**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

**FORM 10-Q**
| **(Mark One)** |
|----------------|
| ** **     |
| **x**          | ** ** | **Quarterly Report Pursuant to Section 13 or 15(d)  of the Securities Exchange Act of 1934.** |
| ** **     |   | ** ** |
| ** **     |   | **For the  quarterly period ended: March 31, 2007** |
| ** **     |   | ** ** |
| ** **     |   | **OR** |
| ** **     |   | ** ** |
| **o**          | ** ** | **Transition Report Pursuant to Section 13 or  15(d) of the Securities Exchange Act of 1934** |

**CommissionFile Number: 333-61386**

**Advanstar, Inc.**

(Exact name ofregistrant as specified in its charter)

| **Delaware**                                                                 |
|------------------------------------------------------------------------------|
| (State or other  jurisdiction of                                             |
| incorporation or  organization)                                              |
|                                                                         |
| **94-3243499**                                                               |
| (I.R.S. Employer                                                             |
| Identification  No.)                                                         |
|                                                                         |
| **641  Lexington Avenue, New York, NY**                                      |
| (Address of  principal executive offices)                                    |
|                                                                         |
| **10022**                                                                    |
| (Zip Code)                                                                   |
|                                                                         |
| Registrant’s  Telephone Number, Including Area Code: **(212) 951-6600** |

Indicate by check markwhether the registrant: (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes  x       No  o

Indicate by check mark if the registrant is a large accelerated filer,an accelerated filer or a non accelerated filer.   
| Large Accelerated Filer   o |   | Accelerated Filer   o |   | Non-Accelerated Filer   x |
|--------------------------------------------|--------|--------------------------------------|--------|------------------------------------------|

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes o       No x

 

As of May 8, 2007, 100 shares of the registrant’scommon stock were outstanding.

 

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| **PART I**     | **Financial Information**                                                                                       |   |
|----------------|-----------------------------------------------------------------------------------------------------------------|--------|
| ** **     | ** **                                                                                                      |   |
| **Item 1.**    | ***Financial  Statements:***                                                                                    | 2      |
|           |                                                                                                            |   |
|           | Condensed Consolidated Balance Sheets (unaudited) at  March 31, 2007 and December 31, 2006                      | 2      |
|           |                                                                                                            |   |
|           | Condensed Consolidated Statements of Operations  (unaudited) for the three months ended March 31, 2007 and 2006 | 3      |
|           |                                                                                                            |   |
|           | Condensed Consolidated Statements of Cash Flows  (unaudited) for the three months ended March 31, 2007 and 2006 | 4      |
|           |                                                                                                            |   |
|           | Notes to  Condensed Consolidated Financial Statements (unaudited)                                               | 5      |
|           |                                                                                                            |   |
| **Item 2.**    | ***Management’s  Discussion and Analysis of Financial Condition and Results of Operations***               | 17     |
| *** ***   | *** ***                                                                                                    |   |
| **Item 3.**    | ***Quantitative  and Qualitative Disclosures About Market Risk***                                               | 28     |
| *** ***   | *** ***                                                                                                    |   |
| **Item 4T.**   | ***Controls and  Procedures***                                                                                  | 28     |
| *** ***   | *** ***                                                                                                    |   |
| **PART II**    | **Other Information**                                                                                           | 28     |
|           |                                                                                                            |   |
| **Item 1.**    | ***Legal Proceedings***                                                                                         | 28     |
| *** ***   | *** ***                                                                                                    |   |
| **Item 1A.**   | ***Risk Factors***                                                                                              | 29     |
| *** ***   | *** ***                                                                                                    |   |
| **Item 6.**    | ***Exhibits***                                                                                                  | 29     |
| *** ***   | *** ***                                                                                                    |   |
| **SIGNATURES** |                                                                                                            | 30     |

 

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**PART I FINANCIAL INFORMATION**

**Advanstar,Inc.**

**CondensedConsolidated Balance Sheets (Unaudited)**

**(Inthousands, except per share data)**
| ** **                                                                                                                          | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                          | ** ** | **2007**           | ** ** | **2006**              | ** ** |
| **Assets**                                                                                                                          |       |               |       |                  |       |
| Current assets                                                                                                                      |       |               |       |                  |       |
| Cash and cash  equivalents                                                                                                          |       | $                  | 13,287     |                  | $          | 37,003 |   |
| Accounts  receivable, net of allowance of $1,085 and $1,001 at March 31, 2007 and  December 31, 2006                                |       | 28,835             |       | 23,562                |       |
| Prepaid expenses                                                                                                                    |       | 8,251              |       | 9,280                 |       |
| Other                                                                                                                               |       | 1,920              |       | 1,855                 |       |
| Total current  assets                                                                                                               |       | 52,293             |       | 71,700                |       |
| Due from parent                                                                                                                     |       | 961                |       | 934                   |       |
| Property, plant and  equipment, net                                                                                                 |       | 24,700             |       | 25,026                |       |
| Intangible and other  assets                                                                                                        |       |               |       |                  |       |
| Goodwill                                                                                                                            |       | 598,457            |       | 598,398               |       |
| Intangibles and  other, net                                                                                                         |       | 36,076             |       | 39,052                |       |
| Total intangible  and other assets, net                                                                                             |       | 634,533            |       | 637,450               |       |
| Non-current assets held  for sale                                                                                                   |       | 3,670              |       | 3,670                 |       |
|                                                                                                                                |       | $                  | 716,157    |                  | $          | 738,780 |   |
|                                                                                                                                |       |               |       |                  |       |
| **Liabilities and Stockholder’s  Equity**                                                                                      |       |               |       |                  |       |
| Current liabilities                                                                                                                 |       |               |       |                  |       |
| Accounts payable                                                                                                                    |       | $                  | 18,319     |                  | $          | 15,571 |   |
| Accrued  compensation                                                                                                               |       | 5,996              |       | 11,306                |       |
| Other accrued  expenses                                                                                                             |       | 39,080             |       | 60,098                |       |
| Deferred revenue                                                                                                                    |       | 27,520             |       | 51,167                |       |
| Total current  liabilities                                                                                                          |       | 90,915             |       | 138,142               |       |
| Long-term debt, net of  current maturities                                                                                          |       | 622,278            |       | 621,909               |       |
| Deferred income taxes                                                                                                               |       | 41,183             |       | 39,244                |       |
| Other long-term  liabilities                                                                                                        |       | 3,853              |       | 2,846                 |       |
| Commitments and  contingencies                                                                                                      |       |               |       |                  |       |
| Stockholder’s equity:                                                                                                          |       |               |       |                  |       |
| Common stock,  $.01 par value, 10,000 shares authorized; 100 shares issued and outstanding  at March 31, 2007 and December 31, 2006 |       | —             |       | —                |       |
| Capital in  excess of par value                                                                                                     |       | 367,136            |       | 367,136               |       |
| Accumulated  deficit                                                                                                                |       | (420,114           | )          | (441,359              | )          |
| Accumulated  other comprehensive income                                                                                             |       | 10,906             |       | 10,862                |       |
| Total  stockholder’s equity                                                                                                    |       | (42,072            | )          | (63,361               | )          |
|                                                                                                                                |       | $                  | 716,157    |                  | $          | 738,780 |   |

 

The accompanyingnotes are an integral part of these condensed consolidated financial statements.

2

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**Advanstar,Inc.**

**CondensedConsolidated Statements of Operations (Unaudited)**

**(In thousands)**
| ** **                                                                         | ** ** | **For the**                 | ** ** |
|------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                         | ** ** | **Three Months Ended** | ** ** |
| ** **                                                                         | ** ** | **March 31,**               | ** ** |
| ** **                                                                         | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| ** **                                                                         |       |                             |       |   |   |
| ** **                                                                         |       |                             | ** ** |   |   |
| Revenue                                                                            |       | $                                | 110,708    |   | $ | 106,578 |   |
|                                                                               |       |                             |       |   |   |
| Operating expenses:                                                                |       |                             |       |   |   |
| Cost of  production (excluding depreciation)                                       |       | 22,584                           |       | 22,139 |   |
| Selling,  editorial and circulation (excluding depreciation)                       |       | 32,189                           |       | 32,695 |   |
| General and  administrative (excluding depreciation)                               |       | 10,701                           |       | 10,162 |   |
| Restructure  charge                                                                |       | —                           |       | 2,405 |   |
| Depreciation and  amortization                                                     |       | 4,524                            |       | 8,662 |   |
| Total operating  expenses                                                          |       | 69,998                           |       | 76,063 |   |
| Operating income                                                                   |       | 40,710                           |       | 30,515 |   |
| Other income (expense):                                                            |       |                             |       |   |   |
| Interest expense                                                                   |       | (20,426                          | )          | (20,589 | ) |
| Interest income                                                                    |       | 203                              |       | 503 |   |
| Other expense,  net                                                                |       | (669                             | )          | (153 | ) |
| Income from  continuing operations before income taxes                             |       | 19,818                           |       | 10,276 |   |
| Provision for  income taxes                                                   |       | 1,950                            |       | 1,999 |   |
| Income from  continuing operations                                                 |       | 17,868                           |       | 8,277 |   |
| Loss from operations of  discontinued businesses, net of income taxes (see Note 4) |       | (7                               | )          | (74 | ) |
| Net income                                                                         |       | $                                | 17,861     |   | $ | 8,203 |   |

The accompanying notesare an integral part of these condensed consolidated financial statements.

