IGN ENTERTAINMENT INC - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934.

For the Quarterly Period Ended March 31, 2003

Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from ______________ to ______________

Commission File Number 000-29121

IGN ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization)

94-3316902
(I.R.S. Employer Identification No.)

3240 BAYSHORE BOULEVARD, BRISBANE, CA 94005
(Address of principal executive offices) (Zip Code)

(415) 508-2000
(Registrant’s telephone number, including area code)

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 o

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

The number of shares of the registrant’s common stock outstanding as of April 30, 2003 was 2,232,260.

Form 10-Q
Table of Contents

			Page

Part I.	Financial Information

	Item 1.	Financial Statements

		Condensed Balance Sheets as of March 31, 2003 and December 31, 2002	3

		Condensed Statements of Operations for the Three Months Ended March 31, 2003 and 2002	4

		Condensed Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002	5

		Notes to Condensed Financial Statements	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

	Item 4.	Controls and Procedures	32

Part II.	Other Information

	Item 1.	Legal Proceedings	33

	Item 2.	Changes in Securities and Use of Proceeds	33

	Item 3.	Defaults Upon Senior Securities	33

	Item 4.	Submission of Matters to a Vote of Security Holders	33

	Item 5.	Other Information	33

	Item 6.	Exhibits and Reports on Form 8-K	33

Signatures			35

Certification			36

IGN ENTERTAINMENT, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share data)

	March 31, 2003			December 31, 2002⁽¹⁾

	(unaudited)

Assets
Current assets:
Cash and cash equivalents	$	3,500		$	3,407
Accounts receivable, net		2,156			2,929
Prepaid expenses and other current assets		626			531

Total current assets		6,282			6,867
Restricted cash		794			781
Goodwill, net		1,949			1,949
Fixed assets, net		1,005			917
Other assets		84			84

Total assets	$	10,114		$	10,598


Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,391		$	1,067
Accrued liabilities and other		1,549			1,779
Deferred revenue		1,045			1,071
Current accrued restructuring charges		239			236

Total current liabilities		4,224			4,153
Accrued restructuring charges, less current portion		1,253			1,315
Deferred rent		347			399
Stockholders’ equity:
Common stock, $0.001 par value: 100,000,000 shared authorized, 2,231,309 and 2,182,911, shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively		2			2
Treasury stock 270,501 at March 31, 2003 and December 31, 2002		(1,176	)		(1,176	)
Additional paid-in capital		152,207			152,156
Other stockholders’ equity		—			(70	)
Accumulated deficit		(146,743	)		(146,181	)

Total stockholders’ equity		4,290			4,731

Total liabilities and stockholders’ equity	$	10,114		$	10,598

______________

⁽¹⁾

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

See notes to condensed financial statements

IGN ENTERTAINMENT, INC.
CONDENSED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)

	Three Months Ended March 31,

	2003			2002

Revenue	$	3,354		$	2,321
Cost of revenue		277			402

Gross profit		3,077			1,919
Operating expenses:
Production and content		781			1,061
Engineering and development		642			1,303
Sales and marketing		1,637			1,363
General and administrative		584			555
Stock-based compensation^(a)		—			41
Restructuring and asset impairment charges		—			5,032
Gain on sale of assets		—			(1,114	)

Total operating expenses		3,644			8,241

Loss from operations		(567	)		(6,322	)
Interest income, net		5			29

Net loss	$	(562	)	$	(6,293	)

Basic and diluted net loss per share	$	(0.26	)	$	(3.58	)

Shares used in per share caclulation		2,191			1,760

^(a) Stock-based compensation relates to the following:
Cost of revenue				$	—
Production and content					6
Engineering and development					20
Sales and marketing					15
General and administrative					—

Total				$	41

See notes to condensed financial statements

IGN ENTERTAINMENT, INC.
STATEMENT OF CASH FLOWS (unaudited)
(in thousands)

	Three Months Ended March 31,

	2003			2002

Cash flows from operations
Net (loss)	$	(562	)	$	(6,293	)
Reconciliation to net cash provided by (used in) operating activities:
Depreciation and amortization		175			899
Stock-based compensation		—			41
Non-cash restructuring and asset impairment charges		—			2,905
Gain on sale of assets		—			(1,114	)
Other non-cash items, net		9			(72	)
Changes in assets and liabilities:
Accounts receivable		764			494
Prepaid expenses and other assets		(95	)		318
Accounts payable and accrued liabilities		94			(950	)
Deferred revenue		(26	)		196
Accrued restructuring		(59	)		(10	)
Deferred rent		(52	)		57

Net cash provided by (used in) operating activities		248			(3,529	)

Cash flows from investing activities
Establishment of facility letters of credit		(13	)		(69	)
Reduction in facility letters of credit		—			1,584
Purchases of fixed assets		(263	)		(361	)
Proceeds from sale of assets		—			1,000
Net refund on tenant improvements		—			335

