 1998 with GeoCities and
Infoseek.

General and Administrative

General and administrative expenses in the third quarter 1998 decreased to
$420,000 as compared to $2,096,000 for the third quarter of 1997.  For the nine
months ended September 30, 1998, general and administrative expenses decreased
to $1,653,000 from $5,702,000 for the comparable period in 1997.  General and
administrative expenses consist primarily of compensation to administrative and
executive personnel, fees for professional services, facility costs and bad debt
expenses.  The decreases for the three and nine month periods ended September
30, 1998 reflect substantially decreased legal costs and general cost cutting
measures including reduced rent costs from the Company's relocation to a smaller
facility.  The three months ended September 30, 1997 includes extensive legal
costs related to lawsuits with Viridis, Inc. and T. Randal Productions, Inc.
The decrease for the nine months ended September 30, 1998 also reflects reduced
bad debt expenses and a 1997 write-off of an asset.  In 1997, the general and
administrative expenses include approximately $2,000,000 from a bad debt expense

                                      12
<PAGE>
 
related to AHN caused when AHN's financing fell through subsequent to the end of
the second quarter 1997.  This 1997 bad debt reserve was partially offset by a
reduction of $1,000,000 in related liability charges.  Also in 1997, there was a
$1,066,000 partial write-off of an asset that represented the capitalization of
costs paid to Time Life, Inc. for the development of The Medical Advisor.

Other Income

For the three and nine months ended September 30, 1998, other income was $0 and
$563,000, respectively, compared to $2,704,000 and $2,704,000, respectively, for
the same periods in 1997.  For the nine months ended September 30, 1998, other
income includes $563,000 related to the reversal of a previously established bad
debt reserve.  This bad debt reserve was initially established in the second
quarter of 1997 as part of general and administrative expenses.  During the
second quarter 1998, the reserve became unnecessary, and, to isolate the
uniqueness of the reserve reversal, management classified it outside of
operating activities as other income.  For the three and nine months ended
September 30, 1997, other income includes $2,704,000 of compensation related to
a full transfer of ownership of the O@sis web site to Mayo and for releasing
Mayo of its obligation to give the Company the "right of first refusal" on Mayo
products published in electronic media."

Interest Income (Expense)

The three and nine months ended September 30, 1998 had net interest income of
$30,000 and $84,000, respectively, compared to net interest expense of $68,000
and $184,000, respectively, for the same periods in 1997.  The 1998 net interest
income includes interest income generated from cash and cash equivalents.  The
1997 net interest expense includes interest income from cash and cash
equivalents which were more than offset by interest expense related to
$3,500,000 in convertible subordinated debentures.  The debentures were
converted into common stock during the fourth quarter of 1997.

Financial Condition, Liquidity and Capital Resources

At September 30, 1998, the Company had cash and cash equivalents of $1,020,000.
Total cash used by operating activities during the nine months ended September
30, 1998 was $7,109,000 and is primarily due to a net loss of $6,645,000.
Investing activities used net cash of $300,000 primarily for purchases of
computer equipment.  Financing activities provided cash of $5,941,000 from
$941,000 in stock option exercises and a $5,000,000 Convertible Redeemable
Preferred Stock financing.  As discussed in the notes to the financial
statements, on October 30, 1998, the Company received net proceeds of $2 million
from a private placement of 1,000,898 shares of common stock, 66,778 five-year
warrants with an exercise price of $4.81 per share, and redemption of 1,470
shares of Series B convertible preferred stock.  To properly market its
OnHealth.com web site, the Company expects a significant use of cash, and will
require additional funding in the fourth quarter of 1998 or first quarter of
1999 to be able to fund its business.  There can be no assurance that financing
will be available in amounts or on terms acceptable to the Company, if at all.

                                      13
<PAGE>
 
Year 2000

The Year 2000 issue is the potential for system and processing failures of 
date-related data and the result of computer-controlled systems using two digits
rather than four to define the applicable year. For example, computer programs
that have time-sensitive software may recognize a date using "00" as the year 
1900 rather than the year 2000. This could result in system failure or 
miscalculations causing disruptions of operations, including, among other 
things, a temporary inability to process transactions, send invoices or engage 
in similar normal business activities.

We could be affected by Year 2000 issues related to non-compliant information
technology ("IT") systems or non-IT systems that we operate or that are operated
by third parties. The Company is in the process of assessing the Year 2000 issue
and expects to complete the program in the third quarter of 1999. At this point
in our assessment, we are not currently aware of any Year 2000 problems relating
to systems we operate or that are operated by third parties that would have a
material effect on our business, results of operations or financial condition,
without taking into account our efforts to avoid such problems. Based on our
assessment to date, we do not anticipate that costs associated with remediating
our non-compliant IT systems or non-IT systems will exceed $100,000, although
there can be no assurance to such effect, and any such cost will be funded
through operating cash flows. To date the Company has incurred no significant
costs related to the assessment of, and preliminary efforts in connection with,
its Year 2000 project and the development of a remediation plan. Management does
not currently expect the Company's financial condition or results of operations
will be materially adversely affected by the Year 2000 issue. There can be no
guarantee that the systems of other companies on which the Company's systems
rely will be timely converted, or that a failure to convert by another company,
or a conversion that is incompatible with the Company's systems, would not have
a material adverse effect on the Company.

To the extent that our assessment is finalized without identifying any
additional material non-compliant IT systems we operate or that are operated by
third parties, the most reasonably likely worst case Year 2000 scenario is a
systemic failure beyond our control, such as a prolonged telecommunications or
electrical failure. Such a failure could prevent us from operating our business,
prevent users from accessing our web site, or change the behavior of advertising
customers or persons accessing our web site. We believe that the primary
business risks, in the event of such failure, would include, but not be limited
to, lost advertising revenues, increased operating costs, loss of customers or
persons accessing our web site, or other business interruptions of a material
nature, as well as claims of mismanagement, misrepresentation, or breach of
contract, any of which could have a material adverse effect on our business,
results of operations and financial condition. We are in the process of
developing a contingency plan that will address situations that may result
should Year 2000 compliance for critical operations not be fully achieved in
1999.

                                      14

<PAGE>
 
Forward Looking Statements

The statement made in this Form 10-Q relating to the Company's ability to meet
its ongoing financial obligations and operations depends on:  (i) the ability of
the Company to raise additional capital, if at all, enabling it to continue the
development and marketing of the OnHealth web site; (ii) the ability of the
Company to meet its expected operating revenues, which are variable with respect
to consumer demand and advertising revenues, (iii) the success of its ongoing
development efforts and market acceptance of the OnHealth web site, (iv) the
success and effectiveness of the Company's new management team; and (v) other
general market conditions and competitive conditions within this market,
including the introduction and further development of competitive web sites.

                                      15

<PAGE>
 
                                  SIGNATURES


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


                                  OnHealth Network Company



                                  By  /s/ Michael D. Conway
                                  Michael D. Conway
                                  Chief Financial Officer

Date:  March 24, 1999

                                      16