3

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**Advanstar,Inc.**

**CondensedConsolidated Statements of Cash Flows (Unaudited)**

**(In thousands)**
| ** **                                                   | ** ** | **For the**                 | ** ** |
|--------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                   | ** ** | **Three Months Ended** | ** ** |
| ** **                                                   | ** ** | **March 31,**               | ** ** |
| ** **                                                   | ** ** | **2007**                         | ** ** | **2006** | ** ** |
| Operating activities:                                        |       |                             |       |   |   |
| Net income                                                   |       | $                                | 17,861     |   | $ | 8,203 |   |
| Adjustments to  reconcile net income to net cash             |       |                             |       |   |   |
| from operating  activities:                                  |       |                             |       |   |   |
| Depreciation and  amortization                               |       | 4,524                            |       | 8,662 |   |
| Loss on asset  disposal                                      |       | 39                               |       | 176 |   |
| Non-cash  interest expense                                   |       | 1,081                            |       | 1,019 |   |
| Deferred income  taxes                                       |       | 1,939                            |       | 1,949 |   |
| Provision for  bad debts                                     |       | 277                              |       | 738 |   |
| Payments of contingent  acquisition compensation             |       | (28,000                          | )          | (446 | ) |
| Changes in  operating assets and liabilities                 |       | (19,877                          | )          | (6,432 | ) |
| Net cash (used  in) provided by operating activities    |       | (22,156                          | )          | 13,869 |   |
|                                                         |       |                             |       |   |   |
| Investing activities:                                        |       |                             |       |   |   |
| Additions to  property, plant and equipment                  |       | (1,972                           | )          | (1,877 | ) |
| Acquisitions of  intangibles, contingent payments, and other |       | (12                              | )          | (9 | ) |
| Net cash used in  investing activities                       |       | (1,984                           | )          | (1,886 | ) |
|                                                         |       |                             |       |   |   |
| Financing activities:                                        |       |                             |       |   |   |
| Payments of  long-term debt                                  |       | —                           |       | (25 | ) |
| Project grant  funds received                                |       | 425                              |       | — |   |
| Net cash  provided by (used in) financing activities         |       | 425                              |       | (25 | ) |
| Effect of exchange rate  changes on cash                     |       | (1                               | )          | (60 | ) |
| Net decrease in cash  and cash equivalents                   |       | (23,716                          | )          | 11,898 |   |
| Cash and cash  equivalents, beginning of period              |       | 37,003                           |       | 46,641 |   |
| Cash and cash equivalents, end of period                     |       | $                                | 13,287     |   | $ | 58,539 |   |

The accompanying notesare an integral part of these condensed consolidated financial statements.

4

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited)**

**1.****                          Basis ofPresentation**

The accompanying unaudited condensed consolidated financialstatements have been prepared by Advanstar, Inc. (“Advanstar”), its whollyowned subsidiary, Advanstar Communications Inc. (“Communications”), andCommunications’ wholly owned subsidiaries (collectively, the “Company”) inaccordance with the instructions to Form 10-Q and, therefore, do not includeall the information and footnotes required by generally accepted accountingprinciples for complete financial statements. Management believes that all adjustments, consisting solely of normalrecurring items considered necessary for a fair statement of financial positionand results of operations, have been included. These condensed consolidated financial statements, however, should beread in conjunction with the audited financial statements and the related notesincluded in the Company’s annual report on Form 10-K for the year endedDecember 31, 2006, filed with the Securities and Exchange Commission on April2, 2007.  The results of operations forthe three months ended March 31, 2007 are not necessarily indicative of theoperating results that may be expected for the entire year ending December 31,2007.

**2.**                          Summary of Significant Interim Accounting Policies

**Interim income tax expense**

The Company determinesits quarterly income tax provision based upon an estimated annual effectiveincome tax rate and discrete items as they occur.  In determining theeffective income tax rate applicable to interim periods, the Company excludestax jurisdictions where no tax expense or benefit is expected for the entireyear.

**3.**                          Goodwill and OtherIntangible Assets

**Goodwill**

The changes in the carryingamount of goodwill by operating segment are as follows:
| **(in thousands)**                                  | ** ** | **Fashion &** | ** ** | **Life**     | ** ** | **Powersports**           | ** ** | ** ** | ** ** | ** ** | ** ** |
|----------------------------------------------------------|------------|------------------------|------------|--------------|------------|---------------------------|------------|------------|------------|------------|------------|
| ** **                                               | ** ** | **Licensing**          | ** ** | **Sciences** | ** ** | **& Automotive** | ** ** | **Other**  | ** ** | **Total**  | ** ** |
|                                                     |       |                   |       |         |       |                      |       |       |       |       |       |
| Balance as of December  31, 2006                         |       | $                      | 316,554    |         | $          | 188,837                   |       | $          | 80,005     |       | $          | 13,002 |   | $ | 598,398 |   |
| Settlement of  contingent of purchase price arrangements |       | —                 |       | —       |       | 15                        |       | —     |       | 15         |       |
| Foreign currency  translation                            |       | —                 |       | —       |       | —                    |       | 44         |       | 44         |       |
|                                                     |       |                   |       |         |       |                      |       |       |       |       |       |
| Balance as of March 31, 2007                             |       | $                      | 316,554    |         | $          | 188,837                   |       | $          | 80,020     |       | $          | 13,046 |   | $ | 598,457 |   |

 

5

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

**Intangible Assets**

Tradeexhibitor and advertiser lists are amortized on a double-declining balancemethod over six years and five years, respectively, and other intangible assetsare amortized on a straight-line basis over three to ten years, and trademarksand trade names are amortized on a straight-line basis over twenty years.  These intangible assets consist of thefollowing:
| **(in thousands)**                 | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                              | ** ** | **2007**           | ** ** | **2006**              | ** ** |
|                                    |       |               |       |                  |       |
| Trade exhibitor  lists                  |       | $                  | 9,311      |                  | $          | 9,301 |   |
| Advertiser lists                        |       | 29,680             |       | 29,680                |       |
| Trade names and  trademarks             |       | 19,211             |       | 19,211                |       |
| Other intangible  assets                |       | 20,761             |       | 20,761                |       |
| Deferred  financing costs               |       | 17,600             |       | 17,600                |       |
|                                    |       | 96,563             |       | 96,553                |       |
| Accumulated amortization                |       | (60,487            | )          | (57,501               | )          |
| Total intangible  and other assets, net |       | $                  | 36,076     |                  | $          | 39,052 |   |

Estimated amortization expense of identifiedintangible and other assets for the remaining nine months of 2007 and for thenext five years is as follows:
| **(in thousands)** | ** ** | ** ** | ** ** |
|-------------------------|------------|------------|------------|
| 2007                    |       | $          | 5,643      |   |
| 2008                    |       | 5,931      |       |
| 2009                    |       | 1,962      |       |
| 2010                    |       | 1,601      |       |
| 2011                    |       | 1,184      |       |
| 2012                    |       | 961        |       |
|                         |            |            |            |  |

 

**4.**                          Acquisitions, Divestitures and Assets Held for Sale

**Acquisitions**

All acquisitions(collectively, the “Acquired Businesses”) have been accounted for using thepurchase method of accounting and, accordingly, the assets acquired andliabilities assumed have been recorded at their fair values as of the dates ofthe acquisitions.  The excess of thepurchase price over the fair value of the assets acquired and liabilitiesassumed has been recorded as goodwill. Results of operations for the Acquired Businesses have been included inthe accompanying condensed consolidated financial statements since theirrespective dates of acquisition.  TheAcquired Businesses were completed to expand the Company’s show and publicationpresence within its existing market sector and to maximize marketing andcustomer service infrastructure and expertise.

In 2005, the Companypurchased an off-road consumer event business (“Off-Road Expo”).  The Company paid $0.1 million in additionalcash consideration in the fourth quarter of 2006 to the former shareholdersbased on the actual 2006 operating revenue from the acquired assets.  This contingent consideration was recorded asgoodwill on the condensed consolidated balance sheet.

6

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

In August 2005, theCompany purchased a fashion industry tradeshow business and related productsfrom the owner of POOL Tradeshow (‘‘POOL’’). The original POOL purchaseagreement provided for additional contingent cash consideration to be paid tothe former owner based on the 2007 and 2008 operating results of POOL andrequired the owner’s continued employment with the Company.  In July 2006, the Company and the formerowner of POOL entered into an agreement which terminated the former owner’semployment with the Company, terminated the former owner’s right to receiveadditional contingent payments and eliminated the Company’s obligations underthe POOL asset purchase agreement and the employment agreement.   Upon execution of this agreement, theCompany made an initial payment of $1.5 million to the former owner. A finalpayment of $0.5 million under the agreement will be made in July of 2007.  This $2.0 million in consideration wasrecorded as compensation expense in the third quarter of 2006.

On August 19, 2005, theCompany purchased Project Global Tradeshow, Inc. (‘‘Project”), a producer oftradeshows serving the fashion industry, for $9.9 million in cash.  The original Projectpurchase agreement provided for additional contingent cash consideration to bepaid to the former owners based on the 2007 and 2008 operating results ofProject and required the former principal owner’s continued employment with theCompany.  In December2006, the Company and the former owners of Project agreed to amend thepurchase agreement in order to terminate the principal former owner’semployment with the Company, terminate the former owners’ right to receiveadditional payments and eliminate the Company’s obligations under the Projectstock purchase agreement and the employment agreement. Under the terms of theamended agreement, the Company made a payment of $28.0 million to the formerowners in January 2007.  This $28.0million in consideration was recorded as compensation expense in the third andfourth quarter of 2006.

In 2005, the Companycompleted two other acquisitions of consumer tradeshow businesses. In 2006, theCompany accrued $0.2 million in contingent consideration based on 2006operating results, which was recorded as goodwill on the condensed consolidatedbalance sheet.

In 2004, the Companypurchased a portfolio of pharmaceutical industry conferences and magazines (‘‘IVT’’).The Company is obligated to pay contingent consideration based on the 2005operating results of the acquired assets and the continued employment of theformer shareholders. Theestimated contingent consideration based on 2005 results was expensed in 2005and is subject to further negotiation with the former shareholders.  The Company expects the finalpayout to the former shareholders to be made in 2007.