Net cash (used in) provided by investing activities		(276	)		2,489

Cash flows from financing activities
Officer loan repayment		70			—
Proceeds from other issuance of common stock to employees, net of repurchases		51			26
Repayment of equipment financing obligations		—			(1,613	)
Purchase of stock for treasury		—			(4	)

Net cash provided by (used in) financing activities		121			(1,591	)

Net increase (decrease) in cash and cash equivalents		93			(2,631	)
Cash and cash equivalents at beginning of period		3,407			8,285

Cash and cash equivalents at end of period	$	3,500		$	5,654

See notes to condensed financial statements

IGN ENTERTAINMENT, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. FINANCIAL STATEMENT PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

Employee Stock Based Compensation

The Company accounts for employee stock based compensation in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related Pro forma information presented below regarding net loss required under SFAS No. 123 “Accounting for Stock-Based Compensation”, has been determined as if the Company had accounted for its stock options under the fair value method of SFAS No. 123. The pro forma net loss per share below reflects both (i) the charge for stock included in the historical net loss and (ii) the expense allocation based on the SFAS No. 123 fair value approach. For the three months ended March 31, 2003, the fair value for the stock options was estimated at the date of each option grant using Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 2%; dividend yields of zero; weighted-average expected lives of the options of 4.0 years; and volatility factors of 84%. No options were granted in the three months ended March 31, 2002.

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

	Three Months Ended March 31,

	2003			2002

Net loss, as reported	$	(562	)	$	(6,293	)
Deduct: stock based employee compensation expense, included in reported net loss		—			41
Add: stock based employee compensation expense determined under fair value method for all awards		(436	)		(735	)

Pro forma net loss	$	(998	)	$	(6,987	)

Basic and diluted loss per share:
As reported	$	(0.26	)	$	(3.58	)

Pro forma	$	(0.46	)	$	(3.97	)

IGN ENTERTAINMENT, INC.

Recent Accounting Pronouncements

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

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

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment to FASB Statement No. 123, Accounting for Stock-Based Compensation.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. The additional disclosure requirements of SFAS No. 148 are effective for fiscal years ending after December 15, 2002. The Company has included its disclosure under SFAS 148 is included in Note 7. IGN has elected to continue to follow the intrinsic value method of accounting as prescribed by Accounting Principles Board Opinion No. 25 (or APB 25), Accounting for Stock Issued to Employees, to account for employee stock options.

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

IGN ENTERTAINMENT, INC.

2. THE COMPANY

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

•

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

•

a subscription program, IGN Insider, whereby paid subscribers have access to premium content and services on the Company’s web sites; and

•

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

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

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

•

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

•

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

3. NET LOSS PER SHARE

Basic and diluted net loss per share are presented in conformity with the Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings Per Share,” for all periods presented.

In accordance with SFAS No. 128, basic and diluted net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase.

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

	Quarter Ended March 31,

	2003			2002

Net loss	$	(562	)	$	(6,293	)

Basic and diluted:
Weighted average shares of common stock outstanding		2,194			1,810
Less: weighted average shares subject to repurchase		(3	)		(50	)

Weighted average shares used in computing basic and diluted net loss per share		2,191			1,760

Basic and diluted net loss per share	$	(0.26	)	$	(3.58	)

IGN ENTERTAINMENT, INC.

4. RESTRUCTURING CHARGES

During 2001, the Board of Directors approved and the Company implemented a restructuring program driven by the decline in revenue from 2000 levels and correspondingly, the Company’s need to improve its cost structure by consolidating excess facilities, decreasing headcount and exiting its non-IGN.com networks. No restructuring charges were recorded in the first quarter of 2003. Components of and changes in accrued restructuring charges for the three months ended March 31, 2003 were as follows (in thousands):

	Lease			Severance		Total

Balance at December 31, 2002	$	1,551		$	—	$	1,551
Provisions		—			—		—
Cash payments, net		(59	)		—		(59	)

Balance at March 31, 2003	$	1,492		$	—	$	1,492

5. COMMITMENTS

IGN is under a lease commitment through February 2004 for its headquarters facility in Brisbane, California. The Company also leases sales and support offices in Los Angeles and New York with commitment dates through July 2003 and October 2004, respectively.

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

The following table summarizes IGN’s future minimum lease payments under all non-cancelable operating leases that expire at various times through 2010 and future sublease income under non-cancelable sublease as of March 31, 2003:

	Occupied Facilities		Excess Facilites			Total

Nine Months Ended December 31, 2003	$	438	$	532		$	970
Years Ended December 31,
2004		154		711			865
2005		58		683			741
2006		—		688			688
2007		—		688			688
2008		—		688			688
Thereafter		—		1,261			1,261

		650		5,251			5,901
Less: future sublease income				(740	)		(740	)

Minimum lease payments	$	650	$	4,511		$	5,161

IGN ENTERTAINMENT, INC.