Thechange in the balance of accrued contingent consideration included in otheraccrued liabilities in the accompanying condensed consolidated balance sheet isas follows:
| **(in thousands)**                 | ** ** | ** ** | ** ** |
|-----------------------------------------|------------|------------|------------|
| ** **                              | ** ** | **Total**  | ** ** |
| Balance at  December 31, 2006 |       | $          | 29,584     |   |
| Payments to  former owners              |       | (28,178    | )          |
| Balance at March 31,  2007              |       | $          | 1,406      |   |

** **

7

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** **

**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

**Divestitures**

The operatingresults, related income taxes, and any gains or losses of the followingdivestitures (collectively, the “Disposed Businesses”) have been reported indiscontinued operations in the condensed consolidated statements of operationsfor the three months ended March 31, 2007 and 2006. ** ******Interest expense wasnot allocated to any of the Company’s discontinued operations.****

*Arenacross*

In December 2005, theCompany sold its Arenacross Championship Series business (“Arenacross”) for atotal selling price of $0.2 million. The Company recorded a $0.4 million losson the sale in 2005. Both in the first and the second quarter of 2006, theCompany incurred $0.1 million in additional costs related to the sale ofArenacross. These costs were reported in loss from discontinued operations.

*DMS*

In 2004, the Company soldits German tradeshow business (“DMS”). The Company is continuing to incur accounting and legal fees inconnection with the closure of its DMS office. These costs are reported as lossfrom discontinued operations.

The financial results ofthe Disposed Businesses included in discontinued operations in the accompanyingcondensed consolidated statements of operations are as follows:
| **(in thousands)**                          | ** ** | **Three Months Ended** | ** ** |
|--------------------------------------------------|------------|----------------------------------|------------|
| ** **                                       | ** ** | **March 31,**               | ** ** |
| ** **                                       | ** ** | **2007**                         | ** ** | **2006** | ** ** |
|                                             |       |                             | ** ** |   |   |
| Loss before  income taxes                        |       | $                                | (7         | ) | $ | (119 | ) |
| Income tax  benefit                              |       | —                           |       | (45 | ) |
|                                             |       |                             |       |   |   |
| Loss from  operations of discontinued businesses |       | $                                | (7         | ) | $ | (74 | ) |
|                                             |       |                             |       |   |   |

**Non-CurrentAssets Held for Sale**

Inthe second quarter of 2005, the Company committed to a plan to sell itsCleveland office building and land (“the Cleveland Office”). The Company ceaseddepreciation of these assets, effective the second quarter of 2005. During thefourth quarter of 2006, the Company recognized a $1.0 million impairment on theCleveland Office to write its carrying value down to its estimated sellingprice less selling costs.  The fair valuewas estimated primarily based upon terms of a letter of intent between theCompany and a buyer of the building and a portion of the land.  As of March 31, 2007 and December 31,2006, the Company reported this building and land as assets held for sale inthe condensed consolidated balance sheet.

8

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

**5.**                          Comprehensive Income

The table below presentscomprehensive income, defined as changes in the equity of the Company excludingchanges resulting from investments by and distributions to shareholders:
| **(in thousands)**                      | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|
| ** **                                   | ** ** | **March 31,**               | ** ** |
| ** **                                   | ** ** | **2007**                         | ** ** | **2006** | ** ** |
|                                         |       |                             |       |   |   |
| Net income                                   |       | $                                | 17,861     |   | $ | 8,203 |   |
| Change in  cumulative translation adjustment |       | 44                               |       | 194 |   |
|                                         |       |                             |       |   |   |
| Comprehensive  income                        |       | $                                | 17,905     |   | $ | 8,397 |   |

**6.**                          Debt

**Credit facility**

Communications is party to a credit facility (the “CreditFacility”) with a group of financial institutions acting as lenders. On May 24,2006, Communications amended and restated its existing credit facility. Theamended Credit Facility reduced the revolving loan from $60.0 million to $50.0million, added a $10.0 million Term Loan, modified or eliminated certainrestrictive covenants and extended the maturity date from April 2007 to May2009 for the entire Credit Facility.  TheCredit Facility is guaranteed by the Company’s parent, Advanstar HoldingsCorp., the Company and Communications’ domestic subsidiaries and iscollateralized by first priority liens on substantially all of the assets ofthe Communications and the guarantors. As a result of the amendment and restatement of the Credit Facility,Communications expensed pre-existing unamortized deferred finance costs of $0.6million and capitalized new deferred finance costs of $1.7 million.

The Credit Facilitycontains restrictive covenants, including limitations on certain asset dispositions,dividends, investments and other restricted payments.  Failure to comply with thecovenants could cause an event of default under the Credit Facility.  Communications incurs a daily commitment fee of 0.5% and 1.25% perannum for unused revolving loan availability and standby letters of credit,respectively.  As of March 31, 2007,Communications had $1.6 million of standby letters of credit, which reducedborrowings available under its Credit Facility to $48.4 million.

**Seniorsecured notes**

Communications’ Senior Secured Notes initially consisted of $130.0million of Second Priority Senior Secured Floating Rate Notes due 2008, whichrequired quarterly amortization equal to 0.25% of the principal amount thereof(the “floating rate notes”), and $300.0 million of 10.75% Second PrioritySenior Secured Notes due 2010 (the “fixed rate notes”).

9

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

The fixed rate notes arefully and unconditionally guaranteed on a senior basis, jointly and severally,by Communications’ wholly owned domestic subsidiaries and collateralized by second priorityliens on substantially all the collateral pledged against borrowings underCommunications’ Credit Facility (other than the capital stock of certain of itssubsidiaries and assets of its parent companies, including the Company and AdvanstarHoldings Inc. (“Holdings”), the Company’s parent).   Thecovenants under the notes include limitations, among other things, onCommunications’ ability to make payments, incur debt incurrence, pay dividends,and make other restricted payments.

In June 2005, Communications used a portion of the proceeds from the2005 sale of businessassets and liabilities associated with certain tradeshows and conferences,trade publications and direct marketing products to repurchase $8.7 million of the fixed ratenotes and $117.8 million of the floating rate notes.

In August 2006, Communications used a portion of the proceeds from theTerm Loan to redeemall of its remaining $9.8 million of outstanding floating rate notes atpar.  As a result of the redemption,Communications recognized a $0.1 million loss onextinguishment of debt related to the redemption for unamortized deferred financing costs.

**Seniorsubordinated debt**

Communications’$160.0 million unsecured, 12% senior subordinated notes due 2011 (the “SeniorSubordinated Notes”) bear interest payable semiannually on February 15 andAugust 15 of each year.  The SeniorSubordinated Notes are fully and unconditionally guaranteed on a seniorsubordinated basis, jointly and severally, by Communications’ wholly owneddomestic subsidiaries.  The covenantsunder the Senior Subordinated Notes include limitations on certain assetdispositions, payments, debt incurrence, dividends and other restrictedpayments.

**Discountnotes**

The Company’s seniordiscount notes due October 2011 (the “Discount Notes”) with a principalamount at maturity of $171.8 million bear interest at 15%, payablesemiannually beginning October 2005, and have an implied yield to maturityof approximately 17.2%.  The notes areredeemable at the Company’s option at specified premiums through 2007 and atpar thereafter.  The notes may also beredeemed at a premium upon a qualifying change of control of the Company.

The Discount Notes arenot guaranteed by the Company’s subsidiaries and require semi-annual cashinterest payments. The Discount Notes contain restrictive covenants that, amongother things, limit the Company’s ability and that of its subsidiaries to incurdebt, pay dividends and make investments. Since the Company is a holding company and its subsidiaries serve as itsonly source of cash flow, its ability to pay interest on these notes will bedependent upon the receipt of dividends from its subsidiaries.  The Credit Facility, the Senior Secured Notesand the Senior Subordinated Notes impose substantial restrictions on theCompany’s subsidiaries’ ability to pay dividends to the Company.

The restricted paymentscovenants in Communications’ Senior Secured Notes indenture and SeniorSubordinated Notes indenture provide that Communications can pay dividends onlyif its leverage ratio (as defined) is 6.0 to 1.0 or better and only from a “basket”defined as the amount by which Communications’ cumulative EBITDA (as defined)since January 1, 2001 exceeds 150% of Communications’ cumulative interestexpense in that period plus certain other items, including proceeds from equityofferings.  The Company cannot provide assurance that Communications’

10

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

results will allow it tomake future distributions in light of these restrictions.  Failure topay interest on these notes will be a default under the notes and also resultin a default under Communications’ Credit Facility, which could have a materialadverse effect on the Company’s financial position, results of operations, andcash flows and/or could impact the Company’s ability to continue to operatewithout an amendment or restructuring of its credit facility and thenotes. Notwithstanding the leverage ratio limitation on restricted payments,Communications can make restricted payments in an aggregate amount ofup to $20 million to the Company, none of which has been used as of March 31,2007.

In February 2007,Communications declared a dividend of $12.9 million payable to the Companywhich was paid on April 16, 2007.  In2006, Communications paid a $12.9 million dividend to the Company both in Marchand October. These dividends made to theCompany in 2007 and 2006 were used for its April 2006, October 2006 and April2007 Discount Notes interest payments.  Debtservice on the Discount Notes will be $38.7 million from April 1, 2007 throughMarch 31, 2008 including the dividend received in April 2007.  Although there can be no assurance, theCompany expects Communications’ results will allow Communications to continueto make dividend payments to satisfy the Company’s debt service obligations.

Accretionof the debt discount on the Discount Notes was $0.4 million and $0.3 million during the three monthsended March 31, 2007 and 2006.  Theseamounts are included in interest expense in the respective accompanyingcondensed consolidated statements of operations.

Long-term debt consists of the following:

 
| **(in thousands)**                                                                                                                                | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                             | ** ** | **2007**           | ** ** | **2006**              | ** ** |
| ** **                                                                                                                                             | ** ** | ** **         | ** ** | ** **            | ** ** |
| Revolving Credit  Facility, interest at LIBOR plus 2.5%; due 2009                                                                                      |       | $                  | —     |                  | $          | — |   |
| Term loan,  interest at LIBOR plus 2.5%; 7.82% at March 31, 2007 due 2009                                                                              |       | 10,000             |       | 10,000                |       |
| 10.75% Second  priority senior secured notes, due 2010, plus unamortized premium of $496 and  $533 at March 31, 2007 and December 31, 2006             |       | 291,831            |       | 291,868               |       |
| Senior  subordinated notes, interest at 12.00%, due 2011                                                                                               |       | 160,000            |       | 160,000               |       |
| Senior discount  notes, interest at 15%, due October 2011, net of unamortized discount of  $11,345 and $11,751 at March 31, 2007 and December 31, 2006 |       | 160,447            |       | 160,041               |       |
|                                                                                                                                                   |       | 622,278            |       | 621,909               |       |
| Less current  maturities                                                                                                                               |       | —             |       | —                |       |
|                                                                                                                                                   |       | $                  | 622,278    |                  | $          | 621,909 |   |

On April 19, 2007, the Company and Communicationsissued a tender offer for any and all of Communications’ fixed rate notes,Communications’ Senior Subordinated Notes, the Discount Notes and a relatedconsent solicitation seeking to eliminate substantially all restrictive covenantscontingent on the pending transaction described in Note 11. Proceeds from thepending transaction are expected to be used to settle all of the Company’s andCommunications’ outstanding long-term debt obligations, including any tenderpremiums, fees and expenses.

11

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

**7.**                          Segments

The Company follows theprovisions of SFAS No. 131, “Disclosures about Segments of an Enterpriseand Related Information” and has three industry focused segments: Fashion &Licensing, Powersports & Automotive and Life Sciences.

The Company evaluates theperformance of, and allocates resources to, its segments based on contributionmargin, which is a non-GAAP measure — defined as revenue less costof production; selling, editorial and circulation; and certain allocatedgeneral and administrative costs.  Theaccounting policies of the reportable segments are the same as those describedin the summary of significant accounting policies.  The segments derive revenue from shows andconferences; trade, professional and consumer periodicals; marketing, directmail and database products and services; and electronic media products.  There are no inter-segment sales ortransfers.  Assets are not allocated tosegments and therefore have not been presented. Revenue and contribution margin from continuing operations of theCompany’s reportable segments are as follows for the three months ended March31, 2007 and 2006:
| **(in thousands)**            | ** ** | **Three Months Ended** | ** ** |
|------------------------------------|------------|----------------------------------|------------|
| ** **                         | ** ** | **March 31,**               | ** ** |
| ** **                         | ** ** | **2007**                         | ** ** | **2006** | ** ** |
|                               | ** ** | ** **                       | ** ** | ** ** | ** ** |
| Revenue                            |       |                             |       |   |   |
| Life Sciences                      |       | $                                | 33,155     |   | $ | 35,038 |   |
| Fashion & Licensing            |       | 52,932                           |       | 48,128 |   |
| Powersports & Automotive       |       | 22,000                           |       | 21,145 |   |
| Other                              |       | 2,621                            |       | 2,267 |   |
| Total revenue                      |       | $                                | 110,708    |   | $ | 106,578 |   |
|                               |       |                             |       |   |   |
| Contribution  margin               |       |                             |       |   |   |
| Life Sciences                      |       | $                                | 11,532     |   | $ | 10,093 |   |
| Fashion & Licensing            |       | 31,306                           |       | 28,875 |   |
| Powersports & Automotive       |       | 11,169                           |       | 10,526 |   |
| Other                              |       | 858                              |       | 1,098 |   |
| Total segment  contribution margin |       | $                                | 54,865     |   | $ | 50,592 |   |

 

12

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

The reconciliation oftotal segment contribution margin to consolidated income from continuingoperations before income taxes is as follows:
| **(in thousands)**                                                    | ** ** | **Three Months Ended** | ** ** |
|----------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                 | ** ** | **March 31,**               | ** ** |
| ** **                                                                 | ** ** | **2007**                         | ** ** | **2006** | ** ** |
|                                                                       |       |                             |       |   |   |
| Total segment  contribution margin                                         |       | $                                | 54,865     |   | $ | 50,592 |   |
| General and  administrative expense unallocated to segment operations |       | (9,631                           | )          | (9,010 | ) |
| Restructuring  charge                                                      |       | —                           |       | (2,405 | ) |
| Depreciation and  amortization                                             |       | (4,524                           | )          | (8,662 | ) |
| Other expense  (primarily interest)                                        |       | (20,892                          | )          | (20,239 | ) |
|                                                                       |       |                             |       |   |   |
| Income from  continuing operations before taxes                            |       | $                                | 19,818     |   | $ | 10,276 |   |

**8.**                          Restructuring Activities and Contract TerminationCosts

In 2005, the Company soldvirtually all of its business assets and liabilities associated with itstradeshows and conferences, trade publications and direct marketing products inthe following primary industries: Information Technology & Communications,Travel/Hospitality, Beauty, Home Entertainment, Abilities and Portfolio,including the shares of the Company’s Hong Kong and Braziliansubsidiaries.   In 2005 related to the above sale, the Company ceased use of certainleased office space in New York, NY, Milford, CT, Santa Ana, CA, and Chicago, IL. In the first quarter of2006, the Company vacated additional leased office space in New York, NY, andrevised its estimate of expected future sublease income for this space, resulting in $2.4million in additional charges during the first quarter of 2006. These charges consist of the discountedremaining future minimum lease payments due under non-cancelable leases, net ofestimated future sublease income. These lease commitments expire at variousdates through 2010.

InJune 2006, the Company entered into a lease modification and surrenderagreement for approximately 60% of its vacated office space in New York,NY.  Under the terms of the agreement,the Company paid the lessor $2.8 million in cash, the lease covering thesurrendered space was terminated and the Company has no further future leaseobligations for the surrendered space. In June 2006 the Company adjusted its accrual for this space based uponthe terms of the agreement and recorded a reduction of operating expenses of$0.1 million.

Thesummary of the Company’s change in facility exit costs restructuring accrual isas follows:
| **(in thousands)**                 | ** ** | **Facility Exit Costs** | ** ** |
|-----------------------------------------|------------|-----------------------------------|------------|
| ** **                              | ** ** | ** **                        | ** ** |
| Balance at  December 31, 2006 |       | $                                 | 1,166      |   |
| Utilized-cash                           |       | (233                              | )          |
| Utilized-non-cash                       |       | —                            |       |
| Balance at March  31, 2007              |       | $                                 | 933        |   |

The facility exit costsrestructuring accrual balance in the accompanying condensed consolidatedbalance sheet is $0.9 million and $1.2 million at March 31, 2007 and December31, 2006, of which 

13

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

$0.4 million and $0.5 million isin other accrued expenses at March 31, 2007 and December 31, 2006, and $0.5million and $0.7 million is in other long-term liabilities at March 31, 2007and December 31, 2006.

**Long-Term Contract Termination**

In October 2006, theCompany and one of its vendors entered into an agreement which terminated along-term contract originally effective through December 31, 2008.  The termination agreement required theCompany to pay a termination fee of $1.9 million which was paid by the Companyin March 2007 and provided for services to be performed by the vendor throughApril 1, 2007.  The Company took a chargeto operations of $1.9 million during the fourth quarter of 2006.  The related liability is included in accountspayable in the accompanying condensed consolidated balance sheet as of December31, 2006.

****9.********                   ********Accounting andReporting of Uncertain Income Tax Positions****

The Company adopted the provisions of FASBInterpretation No. 48 (“FIN 48”) *Accounting for Uncertaintyin Income Taxes — an interpretation of FASB Statement No. 109*effectiveJanuary 1, 2007.  FIN 48 establishes a single model to addressaccounting for uncertain tax positions. FIN 48 clarifies the accounting forincome taxes by prescribing a minimum recognition threshold a tax position isrequired to meet before being recognized in the financial statements. FIN 48also provides guidance on derecognition, measurement classification, interestand penalties, accounting in interim periods, disclosure and transition. Upon adoption on January 1, 2007, the Companyeliminated existing reserves of $3.4 million for uncertain tax positions,related to local tax matters.  Thisreduction was accounted for as a cumulative effect adjustment to the January 1,2007 balance of retained earnings.

The Company is subject to U.S. federal incometax as well as income tax of multiple state, local and foreign jurisdictions.The Company has substantially concluded all U.S. federal income tax matters foryears through 2002. Substantially all material state and foreign income taxmatters have been concluded for years through 2002. The Company’s U.S. federalincome tax return for 2004 is currently under a Limited Issue FocusExamination. New York City income tax returns are currently under examinationfor tax years 2000-2002 for which the statutes have been extended.  The Company believes that its income taxfiling positions and deductions will be sustained on audit and does notanticipate any adjustments that will result in a material change to itsfinancial position.  Therefore, theCompany has no reserves for uncertain tax positions.

TheCompany from time to time may be assessed interest or penalties by major taxjurisdictions, although any such assessments historically have been minimal andimmaterial to our financial results. The Company classifies these items asincome tax expense.

14

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** **

**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

**10.**                   Related-Party Transactions

**Stockholderdividend**

In July 2006, Holdingsentered into a stock purchase agreement with the Company’s former ChiefExecutive Officer, Robert L. Krakoff. Pursuant to the agreement, Holdings agreed to repurchase all of theshares of its common stock held by Mr. Krakoff and Mr. Krakoff surrendered allof his stock options in exchange for a $3.3 million payment.  The Company declared and paid a $3.3 milliondividend to Holdings for purposes of funding this transaction.

**11.**                   Sale and Merger Agreement

On March 28, 2007, theBoard of Directors of Holdings, unanimously approved, and Holdings enteredinto, a definitive merger agreement (the “Merger Agreement”) among Holdings,VSS-AHC Consolidated Holdings Corp. (“Buyer”), VSS-AHC Acquisition Corp. (“MergerSub”), being a wholly owned subsidiary of the Buyer, and DLJ Merchant BankingIII, Inc., as the stockholders’ representative.  Pursuant to the MergerAgreement and subject to the terms and conditions set forth therein, as of theclosing of the merger, the Merger Sub will be merged with and into Holdings,with Holdings being the surviving corporation.