6. SUBSEQUENT EVENT

On May 2, 2003, the Company and GHP Acquisition Corp. (“GHP”) entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement and subject to the terms and conditions set forth therein, GHP will be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a privately-held Company. At the effective time of the Merger, all outstanding shares of the Company’s common stock will be converted into the right to receive $12 per share in cash (without interest). Additionally, all options and warrants (other than options and warrants that are not automatically cancelable in connection with the Merger) to purchase Company common stock that are outstanding as of immediately prior to the Merger and whose exercise prices are less than $12 per share will be converted into the right to receive for each share of Company common stock subject to such options or warrants an amount in cash equal to the difference between $12 and the exercise price of such option (without interest and net of any per share tax withholding). The transaction will constitute a taxable purchase of the Company securities.

IGN ENTERTAINMENT, INC.

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

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

As further described below, on May 2, 2003 we announced that we have entered into an agreement with GHP Acquisition Corp. that provides for a change in control of IGN, which would result in our becoming a privately-held company. This announcement, the agreement and other information related to this proposed acquisition are contained in a Form 8-K that was filed with the SEC on May 5, 2003. We expect to file a proxy statement regarding this proposed acquisition. We advise you to carefully read this proxy statement, when it becomes available, as it will contain important information regarding this proposed acquisition.

Overview

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

Our operating activities to date have been focused on enhancing the quality of our content and services; expanding our audience and the usage of our services; establishing relationships with users and the companies who want to reach this large web-centric audience; building sales momentum and marketing our networks and IGN brands; developing our computer software and hardware infrastructure; and growing our subscriber base.

IGN ENTERTAINMENT, INC.

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

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

Recent Events

On May 2, 2003, we entered into a definitive Agreement and Plan of Merger with GHP Acquisition Corp. Pursuant to this agreement and subject to the terms and conditions set forth therein, GHP Acquisition Corp. will be merged with and into IGN, with IGN as the surviving entity. At the effective time of this merger, all outstanding shares of our common stock will be converted into the right to receive $12 per share in cash (without interest), and options and warrants (other than options and warrants that are not automatically cancelable in connection with this merger) to purchase our common stock that are outstanding as of immediately prior to this merger and whose exercise prices are less than $12 per share will be converted into the right to receive for each share of our common stock subject to such options or warrants an amount in cash equal to the difference between $12 and the exercise price of such option (net of any per share tax withholding). Options and warrants that are not automatically cancelable in connection with this merger, will be entitled to payment by the surviving entity of $12 in cash (without interest) for each share of our common stock subject to such options or warrants upon exercise thereof in accordance with their terms. All other IGN securities will be cancelled without payment in connection with the merger. If completed, this transaction would constitute a taxable purchase of IGN securities. This merger is subject to a number of closing conditions, including approval by a majority of our stockholders.

In connection with the execution of the merger agreement, Christopher Anderson, our Chairman and largest stockholder, and Mark Jung, our Chief Executive Officer and a member of our board of directors, entered into voting agreements pursuant to which they have agreed to vote in favor of the merger so long as the merger agreement is not terminated in accordance with its terms. As a result of this merger our common stock will no longer be publicly traded. Messrs. Anderson and Jung and Kenneth Keller, our Chief Technology Officer, will become stockholders of GHP prior to the merger and, in connection with the merger, will become stockholders of the company surviving the merger. Following the merger, Messrs. Anderson and Jung will become directors of the surviving entity and Messrs. Jung and Keller will continue as the Chief Executive Officer and Chief Technology Officer, respectively, of the surviving entity. We expect to file a proxy statement regarding this proposed acquisition. We advise you to carefully read this proxy statement, when it becomes available, as it will contain important information regarding this proposed acquisition.

Critical Accounting Policies

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

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

IGN ENTERTAINMENT, INC.

Revenue recognition

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

Collectibility of accounts receivable

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

Valuation of goodwill

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

• significant underperformance relative to expected historical or projected future operating results;

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

IGN ENTERTAINMENT, INC.

• significant negative industry or economic trends.

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

Restructuring charges

As of March 31, 2003 we carried an accrual for the unpaid portion of restructuring charges we expensed in the third quarter of 2002 relative to our excess New York and Connecticut facilities. Significant factors used in calculating this accrual include estimates of sublease income, vacancy rates and brokerage costs. Changing economic conditions in future periods could lead management to revise its estimates, which could result in adjustments to our estimated obligations under these lease arrangements.