The aggregate purchaseprice is approximately $1.142 billion subject to deductions for costs of theoutstanding debt of Holdings and its subsidiaries, certain transactionexpenses, change of control payments and certain other liabilities of Holdingsand its subsidiaries.  Additionally, thepurchase price is subject to a post-closing adjustment specified in the MergerAgreement based on the working capital of Holdings upon the closing of themerger.  As a result of the merger, Holding’s shares of common stock willbe converted into the right to receive the applicable merger consideration incash at the closing, subject to the post-closing working capitaladjustment.  The outstanding options of Holdings, including those issuedto the Company’s employees and directors, will be cancelled at closing and optionholders will receive the same per share merger consideration in cash as theholders of common stock receive, net of the exercise price of the option, andsubject to the post-closing working capital adjustment.

Under the MergerAgreement, as soon as practicable after signing, Holdings has agreed to causeCommunications to commence a tender offer and consent solicitation for itsoutstanding 10-3/4% Second Priority Senior Secured Notes due 2010 and 12%Senior Subordinated Notes due 2011 and to cause the Company to commence atender offer for its outstanding 15% Senior Secured Discount Notes due2011.  A tender offer was commenced forthese notes on April 19, 2007 and a related consent solicitation seeking toeliminate substantially all restrictive covenants subject to closing of thetransaction.  Proceeds from the pendingtransaction are expected to be used to settle all outstanding debt, any tenderoffer premium and related fees. Upon settlement of the notes, the Company willwrite off approximately $18.6 million in unamortized deferred finance costs,unamortized debt premium and unamortized debt discount.

In connection with theclosing of the pending transaction, the Company expects to incur an estimated$24.2 million of costs associated with change in control provisions in existingcompensation agreements, transaction bonuses, financial advisory and legalfees.  Of this amount $3.6 millionwas recognized in 2006 related to the Company’s accounting for stockcompensation and $0.6 million was recognized in the quarterly period endedMarch 31, 2007 for legal fees incurred.  The remainder will be recognizedupon closing of the pending transaction.

15

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**Advanstar, Inc.Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)**

**12.**                   Recently Issued Accounting Pronouncements

InSeptember 2006, the FASB issued Statement of Financial Accounting Standard No.157, *Fair Value Measurement (“*FAS 157”). FAS 157 defines fairvalue, establishes a framework for measuring fair value in generally acceptedaccounting principles, and expands disclosures about fair value measurements.This Statement does not require any new fair value measurements. FAS 157 iseffective for the Company on January 1, 2008. The Company has not completed its evaluation of FAS157 and the effect its adoption will have on its consolidated financialstatements.

The FASB also issued in September 2006Statement of Financial Accounting Standards No. 158, *Employers’ Accounting for Defined Benefit Pension and OtherPostretirement Plans*(“FAS158”). The new standard requires companies to recognize the overfundedor underfunded status of a defined benefit postretirement plan as an asset orliability on the balance sheet and to recognize changes in that funded statusin the year in which the change occurs through comprehensive income. FAS 158provides for adoption effective December 31, 2007 for companies that do nothave publicly traded equity securities. As such, our consolidated balance sheet as of December 31, 2007 willreflect the funded status of our postretirement benefit plans, with the offsetreported in other comprehensive income (loss) in its consolidated balancesheet. If the Company had adopted FAS 158 on March 31, 2007, the Company wouldhave recorded an additional $1.2 million of other long term liabilities andother comprehensive income. Upon its adoption of FAS 158 as of December 31,2007, the Company does not expect the actual impact to be materially differentfrom this amount.

In February 2007, the FASB issued Statementof Financial Accounting Standard No. 159, *The FairValue Option for Financial Assets and Financial Liabilities (*“FAS159”). FAS 159 permits entities to measure many financial instruments andcertain other items at fair value that are not currently required to be measuredat fair value.  FAS 159 is effective forthe Company on January 1, 2008. The Company has not completed itsevaluation of FAS 159 and the effect its adoption will have on its consolidatedfinancial statements.

16

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**Item 2.   *Management’s Discussionand Analysis of Financial Condition and Results of Operations***

This quarterly report on Form 10-Q contains forward-looking statementsmade pursuant to the safe harbor provisions of the Private SecuritiesLitigation Reform Act of 1995.  Investorsare cautioned not to place undue reliance on these forward-looking statements,including statements about plans and objectives of management, potentialacquisitions, market growth and opportunity. These forward-looking statements are neither promises nor guarantees andinvolve risks and uncertainties that could cause actual results to differmaterially from those indicated by such forward-looking statements.  You should not expect that theseforward-looking statements will be updated or supplemented as a result ofchanging circumstances or otherwise, and we disavow and disclaim any obligationto do so.  Important cautionarystatements and risk factors that would affect actual results are discussed inthe our periodic reports and registration statements filed with the Securitiesand Exchange Commission, including those under the caption entitled “RiskFactors” in our 2006 annual report on Form 10-K filed with the Securities andExchange Commission on April 2, 2007.

**Overview**

We report our business in these three industry focusedsegments:

·                                          Fashion & Licensing, which serves the men’s,women’s, children’s and product sourcing sectors of the apparel industry andthe merchandise licensing industry through industry tradeshows,  publishing targeted magazines anddirectories; and offering a broad range of marketing support services;

·                                          Life Sciences, which serves the healthcare,dental, veterinary, pharmaceutical, and science fields through publishingprimary and specialty care magazines and professional journals; organizingconferences and other events; developing continuingmedical education (“CME”) products; and the creation of a wide variety ofcustom marketing projects; and

·                                          Powersports & Automotive, which serves thepowersports, off-road and automotive aftermarket industries through trade andconsumer magazines and shows as well as electronic products.

In addition to our three segments described above,we combine our European, market development and e-Media operations into “Other.”

The percentage of our total revenue by segment for thethree months ended March 31, 2007 and 2006 is as follows:
| ** **                    | ** ** | **Three Months Ended** | ** ** |
|-------------------------------|------------|----------------------------------|------------|
| ** **                    | ** ** | **March 31,**               | ** ** |
| ** **                    | ** ** | **2007**                         | ** ** | **2006** | ** ** |
|                          |       |                             |       |   |   |
| Life Sciences                 |       | 30                               | %          | 33 | % |
| Fashion &  Licensing      |       | 48                               | %          | 45 | % |
| Powersports  & Automotive |       | 20                               | %          | 20 | % |
| Other                         |       | 2                                | %          | 2 | % |
|                          |       |                             |       |   |   |

 

17

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Ourrevenue reaches its highest levels during the first and third quarters of theyear due to the timing of the MAGIC Marketplace tradeshows and our other largetradeshows and conferences.  Because showand conference revenue is recognized when a particular event is held, we mayexperience fluctuations in quarterly revenue based on the movement of showdates from one quarter to another.

**Trends and Developments**

Results for thefirst quarter of 2007 reflects the continued progress of our strategy put inplace in 2005 to focus our portfolio on industry sectors where we can leverageour strong market positions, customer relationships and management teams.  We continue to develop new revenue streamsthrough a variety of growth initiatives across all segments and are constantlystriving to improve operating efficiency.

A number of newproducts have expanded and diversified our revenue streams in Fashion &Licensing, and Powersports.  In additionto the expansion and development of new categories and trend areas in MAGIC,the recent acquisitions of POOL and Project have been integrated into theoverall MAGIC Marketplace and contributed to the expansion of our fashionofferings to our exhibitors and attendees during the quarter.

The recentlaunches in Powersports in the off-road market continue to develop, including *DIRTsports* and *Off-Road Business*magazines, Off-Road Impact tradeshow and Off-Road Expo Pomona acquired inOctober 2005.

In Life Scienceswe have continued our progress in healthcare projects through the strengtheningof our sales efforts and effectively addressing our pharmaceutical customers’needs to comply with tighter regulations relating to the management anddelivery of educational projects.  Wehave also continued our growth initiatives including the launch of severalvertical editions of our flagship magazine, Medical Economics.

## **RecentDevelopments — Sale and Merger**

On March 28, 2007,the Board of Directors of our parent, Advanstar Holdings Corp. (“Holdings”),unanimously approved, and Holdings entered into, a definitive merger agreement(the “Merger Agreement”) among Holdings, VSS-AHC Consolidated Holdings Corp. (“Buyer”),VSS-AHC Acquisition Corp. (“Merger Sub”), a wholly owned subsidiary of theBuyer, and DLJ Merchant Banking III, Inc., as the stockholders’ representative. Pursuant to the Merger Agreement and subject to the terms and conditions setforth therein, as of the closing of the merger, the Merger Sub will be mergedwith and into Holdings, with Holdings being the surviving corporation.

The aggregate purchaseprice is approximately $1.142 billion subject to deductions for costs of theoutstanding debt of Holdings and its subsidiaries, certain transactionexpenses, change of control payments and certain other liabilities of Holdingsand its subsidiaries.  Additionally, thepurchase price is subject to a post-closing adjustment specified in the MergerAgreement based on the working capital of Holdings upon the closing of themerger.  As a result of the merger, Holding’s shares of common stock willbe converted into the right to receive the applicable merger consideration incash at the closing, subject to the post-closing working capitaladjustment.  The outstanding options of Holdings, including those issuedto the Company’s employees and directors, will be cancelled at closing andoption holders will receive the same per share merger consideration in cash asthe holders of common stock receive, net of the exercise price of the option,and subject to the post-closing working capital adjustment.

Under the MergerAgreement, as soon as practicable after signing, Holdings has agreed to causeCommunications to commence a tender offer and consent solicitation for itsoutstanding 10-3/4% Second 

18

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Priority SeniorSecured Notes due 2010 and 12% Senior Subordinated Notes due 2011 and to causeus to commence a tender offer for our outstanding 15% Senior Secured DiscountNotes due 2011. A tender offer was commenced for these notes on April 19, 2007and a related consent solicitation seeking to eliminate substantially all restrictivecovenants subject to closing of the transaction. Proceeds from the pendingtransaction are expected to be used to settle the notes tendered and fundtender offer premium and related fees. Upon settlement of the notes, we expectto write off approximately $18.6 million in unamortized deferred finance costs,unamortized debt premium and unamortized debt discount.

In connection with the closing of the pendingtransaction, we expect to incur an estimated $24.2 million of costs associatedwith change in control provisions in existing compensation agreements,transaction bonuses, financial advisory and legal fees.  Of this amount $3.6 million was recognized in2006 related to our accounting for stock compensation and $0.6 million wasrecognized in the quarterly period ended March 31, 2007 for legal feesincurred.  The remainder will be recognized upon closing of the pendingtransaction.

**Recent Developments —****Accounting for Uncertain Income Tax Positions**

We adopted the provisions of FASB Interpretation No.48 (“FIN 48”) *Accounting for Uncertainty in Income Taxes —an interpretation of FASB Statement No. 109*effective January 1,2007.  FIN 48 establishes a single model to addressaccounting for uncertain tax positions. FIN 48 clarifies the accounting for incometaxes by prescribing a minimum recognition threshold a tax position is requiredto meet before being recognized in the financial statements. FIN 48 alsoprovides guidance on derecognition, measurement classification, interest andpenalties, accounting in interim periods, disclosure and transition. Upon adoption on January 1, 2007, weeliminated existing reserves of $3.4 million for uncertain tax positions,related to local tax matters.  Thisreduction was accounted for as a cumulative effect adjustment to the January 1,2007 balance of retained earnings.

19

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**SelectedFinancial Data**

Thefollowing table sets forth selected statements of operations and otherfinancial data.
| **(in thousands)**                                        | ** ** | **For the**                 | ** ** |
|----------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                     | ** ** | **Three Months Ended** | ** ** |
| ** **                                                     | ** ** | **March 31,**               | ** ** |
| ** **                                                     | ** ** | **2007**                         | ** ** | **2006** | ** ** |
|                                                           | ** ** | ** **                       | ** ** | ** ** | ** ** |
| **Income  Statement Data:**                                    |       |                             |       |   |   |
| Revenue                                                        |       |                             |       |   |   |
| Life Sciences                                                  |       | $                                | 33,155     |   | $ | 35,038 |   |
| Fashion & Licensing                                        |       | 52,932                           |       | 48,128 |   |
| Powersports & Automotive                                   |       | 22,000                           |       | 21,145 |   |
| Other                                                          |       | 2,621                            |       | 2,267 |   |
|                                                           |       |                             |       |   |   |
| Total revenue                                                  |       | 110,708                          |       | 106,578 |   |
|                                                           |       |                             |       |   |   |
| Cost of  production, selling, editorial and circulation        |       |                             |       |   |   |
| Life Sciences                                                  |       | 21,083                           |       | 24,165 |   |
| Fashion & Licensing                                        |       | 21,393                           |       | 19,169 |   |
| Powersports & Automotive                                   |       | 10,534                           |       | 10,332 |   |
| Other                                                          |       | 1,763                            |       | 1,168 |   |
|                                                           |       |                             |       |   |   |
| Total cost of production and selling                           |       | 54,773                           |       | 54,834 |   |
|                                                           |       |                             |       |   |   |
| General and  administrative expenses                           |       | 10,701                           |       | 10,162 |   |
| Restructuring  charge                                          |       | —                           |       | 2,405 |   |
| Depreciation and  amortization                                 |       | 4,524                            |       | 8,662 |   |
|                                                           |       |                             |       |   |   |
| Operating income                                               |       | 40,710                           |       | 30,515 |   |
| Other income  (expense):                                       |       |                             |       |   |   |
| Interest expense                                               |       | (20,426                          | )          | (20,589 | ) |
| Interest income                                                |       | 203                              |       | 503 |   |
| Other expense, net                                             |       | (669                             | )          | (153 | ) |
|                                                           |       |                             |       |   |   |
| Income from continuing operations before income  taxes         |       | 19,818                           |       | 10,276 |   |
| Provision for  income taxes                                    |       | 1,950                            |       | 1,999 |   |
|                                                           |       |                             |       |   |   |
| Income from continuing operations                              |       | 17,868                           |       | 8,277 |   |
|                                                           |       |                             |       |   |   |
| Loss from  operations of discontinued businesses, net of taxes |       | (7                               | )          | (74 | ) |
|                                                           |       |                             |       |   |   |
| Net income                                                     |       | $                                | 17,861     |   | $ | 8,203 |   |

** **

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** **

**Results of Operations**

# ThreeMonths Ended March 31, 2007 Compared to the Three Months Ended March 31, 2006

*Revenue*

Revenue in the firstquarter of 2007 increased 3.9% to $110.7 million from $106.6 million in thefirst quarter of 2006.

Life Sciencesrevenue of $33.2 million decreased 5.4% or $1.8 million from $35.0 million inthe first quarterof 2006 primarily due to a $2.2 million decline in revenue from our healthcarecustom projects due to customers scheduling fewer custom projects to becompleted during the quarter.  Thedecrease in revenue was further attributable to an overall decline in our IVTpharmaceutical conferences as we continue to re-position our product offeringsto meet our customer needs in this market. These revenue declines were partially offset by ad page growth from ourprimary care and veterinary publications over the same quarter last year.

Fashion and Licensing revenue of $52.9 million increased 10.0% or $4.8million from $48.1 million in the first quarter of 2006 primarily due toour expansion of Premium Contemporary category at MAGIC Marketplace.  *License!*magazinegrew 25.5% in revenue over the same quarter of 2006.

Powersports &Automotive revenue of $22.0 million increased 4.0% or $0.9 million from $21.1million in the first quarter of 2006. This increase was drivenprimarily by growth in the square footage sold at our IMS events and DealerExpo shows, as well as improved yields from our publications and Dealer Expo*.*

Revenuefrom Other operations in the first quarter of 2007 was $2.6 millioncompared to $2.3 million reported in the first quarter of 2006 primarily due toan overall increase in ad page yield from our European operations.

*Cost of production, selling, editorial andcirculation costs*

Overall cost ofproduction, selling, editorial and circulation expenses in the first quarter of2007 were held flat at $54.8 million in both first quarter 2007 and 2006.

Life Sciences expenses inthe first quarter of 2007 decreased by 12.8%, or $3.1 million, to $21.1 millionfrom $24.2 million in the same quarter of 2006. Cost declines were primarily driven by a decrease in the number ofhealthcare custom projects and IVT pharmaceutical conferences delivered or heldin the first quarter of 2007 as compared to the same quarter of 2006.  Additionally, costs declined due to improvedoperating efficiencies and favorable pricing under renegotiated vendorcontracts.

Fashion & Licensingexpenses in the first quarter of 2007 increased by 11.6%, or $2.2 million, to$21.4 million from $19.2 million in the first quarter of 2006, primarily due tothe expansion of our MAGIC Marketplace and our Las Vegas POOL and New YorkProject events being held in temporary venues.

Powersports &Automotive expenses in the first quarter of 2007 increased by 2.0%, or $0.2million, to $10.5 million from $10.3 million in the first quarter of 2006 dueprimarily to increased costs for our IMS shows.

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Expenses of Otheroperations in the first quarter of 2007 were $1.8 million, compared to $1.2million in the first quarter of 2006. This increase is primarily due to costs associated with the increased adpages from *DPR Europe*, the Asian publicationlaunches and investments in the development of our e-media product offerings.

*General and administrativeexpenses*

General and administrative costs increased $0.5 million to$10.7 million in the first quarter of 2007 from $10.2 million in the firstquarter of 2006. This increase is primarily due to increases in employeemedical expense from several large claims in the first quarter of 2007 comparedto the same period of 2006.

*Restructuring charge*

In 2005, we sold virtually allof our business assets and liabilities associated with our tradeshows andconferences, trade publications and direct marketing products in the followingprimary industries: Information Technology & Communications,Travel/Hospitality, Beauty, Home Entertainment, Abilities and Portfolio,including the shares of our Hong Kong and Brazilian subsidiaries.   In 2005 related to the above sale, we ceaseduse of certain leased office space in New York, NY, Milford, CT, Santa Ana, CA,and Chicago, IL. In the first quarter of 2006, we vacated additional leasedoffice space in New York, NY, and revised our estimate of expected futuresublease income for this space, resulting in $2.4 million in additional chargesduring the first quarter of 2006. These charges consist of the discountedremaining future minimum lease payments due under non-cancelable leases, net ofestimated future sublease income. These lease commitments expire at variousdates through 2010.

In June 2006, we entered into alease modification and surrender agreement for approximately 60% of its vacatedoffice space in New York, NY.  Under theterms of the agreement, we paid the lessor $2.8 million in cash, the leasecovering the surrendered space was terminated and we have no further futurelease obligations for the surrendered space. In June 2006 we adjusted our accrual for this space based upon the termsof the agreement and recorded a reduction of operating expenses of $0.1million.

*Depreciation and amortizationexpense*

Depreciation andamortization expense was $4.5 million in the first quarter of 2007 and $8.7million in the first quarter of 2006. The decrease was primarily due to thereduction in amortization attributable to identifiable intangible assets whichbecame fully amortized in the fourth quarter of 2006.

# *Interest expense*

Interest expense in the first quarter of 2007 decreased $0.2 million,or 0.8%, to $20.4 million from $20.6 million in the first quarter of 2006.  The decreased interest expense relating tothe $9.8 million repayment of Communications floating rate notes in August2006. See “—Liquidity and Capital Resources—**Second priority secured notes.”

At March 31, 2007, $612.3million, or 98%, of our total debt is at a fixed rate with the remaining 2% ofour debt subject to interest rate fluctuations.

# *Other expense*

Other expense in thefirst quarter of 2007 increased to $0.7 million compared to $0.2 million in thefirst quarter of 2006 primarily due to legal costs incurred in conjunction withthe pending transaction described in “—Recent Developments—Saleand Merger.”

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# *Provision for income taxes*

The provision for incometaxes before discontinued operations was $2.0 million in both the first quarter2007 and 2006.  For both 2007 and 2006,the provision includes income taxes in certain foreign jurisdictions and adeferred tax provision related to the basis of goodwill for tax purposes beingless than the carrying value of goodwill for financial reporting purposes.

# *Discontinued operations*

In December 2005, we sold our Arenacross ChampionshipSeries (“Arenacross”) for a total selling price of $0.2 million. We recorded aloss on the sale of $0.4 million in December 2005.** **Both in the first and the secondquarter of 2006, the Company incurred $0.1 million in additional costs relatedto the sale of Arenacross. These costs were reported in loss from discontinuedoperations.