Results of Operations for the Three Months Ended March 31, 2003 and 2002

	Three Months Ended March 31,

	2003		2002

	(in thousands)
Revenue	$	3,354	$	2,321

Revenue was $3,354,000 and $2,321,000 for the three months ended March 31, 2003 and 2002, respectively, an increase of 45%. Our increased revenue is due to the combination of the general growth in gaming and consumer advertising spending and increased subscription revenue from a growing subscriber base. Subscription revenue grew as a percentage of total revenue to 17% from 13% for the three months ended March 31, 2003 and 2002, respectively.

We currently believe that full year 2003 revenues will increase over our full year 2002 revenues; however, given the current unpredictability in advertising spending and weakness in advertising demand and our subscriptions model is new and evolving, we can make no assurances that we will maintain 2002 levels or expected 2003 levels in future periods.

	Three Months Ended March 31,

	2003			2002

	(in thousands)
Cost of revenue	$	277		$	402

Percentage of revenue		8	%		17	%

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

For the three months ended March 31, 2003 and 2002, cost of revenue was $277,000 and $402,000, respectively, which represents a decrease of 31%. Our decreased cost of revenue is primarily due to a reduction in the number of affiliates, lower hosting costs due to a more favorable hosting contract with our outside service provider and less reliance upon third-party content.

During the fourth quarter of 2000, in connection with our strategy to deemphasize our affiliate relationships and to manage our costs, we began to renegotiate, terminate or let expire many of our affiliate contracts and as of the second quarter of 2002, virtually all of these relationships had been

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terminated. Affiliate costs were less than 1% of cost of revenue for the three months ended March 31, 2003 as compared to 14% in the prior year’s comparative period.

We currently believe that cost of revenue will increase slightly in absolute dollars for the full year 2003 as compared to 2002.

Operating Expenses

We categorize operating expenses into production and content, engineering and development, sales and marketing, general and administrative, stock-based compensation, restructuring and impairment charges and gain on sale of assets. Prior to 2002, we incurred expenses for amortization of goodwill; however, effective January 1, 2002, we adopted SFAS No. 142, which required the use of a nonamortization approach to account for purchased goodwill and certain intangibles. No goodwill amortization or impairment charges were recorded during the three months ended March 31, 2003 and 2002, respectively; however, future impairment reviews may result in periodic write-downs.

We currently believe that each of production and content, engineering and development, sales and marketing and general and administrative expenses will increase slightly for the full year 2003 as compared to 2002.

	Three Months Ended March 31,

	2003			2002

	(in thousands)
Production and content	$	781		$	1,061

Percentage of revenue		23	%		46	%

Production and content expenses consist primarily of personnel and related costs for editorial, artistic and production staff; payments to freelance writers and artists; telecommunications and computer related expenses for the creation of content for our web sites; and corporate overhead cost allocations. Production and content costs were $781,000 and $1,061,000 for the three months ended March 31, 2003 and 2002, respectively, which represents a decrease of 26%. The decrease was due primarily to the reduction of corporate overhead cost allocations and in particular rent expense, as we restructured and reduced our facilities.

	Three Months Ended March 31,

	2003			2002

	(in thousands)
Engineering and development	$	643		$	1,303

Percentage of revenue		19	%		56	%

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

Engineering and development expenses were $643,000 and $1,303,000 for the three months ended March 31, 2003 and 2002, respectively, which represents a decrease of 51%. The decrease was due primarily to decreased depreciation expense as certain equipment became fully depreciated.

IGN ENTERTAINMENT, INC.

	Three Months Ended March 31,

	2003			2002

	(in thousands)
Sales and Marketing	$	1,637		$	1,363

Percentage of revenue		49	%		59	%

Sales and marketing expenses consist primarily of personnel and related costs for our direct sales force; product management and advertising operations support personnel; marketing staff; and corporate overhead cost allocations. In addition, these expenses include costs of tradeshows and promotional activities.

Sales and marketing expenses were $1,637,000 and $1,363,000 for the three months ended March 31, 2003 and 2002, respectively, which represents an increase of 20%. The increase was due primarily to an increase in sales and marketing compensation expense as we increased staff and incurred more commissions due to higher revenue levels.

	Three Months Ended March 31,

	2003			2002

	(in thousands)
General and administrative	$	584		$	555

Percentage of revenue		17	%		24	%

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

General and administrative expenses were $584,000 and $555,000 for the three months ended March 31, 2003 and 2002, respectively, which represents an increase of 5%. The slight increase was largely due an increase in bad debt provision as a function of our increased accounts receivable at March 31, 2003 as compared to March 31, 2002.

	Three Months Ended March 31,

	2003			2002

	(in thousands)
Stock-based compensation	$	—		$	41

Percentage of revenue		0	%		2	%

In the first quarter of 2002, we recorded stock-based compensation expense of $41,000 primarily due to employees who had certain portions of their stock option vesting accelerated as part of their termination packages. No stock-based compensation was recorded in the first quarter of 2003.

	Three Months Ended March 31,

	2003			2002

	(in thousands)
Restructuring and asset impairment charges	$	—		$	5,032

Percentage of revenue		0	%		217	%

During 2001, we implemented a restructuring program to enhance the focus and cost effectiveness of our business. As part of this program we restructured certain of our facility leases, exited our non-IGN.com networks and enacted reductions in force.

IGN ENTERTAINMENT, INC.

In the first quarter of 2002, we recorded restructuring charges of $4,959,000 for facility exit costs related to the restructuring of our Brisbane headquarters lease and $73,000 related to employee separation costs. No restructuring charges were recorded in the first quarter of 2003.

We believe that additional restructuring charges may be incurred in the future in connection with ongoing cost reduction efforts.

	Three Months Ended March 31,

	2003			2002

	(in thousands)
Gain on sale of assets	$	—		$	(1,114	)

Percentage of revenue		0	%		-48	%

On January 16, 2002 we completed the sale of our HighSchoolAlumni network to Reunion.com, a private company, for approximately $1,000,000 in cash. The gain on sale of assets represents cash received, plus the deferred revenue balance on the date of sale related to the unrecognized portion of subscription money received from our HighSchoolAlumni subscription program, less the net unamortized value of our 1999 acquisition of Ameritrack. No gain on sale of assets was recorded in the first quarter of 2003.

	Three Months Ended March 31,

	2003		2002

	(in thousands)
Interest and other income (expense), net	5		29

Percentage of revenue	0	%	1	%

Interest and other income, net was $5,000 and $29,000 for the three months ended March 31, 2003 and 2002, respectively, which represents a decrease of 83%. This decrease was due primarily to our decreasing cash and cash equivalent position as a result of our operating losses; including restructuring charges.

Liquidity and Capital Resources

	Three Months Ended March 31,

	2003		2002

Cash provided by (used in) operating activities	248		(3,529	)
Cash (used in) provided by investing activities	(276	)	2,489
Cash provided by (used in) financing activities	121		(1,591	)

Cash provided by operating activities totaled $248,000 during the three months ended March 31, 2003 compared to a cash usage of $3,529,000 in the comparative 2002 period. This improvement resulted from the decrease in operating expenses, increased revenue and the resulting decrease in net loss for the three months ended March 31, 2003 compared to the three months ended March 31, 2002. Working capital at March 31, 2003 was $2,058,000. Cash and cash equivalents at March 31, 2003 was $3,500,000.

Net cash used in investment activities for the three months ended March 31, 2003 was $276,000 due primarily to the purchase of fixed assets. Net cash provided by investing activities for the three months ended March 31, 2002 of $2,489,000 was due primarily to a reduction of our facility letters of $1,584,000 and proceeds of $1,000,000 from the sale of our HighSchoolAlumni web site.

IGN ENTERTAINMENT, INC.

Net cash provided from financing activities for the three months ended March 31, 2003 was $121,000 consisting of $70,000 from the repayment of a loan to an officer and $51,000 of proceeds from issuance of common stock to employees. Net cash used in financing activities for the three months ended March 31, 2002 of $1,591,000 was due primarily to the pay off of our remaining equipment lease obligation of $1,613,000.

In December 2000, the Board of Directors authorized a stock repurchase program under which IGN is authorized to repurchase up to 277,778 shares of our common stock in the open market for cash. From the inception of this program through March 31, 2003, IGN repurchased 270,501 shares at an average purchase price of $4.35 per share; 1,190 of these shares were repurchased in the first quarter of 2002 with no shares repurchased since.

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

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

The following table details our current lease commitments under non-cancelable operating leases that expire at various times through 2010 and future sublease income under non-cancelable sublease as of March 31, 2003:

	Occupied Facilities		Excess Facilites			Total

Nine Months Ended December 31, 2003	$	438	$	532		$	970
Year Ended December 31,
2004		154		711			865
2005		58		683			741
2006		—		688			688
2007		—		688			688
2008		—		688			688
Thereafter		—		1,261			1,261

		650		5,251			5,901
Less: future sublease income				(740	)		(740	)

Minimum lease payments	$	650	$	4,511		$	5,161

Since March 31, 2003, we have incurred significant expenses in connection with the negotiation and execution of the Agreement and Plan of Merger described under “Recent Events” above. We expect that we will incur additional expenses in connection with the transactions contemplated by this agreement. In addition, if either party terminates this agreement, under certain circumstances further described in this agreement and under our risk factor captioned “IGN’s agreement to merge with GHP Acquisition Corp. may result in a large break-up fee payment to GHP Acquisition Corp. under certain circumstances,” we may be required to pay GHP Acquisition Corp. a fee of $1,200,000, plus its reasonable expenses incurred in connection with these transactions.