In 2004, we sold our German tradeshow business (“DMS”).  We are continuing to incur accounting andlegal fees in connection with the closure of its DMS office. These costs arereported as loss from discontinued operations.

**Liquidity and Capital Resources**

Thefollowing discussion presents our liquidity and capital resources on aconsolidated basis, including that of our subsidiaries.

We are aholding company and have no direct material operations.  Our principal asset is our ownership ofCommunications and our only material liabilities are the senior discounts notesand our guarantee of the Communications Credit Facility.  Our principal liquidity needs are for debtservice on the senior discount notes.

Communications’principal cash needs are for debt service, capital expenditures, investments inour products and selective acquisitions, as well as to provide us with cash tofinance our cash needs.  Its principalsources of liquidity will be cash flow from operations and borrowings under itsCredit Facility.

*Sources and uses of funds*

Operatingcash flows may be significantly affected by the working capital characteristicsof our business. We generally operate with negative working capital, excludingcash and current maturities of long-term debt, due to the impact of deferredrevenue from shows, which is billed and collected as deposits up to one year inadvance of the respective show. Deferred revenue increases on the balance sheetin the quarters immediately preceding our busy first quarter show season as wecollect deposits for booth space several months in advance of the shows.  Revenue and contribution margin arerecognized in the quarter that the events are held, resulting in the reversalof the deferred revenue.

Weanticipate that our operating cash flow, together with borrowings under theCredit Facility and other future financings and refinancings, will besufficient to fund our anticipated future operating expenses, capitalexpenditures, debt service and other obligations as they become due.  However, our ability to make scheduledpayments of principal, to pay interest on or to refinance our indebtedness andto satisfy our other debt obligations will depend upon our future operatingperformance.  Our future performance andcontinued compliance with the covenants contained in Communications’ CreditFacility will be affected by general economic, financial, competitive,legislative, regulatory, business and other factors beyond our control.  We expect to be in compliance with our debtcovenants during 2007.

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Ifthe pending transaction as described in “—Recent Developments— Sale and Merger”is consummated, we anticipate our financing structure should have adequate cashavailable to fund our future operating expenses, capital expenditures, debtservice and other obligations as they become due.

Historically,our financing requirements have been funded primarily through cash generated byoperating activities and borrowings under Communications’ revolving CreditFacility.  From time to time, we havealso raised additional funds through sales of common stock, high yieldofferings and term borrowings under Communications’ Credit Facility forpurposes of completing selective acquisitions.

Asof March 31, 2007, we had cash and cash equivalents of $13.3 million and alsohad $48.4 million in availability under Communications’ revolving CreditFacility. The following table shows our cash flow activity for the three monthsended March 31, 2007 and 2006 and should be read in conjunction with theconsolidated statements of cash flows:
| **(in thousands)**                                   | ** ** | **Three Months Ended** | ** ** |
|-----------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                | ** ** | **March 31,**               | ** ** |
| ** **                                                | ** ** | **2007**                         | ** ** | **2006** | ** ** |
|                                                      |       |                             |       |   |   |
| Net cash (used  in) provided by operating activities |       | $                                | (22,156    | ) | $ | 13,869 |   |
| Net cash (used  in) investing activities                  |       | (1,984                           | )          | (1,886 | ) |
| Net cash  provided by (used in) financing activities      |       | 425                              |       | (25 | ) |
| Effect of  exchange rate changes on cash                  |       | (1                               | )          | (60 | ) |
| Net (decrease)  increase in cash and cash equivalents     |       | $                                | (23,716    | ) | $ | 11,898 |   |

The $36.0 million decrease in cash from operatingactivities as compared to the first quarter of 2006 was due principally to the$28.0 million payment made in January 2007 for the settlement of a futurecontingent earn-out related to the Project tradeshow acquisition.  The decrease in cash is also attributable to1) an increase in accounts receivables of $5.6 million; and 2) a decrease incash collected in advance of our second and third quarter events of $3.8million primarily due to impact of timing of customer payments. Further thedecrease in cash is attributable to a decline in accounts payable and accrued compensationof $3.0 million.  These decreases werepartially offset by improved operating results of $6.0 million.

Net cash used in investing activities was $2.0 million inthe first quarter of 2007 and $1.9 million in the same quarter of 2006. Cashused in investing activities was principally due to cash used for capitalexpenditures. The majority of the first quarter of 2007 expenditures arerelated to our shows and events infrastructure. We believe that this amount of capital expenditure will be adequate togrow our business according to our business strategy and to maintain the keytradeshows, publications and business of our continuing operations.

Wedid not complete any acquisitions in the first three months of 2007. In connection with any future acquisitions, as apart of our on-going business strategy, we may require additional funding,which may be provided in the form of additional debt or equity financing or acombination thereof.  There can be noassurance that any additional financing will be available to us on acceptableterms or in a manner that complies with the restrictive covenants in our debtinstruments.  Consistent with ourlongstanding strategy, we continue to pursue potential acquisitions of complementarybusinesses.

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Cash provided by financing activities in the firstquarter of 2007 was$0.4 million for project grant funds received.

Communications may need to borrow against its CreditFacility in the second quarter of 2007 to meet current debt servicerequirements.

*Debtservice*

As of March 31, 2007, we had total indebtedness of$622.3 million and $48.4 million of borrowings available underCommunications revolving credit facility. Our principal debt obligations are described below.

On April 19, 2007, subject to closing of the pendingtransaction, Communications along with us commenced a tender offer and relatedconsent solicitation seeking to eliminate substantially all restrictivecovenants for Communications’ fixed rate notes, and senior subordinated notesand our Discount notes.  Proceeds fromthe pending transaction described “—Recent Developments— Sale and Merger” areexpected to be used to settle the notes tendered and fund tender offer premiumand related fees.

*Credit facility amendment and restatement*

On May 24, 2006, Communications amended and restated its existingCredit Facility. The amended Credit Facility reduced the revolving loancommitment amount from $60.0 million to $50.0 million, added a $10.0 million Term Loan, modified certainrestrictive covenants and extended the maturity date from April 2007 to May2009 for the entire Credit Facility.** **The amendment also eliminated theminimum quarterly fixed charge coverage ratio covenant.

*Second priority secured and floating rate notesrepayment*

In August 2006, Communications used a portion ofthe proceeds from the Credit Facility Term Loan to redeem all ofits remaining $9.8 million of outstanding floating rate notes at par.

*Creditfacility*

Communications’Credit Facility consists of a $50.0 million revolving Credit Facilitywhich terminates in May 2009, and $10.0 million term loan which matures in May2009.  Borrowings under the CreditFacility generally bear interest based on a margin over, at Communications’option, the base rate or LIBOR.  Theapplicable margin for revolving credit loans varies based upon its ratio ofconsolidated debt to EBITDA, as defined in the Credit Facility, and iscurrently 2.5% over LIBOR or 2.50% over the base rate.  Communications incurs a daily commitment feeof 0.5% and 1.25% per annum for unused revolving loan availability and standbyletters of credit, respectively.

Communications’obligations under the Credit Facility are guaranteed by Advanstar HoldingsCorp. (“Advanstar Holdings” or “Holdings”), our parent company, us, Communications,and all of Communications’ existing and future domestic subsidiaries.Communications’ obligations under the Credit Facility are collateralized bysubstantially all of the assets of Communications and the subsidiaryguarantors, including a pledge of the capital stock of all Communicationsexisting and future domestic subsidiaries, a pledge of no more than 65% of thevoting stock of any foreign subsidiary directly owned by Communications or anydomestic subsidiary, a pledge of all intercompany indebtedness in favor ofCommunications and Communications’ domestic subsidiaries, a pledge ofCommunications’ capital stock held by us and a pledge of our capital stock heldby Advanstar Holdings.   The CreditFacility contains restrictive covenants, including limitations on certain assetdispositions, dividends, investments and other 

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restrictedpayments.  Failure to comply with the covenants couldcause an event of default under the Credit Facility.

*Secondpriority senior secured notes*

Communications’$291.3 million of fixed rate notes mature in 2010.  The notes are guaranteed by each ofCommunications’ existing and future domestic restricted subsidiaries andcollateralized by second-priority liens on the assets collateralizingCommunications’ Credit Facility (other than certain subsidiary stock and assetsof its parent companies).  The fixed ratenotes bear interest at an annual rate of 10.75%, which is payable semi-annuallyin cash.  The notes contain restrictivecovenants that, among other things, limit Communications’ ability to incurdebt, pay dividends and make investments.

*Seniorsubordinated notes*

Communications’$160.0 million 12% senior subordinated notes mature in 2011 and areguaranteed by each of Communications’ existing and future domestic restrictedsubsidiaries.  Interest on the notes ispayable semi-annually in cash.  The notescontain restrictive covenants that, among other things, limit Communications’ability to incur debt, pay dividends and make investments.

*Seniordiscount notes*

Aspart of the financing for the acquisition of substantially all of the commonstock of Holdings by certain DLJ Merchant Banking funds in October 2000, weissued 15% senior discount notes due October 2011 with a principal amountat maturity of $103.2 million. Concurrently with the closing of the offering of Communications’ 12%senior subordinated notes, we sold additional senior discount notes dueOctober 2011 with an additional aggregate principal amount at maturity of$68.6 million.  These notes requirecash interest payments beginning in April 2006 and contain restrictivecovenants that, among other things, limit our ability and that of oursubsidiaries to incur debt, pay dividends and make investments.

Weare a holding company and our ability to pay interest on these notes will bedependent upon the receipt of dividends from our subsidiaries.  Communications’ Credit Facility, the seniorsubordinated notes and second priority senior secured notes impose substantialrestrictions on our subsidiaries’ ability to pay dividends.   The restricted payments covenants inCommunications’ senior secured notes indenture and senior subordinated notesindenture provide that Communications can pay dividends only if its leverageratio (as defined) is 6.00 to 1.00 or better and only from a basket equal tothe amount by which its cumulative EBITDA (as defined) since January 1, 2001exceeds 150% of its cumulative interest expense in that same period plus otheritems, including proceeds from equity offerings. In addition to such basket andnotwithstanding the leverage ratio limitation on restricted payments,Communications can make additional restricted payments in an aggregateamount of up to $20 million to us, noneof which has been used as of March 31, 2007.  As of March 31, 2007, Communications’ leverage ratio underthe most restrictive of these indentures was 4.95 to 1.00.