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

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We believe that our available cash, cash equivalents and short-term investments and cash flows from operations will be sufficient to meet our anticipated needs for working capital and capital expenditures at least until the end of our fiscal year 2003. To meet our longer term liquidity needs, we may need to raise additional funds, establish additional credit facilities, seek other financing arrangements or further reduce costs and expenses. Additional funding may not be available on favorable terms, on a timely basis or at all. See our risk factor entitled “We have negative cash flow and may not have sufficient cash to continue operations or, even if we can continue operations, to effectively manage our working capital requirements and fund our operations for the period required to achieve profitability” as set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of this report.

IGN ENTERTAINMENT, INC.

RISK FACTORS

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

Risks Related to Our Business

Our current business model is unproven and may fail.

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

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

Uncertainty surrounding our proposed merger with GHP Acquisition Corp., or GHP, may have an adverse effect on employee morale and retention, and result in the diversion of management attention and resources. Completion of the merger is subject to numerous risks and uncertainties. IGN may be unable to obtain stockholder approval required to complete the proposed merger in a timely manner, or at all. If the merger is not completed, the price of our common stock may decline, particularly to the extent that the current market price of our common stock reflects a market assumption that the merger will be completed. In addition, our business may be harmed to the extent that our customers believe that we cannot effectively operate our business without the merger or there is customer and employee uncertainty surrounding the future direction of IGN. We also will be required to pay significant costs incurred in connection with the merger, including legal, accounting and financial advisory fees, whether or not the merger is completed. We expect to file a proxy statement regarding this proposed merger. In this document, we will describe the foregoing risks in greater detail. We advise you to carefully read this proxy statement, when it becomes available, as it will contain important information regarding this proposed merger.

IGN ENTERTAINMENT, INC.

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

We do not know with certainty whether our cash reserves and any cash flows from operations or financing will be sufficient to fund our operations beyond 2003. The report of our independent auditor, Ernst & Young LLP, on our 2002 financial statements contained on our Form 10-K for the year ended December 31, 2002 contains an explanatory paragraph describing conditions that raise substantial doubt about our ability to continue as a going concern. We have limited cash and credit available, and may be unable to raise additional financing or establish additional lines of credit to meet our anticipated and unanticipated working capital requirements. In the event we raise capital via equity financing, our existing stockholders could experience significant dilution. If adequate funds are not available to satisfy either short- or long-term capital requirements, we might be required to significantly limit our operations or delay or abandon some of our planned future expenditures, any of which actions could harm our business. Our future capital requirements depend upon many factors, including:

•

our ability to increase revenues;

•

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

•

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

•

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

•

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

•

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

•

the amount and timing of leasehold improvements and capital equipment purchases;

•

the response of competitors to our content and service offerings; and

•

the willingness of advertisers to become and remain our customers.

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

If we are required to pay a break-up fee under the terms of the agreement relating to the merger, our ability to operate our business would be significantly and adversely affected. As of March 31, 2003, our working capital and cash and cash equivalents were $2,058,000 and $3,500,000, respectively. Under the terms of the agreement, we may be required to pay a $1,200,000 “break-up fee,” and to reimburse GHP for its reasonable out-of-pocket costs and expenses related to the merger. Among other circumstances, if (i) our board fails to recommend or withdraws its recommendation to the stockholders to vote to approve the proposed merger, (ii) our stockholders do not vote to approve the merger following a change in our board's recommendation that is adverse to GHP, or (iii) the agreement is terminated for various reasons, including as a result of our incurable breach of a representation or warranty under the agreement, following our receipt of another offer to buy IGN, and we enter into an agreement relating to a change in control of IGN during the twelve-month period following this termination, IGN is required to pay GHP $1,200,000 and reimburse its reasonable out-of-pocket costs and related expenses, including legal and accountant fees. In addition, under this agreement, we would be required to reimburse GHP's reasonable out-of-pocket costs and related expenses, including legal and accountant fees, if this agreement is terminated because our stockholders do not approve the proposed merger or we incurably breach a representation, warranty or covenant under this agreement. If we are required to pay these fees, it might harm our ability to continue as a going concern.

IGN ENTERTAINMENT, INC.

We have not achieved profitability and anticipate continued losses.

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

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

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

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

•

growth of our user base;

•

the attractiveness of our user base to advertisers;

•

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

•

acceptance by advertisers of the Internet as an advertising medium;

•

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

•

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

•

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

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

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

IGN ENTERTAINMENT, INC.

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

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

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

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

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

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

Additional financings could disadvantage our existing stockholders.