InFebruary 2007, Communications declared a dividend of $12.9 million payable uswhich was paid on April 16, 2007. Communications declared and paid both inMarch 2006 and October 2006 a dividend of $12.9 million to us. These dividendsmade to us in 2006 and 2007 were used for our April 2006, October 2006 andApril 2007 discount note interest payments. Debt service on our discount notes will be $38.7 million from April1, 2007 through March 31, 2008 including the dividend paid by Communications inApril 2007.

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Weexpect Communications’ results will allow it to continue to make dividendpayments to us for purposes of debt service. However, Communications’ results are subject to a variety of factors,including general economic conditions and conditions in its markets, and wecannot assure you Communications will be able to make future dividend payments.

*Contractualand contingent obligations*

Ourcontractual obligations (excluding accounts payable and accrued expenses), asof March 31, 2007 are as set forth below:
| **(in millions)**                      | ** ** | **Payments Due By Period** | ** ** |
|---------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                  | ** ** | ** **                                | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | **After** | ** ** | ** ** | ** ** |
| ** **                                  | ** ** | **2007(1)**                               | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012** | ** ** | **2012** | ** ** | **Total** | ** ** |
|                                        |       |                                      |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Indebtedness                                |       | $                                         | —     |   | $ | — |   | $ | 10.0 |   | $ | 291.3 |   | $ | 331.8 |   | $ | — |   | $ | — |   | $ | 633.1 |   |
| Interest on  indebtedness(2)                |       | 67.5                                      |       | 77.4 |   | 76.9 |   | 68.5 |   | 30.0 |   | — |   | — |   | 320.3 |   |
| Acquisition related compensation payable(3) |       | 1.4                                       |       | — |   | — |   | — |   | — |   | — |   | — |   | 1.4 |   |
| Operating lease  obligations                |       | 3.6                                       |       | 4.5 |   | 3.1 |   | 2.7 |   | 2.1 |   | 2.1 |   | 3.8 |   | 21.9 |   |
|                                        |       |                                      |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total  contractual cash obligations         |       | $                                         | 72.5       |   | $ | 81.9 |   | $ | 90.0 |   | $ | 362.5 |   | $ | 363.9 |   | $ | 2.1 |   | $ | 3.8 |   | $ | 976.7 |   |

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(1)             For the period fromApril 1, 2007 through December 31, 2007.

(2)             Interest on ourvariable rate debt is calculated using LIBOR of 5.3%, the rate in effect onMarch 31, 2007.  Because our variablerate debt bears interest at a variable rate, actual payments could differ.

(3)             Relates to contingentcompensation obligations relating to acquisitions which had not been paid as ofMarch 31, 2007.

We haveno material capital lease obligations or purchase obligations.  We have contingent obligations composed of$1.6 million of letters of credit securing our lease facilities.

*Off-balancesheet arrangements*

We haveno material off-balance sheet arrangements.

*Recentlyissued accounting pronouncements*

In September 2006, the FASB issued Statement ofFinancial Accounting Standard No. 157, *FairValue Measurement (“*FAS 157”). FAS 157 defines fair value,establishes a framework for measuring fair value in generally acceptedaccounting principles, and expands disclosures about fair value measurements.This Statement does not require any new fair value measurements.  FAS 157 is effective for us on January 1,2008. We have not completed our evaluation of FAS 157 and the effect itsadoption will have on our consolidated financial statements.

The FASB also issued in September 2006 Statement ofFinancial Accounting Standards No. 158, *Employers’Accounting for Defined Benefit Pension and Other Postretirement Plans*(“FAS 158”). The new standardrequires companies to recognize the overfunded or underfunded status of adefined benefit postretirement plan as an asset or liability on the balancesheet and to recognize changes in that funded status in the year in which thechange occurs through comprehensive income. FAS 158 provides for adoptioneffective December 31, 2007 for companies that do not have publicly tradedequity securities.  As such, ourconsolidated balance sheet as of December 31, 2007 will reflect the fundedstatus of our 

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postretirement benefit plans, with the offset reportedin other comprehensive income (loss). If we had adopted FAS 158 on March 31,2007, we would have recorded an additional $1.2 million of other long termliabilities and other comprehensive income on our consolidated balance sheet.We do not expect the actual impact upon adoption on December 31, 2007 to bematerially different from this impact.

In February 2007, the FASBissued Statement of Financial Accounting Standard No. 159, *The Fair Value Option for Financial Assets and Financial Liabilities (*“FAS159”). FAS 159 permits entities to measure many financial instruments andcertain other items at fair value that are not currently required to bemeasured at fair value.  FAS 159 iseffective for us on January 1, 2008. We have not completed our evaluationof FAS 159 and the effect its adoption will have on our consolidated financialstatements

# **ITEM 3.***** Quantitative and Qualitative Disclosures About Market Risk***

We are exposed to various market risks, which are thepotential losses arising from adverse changes in market rates and prices, suchas foreign currency exchange and interest rates.  We do not enter into derivatives or otherfinancial instruments for trading or speculative purposes.  We have previously entered into financialinstruments to manage and reduce the impact of changes in interest rates andforeign currency exchange rates. However, we have no such instruments asof March 31, 2007.

# **Interest Rates**

At March31, 2007, we had fixed rate debt of $612.3 million and variable rate debtof $10.0 million.   A change ininterest rates of 1% would not be material to our operating results.

# **Currencies**

Outsideof the United States, we maintain assets and operations in the United Kingdom.These assets and operations, and our exposure to any currency gains or losses,are not material to our operating results.

# **ITEM 4T. *****Controls and Procedures***

*Evaluationof disclosure controls and procedures*

Advanstar’s ChiefExecutive Officer and Chief Financial Officer, after evaluating theeffectiveness of the Company’s disclosure controls and procedures (as definedin Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, asamended (the “Exchange Act”)) as of the end of the period covered by thisreport (the “Evaluation Date”), have concluded that as of the Evaluation Date,our disclosure controls and procedures were effective.

*Changesin internal controls*

There were no significantchanges during our first fiscal quarter in our internal controls over financialreporting that have materially affected or are reasonably likely to materiallyaffect the Company’s internal controls over financial reporting.

# **PART II         OtherInformation**

**Item 1.Legal Proceedings**

Weare not a party to any legal proceedings which would be material to ourbusiness, financial condition or results of operations other than ordinarycourse, routine litigation.

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**Item 1A.Risk Factors**

There have been nomaterial changes in the risk factors provided in Part I, Item 1A of our 2006Annual Report on Form 10-K as filed with the SEC on April 2, 2007.

Items 2 to 5 of form 10-Qare not applicable.
| **Item 6.** | ** ** | **Exhibits**                                                                                                                                                                                                                                                                                                                                     |
|-------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **  | ** ** | ** **                                                                                                                                                                                                                                                                                                                                       |
| 2.1         |       | Agreement and Plan of Merger dated as of March 28,  2007 among Advanstar Holdings Corp., VSS-AHC Consolidated Holdings Corp.,  VSS-AHC Acquisition Corp., and DLJ Merchant Banking Funds III, Inc.  (Previously filed as an exhibit to the Company’s current report on Form 8-K  dated March 28, 2007 and incorporated by reference herein) |
|        |       |                                                                                                                                                                                                                                                                                                                                             |
| 31.1        |       | Certification of principal executive officer  required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                             |
| 31.2        |       | Certification of principal financial officer  required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                             |
| 32.1        |       | Certification of principal executive officer  required by Rule 13a-14(b) or 15d-14(b) of the Exchange Act                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                             |
| 32.2        |       | Certification of principal financial officer  required by Rule 13a-14(b) or 15d-14(b) of the Exchange Act                                                                                                                                                                                                                                        |

 

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**SIGNATURES**

Pursuant to the requirementsof the Securities Exchange Act of 1934, the Registrant has duly caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.
|             |   | ADVANSTAR, INC.   |
|-------------|--------|-------------------|
|        |   |              |
|        |   |              |
| May 8, 2007 |   | /s/ Ted S. Alpert |
|        |   |              | Theodore S. Alpert |
|        |   |              | Vice President-Finance, Assistant Secretary and |
|        |   |              | Chief Financial Officer |
|        |   |              | (Principal Financial Officer and Authorized |
|        |   |              | Representative of the Registrant) |

 

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**ExhibitIndex**
| Exhibit No. | ** ** | **Document**                                                                                                                                                                                                                                                                                                                                     |
|-------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |       |                                                                                                                                                                                                                                                                                                                                             |
| 2.1         |       | Agreement and Plan of Merger dated as of March 28,  2007 among Advanstar Holdings Corp., VSS-AHC Consolidated Holdings Corp.,  VSS-AHC Acquisition Corp., and DLJ Merchant Banking Funds III, Inc.  (Previously filed as an exhibit to the Company’s current report on Form 8-K  dated March 28, 2007 and incorporated by reference herein) |
|        |       |                                                                                                                                                                                                                                                                                                                                             |
| 31.1        |       | Certification of principal executive officer  required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                             |
| 31.2        |       | Certification of principal financial officer  required by Rule 13a-14(a) or 15d- 14(a) of the Exchange Act                                                                                                                                                                                                                                       |
|        |       |                                                                                                                                                                                                                                                                                                                                             |
| 32.1        |       | Certification of principal executive officer  required by Rule 13a-14(b) or 15d-14(b) of the Exchange Act                                                                                                                                                                                                                                        |
|        |       |                                                                                                                                                                                                                                                                                                                                             |
| 32.2        |       | Certification of principal financial officer  required by Rule 13a-14(b) or 15d-14(b) of the Exchange Act                                                                                                                                                                                                                                        |

 

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