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

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

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

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

We cannot forecast our revenue and operating results with precision, particularly because we are in the early stages of operating our new business model; we are dependent upon general activity in the video game industry and development schedules for such video game platform or software products are frequently unreliable; our current products and services are relatively new and evolving; and our liquidity prospects are uncertain. In particular, advertising revenue is greatly subject to fluctuation as companies tend to advertise more in typically strong consumer spending periods, which are dependent upon overall economic conditions. Additionally, fluctuations occur as customer product releases and associated advertising tends to increase around holiday or tradeshow periods and declines in periods of weaker

IGN ENTERTAINMENT, INC.

demand. Further, the U.S. economy is much weaker now than when we started our business, and reductions of marketing and advertising budgets or delays in spending of budgeted resources could continue to have a negative impact on our advertising revenue. This weakness has and could continue to have serious consequences for our business and operating results and, even if these conditions improve, we cannot assure you that marketing budgets and advertising spending will increase from current levels. If revenue in a particular period does not meet expectations, it is unlikely that we will be able to adjust our level of expenditures significantly for the same period. If our operating results fail to meet expectations, the trading price of our common stock would decline.

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

Because of the uncertain nature of the rapidly changing markets we serve, we believe that period-to-period comparisons are not necessarily meaningful and are not necessarily indicative of future performance. We anticipate that the results of our operations will fluctuate significantly in the future as a result of a variety of factors, including: general developments in the video game industry; the long sales cycle we face selling advertising and promotions; our ability to attract new and to retain existing audience and subscribers; seasonal trends in Internet usage, advertising placements, electronic commerce and video game product launches; and other factors discussed in this section. As a result, it is likely that in some future quarters or years our results of operations will fall below the expectations of investors, which would cause the trading price of our common stock to decline.

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

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

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

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

IGN ENTERTAINMENT, INC.

Our failure to manage our restructuring could result in our inability to effectively operate our new business.

We have significantly reduced our operations and anticipate that further change will be required to address potential market problems and opportunities. If we fail to manage this change, we will be unable to effectively operate our business. From a peak of approximately 380 full-time employees in March 2000, we have reduced our workforce, through attrition and lay offs, to approximately 90 full-time employees as of March 31, 2003. Further, we virtually eliminated all relationships with affiliated web sites, introduced a pay-for-access subscription model and opened an online store. These significant changes have placed, and we expect them to continue to place, a strain on our management, operational and financial resources. In particular, the reduction in workforce could have negative consequences on our ability to sell advertising, produce content and to attract new users, or to maintain our web site’s availability and performance.

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

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

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

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

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

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

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

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

IGN ENTERTAINMENT, INC.

Further, we have conducted several workforce reductions over our brief operating history. These reductions can cause anxiety and uncertainty and could adversely affect employee morale. As a result, our remaining personnel may seek employment with larger, more established companies or companies they perceive as having less volatile stock prices.

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

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

We may be subject to legal liability for online services.

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

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

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

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

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

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similar intellectual property on a timely and cost-effective basis, we might be unable to continue operating our business as planned.

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

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

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

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

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

Risks Related to Our Industry

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

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

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

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

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

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

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

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

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

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

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

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

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

•

user privacy and expression;

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taxation and pricing;

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the rights and safety of children;

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intellectual property;

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defamation;

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sweepstakes and promotions; and

•

information security.

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

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

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Risks Related to the Securities Markets

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

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

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actual or anticipated variations in our quarterly results of operations;

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our cash position;

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our limited amount or availability of public float shares;

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

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

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public perception of Internet content and service companies;

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

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

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changes in financial estimates or recommendations by securities analysts;

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additions or departures of key personnel;

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additions or departures of key customers;

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our ability to attract or retain subscribers; and

•

failure to maintain minimum NASDAQ listing requirements.

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

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

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

The sale of the common stock or the perception that shares of common stock will be sold under our recently filed Form S-3 registration statement could lower our stock price and negatively impact our ability to raise capital through the public markets.

Sales in the public market of the common stock covered by our registration statement filed on Form S-3 (No. 333-96637) with the SEC could lower our stock price and impair our ability to raise funds in additional stock offerings. Future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, might adversely affect the prevailing market price of our common stock and make it more difficult for us to raise funds through a public offering of our equity securities.

In addition, the nature of some of the selling stockholders named in the Form S-3 could be perceived negatively by other investors or potential investors and could cause our stock price to decline. Chris Anderson, our chairman and a beneficial owner of more than 30% of our outstanding common stock and Mark Jung, our chief executive officer, offer a substantial majority of all the shares covered by the Form S-3. Other investors or potential investors could interpret this participation to indicate, for example,

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that these selling stockholders lack confidence in IGN. This and any other negative interpretations arising from the participation of these selling stockholders in the Form S-3, could cause our stock price to decline.

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

Our executive officers and directors and their affiliates together owned approximately 50% of our outstanding common stock as of April 15, 2003. Christopher Anderson, the chairman of our board of directors, owned approximately 37% of our outstanding common stock alone. As a result, these stockholders exercise significant control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of control could disadvantage other stockholders with interests different from those of our officers, directors and their affiliates. For example, stockholders who are officers and directors could delay or prevent someone from acquiring or merging with us even if the transaction would benefit other stockholders.

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

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

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

We cannot assure you that we will be able to meet or maintain all of the requirements for continued listing on the NASDAQ SmallCap Market in the future. For example, we must attract a new independent member to our Board of Directors and our Audit Committee in the near future to comply with current listing requirements. Additional requirements that we must meet to remain listed on the NASDAQ SmallCap Market include (i) maintaining a minimum bid price of $1.00 per share, and (ii) having either (a) stockholders’ equity of $2,500,000, (b) a market capitalization of $35,000,000, or (c) net income from continuing operations (in the latest fiscal year or in two of the last three fiscal years) of $500,000. Currently, we satisfy these selected quantitative requirements (i) and (ii). Given our market capitalization is currently less than $35,000,000 and our net income from operations (in the latest fiscal year or in two of the last three fiscal years) was less than $500,000, it is reasonably possible that our stockholders’ equity, which was $4,290,000 as of March 31, 2003, could decline below $2,500,000 in future periods and that such decline could jeopardize our continued listing on the NASDAQ SmallCap Market. If we do not meet NASDAQ listing requirements, we expect that our common stock would be traded on the NASD Over-The-Counter Bulletin Board. If our common stock were to be delisted from the NASDAQ SmallCap Market, the liquidity of your investment would be diminished and the volatility of the trading price of our common stock would increase. Further, our stock could then potentially be subject to what are known as the “penny stock” rules, which place additional requirements on broker-dealers who sell or make a market in such securities. Consequently, if we were removed from the NASDAQ SmallCap Market, the ability or willingness of broker-dealers to sell or make a market in our common stock might decline. As a result, your ability to resell your shares of our common stock could be harmed.

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Item 3 - Quantitative and Qualitative Disclosures About Market Risk

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

We had no foreign currency hedging or other derivative financial instruments as of March 31, 2003.

Item 4 - Controls and Procedures

Within the 90 days prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer (who is both our principal executive officer and principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15b under the Securities Exchange Act of 1934. Based on this review of our disclosure controls and procedures, the chief executive officer (who is both our principal executive officer and principal financial officer), has concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC filings.

There were no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of our chief executive officer’s (who is both our principal executive officer and principal financial officer) evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

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Part II - OTHER INFORMATION

Item 1 - Legal Proceedings

Not applicable

Item 2 - Changes in Securities and Use of Proceeds

Not applicable

Item 3 - Defaults Upon Senior Securities

Not applicable

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

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

Item 5 - Other Information

Not applicable

Item 6 - Exhibits and Reports on Form 8-K

(a)

Exhibits

Exhibit Number	Description

10.01	Fifth Amendment to Brisbane Technology Park Lease dated November 29, 1999, between Registrant and GAL-Brisbane, L.P. Dated November 25, 2002

99.01	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

______

As contemplated by SEC Release No. 33-8212, this exhibit is furnished with this Quarterly Report on Form 10-Q and is not deemed filed with the Securities and Exchange Commission and is not incorporated by reference in any filing of IGN Entertainment, Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

(b)

Reports on Form 8-K

A Current Report on Form 8-K dated February 5, 2003 was filed by the registrant on February 6, 2003 to report under Item 5: Other Events that the Registrant announced its financial results for the quarter and year ended December 31, 2002, and under Item 7: Financial Statements and Exhibits the filing of a press release exhibit.

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A Current Report on Form 8-K dated May 2, 2003 was filed by the registrant on May 5, 2003 to report under Item 5: Other Events that the Registrant had entered into a definitive agreement and plan of merger with GHP Acquisition Corp., and under Item 7: Financial Statements and Exhibits the filing as exhibits the agreement and plan of merger, voting agreement between GHP Acquisition Corp. and Chris Anderson, voting agreement between GHP Acquisition Corp. and Mark Jung and a press release.

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SIGNATURES

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

	IGN ENTERTAINMENT, INC.
Date: May 15, 2003	By:	/s/ MARK A. JUNG

		Mark A. Jung Chief Executive Officer and Director (principal executive officer and principal financial officer)

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CERTIFICATION

I, MARK A. JUNG, certify that:

I have reviewed this quarterly report on Form 10-Q of IGN Entertainment, Inc.;

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

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

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:

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

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

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

I have disclosed, based on my most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

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

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

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


Date: May 15, 2003	By:	/s/ MARK A. JUNG

		Mark A. Jung Chief Executive Officer (principal executive officer and principal financial officer)

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Quarterly Report on Form 10-Q
Index to Exhibits

Exhibit Number	Description

10.01	Fifth Amendment to Brisbane Technology Park Lease dated November 29, 1999, between Registrant and GAL-Brisbane, L.P. Dated November 25, 2002.

99.01	Certification pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*